REG - Apax Global Alpha Ld - 2021 Annual Report and Accounts
02/03/2022 07:00
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RNS Number : 2945D Apax Global Alpha Limited 02 March 2022
Apax Global Alpha
Annual Report & Accounts 2021
Introduction
Who we are
Apax Global Alpha Limited ("AGA", "Apax Global Alpha" or the "Company") is a
closed-ended investment company that invests in a portfolio of Private Equity
Funds advised by Apax Partners LLP ("Apax"). It also holds debt and equity
investments ("Derived Investments") which are identified as a -direct result
of the Private Equity investment process, insights, and expertise of Apax.
The Company has a Premium listing and is a constituent of the FTSE 250 Index
(LSE: APAX).
Adjusted NAV1
€1.5bn
Invested Portfolio
Private Equity / Derived Investments
75% / 25%
1. Adjusted NAV is an Alternative Performance Measure ("APM"). It
represents NAV of €1,490.1m adjusted for the performance fee reserve of
€8.4m at year end. Further details can be seen on page 58.
our objective
Our objective is to provide shareholders with superior long-term returns
through capital appreciation and regular dividends.
AGA aims to build and maintain a global portfolio of investments across four
core sectors - Tech & Digital, Services, Healthcare, and
Internet/Consumer, delivering sustained value across economic cycles.
Target annualised
Total NAV Return
12-15%
Target Dividend Yield p.a.
5%
of NAV
OUR INVESTMENT APPROACH
Our investment approach seeks to provide investors with access to Apax's
Private Equity Funds across all stages of maturity. Leveraging Apax's insights
derived from Private Equity activities, AGA also holds a focused portfolio of
debt and equity investments that provides additional liquidity and flexibility
for the Company with the aim of generating superior risk-adjusted returns.
Sectors
4
Investment advisor
investing experience
Nearly
50
years
Apax Global
Alpha Limited
Apax Global Alpha Limited provides shareholders with access to a diversified
Private Equity portfolio across four core sectors, as well as a focused
portfolio of debt and equity investments, derived from the insights gained by
the Apax team.
Contents
Overview
Business Model 2
Investment Case 4
Key Highlights 5
Strategic Report
Chairman's Statement 6
Responsible Investing 8
Investment Manager's Report 12
- Market Review 12
- Performance Review 14
- Portfolio Review 18
Private Equity 18
Derived Investments 26
Risk Management Framework 30
Governance Report
Chairman's Introduction 34
Governance at a glance 35
AGA Board of Directors 36
Investment Manager Board 38
Investment Advisor's AGA Investment Committee 39
Corporate Governance Statement 40
- Stakeholder Engagement 42
- Key Activities of the Board 43
Directors' Duties 44
Governance Framework 46
Audit Committee Report 47
Remuneration Report 49
Directors' Report 50
Viability Statement 52
Statement of Directors' Responsibilities 53
Financial Statements
Independent auditor's report 54
Statement of financial position 58
Statement of profit or loss and other
comprehensive income 59
Statement of changes in equity 60
Statement of cash flows 61
Notes to the financial statements 62
Administration 80
Investment policy 81
AIFMD 82
Quarterly returns since 1Q17 83
Portfolio allocations since 1Q17 85
Glossary 86
OVERVIEW \ Business model
Our objective is to provide shareholders with superior
long-term returns through capital appreciation from our investment portfolio
and regular dividends.
In order to achieve the Company's investment objective, AGA is:
1. a limited partner in Private Equity Funds raised and advised by Apax (the
"Apax Funds" or "the Funds"); and
2. a direct investor in debt and equity instruments which are identified by
leveraging the insights gained by Apax as a result of the Private Equity
investment process.
The Company refers to these two investment activities as its "Private Equity
investments" and "Derived Investments", respectively.
The Company: Apax Global Alpha Limited
AGA is a publicly traded investment company that provides shareholders
with exposure to a portfolio of Private Equity Funds advised by Apax. The
Apax Funds manage a diversified Private Equity portfolio across all stages of
maturity (investment, maturity, and harvesting).
AGA also holds a portfolio of debt and equity investments, derived from Apax's
sector insights and expertise. This portfolio provides additional capital
flexibility and liquidity for the Company with the aim of generating superior
risk-adjusted returns.
As AGA is typically a sizeable investor in each Apax Fund, it benefits from
the better terms which are also available to other similarly-sized third-party
investors in those funds.
Details about the Company's Board can be found in the Governance section on
pages 36-37.
AGA SHAREHOLDERS
AGA
Apax Global Alpha Limited
What AGA does
• Sets Company objectives and investment strategy
• Governance and risk management
• Appoints and oversees service providers
Private Equity
TECH & DIGITAL
SERVICES
HEALTHCARE
Derived
Investments
INTERNET/CONSUMER
Portfolio companies
Investment Manager: Apax Guernsey Managers Limited
AGA has appointed Apax Guernsey Managers Limited ("AGML") as its discretionary
Investment Manager. AGML is managed by a board of experienced investment
professionals and operational private equity executives. Biographies for the
individual directors can be found on page 38.
Investment Advisor: Apax
Apax is a leading global private equity advisory firm. It looks for
opportunities to partner with exceptional management teams to build great
businesses and achieve transformative growth. The Apax Funds seek buyout
opportunities in four key sectors: Tech & Digital, Services, Healthcare,
and Internet/Consumer.
Apax has pursued this sector strategy for over 30 years, leveraging the firm's
digital expertise and Operational Excellence Practice ("OEP") to help
accelerate value creation for its investors.
AGML
Apax Guernsey Managers Limited is the Investment Manager to AGA
What AGML does
• Performs discretionary portfolio management
• Makes investment decisions
• Carries out portfolio performance analysis and risk management
Apax
Apax is the Investment Advisor to AGML and the Apax Funds
What APAX does
• Identifies and performs due diligence of investment opportunities
• Recommends potential investments to AGML and the Apax Funds for
consideration
• Provides investor relations services to AGA
OVERVIEW \ INVESTMENT CASE
Why invest in AGA?
Unique private equity access
AGA provides investors access to eight Private Equity Funds advised by Apax,
which contain an actively managed portfolio of investments. Value creation is
achieved through sector focus, digitalisation, transformational ownership, and
operational value-add.
Private Equity portfolio companies as at 31 December 2021
75
Sector-driven strategy
AGA focuses on four attractively positioned and dynamic sectors, benefitting
from accelerating changes in global trends: Tech & Digital, Services,
Healthcare, and Internet/Consumer.
Sectors
4
Attractive net returns
AGA targets Total NAV Return of 12-15%, including a dividend target of 5% of
NAV per year, aiming to generate both capital appreciation and an attractive
level of dividend income for investors.
FY 2021 Total NAV Return1
28.7%
Distinctive approach to liquidity management
AGA employs a portfolio of debt and equity investments to manage capital not
invested in Private Equity. This provides liquidity and flexibility for the
portfolio while generating enhanced risk-adjusted returns.
% of Invested Portfolio in Derived Investments at 31 December 2021
25%
"Access to a diversified Private Equity portfolio across four global sectors"
OVERVIEW \ Key highlights
FY 2021 Key highlights
FY 2021 Total NAV Return1
28.7%
Adjusted NAV2 as at 31 December 2021
€1,482m
FY 2021 dividends
12.33p
Adjusted NAV2 per share as at 31 December 2021
€3.02/£2.54
AGA's invested Portfolio as at 31 December 2021
private equity 75.1%
derived debt 22.6%
derived equity 2.3%
Total return3 Investment lifecycle
FY 2021 Investment Transformation Realisation
Private Equity 19 35.3% 15
41.0% New investments LTM EBITDA growth Exits and IPOs
(including significant partial exits)
20.2%
Tech & Digital 11 LTM revenue growth
Tech & Digital 11
Services 3 Services 2
Healthcare 2 Healthcare -
Internet/Consumer 3 Internet/Consumer 2
Derived Investments 21 19
13.4% New investments Full exits
Derived Debt
37.5%
Derived Debt 21
Derived Debt 16
Derived Equity Derived Equity - Derived Equity 3
1. Total NAV Return is an APM. It means the return on the movement in the
Adjusted NAV per share over the period plus any dividends. Further details can
be seen on page 58.
2. Adjusted NAV is an APM. It represents NAV of €1,490.1m adjusted for
the performance fee reserve of €8.4m at year end. Further details can be
seen on page 58.
3. Total Return is an APM. It reflects the sub-portfolio performance on a
stand-alone basis. It excludes items at overall AGA level such as cash,
management fees and costs. For details of calculations used see the glossary
on page 87.
strategic report \ Chairman's statement
Strong full year performance across the portfolio
Sector strategy and a focus on digital continued to drive strong operating
performance and NAV growth across the portfolio in 2021.
Despite the emergence of new Covid-19 variants throughout the year, 2021 saw
a strong economic recovery from the pandemic on the back of ample fiscal
support and pent-up consumer demand. We would expect this recovery to continue
into 2022 but with more downside risk, driven by declining fiscal stimulus,
inflationary pressures, higher interest rates, and persistent supply chain
challenges. Recent stock market movements reflect these concerns.
I am pleased to report that AGA's portfolio remains well-positioned against
this backdrop, with a strategy that is not predicated on continued tailwinds
in financial markets or the re-rating of particular sectors. Instead, the
trends which underpin our investment decisions are long-term and structural in
nature, our portfolio is mature and well-diversified within our chosen
sectors, and we maintain a strong balance sheet in order to deploy capital
across economic cycles.
Results
AGA's sector-driven strategy and its focus on achieving digital transformation
and business improvement in its Private Equity investments produced strong
operating performance and substantial NAV growth across the portfolio in 2021.
Total NAV Return for the period was 28.7% and Adjusted NAV per share increased
from €2.45 (£2.19) at the end of 2020 to €3.02 (£2.54) at 31 December
2021.
Private Equity, which continues to make up the largest part of AGA's
portfolio, was the main driver of this strong performance, achieving a Total
Return of 41.0% in 2021. AGA's Private Equity portfolio is well-balanced and
diversified across vintages, including several funds in the maturity and
harvesting phases. As a result, AGA experienced another record level of
distributions which amounted to €275.1m in the year, with exits achieved at
an average uplift of 50.2%. This was offset by calls of €199.9m from the
Apax Funds for new investments.
Derived Equity (37.5% Total Return) and Derived Debt (13.4% Total Return) also
produced strong results over the year, with the performance of the Debt
portfolio in particular supported by favourable currency movements.
The high level of activity in the Private Equity portfolio, in the face of the
ongoing impact of the Covid-19 pandemic, shows the effectiveness of Apax's
investment strategy to achieve superior returns by identifying and acquiring
high-potential companies at a discount, in attractive target sub-sectors in
which the team has built up significant expertise and can work side-by-side
with management to unlock value and achieve a re-rating at exit.
Portfolio Update
At 31 December 2021, AGA was 90% invested with net current assets, inclusive
of cash, representing €141.7m, or 10% of Adjusted NAV. This provides AGA
with a healthy liquidity position to meet future calls from the Apax Funds as
Apax Digital Fund II, to which AGA made a $90m commitment in 2021, starts to
draw down capital and Apax X continues its pace of deployment. The Board will
also continue to consider making commitments to new Apax Funds
as they become available.
AGA continued to build on its investments in the Apax Funds during 2021, and
by the end of 2021 75% of the Company's Invested Portfolio was held in Private
Equity. In line with AGA's strategy, any remaining capital is deployed into
credit and equity investments, and these made up 23% and 2% of AGA's Invested
Portfolio, respectively, at the end of 2021.
There were several public markets exits in the Private Equity portfolio in the
period, with the Apax Funds taking advantage of the high valuation environment
to realise part of their holdings. To date, AGA has realised 3.0x the total
initial costs of investment through pre-IPO funding rounds, primary and
secondary sell-downs of shares in the companies in the Private Equity
portfolio that listed in 2021. As a result of these IPOs, the share of
publicly listed companies in the Private Equity portfolio has increased
substantially to stand at 25% as at 31 December 2021, an unusually high
proportion. AGA is well-positioned to receive further distributions in the
future from these holdings as the Apax Funds exit their remaining positions
over time.
Looking through a sector lens, the portfolio continued to be weighted towards
Tech & Digital (41%), followed by Services (24%), Healthcare (21%), and
Internet/Consumer (14%). Within these sectors, the focus remains on targeted
sub-sectors such as tech-enabled services in Tech & Digital, med-tech in
Healthcare, density-based businesses in Services, and online marketplaces in
Internet/Consumer. Exposure to high-growth, unprofitable tech businesses is
limited.
Liquidity, Commitments, and Funding
AGA's liquidity position remains healthy. Proceeds received from Private
Equity exits were re-deployed into Derived Debt, primarily in first and second
lien loans, to minimise cash drag for investors. In addition to €335.6m in
Derived Investments, AGA's €140.0m evergreen revolving credit facility,
which was renewed at the start of 2021, remained undrawn.
Dividend
AGA's policy is to pay dividends representing 5% of NAV each year to its
shareholders. Dividend payments are supported by income (net of expenses) from
Derived Investments and a steady flow of realisations from the Private Equity
portfolio. In line with the Company's policy, the Board has determined a final
dividend of 6.36 pence per share, bringing the full year dividend to 12.33
pence per share. This represents an increase of 21.5% compared to 2020. The
final dividend is expected to be paid on 4 April 2022 to shareholders on the
register of members on 11 March 2022. The shares will trade ex-dividend on 10
March 2022.
Responsible investing and a commitment to net zero
2021 saw significant new ESG initiatives underway at both AGA and Apax. AGA
published its first Responsible Investment policy to also include Derived
Investments and the Board took the decision to reduce the Company's carbon
footprint and offset its CO2 emissions. More details can be found in the
Responsible Investing section on page 8.
Governance and Board Evaluation
An external evaluation of the Board was undertaken in 2021. Overall, the
review concluded that the Company has a well-functioning and highly effective
Board, a strong corporate governance culture, and directors who are diligent
and independent in their outlook. There were a small number of recommendations
as to how the Board could improve further the quality of its oversight of the
business of the Company and these will be considered for implementation in
2022.
2022 AGM resolution on directors' fees and expenses
The Board currently comprises five directors following the appointment of
Stephanie Coxon in 2020. This appointment took the Company to the limit of the
aggregate remuneration fee cap specified in the Company's Articles despite
there having been no change to individual directors' fees since IPO. Although
there is no current intention to increase fees payable to directors, the
Company is seeking shareholder approval to increase the remuneration cap by
£80,000 to £395,000 in order to provide flexibility as it commences planning
for the retirement of several long-standing members of the Board over the
coming years.
Outlook
Covid-19 remains a risk to the outlook and we may continue to experience the
economic consequences of further government measures taken to control the
virus and limit its impact on overstretched healthcare systems.
Increasing inflation, geopolitical uncertainty, and the potential impact on
real interest rate movements on equity valuations will likely continue to
colour the market environment in the coming months. Against this backdrop, we
believe AGA's diversified portfolio and Apax's disciplined, sector-focused
investment strategy should mean that the Company's portfolio remains resilient
and well-positioned to take advantage of any emerging opportunities.
Tim Breedon CBE
Chairman
1 March 2022
strategic report \ Responsible investing
Committed to creating long‑term value and delivering sustainable returns
The Board of Directors of Apax Global Alpha believes that approaching
investing responsibly is important in protecting and creating long-term value.
The Board relies upon its Responsible Investment policy and the practices of
Apax to ensure it delivers returns ethically and responsibly.
Delivering sustainable returns has been a key focus for Apax and the Apax
Funds' portfolio companies for over a decade. Apax has built an Environmental,
Social, and Governance ("ESG") programme that closely aligns with industry
principles, incorporating ESG issues into investment analysis and
decision-making processes, policies, and practices. The focus has been on
transparency and on improving and enhancing the measuring of outcomes. Apax
collects, and reports on, over 130 ESG-related metrics from the Apax Funds'
portfolio companies.
This effort has been endorsed by many external stakeholders who validate
Apax's approach as industry leading. The annual assessment by the Principles
for Responsible Investment ("PRI") rates the Apax ESG programme as A+.
Section 172 of the Companies Act 2006
The Board is committed to promoting the long-term success of the Company
whilst conducting business in a fair, ethical and transparent manner. Whilst
AGA is Guernsey registered, the Board recognises the intention of the AIC Code
that matters set out in Section 172 of the Companies Act, 2006 should be
considered and reported on. This requires directors to act in good faith and
in a way that is the most likely to promote the success of the Company. In
doing so, directors must take into consideration the interests of AGA's
stakeholders, the impact AGA has on the community and the environment, take a
long-term view on consequences of the decisions they make, as well as aim to
maintain a reputation for high standards of business conduct and fair
treatment of all AGA's stakeholders.
Whilst the Board has ultimate responsibility for the Company's strategy and
conduct, as an investment company, AGA does not have any employees and
carries out its core activities through third-party service providers. All
key providers have an established track-record and, through regulatory
oversight, are required to have in place suitable policies and procedures to
ensure they maintain high standards of business conduct, treat shareholders
fairly, and employ corporate governance best practice. The Company strongly
believes that fostering healthy and constructive relationships with its broad
range of stakeholders should result in increased shareholder value over the
long term. The Board believes that fulfilling the Directors' duties under
Section 172 of the Companies Act 2006 supports AGA in achieving its investment
objectives and ensuring that all decisions are made in a responsible and
sustainable way. Further details on how we meet the duties placed on directors
under Section 172 can be found in this section and on pages 34-53.
AGA's ESG policy
Visit: https://www.apaxglobalalpha.com/media/2371/aga-esg-policy-2022.pdf
Apax's Sustainability report
Visit: https://www.apax.com/create/responsibility/sustainability/
AGA's Modern Slavery and Human Trafficking Statement
Visit: https://www.apaxglobalalpha.com/site-tools/modern-slavery-statement/
ESG integration throughout the investment process
The approach to ESG differs across the Private Equity and the Derived
Investments portfolios.
In Private Equity, ESG is embedded throughout the Apax Funds' investment
process, from pre-investment due diligence, during ownership and through
to exit. Supported by Apax's ESG team and Operational Excellence Practice
("OEP"), investment teams are responsible for identifying and monitoring
portfolio companies' ESG footprint, for driving value and for mitigating risk
relevant to particular material ESG matters.
AGA's Derived Investments portfolio consists of investments where AGA is a
minority investor in the underlying companies. Therefore, there is less scope
to influence ESG matters post-investment than in the Private Equity portfolio
and the approach to ESG for Derived Investments primarily focuses on due
diligence carried out before an investment is made.
ESG in the Private Equity Investment process
Due Diligence
- ESG due diligence carried out for each new private equity
investment made by the Apax Funds
- Apax's Sustainability Committee reviews the findings of the ESG
due diligence process, and these are incorporated into the final Investment
Committee documentation prior to each new commitment
- The objective is to create a high degree of awareness upfront with
regard to potential ESG issues and opportunities which can contribute to value
creation at a very early stage
Active ownership
- Apax's ESG team works with the investment teams to monitor the
integration of ESG management within the Funds' portfolio companies
- Apax collects over 130 ESG KPIs from the Funds' portfolio
companies annually, thereby instilling a discipline across the Funds'
portfolio to measure and monitor non-financial indicators relevant to their
businesses. These are reported in Apax's publicly available Sustainability
Report - the key goal of the data collection is to develop a better
understanding of the materiality of certain ESG KPIs to the overall operations
of a portfolio company and to support ESG improvements
Exit
- Throughout the Apax Funds' ownership, Apax is able to capture the
ESG footprint of the Funds' portfolio companies and establish possible areas
where the Apax investment teams, together with the OEP, can create value and
drive improvements ahead of exit
"ESG is embedded throughout the Apax Funds' investment process"
Responsible Investment Highlights 2021
2021 saw significant new ESG initiatives underway at both AGA and Apax. AGA
published its first Responsible Investment policy to also include Derived
Investments. The Company also made available information about its commitment
to ESG through the Association of Investment Companies ("AIC") as part of its
push to increase transparency within the industry.
At the start of 2021, the Board made a decision to offset the CO(2) emissions
relating to AGA's own activities and for AGA to become carbon neutral. The
Company's emissions have been offset via Carbon Footprint Ltd.
Apax, in partnership with climate and sustainable development expert
ClimateCare, also agreed to offset carbon emissions associated with the firm's
own activities and the firm has been conducting carbon neutral operations
since 2019.
Whilst the Apax Funds' portfolio is typically considered to be 'asset light'
with low carbon intensity, Apax has the conviction that all companies in the
most recent funds must engage on climate action. To that effect, Apax,
together with PwC as its implementation partner, has launched a firm-wide
decarbonisation project focused on the Funds' portfolio companies. This
project will develop reduction strategies for those companies where there are
material avoidable sources of emissions and will future proof these companies
by measuring and minimising their impact on the planet going forward.
Led by Apax's IT team and the OEP, Apax has also created a comprehensive data
analytics platform designed to pool together all portfolio company data
streams within its systems, both financial and non-financial. The full set of
ESG KPIs was merged into this platform, creating additional analysis
capabilities and increased data accessibility for investors. The platform will
allow deal teams to better track areas for improvement in real time as well as
identify emerging issues.
Apax also continued its focus on Inclusion and Diversity ("I&D"),
carrying out a firm-wide self-identification exercise in 2021 to help
establish a benchmark for improvement in this area.
Outlook and focus areas 2022
Responsible Investing continues to be an area of focus for the Board and,
with new regulation coming into force around climate and diversity
disclosures, we would expect to further expand our initiatives in this area.
Modern Slavery1
Given the nature of Apax's advisory business, there is a very low risk of
slavery or human trafficking in connection with its activities. Apax's key
suppliers are professional services firms who provide operational, commercial,
and financial advice for the review of investments made by the Apax Funds.
Apax expects all those in its supply chain and its contractors to comply with
its values. Apax is committed to implementing and enforcing effective systems
and controls to safeguard against slavery and human trafficking taking place
in its business or supply chains. Specifically, it looks to ensure that its
global team receives training to understand the risks of modern slavery and it
includes anti-slavery and human trafficking measures in its Global Business
Standards.
Environment
Tide, a journey to net zero
Tide, the UK's leading business financial platform and a portfolio company of
the Apax Digital Fund, has embarked on a decarbonisation journey, and to
tackle its most material environmental indicators, which are energy usage and
travel. Tide has set a target of being net zero by the end of 2022 and will be
measuring its carbon footprint on a monthly basis, with audits being carried
out by an external party. Tide is not just focusing on its own climate
strategy but also on providing training and support to its nearly 400,000
members.
Social
Kepro, establishing leadership in I&D
Kepro, a US provider of government sponsored healthcare programmes and an Apax
IX portfolio company, has focused heavily on fostering an inclusive culture.
In the last year the company set out to develop an I&D Charter, making
I&D a board priority.
Kepro employs over 1,000 individuals across 14 offices in the US. Like many
companies in the healthcare industry, over 80% of employees are female but
this does not translate across to the board level and senior leadership, and
driving diversity in senior roles is a key priority for the board.
Importantly, the push around I&D also ties into the bigger industry
conversation around health equity.
Whilst the company is only at the start of its journey, good progress has been
made on structure and governance, including in the supply chain, ensuring
Kepro's vendor strategy reflects its objectives and values.
Governance
Authority Brands, laying the foundation for good corporate governance
Apax IX first invested in Authority Brands in 2018 and the company has since
grown significantly, expanding its franchise through eight acquisitions. This
has presented the company with a number of challenges, adapting to a growing
workforce and ensuring alignment of cultures. When Authority Brands embarked
on its first carveout (of the ClockWork brands), it had a small team and no
payroll system. Since then, Authority Brands has grown key functional areas
such as HR, marketing and IT and can better work with the acquiree companies
to ensure a smooth integration that puts people first. Authority Brands has
also focused heavily on culture and reporting structures and has built a
code of values that puts the success of the franchise owners first, led by
the CEO - himself a former franchisee.
1.
https://www.apax.com/media/2534/modern-slavery-and-human-trafficking-statement-2021.pdf
strategic report \ Investment manager's report
Market review
REVIEW OF 2021
2021, like 2020, was dominated by Covid-19 and the vaccine rollout. While we
saw the emergence of the Omicron variant towards the end of the year, the
reduced number of hospitalisations and deaths allowed many governments to
gradually reopen their economies, albeit with certain restrictions put in
place again at the end of the year.
Significant monetary and fiscal stimulus drove recovery in 2021, however this
lagged original expectations with the virus, supply and labour constraints all
limiting growth. Whilst recovery is likely to continue, these challenges are
potential constraints for 2022 growth.
Inflation
The favourable macro-economic backdrop, combined with loose monetary policy
and some supply chain shortages, is now giving rise to concerns around
inflation. Indeed, the beginning of 2022 has seen higher inflation rates which
are likely to persist for longer than originally expected. There have been
more hawkish signals from monetary authorities, accompanied by an increase in
long-term bond yields and a decrease in multiples of high growth stocks.
Equity markets
Following the dramatic swings in 2020, equity markets performed strongly in
2021 with the S&P up 29% and STOXX Europe 600 up 22% in the year. Only
towards the end of 2021, as market participants focused more on the impact of
rising inflation, interest rates as well as mounting geopolitical risks,
volatility returned to equity markets.
Throughout 2021, valuations remained highly elevated on a forward earnings
multiple basis against a backdrop of negative real rates and very rapid
expansion of central bank balance sheets. However, valuations were less
stretched when viewed from an equity risk premium perspective given rates.
There continues to be a significant divergence in performance between sectors
and companies as investors differentiated between those that are likely to be
long-term winners, and those that could be structurally challenged. This
distinction is evident within AGA's portfolio as the core sectors to which the
Apax Funds have exposure generally performed better than the market as a
whole. There were some exceptions in legacy "bricks-and-mortar" retail and
other consumer-facing businesses. Further information about the portfolio is
provided throughout the rest of this report.
Private Equity markets
In private equity markets, the volume and value of transactions was extremely
robust in 2021.
Ample available capital, borrower-friendly credit markets, and a supportive
policy environment drove record deployment levels in 2021. Whilst the evolving
policy backdrop may take some of the froth out of parts of the market such as
growth-oriented technology valuations, this industry momentum is likely to
carry into 2022.
Credit markets
As the global economy continued to recover during 2021, long-term government
bond yields increased. The 10-year US treasury yield increased from 0.5% in
2020 to 1.5% as at 31 December 2021 and German 10 year bund yields also
increased from -0.9% at their lows in 2020 to -0.2% as at 31 December 2021.
Whilst yields have increased recently, the market is currently pricing in
relatively benign long-term inflation. There is a tail risk that inflation
overshoots, leading to materially higher short-term and long-term rates.
FIG.1:AGA FY2021 PRIVATE EQUITY PERFORMANCE1
FTSE 250 16.9%
STOXX 600 22.2%
S&P 500 28.7%
AGA Private Equity Total Return 41.0%
1. Represents AGA's Private Equity Total Return for FY 2021 compared to
major equity indices (calculated on a total return
During the early phases of the Covid-19 crisis, credit spreads widened
materially for investment grade, high yield and leveraged loans. In
particular, high yield and loan markets dislocated severely, with prices for
loans in high-quality companies dropping in line with the broader markets.
However, from the second half of 2020, and continuing in 2021, spreads
tightened across the credit spectrum, with high yield loans performing
particularly strongly, driving prices up and spreads down.
As in public equities, investors distinguished between what were perceived to
be higher and lower quality sectors and companies.
Outlook
The economic outlook remains positive in the short term albeit with some
headwinds from high inflation, geopolitical uncertainty, and the lasting
impact of Covid-19. In most developed markets, and whilst at a lower rate than
in 2021, economies are expected to grow strongly in 2022, driven by continued
re-opening (particularly in the service sector) and pent-up demand.
Despite a decline in equity benchmarks at the start of 2022, valuation levels
for both public and private equity markets remain at elevated levels. Equity
markets have been supported by very low bond yields and a lack of attractive
liquid investment alternatives, indicating that valuations may remain
relatively elevated for the foreseeable future.
Valuations in both public and private markets are also expected to continue to
be materially superior for those companies viewed as better positioned for the
long-term compared to those which are more impacted by the pandemic or
structurally challenged. This supports the Apax strategy of finding companies
with quality prospects in good areas but that are undermanaged and, through
transformation, have potential for both superior earnings growth and multiple
re-rating.
Performance review
Total NAV Return
28.7%
Adjusted NAV
€1,482m
Adjusted NAV per share
€3.02/ £2.54
Sector-led investment strategy delivering strong returns across the portfolio
Performance highlights
AGA's Total Adjusted NAV increased to €1.5bn at 31 December 2021 and Total
NAV Return was 28.7% (22.8% constant currency). This reflects a marked
improvement on the prior year (14.8% Total NAV Return), despite a largely
flat fourth quarter, where market volatility in the Apax Funds' publicly
listed holdings, particularly in tech, impacted valuations at year end.
Building on the momentum in the second half of 2020, both the Private Equity
and the Derived Investments portfolios experienced strong performance in the
last twelve months. Total Return was mainly driven by good operating
performance in the underlying portfolio companies, a supportive valuation
environment, and premium valuations achieved on exits.
The Apax Funds took advantage of the strong valuation environment during the
year to exit those Private Equity investments that had completed their
transformation journeys and where valuations re-rated to very high levels.
Exit activity in the Private Equity portfolio in 2021 delivered €275.1m in
distributions to AGA, with exits, including IPOs and partial realisations,
achieving an average uplift of 50.2%. This flow of realisations continued
to complement income from the Derived Investments portfolio to support the
Company's dividend policy to pay 5% of NAV each year, and dividends to
shareholders for FY 2021 was €64.6m.
AGA and the Apax Funds were also able to identify attractive new investments
in core sub-sectors in the period, with AGA deploying €443.4m across the
Private Equity and Derived Investments portfolios.
TOTAL NAV RETURN CONTRIBUTIONS (%)
Private Equity 21.0%
Derived Debt 2.3%
Derived Equity 1.1%
Cost and other movements (0.9)%
Performance fee adjustments(1) (0.7)%
FX 5.9%
Total NAV Return(2) 28.7%
1. Performance fee adjustment accounting for the movement in the
performance fee reserve at 31 December 2021
2. Total NAV Return means the movement in the Adjusted NAV per share over
the period plus any dividends paid
ADJUSTED NAV DEVELOPMENT (€M)
Adjusted NAV 31 December 2020 1,201.2
Private Equity 252.6
Derived Debt 27.8
Derived Equity 13.0
Cost and other movements (10.7)
Dividends paid (64.6)
Performance fee adjustments(1) (8.4)
FX 70.8
Adjusted NAV 31 December 2021 1,481.7
1. Performance fee adjustment accounting for the movement in the
performance fee reserve at 31 December 2021
PORTFOLIO SPLIT BY SECTOR
Total Private Equity Derived Investments
Tech & Digital 40% 32% 8%
Services 24% 18% 6%
Healthcare 22% 13% 9%
Internet/Consumer 14% 12% 2%
As at 31 December 2021, AGA was 90% invested, with an Invested Portfolio of
€1.3bn. The majority of the Invested Portfolio was invested in Private
Equity (75%), with the Derived Investments portfolio representing 25%. Net
current assets (inclusive of cash) represented €141.7m, or 10% of
Adjusted NAV.
This provides AGA with a healthy liquidity position to meet future calls from
the Apax Funds as the Apax Digital Fund II, to which AGA made a $90m
commitment in the year, starts to draw down capital and Apax X continues its
pace of deployment.
Exposure to public equity
As highlighted in the portfolio review section, the number of IPOs in the
period significantly increased AGA's exposure to publicly listed companies. At
31 December 2021, listed companies represented 25% of AGA's Private Equity
portfolio.
These IPOs presented significant liquidity events for the Apax Funds and are a
first step towards exiting these portfolio companies. In 2021, the majority
of IPOs were in the Tech & Digital sector where the Apax Funds took
advantage of the high valuation environment to realise part of their holdings.
Whilst an IPO is not a full exit of a portfolio company, to date, AGA has
already realised 3x initial costs from pre-IPO funding rounds, primary, and
secondary sell-downs of shares in the companies in the Private Equity
portfolio that listed in 2021. AGA is well-positioned to receive further
distributions as the Apax Funds reduce and exit their remaining holdings in
these companies over time.
Portfolio valuations
In Private Equity, the Apax Funds predominantly use a comparable-based
valuation methodology, preferring the transparency that comes with this
approach as opposed to alternatives such as using Discounted Cash Flows or
long-term trading multiples. Fair value of the Apax Funds' private investments
is largely determined using public trading comparatives and/or transaction
comparables as appropriate. Public stock is valued at the closing share price
of the portfolio company as at 31 December 2021.
Portfolio highlights
AGA benefitted from exposure to four key sectors and, within those sectors, a
selection of core sub-sectors. At 31 December 2021, AGA's Invested Portfolio
was weighted towards Tech & Digital (40%), followed by Services (24%),
Healthcare (22%), and Internet/Consumer (14%).
At 64%, the majority of AGA's geographic exposure continued to be in North
America, followed by Europe at 15%. This is largely mirrored by the currency
exposure, with US dollar representing 69% and the Euro representing 15% of
the portfolio.
Tech & Digital
In Tech & Digital the focus remained on three core sub-sectors of
expertise - software, tech-enabled services, and telecoms.
- In software, valuations remained high with key sub-sector trends
centred on the ongoing shift to Software-as-a-Service ("SaaS"), a focus on
higher growth and lower leverage deals, and sector consolidation. Against this
backdrop, in Private Equity, the Apax team sought out opportunities for add-on
M&A and platform acquisitions such as the Apax Funds' investments in
EveryAction, Social Solutions and CyberGrants; margin and pricing improvements
with support from the Operational Excellence Practice ("OEP"), as well as
growth acceleration.
- There was also consolidation in the tech-enabled services sector
and the Apax team focused on identifying new growth areas in mid-sized
next-generation IT services such as digital transformation, Artificial
Intelligence ("AI"), and cybersecurity services. As an example, Apax X
invested in Herjavec Group, a North American security services provider, and
supported the company's further expansion through a merger with Fishtech
Group at the end of 2021.
- In telecoms, valuations were more moderate with revenue
stabilising in some markets. Here again, the Apax Funds identified a
consolidation trend, with satellite at an inflection point, leading to an
agreement to sell Inmarsat to Viasat. The Apax Funds also continued to
identify opportunities to invest in disruptors, and signed an agreement to
acquire T-Mobile in the period.
Services
Services is a broad sector and the Apax team seeks opportunities to invest in
businesses that, empowered by technology, can deliver improved services to
customers. These companies often share similar business models and market
structures, benefitting from economies of scale.
- In outsourced sales and marketing, the Apax Funds' portfolio
companies continued to benefit from attractive structural dynamics such as a
shift to an outsourced sales force. This sub-sector also continued to
experience consolidation, presenting significant add-on opportunities for the
Apax Funds' portfolio companies. For example, in 2021, GamaLife entered the
Italian life insurance market through the acquisition of a business unit of
Zurich Investments Life.
- Among density-based businesses, there were good opportunities for
add-on M&A, with successful businesses able to achieve higher margins and
faster growth. The Apax Funds' portfolio companies benefitted from this trend
with companies like TOI TOI & DIXI signing new add-on acquisitions, having
executed thirteen deals under the Apax Funds' ownership.
- Residential services have increasingly become an area of focus for
the Apax Funds, with the Apax team having identified an opportunity to invest
in a highly fragmented "mom-and-pop" market with ample room to scale and drive
digital improvements. Following on from the investment in Authority Brands in
2018, the Funds invested in SavATree and American Water Resources, a carveout
from American Water Works (NYSE:AWK), in the year.
Healthcare
The Apax Funds' portfolio companies continued to benefit from attractive
structural trends in Healthcare such as changing demographics and significant
investment into healthcare to improve and extend life.
- The trend around investment into digital health and innovation saw
the Apax Funds expand their med-tech portfolio, focusing on investments in
category champions such as Rodenstock, a manufacturer of premium ophthalmic
lenses.
- There was a continued favourable regulatory environment in
healthcare services, particularly in the US, and the Apax team identified an
opportunity for the Funds to invest in Eating Recovery Center, a provider of
eating disorder and mood and anxiety treatment in the US. In Europe, the Apax
Funds exited Unilabs (3.5x gross MOIC) which is a good example of the Apax
Funds' transformative ownership approach. The company completed over 50 add-on
acquisitions under the Funds ownership, enhanced its product offering, and
expanded its geographical footprint.
Internet/Consumer
The main sub-sectors in the Internet/Consumer sector were online marketplaces,
where the Apax playbook has driven strong growth in consumer traffic and
monetisation, and consumer packaged goods. The latter primarily includes
well-invested premium consumer brands in specialised categories where
consumers trade up to higher price points.
- Online marketplaces, which make up 31% of the Internet/Consumer
portfolio, experienced continued good performance, with many portfolio
companies benefitting from pricing power that translated to strong profit
growth.
- In the consumer packaged goods sub-sector, the focus on premium
goods saw the Apax Funds acquire Nulo, the pet food brand, in April 2021, and
sign a new investment in Far Niente, a producer of premium wines in the US.
- Elsewhere in the Private Equity portfolio, ecommerce platform
MatchesFashion experienced some operational challenges. Meanwhile retailer
Cole Haan continued to recover, benefitting from new product category
launches. However, performance remained below pre-Covid-19 levels.
PORTFOLIO OVERVIEW AT 31 DECEMBER 2021
(Portfolio by geography)
December 2021 December 2020
North America 64% 63%
Europe 15% 16%
United Kingdom 9% 7%
Israel 3% 3%
India 4% 4%
China 1% 2%
Rest of World 4% 5%
(Portfolio by currency)
December 2021 December 2020
USD 69% 68%
EUR 15% 15%
GBP 7% 7%
INR 2% 2%
HKD 1% 1%
Other 6% 7%
Commitments and funding
As at 31 December 2021, AGA was a limited partner in eight Apax Funds,
providing exposure to 75 underlying portfolio companies. Outstanding
commitments to the Apax Funds (together with recallable distributions)
amounted to €385.3m, with at least €115.3m of calls expected over the next
12 months (representing current outstanding balances of underlying Private
Equity capital call facilities drawn at 31 December 2021). Based on the
current deal pipeline, we would expect calls in 2022 to be higher than
€115.3m. This is balanced against cash of €108.5m and Derived Investments
of €327.2m2. AGA also has access to a €140.0m revolving credit facility
with Credit Suisse. The terms of this facility were amended on 21 January
2021, converting the existing facility to an evergreen structure whereby
either party is required to give two years' notice to terminate the
agreement.
Apax X, Apax IX, Apax VIII, AMI, ADF and ADF II also operate capital call
facilities to bridge capital calls from its investors. The operation of a
capital call facility provides AGA and other Apax Fund investors with
significant visibility for liquidity planning.
In 2021, AGA made a commitment of $90m to Apax Digital Fund II which closed
in September 2021 at $1.9bn. In assessing the size of any new commitments,
the Board, on the advice of the Investment Manager, appraises potential
scenarios in relation to the economic environment, the returns achieved by
the Apax Funds, their investment pace, and the likely timing and value of
realisations. As the Company is typically a sizeable investor in each Apax
Fund, it benefits from the better terms which are also available to other
similarly-sized third-party investors in those funds. During 2021, the average
management fee paid on the Company's commitments to the Apax Funds was 1.3%.
Where the Apax Funds are subject to management fee payments, there is no
additional fee charged to the Company.
Strategic Report\Portfolio review
Private equity
A sector-led strategy focused on "mining hidden gems"
HIGHLIGHTS
PRIVATE EQUITY TOTAL RETURN 41.0%
LTM EBITDA GROWTH 35.3%
% OF INVESTED PORTFOLIO 75%
TOTAL NEW INVESTMENT1 €207.2m
DISTRIBUTION FROM APAX FUNDS €275.1m
AVERAGE UPLIFT ON EXITS² 50.2%
1. AGA's investment cost on a look-through basis
2. See page 22 for further details
AGA FY 2021 PRIVATE EQUITY PERFORMANCE
Movement in underlying portfolio companies' earnings 38.8%
Movement in net debt1 (0.2)%
Movement in comparable companies' valuation multiples(2) 10.7%
One-of and other(3) (2.5)%
Management fees and carried interest accrued by the Apax Funds (12.2)%
Movement in performance fee reserve4 -%
FX 6.4%
LTM Total Return 41.0%
1. Represents movement in all instruments senior to equity
2. Movement in the valuation multiples captures movement in the comparable
companies valuation multiples. In accordance with International Private
Equity and Venture Capital Valuation ("IPEV") guidelines, the Apax Funds use
a multiple-based approach where an appropriate valuation multiple (based
on both public and private market valuation comparators) is applied to
maintainable earnings, which is often but not necessarily represented
by EBITDA to calculate Enterprise Value
3. Mainly dilutions from the management incentive plan as a result of
growth in the portfolio's value
4. Performance fee adjustment accounting for the movement in the
performance fee reserve at 31 December 2021
Strong performance benefitting from multiple levers of value creation and
business transformation.
The Apax strategy of "mining hidden gems" resulted in strong returns for the
Private Equity Funds in 2021, delivering an average Gross MOIC¹ of 4.5x and
average Gross IRR¹ of 54.1% in the twelve months to 31 December 2021.
Key attributes of Apax's "hidden gem" strategy:
- Focus on "coveted categories", being high quality sub-sectors in
Tech & Digital, Services, Healthcare and Internet/Consumer, where the
investment team has significant experience and expertise, and
where successful businesses often trade for high multiples;
- Rather than targeting readily identifiable businesses, Apax
generally seeks to identify assets operating below, or sometimes significantly
below, their full potential - the "hidden gems". These are businesses in which
the sub-sector teams can visualise this full potential and where the Apax
Funds can invest at reduced entry valuations;
- Once an asset has been acquired, the focus is on business
improvement, including through digitalisation and input from Apax's
Operational Excellence Practice ("OEP"), and opportunities where the Apax
Funds can significantly enhance a company's value; and
- Finally, reaping the rewards of this strategy to achieve superior
returns by selling improved businesses which are intrinsically more valuable
than they were at the time of acquisition.
This strategy is not predicated on continued tailwinds in financial markets or
in the re-rating of particular sectors. Instead, its foundation involves
pulling multiple micro levers to accelerate business performance and improve
quality, in the expectation that the Funds can "buy right" at entry and be
paid for that growth, and those improvements, at exit.
Performance update
Performance in Private Equity was primarily driven by earning growth in the
underlying portfolio. LTM EBITDA growth across the portfolio was 35.3% for the
twelve months to 31 December 2021, and the weighted average valuation
multiple increased to 23.2x LTM EBITDA (16.9x at 31 December 2020). The
multiple increase primarily reflects the re-rating of public market valuations
over the year, mainly in tech. Excluding publicly listed companies, the
average LTM EBITDA multiple at 31 December 2021 was 18.1x, compared to 17.4x
at 31 December 2020.
The pace of investment seen in the second half of 2020 continued into 2021.
AGA deployed €207.2m across 19 new Private Equity investments on a
look-through basis in the year.
The Apax Funds continued to execute their investment strategy with modest
levels of financial leverage at entry, which on average was 3.8x net
debt/EBITDA in Apax IX and 4.7x in Apax X as at 31 December 2021.
PORTFOLIO YEAR-OVER-YEAR LTM REVENUE GROWTH2: December 2021: 20.2% vs December
2020: 6.6%
PORTFOLIO YEAR-OVER-YEAR LTM EBITDA GROWTH2: December 2021: 35.3% vs December
2020: 20.8%
NET DEBT/EBITDA MULTIPLE2: December 2021: 4.2x vs December 2020: 3.9x
ENTERPRISE VALUE/EBITDA VALUATION MULTIPLE2: December 2021: 23.2x vs December
2020: 16.9x
1 Gross IRR and Gross MOIC for Private Equity represents full and
partial exits calculated based on the concurrent aggregate expected cash flows
and remaining fair value in euro across all funds signed, or an exit was
sufficiently close to being signed that the Apax Funds incorporated the
expected exit multiple into the quarter end valuation
2 Gross Asset Value weighted average of the respective metrics across the
portfolio. Investments can be excluded for reasons such as: investments in the
financial services sector; companies with negative EBITDA (or moving from
negative to positive EBITDA in the case of growth metrics); investments that
are written off; companies where EBITDA is not meaningful for company specific
reasons.
NAV performance
Private Equity Adjusted NAV grew 28.5% in 2021 to €1.0bn.
Private Equity Adjusted NAV grew from €788.3m at 31 December 2020 to
€1.0bn at 31 December 2021. This was mainly driven by fair value gains of
€252.6m, primarily from strong performance in Apax IX. In the period AGA
received €275.1m of distributions from exits, balanced against €199.9m of
calls for new investments, mainly from Apax X (€182.6m).
The strongest valuation gains in the year were from ThoughtWorks, Global-e,
Unilabs, and Authority Brands. The largest valuation declines in the portfolio
were from Duck Creek, InnovAge, MatchesFashion and Cole Haan. In line with
best practice, public stock is valued using the closing price at period
end, making the Private Equity portfolio more susceptible to share price
volatility, something we would expect to continue in the medium term.
PRIVATE EQUITY ADJUSTED NAV DEVELOPMENT (€M)
Adjusted NAV at 31 December 2020 788.3
Calls 199.9
Distributions (275.1)
Gains 252.6
Performance fee adjustment1 -
FX 47.2
Adjusted NAV at 31 December 20212 1012.9
1. Performance fee adjustment accounting for the movement in the
performance fee reserve at 31 December 2021
2. Includes AGA's exposure to carried interest holdings in AEVII and AEVI
which were respectively valued at €16.2m and €4.9m at 31 December 2021
Apax Funds Update
Well-diversified portfolio across fund vintages.
The Private Equity portfolio is well diversified across fund vintages with
17% in the harvesting phase, 60% in the maturity phase, and 23% in the
investment phase.
At 31 December 2021, AGA's largest exposure was to Apax IX which is now 91%
invested and committed, having closed 25 investments, with the remaining
capital mainly reserved for follow-on investments.
Apax X held a final fund close in January 2021 with commitments of $11.7bn.
Having made its first investment in 2019, Apax X was 70% invested and
committed at the end of 2021. The fund closed 13 new investments in 2021,
bringing the total number of portfolio companies in Apax X to 19.
The earlier buyout funds continue to focus on identifying opportunities to
exit their remaining portfolio companies at attractive valuations. At 31
December 2021, Apax VIII had achieved 16 full realisations, with 9 companies
remaining in the portfolio, 7 of which have been partially realised.
As aforementioned, in the period AGA made a commitment of $90m to the Apax
Digital Fund II, the successor fund to the Apax Digital Fund which is now 86%
invested and committed. The new fund is expected to continue the predecessor
fund's strategy of investing in a balanced portfolio of minority equity and
growth buyout opportunities in mid-market technology companies.
PRIVATE EQUITY PORTFOLIO AT 31 DECEMBER 2021
INVESTED PORTFOLIO
A AIX (40%) C AEVII (2%) E AMI (2%) G AX (17%) I DI (25%)
B AVIII (10%) D AEVI (1%) F ADF (3%) H ADF II (0%)
(Apax X) (Apax IX)
AGA NAV: €232.2m AGA NAV: €537.0m
Distributions(4): €0.0m Distributions(4): €210.0m
% of AGA PE portfolio: 23% % of AGA PE portfolio: 53%
Vintage: 2020 Vintage: 2016
Commitment: €199.8m + $225.0m Commitment: €154.5m + $175.0m
Invested and committed: 70% Invested and committed: 91%
Fund size: $11.7bn Fund size: $9.5bn
(Apax VIII) (Apax Europe VII)
AGA NAV: €143.9m AGA NAV: €24.7m
Distributions(4): €540.4m Distributions(4): €91.4m
% of AGA PE portfolio: 14% % of AGA PE portfolio: 2%
Vintage: 2012 Vintage: 2007
Commitment: €159.5m + $218.3m Commitment: €86.1m
Invested and committed: 108% Invested and committed: 108%
Fund size: $7.5bn Fund size: €11.2bn
(Apax EUROPE VI) (AMI)
AGA NAV: €7.1m AGA NAV: €28.7m
Distributions(4): €9.0m Distributions(4): €38.7m
% of AGA PE portfolio: 1% % of AGA PE portfolio: 3%
Vintage: 2005 Vintage: 2015
Commitment: €10.6m Commitment: $30.0m
Invested and committed: 107% Invested and committed: 72%
Fund size: €4.3bn Fund size: $0.5bn
(Apax Digital) (Apax Digital II)
AGA NAV: €40.4m AGA NAV: (€1.1m)
Distributions(4): €16.8m Distributions(4): €0.0m
% of AGA PE portfolio: 4% % of AGA PE portfolio: 0%
Vintage: 2017 Vintage: 2021
Commitment: $50.0m Commitment: $90.0m
Invested and committed: 86% Invested and committed: 0%
Fund size: $1.1bn Fund size: $1.9bn
4. Represents distributions received by AGA since 15 June 2015
Investment Activity
The Apax Funds closed 19 new investments in 2021, with AGA investing €207.2m
on a look-through basis. Additionally, Apax X signed one new deal, T-Mobile,
which is expected to close in 2022. New investments were primarily in Tech
& Digital and the Services sectors, with five of the new investments in
Tech & Digital being in the Apax Digital Fund.
New investments in the Apax Funds reflect Apax's strategy of "mining hidden
gems", focused on identifying opportunities to invest in "unpolished" assets
in attractive parts of the economy where, through business improvement, the
Apax Funds are able to reap the rewards and achieve a re-rating at exit.
Turning to realisations, the Apax Funds made 15 full or significant partial
exits or IPOs in the year. This brings the share of publicly listed companies
in the Private Equity portfolio to 25% as at 31 December 2021 (15% at 31
December 2020). The majority of IPOs in the period were in the Tech &
Digital sector, where the Apax Funds identified an opportunity to take
advantage of high public market valuations. Whilst an IPO is not a full exit
of a portfolio company, to date AGA has already realised 3.0x initial costs
from pre-IPO funding rounds, primary, and secondary sell-downs of shares in
the companies in the Private Equity portfolio that listed in 2021.
Exits, including IPOs and significant partial exits, in the period were
achieved at an average uplift to previous Unaffected Valuations of 50.2%.
Average gross MOIC was 4.5x and gross IRR was 54.1%.
PRIVATE EQUITY LIFECYCLE
INVESTMENT PHASE AX, ADF II
MATURITY PHASE AIX, AMI, ADF
HARVESTING PHASE AVIII, AEVI, AEVII
Private equity portfolio by vintage
Vintage
A 2005-2015 9%
B 2016 7%
C 2017 28%
D 2018 11%
E 2019 17%
F 2020 8%
G 2021 20%
Case study - Services
New investment in American Water Resources
A good example of Apax's "mining hidden gems' strategy is Apax X's investment
in business services company American Water Resources, a provider of various
warranty protection programmes and other home services in the US. Apax X was
able to invest in the business at a discount to where comparable companies
are valued, in part because of the complexity of the carveout from American
Water Resources. The business operates in an attractive sub-sector given its
high margins, high retention rates, high barriers to entry, and ample
opportunities for cross-sell. Working alongside Apax's OEP, the investment
team has identified significant opportunities for business improvement in
areas such as digital acceleration to drive customer acquisitions, margin
expansion, as well as customer services improvements through enhanced mobile
capabilities. There is also an opportunity to grow the company through add-on
M&A. On a look-through basis, AGA invested €18.6m in American
Water Resources.
Total new investment¹ : €207.2m
TECH & DIGITAL 39%
HEALTHCARE 18%
SERVICES 30%
INTERNET/CONSUMER 13%
New Investments €m
Tech & Digital 79.9
Azentio - AX 6.6
Provider of critical, vertical-specific software for customers in banking,
financial services and insurance
Comax - AMI 1.3
Provider of SaaS-based retail ERP system that primarily serves the food retail
space in Israel
Faculty - ADF 1.9
AI and machine learning specialists
Guesty - ADF & AMI 2.0
Provider of end-to-end solutions for professional hosts and property
management companies
Herjavec Group - AX 8.8
Provider of cybersecurity products and services to enterprise organisations
Infogain - AX 19.0
Provider of human-centred digital platform engineering services
Lever - ADF 2.0
Talent acquisition suite platform
Lutech - AX 8.8
IT services, software and technology company in Italy
New Social Good Software Platform - AX 23.5
Provider of next-generation SaaS solutions to the social good ecosystem
Revolution Prep - ADF 3.6
US provider of online academic tutoring and test preparation services
Tide - ADF 2.4
The UK's leading business financial platform
Services 61.9
American Water Resources - AX 18.6
US provider of affordable home protection programmes
PIB Group - AX 19.5
Insurance advisory business
SavATree - AX 23.8
Professional tree, shrub and lawn care provider
Healthcare 37.5 37.5
Eating Recovery Center - AX 20.1
US leader in eating disorder treatment
Rodenstock - AX 17.4
Manufacturer of premium ophthalmic lenses in Germany
Internet/Consumer 27.9
Far Niente - AX 7.8
Producer of premium wines in the US
idealista - AX 9.9
Online real estate classifieds
Nulo - AX 10.2
One of the fastest growing major pet food brands in the US pet speciality
channel
GROSS MOIC² on realisations: 4.5x
TECH & DIGITAL 82%
HEALTHCARE 4%
SERVICES -%
INTERNET/CONSUMER 14%
Exits UPLIFT SINCE 31 GROSS MOIC² GROSS
IRR²
DEC 20 ³
Tech & Digital 49.3% 5.5x 61.7%
Full EXITs
Signavio - ADF 2.8x 97.9%
Next-gen business process management software platform
ZAP Group - AMI 2.4x 22.5%
Consumer internet business in Israel
TietoEVRY - AVIII 2.7x 34.1%
Nordic IT services business
Zensar - AVIII 1.5x 12.0%
Technology services provider
significant PARTIAL EXITS / IPOs
Duck Creek - AVIII 6.4x 46.8%
Provider of SaaS core system solutions for P&C insurance carriers
Genius Sports - AIX 3.0x 46.6%
Global leader in sports data technology
Global-e - AMI 41.4x 191.5%
Leading provider of cross-border e-commerce solutions
Paycor - AIX 3.7x 51.4%
Provider of SaaS payroll and human capital management software to US SMEs
SoYoung - ADF 1.6x 16.5%
The largest online medical aesthetic marketplace in China
Thoughtworks - AIX 12.8x 93.3%
Digital transformation and software development company
Wizeline - ADF 5.6x 69.8%
Intelligent software delivery and product company
Internet/Consumer 83.5% 4.3x 65.8%
Full EXITs
Boats Group - AIX 3.9x 37.4%
Online marketplace and provider of software solutions for recreational
marine industry
significant PARTIAL EXITS/IPOs
Baltic Classifieds Group - AIX 4.6x 95.2%
Online classifieds group in the Baltics
Services 15.3% 1.0x 0.0%
Full EXIT
Psagot - AEVII 0.7x (2.7%)
One of the largest asset management businesses in Israel
significant PARTIAL EXIT
Boasso Global (Quality Distribution) - AVIII 1.3x 4.8%
Operator of the largest bulk tank truck network in North America
1. Represents AGA's look-through cost to investments acquired by the Apax
Funds during FY 2021
2. Represents Gross IRR and Gross MOIC on full and partial exits
calculated based on the concurrent aggregate expected cash flows and remaining
fair value in euro across all funds signed, or an exit was sufficiently close
to being signed that the Apax Funds incorporated the expected exit multiple
into the quarter end valuation.
3. Uplift represents proceeds received (translated at FX rates received)
or proceeds expected to be received for deals yet to sign (at period end FX
rates) compared to their last Unaffected Valuation⁴ at AGA level. For deals
that were partially realised or IPO'd it includes proceeds received and the
latest remaining fair value at 31 December 2021. For investments where there
were subsequent partial realisations since December 2020, uplift was
calculated by taking proceeds received in FY 2021 plus remaining fair value at
31 December 2021 compared to fair value at 31 December 2020
4. Unaffected Valuation is determined as the fair value in the last
quarter before exit, when valuation is not affected by the exit process (i.e.
because an exit was signed, or an exit was sufficiently close to being
signed that the Apax Funds incorporated the expected exit multiple into the
quarter end valuation)
Signavio
Gross MOIC: 2.8x
Gross IRR: c.98%
Date of investment: 2019
Fund: ADF
Sector: Tech & Digital
Region: Germany
Status: Realised
Website: signavio.com
Supporting the continued growth of a leading business process intelligence
company
Investment thesis
Signavio is a leading provider of Software-as-a-Service ("SaaS") based
business-process analysis and decision-management software that helps
companies design, implement, analyse and manage complex processes, decisions
and workflows.
Having explored the Robotic Process Automation market in depth, the Apax
Digital Fund ("ADF") decided that, despite it being an interesting space,
valuations had detached from the underlying fundamentals. This led to the team
exploring derivative players which may benefit from the growth in automation,
including in process intelligence, ADF ultimately identified Signavio as a
standout provider in this sector.
Drawing on the Apax Digital team's deep technology expertise and the broader
Apax Funds' experience in scaling global software companies, ADF saw the
opportunity to back a differentiated asset with a best-in-class product. In
2019 ADF led a successful $177m investment round in Signavio.
Value Creation highlights
- The Apax Digital team worked with the company on strategies to
attract and retain talent, with a particular focus on critical engineering and
go-to-market ("GTM") roles. They also helped the company bolster its board
with Jeff Barnett, a senior software executive and former CEO of Demandware,
appointed Chairman.
- The team assisted Signavio's sales leadership with expansion of
channel relationships and improvements in GTM strategy.
- The Apax Digital team and management jointly evaluated multiple
M&A opportunities sourced by ADF.
- Alongside the Operational Excellence Practice ("OEP"), the team
worked closely with the company to introduce several operational initiatives,
including optimising Signavio's security and infrastructure as well as
strengthening its internal HR function to support the organisation in its next
stage of growth.
Realisation
Since the investment, Signavio experienced continued growth despite the global
Covid-19 pandemic, and made substantial progress with its process
intelligence module, a key strategic growth area.
In January 2021, ADF agreed, alongside other shareholders, to sell Signavio to
the business process intelligence unit of SAP.
"When ADF invested, we backed an incredible management team, led by CEO and
co-founder Gero Decker, in what we knew was a standout offering in an exciting
space. The progress we've made together in partnership, against such a dynamic
backdrop, is humbling to have witnessed."
Dan O'Keefe
Managing Partner, Apax Digital
"It has been a pleasure working with Gero and the whole Signavio family;
we're thrilled by the rapid progress we've made together."
Mark Beith
Partner, Apax Digital
New Social Good Software Platform
Creating a leading provider of next-generation SaaS solutions to the social
good ecosystem
Donors served: 38m
Annual Revenue: $200m+
Date of investment: 2021
Fund: Apax X
Sector: Tech & Digital
Region: US
Status: Current
Transaction Highlights
- Acquisition and merger of three software companies, creating a new
social good software platform of scale
- Combined business supports a network of 650,000 nonprotfit
organisations, and over 38 million donors and volunteers, helping match
non-profits seeking more donations with individuals, foundations and companies
looking for opportunities to help
- Ties closely with Apax's long-standing focus on ESG and impact
outcomes
Background
In 2021, Apax X acquired and merged EveryAction, Social Solutions and
CyberGrants, three leading software companies serving nonprofits and
their supporters.
Apax's focus on creating a positive impact, coupled with the Tech team's deep
expertise in vertical enterprise software, uniquely positioned Apax to
identify these three leading assets in adjacent segments of the social good
software landscape.
Investment thesis
Apax X will look to create a next-generation social good market leader and to
scale the three companies' unique offerings, improve their support for
nonprofit organisations, and increase the collective value proposition for
customers.
Leveraging the OEP's know-how and experience, the Fund will work with the
company to:
- Support the integration and value creation efforts, including
go-to-market strategy and execution
- Support product innovation and cross-sell opportunities
- Accelerate growth in both software and payment revenue
- Focus on strategic and transformative M&A opportunities to
drive industry consolidation
Together, these three businesses have significant scale and are well
positioned to drive innovation and progress in the social good space, with
the potential to completely reshape the sector.
"ll three companies are mission driven and have leading solutions in their
respective segments. This combination will truly maximise their collective
impact by bringing together world-class talent and products. The resulting
scale and connectivity between donors and nonprofits will help reshape
philanthropic giving."
Jason Wright
Partner, Apax
Derived Investments
Returns in debt underpin strong performance
in the portfolio
HIGHLIGHTS
DERIVED INVESTMENTS TOTAL RETURN 15.8%
DERIVED DEBT TOTAL RETURN 13.4%
DERIVED EQUITY TOTAL RETURN 37.5%
% OF INVESTED PORTFOLIO 25%
TOTAL NEW INVESTMENT €243.5m
TOTAL DIVESTED €263.7m
DERIVED INVESTMENTS PERFORMANCE (%)
Income 7.8%
Realised gains 1.0%
Unrealised losses 2.9%
Performance fee adjustment(1) (2.4%)
FX 6.5%
Total return 15.8%
1. Performance fee adjustment accounting for the movement in the
performance fee reserve at 31 December 2021
Performance highlights
The Derived Investments portfolio consists of debt and equity investments
which make up 91% and 9% of AGA's Derived Investments portfolio,
respectively.
In the twelve months to 31 December 2021, the Derived Investments portfolio
achieved a Total Return of 15.8% (9.3% constant currency). Performance was
primarily driven by Derived Debt and also benefitted from an appreciation
of the US dollar against the euro during the year,
The focus in Derived Debt remained on investments in lower risk first and
second lien loans where there is a high degree of visibility on cash flow, and
in target sub-sectors where Apax has unique insights, gained from the team's
Private Equity investment activity.
The majority of positions in the Derived Debt portfolio were in floating-rate
securities, which makes the portfolio well-positioned in the event of further
interest rate increases in the year ahead.
Derived Debt generated a Total Return of 13.4% (6.9% constant currency), and
Derived Equity achieved a Total Return of 37.5% (30.2% constant currency) in
2021.
The Derived Debt portfolio experienced steady operational performance from
underlying portfolio companies. LTM EBITDA growth to 31 December 2021 was
22.2% compared to 26.2% at 31 December 2020. Reflecting the increased share of
first lien loans in the portfolio, the overall yield to maturity of the
portfolio reduced to 6.2% at 31 December 2021 (8.1% at 31 December 2020).
The Derived Debt portfolio was primarily invested in Tech (40%) and Healthcare
(35%) with significant exposure to the US dollar (83%).
As at the 31 December 2021, the Derived Equity portfolio consisted of six
positions, mainly in Services.
Investment activity
The overall value of the Derived Investments portfolio increased slightly
from €319.4m at 31 December 2020 to €335.6m at 31 December 2021, as
capital not invested in Private Equity was deployed into new debt
instruments. At period end, the Derived Investments portfolio represented 25%
of the total Invested Portfolio.
In managing AGA's Derived Debt portfolio, we focused on both absorbing capital
returned from Private Equity investments in the year, whilst at the same time
increasing the liquidity profile of the Derived Investments portfolio over the
year. We expect additional capital calls from the Private Equity portfolio
over the next twelve months, mainly driven by the investment activity of Apax
X. In light of this, we have increased the share of first lien loans in the
portfolio from 39% of Derived Debt at the beginning of the year to 59% at 31
December 2021.
No new investments were made in Derived Equity, where strong public market
valuations made new investments in Derived Equity less attractive.
Turning to realisations, exits in Derived Debt achieved a Gross MOIC¹ of
1.2x and a Gross IRR¹ of 10.3% in the twelve months to 31 December 2021,
whilst Derived Equity achieved a Gross MOIC¹ of 1.2x and a Gross IRR¹ of
5.6%.
Total new investment
€243.5m
TECH & DIGITAL 58%
HEALTHCARE 14%
SERVICES 19%
INTERNET/CONSUMER 9%
New Investments closed €m
Tech & Digital 141.2
Aptean - Second lien term loan 12.5
Provider of industry-specific ERP, supply chain and compliance software
Astra - First lien term loan 14.0
Mission-critical software for higher education institutions to manage the
student life-cycle and data
Confluence - Second lien term loan + PIK 21.3
Web-based corporate wiki developer
HelpSystems - First lien term loan 20.5
Provider of software solutions to IT departments
Infogain - First lien term loan 13.6
Global IT service provider
Mindbody - Convertible instrument 8.6
SaaS company that provides cloud-based online scheduling and other business
management software for the wellness services industry
Mitratech - First lien term loan + second lien term loan 9.8
Provider of end-to-end software products for legal & compliance
professionals
Precisely - First lien term loan 25.4
Provider of infrastructure of software solutions
Therapy Brands - First lien term loan + second lien term loan 12.7
Provider of fully integrated practice management and EHR solutions for mental
and behavioural health providers
Add-on
EverCommerce - First lien term loan 1.2
Multi-vertical portfolio of marketing business management and customer
experience software solutions
Syndigo - Second lien term loan 1.6
Provider of product content management solutions
€m
Services 45.8
Hightower - Senior unsecured note 4.2
Provider of investment services
PIB Group - First lien term loan 22.9
Insurance advisory business
PSSI - First lien term loan 16.6
Provider of cleaning, sanitation, and compliance services to food processing
plants
Veritext - Second lien term loan 2.1
Court reporting company
€m
Healthcare 33.4
AccentCare - First lien term loan 20.6
Provider of post-acute healthcare services in the US
MDVIP - Second lien term loan 12.8
National network of primary care doctors in the US
€m
Internet/Consumer 23.1
Trade Me - Second lien term loan 23.1
Online classifieds advertising and marketplace platform in New Zealand
New Investments closed
€m
Tech & Digital
141.2
Aptean - Second lien term loan
Provider of industry-specific ERP, supply chain and compliance software
12.5
Astra - First lien term loan
Mission-critical software for higher education institutions to manage the
student life-cycle and data
14.0
Confluence - Second lien term loan + PIK
Web-based corporate wiki developer
21.3
HelpSystems - First lien term loan
Provider of software solutions to IT departments
20.5
Infogain - First lien term loan
Global IT service provider
13.6
Mindbody - Convertible instrument
SaaS company that provides cloud-based online scheduling and other business
management software for the wellness services industry
8.6
Mitratech - First lien term loan + second lien term loan
Provider of end-to-end software products for legal & compliance
professionals
9.8
Precisely - First lien term loan
Provider of infrastructure of software solutions
25.4
Therapy Brands - First lien term loan + second lien term loan
Provider of fully integrated practice management and EHR solutions for mental
and behavioural health providers
12.7
Add-on
EverCommerce - First lien term loan
Multi-vertical portfolio of marketing business management and customer
experience software solutions
1.2
Syndigo - Second lien term loan
Provider of product content management solutions
1.6
€m
Services
45.8
Hightower - Senior unsecured note
Provider of investment services
4.2
PIB Group - First lien term loan
Insurance advisory business
22.9
PSSI - First lien term loan
Provider of cleaning, sanitation, and compliance services to food processing
plants
16.6
Veritext - Second lien term loan
Court reporting company
2.1
€m
Healthcare
33.4
AccentCare - First lien term loan
Provider of post-acute healthcare services in the US
20.6
MDVIP - Second lien term loan
National network of primary care doctors in the US
12.8
€m
Internet/Consumer
23.1
Trade Me - Second lien term loan
Online classifieds advertising and marketplace platform in New Zealand
23.1
Total DIVESTMENTS
€263.7m
TECH & DIGITAL 68%
HEALTHCARE 8%
SERVICES 15%
INTERNET/CONSUMER 9%
Exits GROSS GROSS
MOIC¹
IRR¹
Tech & Digital 11.3% 1.2x
Airtel Africa - Listed equity 21.1% 1.5x
Provider of telecommunications and mobile money services in Africa
Astra - First lien term loan 1.4% 1.0x
Mission-critical software for higher education institutions to manage the
student life-cycle and data
Astra - First lien term loan 10.6% 1.1x
Evercommerce - First lien term loan 5.1% 1.1x
Service commerce platform
Exact - Second lien term loan 8.5% 1.2x
Dutch business software market company
Paycor - Convertible instrument 10.9% 1.3x
Provider of SaaS payroll and human capital management software to US SMEs
Planview - Second lien term loans 18.2% 1.2x
Global enterprise software company
PowerSchool - Second lien term loan 7.8% 1.2x
Provider of K-12 education technology software
Precisely software - First lien term loan 17.2% 1.0x
Provider of infrastructure of software solutions
Rocket Software - Second lien loan 8.3% 1.2x
Provider of legacy infrastructure software
Syncsort - Second lien term loan 12.2% 1.4x
Provider of infrastructure software solutions
TietoEVRY - Listed equity 9.6% 1.3x
Nordic IT services business
Internet/Consumer 14.0% 1.3x
Trade Me - Second lien term loan 14.0% 1.3x
Online classifieds advertising and marketplace platform in New Zealand
Services 5.7% 1.2x
AmeriLife - Second lien term loan 10.5% 1.2x
Provider of life and health insurance solutions
Boasso Global (Quality Distribution) - Second lien term loan 11.8% 1.7x
Operator of the largest bulk tank truck network in North America
Development Credit Bank - Listed equity -13.1% 0.6x
SME and retail focused private sector bank
Veritext - First lien term loan 12.4% 1.0x
Court reporting company
Healthcare 4.9% 1.1x
AccentCare - First lien term loan 4.9% 1.1x
Provider of post-acute healthcare services in the US
1. Represents Gross IRR and Gross MOIC calculated based on the aggregate
concurrent euro cash flows since inception of deals fully realised during FY
2021
Exits
GROSS
IRR¹
GROSS
MOIC¹
Tech & Digital
11.3%
1.2x
Airtel Africa - Listed equity
Provider of telecommunications and mobile money services in Africa
21.1%
1.5x
Astra - First lien term loan
Mission-critical software for higher education institutions to manage the
student life-cycle and data
1.4%
1.0x
Astra - First lien term loan
10.6%
1.1x
Evercommerce - First lien term loan
Service commerce platform
5.1%
1.1x
Exact - Second lien term loan
Dutch business software market company
8.5%
1.2x
Paycor - Convertible instrument
Provider of SaaS payroll and human capital management software to US SMEs
10.9%
1.3x
Planview - Second lien term loans
Global enterprise software company
18.2%
1.2x
PowerSchool - Second lien term loan
Provider of K-12 education technology software
7.8%
1.2x
Precisely software - First lien term loan
Provider of infrastructure of software solutions
17.2%
1.0x
Rocket Software - Second lien loan
Provider of legacy infrastructure software
8.3%
1.2x
Syncsort - Second lien term loan
Provider of infrastructure software solutions
12.2%
1.4x
TietoEVRY - Listed equity
Nordic IT services business
9.6%
1.3x
Internet/Consumer
14.0%
1.3x
Trade Me - Second lien term loan
Online classifieds advertising and marketplace platform in New Zealand
14.0%
1.3x
Services
5.7%
1.2x
AmeriLife - Second lien term loan
Provider of life and health insurance solutions
10.5%
1.2x
Boasso Global (Quality Distribution) - Second lien term loan
Operator of the largest bulk tank truck network in North America
11.8%
1.7x
Development Credit Bank - Listed equity
SME and retail focused private sector bank
-13.1%
0.6x
Veritext - First lien term loan
Court reporting company
12.4%
1.0x
Healthcare
4.9%
1.1x
AccentCare - First lien term loan
Provider of post-acute healthcare services in the US
4.9%
1.1x
1. Represents Gross IRR and Gross MOIC calculated based on the aggregate
concurrent euro cash flows since inception of deals fully realised during FY
2021
Private Equity
Top 30 Private Equity Investments - AGA's Indirect Exposure
Portfolio company Sector Geography Valuation % of
€m Total NAV
Thoughtworks Tech & Digital North America 127.2 9%
Unilabs Healthcare Europe 68.4 5%
AssuredPartners Services North America 50.4 3%
Duck Creek Technologies Tech &Digital North America 48.3 3%
Paycor Tech &Digital North America 47.8 3%
Vyaire Medical Healthcare North America 43.1 3%
Authority Brands Services North America 43.0 3%
Trade Me Internet/Consumer Rest of World 37.2 2%
Candela Healthcare North America 37.1 2%
Cole Haan Internet/Consumer North America 34.8 2%
PIB Group Services United Kingdom 30.7 2%
Infogain Tech &Digital North America 29.2 2%
Social Good Software Platform Tech &Digital North America 27.6 2%
TOI TOI & DIXI (ADCO Group) Services Europe 27.2 2%
Safetykleen Europe Services United Kingdom 26.1 2%
Rodenstock Healthcare Europe 25.1 2%
SavATree Services North America 24.3 2%
Wehkamp Internet/Consumer Europe 23.9 2%
Fractal Analytics Tech &Digital India 22.7 2%
Baltic Classifieds Group Internet/Consumer Europe 20.8 2%
Inmarsat Tech &Digital United Kingdom 20.6 1%
Coalfire Tech &Digital North America 20.3 1%
Eating Recovery Center Healthcare North America 20.3 1%
Tosca Services Services North America 20.1 1%
American Water Resources Services North America 18.5 1%
Lexitas Services North America 18.4 1%
MyCase Tech &Digital North America 16.8 1%
Boasso Global (Quality Distribution) Services North America 15.6 1%
KAR Global Internet/Consumer North America 15.0 1%
Solita Tech &Digital Europe 14.8 1%
Total top 30 - gross values 975.3 65%
Other investments 311.8 21%
Carried interest (169.5) -11%
Capital call facilities and other (104.7) -7%
Total Private Equity 1,012.9 68%
Derived Investments
Top Derived Investments holdings
Instrument Sector Geography Valuation % of
€m Total NAV
PIB Group 1L term loan Services United Kingdom 24.0 2%
Confluence PIK + 2L term loan Tech &Digital North America 22.1 1%
AccentCare 1L term loan Healthcare North America 21.9 1%
HelpSystems 1L term loan Tech &Digital North America 21.8 1%
PSSI 1L term loan Services North America 17.4 1%
Neuraxpharm 1L term loan Healthcare Europe 15.2 1%
Vyaire Medical 1L term loan Healthcare North America 14.9 1%
Infogain 1L term loan Tech &Digital North America 14.4 1%
Therapy Brands 1L + 2L term loan Tech &Digital North America 13.6 1%
Precisely 1L term loan Tech &Digital North America 13.3 1%
MDVIP 2L term loan Healthcare North America 13.3 1%
Aptean 2L term loan Tech &Digital North America 13.2 1%
WIRB-Copernicus Group 1L term loan Healthcare North America 13.0 1%
Alexander Mann Solutions 1L term loan Services United Kingdom 12.9 1%
Trade Me 2L term loan Internet/Consumer Rest of World 12.5 1%
PCI 1L term loan Healthcare North America 10.5 1%
Mitratech 1l + 2L term loan Tech &Digital North America 10.5 1%
Just Group Listed equity Services United Kingdom 10.4 1%
Mindbody Convertible debt Tech &Digital North America 8.9 1%
Navicure 1L term loan Healthcare North America 8.7 1%
Southern Veterinary Partners 2L term loan Healthcare North America 7.2 1%
Sinopharm Listed equity Healthcare China 6.8 0%
FullBeauty Equity Internet/Consumer North America 6.8 0%
Veritext 2L term loan Services North America 6.5 0%
Hightower Senior unsecured note Services North America 4.6 0%
Syndigo 2L term loan Tech &Digital North America 4.3 0%
Repco Home Finance Listed equity Services India 4.2 0%
Cengage Learning. OTC equity Other North America 2.6 0%
Answers Equity Services North America 0.1 0%
Total Derived Investments 335.6 22%
Risk Management framework
Identify, evaluate and mitigate
The Board has established a set of risk management policies, procedures and
controls, and maintains oversight through regular reviews by the Board and the
Audit Committee
The Board and Audit Committee monitor the Company's principal risks on a
quarterly basis and a more detailed review is done at least annually.
The risk governance framework is designed to identify, evaluate and mitigate
the risks deemed by the Board as being of significant relevance to the
Company's business model and to reflect its risk profile and risk appetite.
The underlying process aims to assist the Board to understand and where
possible mitigate, rather than eliminate, these risks and, therefore, can only
provide reasonable and not absolute assurance against loss.
The Board regularly reviews a register of principal risks and uncertainties
(the "Risk Register") maintained on behalf of the Board by the Company
Secretary. The Risk Register serves as a detailed assessment and tracking
undertaken by the Board of the Company's exposure to risks in three core
categories: strategic and business risks, operational risk, and financial and
portfolio risks.
Ownership and governance
While the Board remains ultimately responsible for the identification and
assessment of risk, as well as implementing and monitoring procedures to
control such risks, and for reviewing them on a regular basis, the Board
places reliance on its key service providers, to whom it has delegated aspects
of the day-to-day management of the Company. This delegation includes the
design and implementation of controls over specific risks.
The Board undertakes an annual review of its risk appetite, considering
recommendations from the Audit Committee and key service providers responsible
for implementing the controls related to risks identified by the Board, as
noted above. The Board considers existing and new risks at each quarterly
Board meeting and more frequently if necessary.
Investment performance
In accordance with the Investment Management Agreement between the Company and
the Investment Manager, responsibility for delivering investment performance
in line with the Company's strategic and business objectives, as well
as remaining within the parameters of its investment risk appetite, is
delegated to the Investment Manager.
Specific investment decisions are taken by the Investment Manager within
parameters of authority approved by the Board, while separate risk functions
within the Investment Manager support and review decision making.
Risk assessment
In assessing each category of risk, the Board considers systemic and
non-systemic risks as well as the control framework established to reduce the
likelihood and impact (the "residual risk rating") of individual inherent
risks. The Board does not consider political risk in isolation but
incorporates it within its consideration of other principal risks. During the
previous year, the Board added a new risk following the outbreak of the
Covid-19 pandemic globally. The Board still considers the impact of Covid-19
on each of the Company's individual risks and as part of this continued
process a number of risks were marked lower than last year as the course and
effects of the pandemic have become less uncertain.
The Board is not, practically, in a position to consider every risk. However,
where possible, it does seek to identify, assess and mitigate remote and
emerging risks which might have a significant consequence or might not be
controllable.
In considering the framework around the policies and procedures adopted to
reduce the potential impact of individual risks, the Board takes account of
the nature, scale and complexity of the Company, its investment objectives and
strategy, and the role of the key service providers.
The wider control environment of the Company includes the policies and
procedures adopted by the key service providers. The Board considers these
policies and procedures in its assessment of individual risks and emerging
risks. The Board seeks regular reporting and assurance from its main service
providers on the robustness of their control environments and, based on such
assurances, assesses the suitability, adequacy and relevance of those
policies and procedures.
Individual risks are assessed based on the likelihood of occurrence and
consequential impact. For the avoidance of doubt, likelihood and consequence
are assessed after considering the mitigating effect of the control framework.
Risks are then ranked in order of residual risk rating likelihood and then
consequence. Judgement is applied in determining which risks rank above the
others where such risks have the same residual risk rating, likelihood and
consequence.
Emerging risks are identified and assessed as part of the quarterly review
process undertaken by the Board and Audit Committee. These are risks that may
have a material effect on the Company if they were to occur. Where possible,
mitigating measures are considered by the Board but due to the unknown nature
of future events the impact of these risks may not materialise. Since year end
there have been no emerging risks identified, however the Board continues to
monitor the impact of inflation, geopolitical uncertainty and other wider
market developments. In the previous year, the Covid-19 risk was identified
and as the pandemic continues to unfold it remains a component of the
principal risks.
Though not included in the key principal risks highlighted on the right, the
Board does monitor ESG within its risk register. The Board assesses its impact
on the wider Company risks, including performance risk, and reputational risk
and reviews the mitigating measures in place.
The Board recognises that it has limited control over many of the risks it
faces, such as political and macroeconomic events and changes in the
regulatory environment, and it periodically reviews the potential impact of
such ongoing risks on the business and actively considers them in its
decision making.
PRINCIPAL RISKS
The Board is ultimately accountable for effective risk management affecting
the Company.
The Audit Committee has undertaken an exercise to identify, assess and manage
risks within the Company. The principal risks identified have been assessed
based on residual likelihood and consequence and are summarised on the heat
map below:
Strategic and Business
SB1: Company performance
SB2: Discount to NAV
SB3: Regulatory, tax
and legislative risk
SB4: Covid-19 risk
Operational
OP1: Continuity risk
OP2: Service provider risk
Financial and portfolio
FR1: Liquidity risk
FR2: Currency risk
FR3: Portfolio risk
The Company's principal risks are split between three main risk categories
SB Strategic and business risks
OP Operational risks
FR Financial and portfolio risks
- Increase
« No change
¯ Decrease
Item Risk Current year assessment Mitigating measures Risk status
SB1 Company performance The Company's returns have continued to remain strong despite the continued - Performance, positioning and investment restrictions are analysed «
presence of Covid-19. The Board has decided to maintain the dividend policy. and monitored constantly by the Investment Manager
The target return and target dividend yield are based on estimates and Total NAV Return for 2021 was 28.7% - please refer to the portfolio review
assumptions. section from page 18 for further details. - Investment performance is reviewed, challenged, and monitored by
The actual rate of return and dividend yield may the Board
be lower than targets.
- The Board continues to monitor emerging risks that may impact the
Company's performance
SB2 Discount to NAV The Company's shares continued to trade at a discount to NAV during the year, - The Board receives regular reports from its corporate broker and «
with the average level of the discount somewhat higher than in previous years. the Investment Advisor's investor relations team on a quarterly basis
Persistent high discount to NAV The increase is partly attributable to broader equity market volatility. The
may create dissatisfaction discount continues to be closely monitored by the Board. - These reports provide insight into shareholder sentiment,
amongst shareholders. movements in the NAV and share price discount and an assessment of discount
management strategies if required
SB3 Regulatory, tax There were no significant changes in - Service providers have controls in place to monitor and review «
and legislative risk
regulation or legislation that materially impacted the Company during the changes that may impact the Company
year.
Regulatory, tax or legislative changes may result in limitation - Professional advisors are engaged through primary service
of marketing or force restructuring. This includes the impact of political providers, if required
issues within the UK and the UK's wider relationship with Europe.
SB4 COVID-19 risk The Company added this risk in the prior year following the initial outbreak - The Board considers the impact of the Covid-19 crisis on the ↓
of the global Covid-19 pandemic but considered it remained applicable general risk environment as well as its effect on the strategic, financial and
The outbreak of the global Covid-19 pandemic has led to extraordinary public throughout 2021. operational risks identified on an ongoing basis
health measures being taken which have had and continue to have, substantial
and potentially long-lasting economic, market, political and social effects.
These will have an impact not only on the performance of the Company's
investment portfolio but may intensify the general risk environment and The Board noted that the key areas including liquidity, fair market value of
heighten strategic, financial and operational risks to which it is already investments and the operations of its service providers continued to be
exposed. impacted by Covid-19, albeit, to a lesser extent given the relaxation of
government-led restrictions. The Board continues to receive regular updates
from its key service providers, as well as the Investment Manager and
Investment Advisor to ensure that they have been actively monitoring and
responding to each of these key risks.
OP1 Continuity risk During the year, business continuity plans remained in place at the Company's - All key service providers have in place business continuity «
key service providers and the Company noted that business continued with procedures which are tested on a regular basis and subject to minimum
Business continuity, including that provided by service providers, may be little disruption despite service providers' staff working remotely. The regulatory standards in their jurisdictions
impacted by a natural disaster, cyber-attack, infrastructure damage or other pandemic has highlighted that service providers have responded well and
"outside" factors. business continuity plans have been appropriate and effective.
OP2 Service provider risk Control failures at key service providers are reported and reviewed. There - The Board conducts a formal review of all key service providers on «
were no material issues identified as part of the formal review conducted by an annual basis
Control failures at key service providers may result in decreased service the Board; despite service providers enacting work-from-home policies,
quality, loss of information, information security breach, theft or fraud. business has continued with little disruption. - All key service providers have controls and procedures in place to
mitigate risks related to the loss of information, security breaches, theft
and fraud
FR1 Liquidity risk The Board recognised that the liquidity risk which was heightened in the prior - Cash flow modelling is prepared and tested under various stress ↓
year by Covid-19 has been reduced by the increase in investment activity in test scenarios
Decreases in the value of investments due to market weakness may affect the both Private Equity and the broader financial market to heights that surpass
pace and value of realisations, leading to reduced liquidity and/or ability pre-pandemic levels. This has returned some certainty to the value and pace of - Revolving credit facility was converted into an evergreen
to maintain credit facilities and meet covenant requirements. Private Equity calls and distributions. structure in January 2021 and is available in the event of substantial
liquidity issues
- A higher proportion of the Derived Debt portfolio is now invested
The Board regularly assesses liquidity in highly stressed conditions as part in first lien instruments which have better liquidity
of its assessment to continue as a going concern. Additionally, please refer
to the viability statement on page 52 for further details. - The Apax Funds operate capital call facilities which provide good
visibility of future expected calls
FR2 Currency risk Appreciation of USD against the euro led to stronger returns being reported in - The Investment Manager operates an investment framework to manage ↓
the year than were achieved by the investment portfolio in local currency and monitor the investment portfolio of the Company
The Company has established a global investment mandate and has appointed an terms. Please refer to note 12 on currency risk in the financial statements
Investment Manager whose policy it is not to hedge currency exposures. where the Company's sensitivity to movements in exchange rates has been - Currency exposure analysis and monitoring forms part of the
Movements in exchange rates create NAV volatility when the value of assessed. investment framework
investments is translated into the Company's reporting currency (the euro).
- The Investment Manager maintains a monitoring tool that constantly
tracks portfolio exposures
- Transparency allows investors to hedge their own exposure as
desired
FR3 Portfolio risk The majority of the Company's assets are in Private Equity, which are valued - The Investment Manager prepares the valuations on a quarterly ↓
based on NAV statements provided by the Apax Funds. The Company's Debt basis
Risk of error, process failure or incorrect assumptions lead to incorrect portfolio is valued based on broker quotes and/or models which use market
valuation of portfolio holdings. inputs. - The review process includes a meeting with the Board and
Investment Advisor where the key assumptions are challenged and explained
- Semi-annually the AGA valuations are either reviewed or audited
by the Company's auditors
governance \ Chairman's introduction
Long-term success
Tim Breedon CBE
Chairman
Dear Shareholder,
On behalf of the Board, I am pleased to introduce the Company's corporate
governance statement on pages 40 to 43.
Promoting long-term success
As the emergence of new Covid-19 variants continued to impact many parts of
the economy in 2021, the Board continued to focus on effective leadership and
risk oversight throughout the year.
Among other things, the Board undertook a detailed review of the Company's
risk appetite statement, the risk register, and the internal control
framework, and I am pleased to say that your Company continued to maintain a
good level of corporate governance in 2021.
I can also confirm that, during the year under review, the Board of Directors
has acted to promote the long-term success of the Company for the benefit of
shareholders, whilst having due regard to the matters set out in section 172
of the UK Companies Act 2006. You can read more about this on page 8. This
was also confirmed by the external Board evaluation conducted in 2021, more
details of which can be found on page 41.
Our Board of Directors
The Company has a strong, fully independent Board of experienced Non-Executive
Directors. The Directors, all of whom are non-executive and considered to be
independent for the purposes of Chapter 15 of the Listing Rules, are
responsible for the determination of the investment policy of the Company and
for overseeing the Company's activities. Biographies of the Board of
Directors, including details of their relevant experience and current
appointments, are available on pages 36 and 37 and the Company's website at:
www.apaxglobalalpha.com/who-we- are/leadership-team/board-of-directors
At 31 December 2021, the Board was composed of 60% male and 40%
female Directors.
AGM
To ensure the safety of our shareholders, we were again required to limit
in-person attendance to the 2021 Annual General Meeting. Instead arrangements
were made for shareholders to dial in remotely to listen to the AGM. We were
pleased that 99.8% of votes cast in respect of the triennial discontinuation
resolution supported the continuation of the Company in its current form.
Looking ahead to our seventh AGM in 2022. This will be held on 5 May 2021 at
3:00pm (UK time) at East Wing, Trafalgar Court, Les Banques, St Peter Port,
Guernsey, Channel Islands, GY1 3PP.
Subject to Guernsey government guidance in respect of Covid-19, we hope to
welcome shareholders to attend the AGM in person. Shareholders will also be
able to dial in remotely to listen to the AGM and can submit questions in
advance to the Company Secretary by email at: AGA‑admin@aztecgroup.co.uk
For more information about the AGM visit:
https://www.apaxglobalalpha.com/investors/investor-centre/
Compliance with the AIC Code, the UK Corporate Governance Code, and the GFSC
Code
The Directors recognise the importance of sound corporate governance and, as
a closed-ended investment company, have adopted the Association of Investment
Companies ("AIC") Code of Corporate Governance (the "AIC Code"), which has
been endorsed by the Financial Reporting Council.
The Board considers that reporting against the principles and recommendations
of the AIC Code, which incorporates the UK Corporate Governance Code (the
"UK Code") and the Guernsey Financial Services Commission Finance Sector Code
of Corporate Governance (the "GFSC Code"), will provide better information to
shareholders. I am pleased to report that for the year under review, we have
consistently applied the principles of good governance contained in the AIC
Code and you can find more details on this on the subsequent pages.
You can find a copy of the AIC Code on the AIC website at www.theaic.co.uk
Tim Breedon CBE
Chairman
1 March 2022
Governance at a glance
The Board aims to promote the Company's long‑term success and to preserve
and strengthen stakeholder confidence in our business integrity. This is
achieved through the application and maintenance of the highest standards of
corporate governance.
Major Board activities in 2021
Major decisions taken by the Board and its Committees during 2021 included:
- A detailed review of, and amendments to, the Company's risk
appetite statement and underlying risk register
- Review of internal financial controls
- Renewal of the Company's Revolving Credit Facility, converting the
existing facility into an evergreen structure
- Review of AGA's ESG policy and undertaking of a new commitment to
carbon neutrality
- New commitment to Apax Digital Fund II
- Commitment to providing more regular transaction updates to
investors outside of financial results
Leading a responsible business
A summary of the Directors' attendance at meetings which they were eligible to
attend is provided below. Eligibility to attend the relevant meetings is shown
in brackets.
Total Board Total Audit Committee
Tim Breedon 5 (5) n/a
Susie Farnon 5 (5) 7 (7)
Chris Ambler 5 (5) 7 (7)
Mike Bane 5 (5) 7 (7)
Stephanie Coxon 5 (5) 7 (7)
1. The Board will appoint committees of the Board on occasion to deal with
specific operational matters; these committees are not established under
separate terms of reference as their appointment is conditional upon terms
resolved by the Board in formal Board meetings and authority conferred to such
committees will expire upon the due completion of the duty for which they have
been appointed. Such committees are referred to as "other" committee meetings
2. The Chairman of the Company, Tim Breedon, whilst not required to attend
meetings of the Audit Committee, does so on occasion, particularly where
financial reports are being reviewed.
Board diversity
Female 40%
Male 60%
Board independence
100%
Election and re-election of Directors at the 2022 AGM
In accordance with the Company's Articles of Incorporation and the principles
of the AIC Code, all Directors of the Company will offer themselves for
re-election at the 2022 AGM.
Following the successful evaluation of the Board (see page 41), it is
proposed to shareholders that each of Tim Breedon, Susie Farnon, Chris
Ambler, Mike Bane, and Stephanie Coxon, be re-elected at the 2022 AGM.
governance \ AGA Board of Directors
Female 40%
Male 60%
Tim Breedon
Chairman
Tenure
6 years, 8 months
Skills and experience
Tim Breedon joined the AGA Board on 28 April 2015. He worked for the Legal
& General Group plc for 25 years, most recently as Group Chief Executive
between 2006 and 2012. He was a Director of the Association of British
Insurers ("ABI"), and also served as its Chairman between 2010 and 2012. He
served as Chairman of the UK government's non-bank lending task force, an
industry-led task force that looked at the structural and behavioural barriers
to the development of alternative debt markets in the UK. He is a
Non-Executive Director of Barclays plc and Quilter plc, and was Chairman of
Northview Group from 2017 to 2019. He was previously lead Non-Executive
Director of the Ministry of Justice between 2012 and 2015. Tim was formerly a
Director of the Financial Reporting Council and was on the Board of the
Investment Management Association.
He has over 25 years of experience in financial services and has extensive
knowledge and experience of regulatory and government relationships. He brings
to the Board experience in asset management and knowledge of leading a major
financial services company.
Current appointments
Non-Executive Director of:Barclays plc; and Quilter plc.
Qualifications
Graduate of Oxford University and an MSc in Business Administration from the
London Business School.
Susie Farnon
Non-Executive Director
Tenure
6 years, 5 months
Skills and experience
Susie Farnon joined the AGA Board on 22 July 2015 and was appointed as
Chairman of its Audit Committee on 1 July 2016 and elected as Senior
Independent Director on 18 November 2016. She served as President of the
Guernsey Society of Chartered and Certified Accountants, as a member of The
States of Guernsey Audit Commission and as a Commissioner of the Guernsey
Financial Services Commission. Susie was a Banking and Finance Partner with
KPMG Channel Islands from 1990 until 2001 and was Head of Audit at KPMG in the
Channel Islands from 1999 until 2001.
Current appointments
Non-Executive Director of:HICL Infrastructure plc;
Real Estate Credit Investments Ltd; and, Bailiwick Investments Limited.
Board member of The Association of Investment Companies.
Qualifications
Fellow of the Institute of Chartered Accountants in England and Wales.
Chris Ambler
Non-Executive Director
Tenure
6 years, 8 months
Skills and experience
Chris Ambler joined the AGA Board on 28 April 2015. He has experience in a
number of senior positions in the global industrial, energy and materials
sectors working for major corporations including ICI/Zeneca, The BOC Group
and Centrica/ British Gas, as well as in strategic consulting roles.
Current appointments
Chief Executive of Jersey Electricity plc; and Non-Executive Director of:
Foresight Solar Fund Limited.
Qualifications
Graduate of Queens' College, Cambridge and an MBA from INSEAD. Chartered
Director, Chartered Engineer and a Member of the Institution of Mechanical
Engineers.
Mike Bane
Non-Executive Director
Tenure
3 years, 6 months
Skills and experience
Mike Bane joined the AGA Board on 3 July 2018. He has more than 35 years of
audit and advisory experience with a particular focus on the asset management
industry. Mike retired from EY in June 2018 where he was a member of EY's
EMEIA Wealth and Asset Management Board. Following an earlier career in London
with PwC, he has been a Guernsey resident for over 20 years and has served as
President of the Guernsey Society of Chartered and Certified Accountants.
Current appointments
Non-Executive Director of: HICL Infrastructure plc
Standard Life Investments Property Income Trust Limited
Qualifications
Mathematics graduate of Magdalen College Oxford University and
a Chartered Accountant.
Stephanie Coxon
Non-Executive Director
Tenure
1 year, 9 months
Skills and experience
Stephanie joined the AGA Board on 31 March 2020. She is a Fellow of the
Institute of Chartered Accountants in England and Wales and is a
non-executive director on several London listed companies.
Prior to becoming a non-executive director, Stephanie led the investment trust
capital markets team at PwC for the UK and Channel Islands. During her time at
PwC, she specialised in advising FTSE 250 and premium London listed companies
on accounting, corporate governance, risk management and strategic matters.
Current appointments
Non-Executive Director of: JLEN Environmental Assets Group Limited
PPHE Hotel Group Limited;
International Public Partnerships Limited;
PraxisIFM Group Limited
Qualifications
Fellow of the Institute of Chartered Accountants in England and Wales.
governance \ INVESTMENT MANAGER BOARD
Paul Meader
Director
Tenure
6 years, 8 months
Skills and experience
Paul Meader has acted as Non-Executive Director of several insurers, London
and Euronext listed investment companies, funds and fund managers in real
estate, private equity, hedge funds, debt, structured product and multi-asset
funds. He is a senior investment professional with over 30 years of
multi-jurisdictional experience, 14 years of which were at chief executive
level.
Paul was Head of Portfolio Management at Collins Stewart (now Canaccord
Genuity) between 2010 and 2013 and was the Chief Executive of Corazon Capital
Group from 2002 to 2010. Paul was Managing Director at Rothschild Bank
Switzerland C.I. Limited from 1996 to 2002 and previously worked for Matheson
Investment Management, Ulster Bank, Aetna Investment Management and Midland
Montagu (now HSBC).
Current appointments
Non-Executive Director of a number of other companies in fund management and
insurance, inclusive of the General Partners of the Apax Private Equity Funds.
Qualifications
MA (Hons) in Geography from Oxford University and a Chartered Fellow of the
Chartered Institute of Securities and Investment.
Martin Halusa
Director
Tenure
6 years, 8 months
Skills and experience
Martin Halusa was Chairman of Apax Partners from January 2014 to March 2016,
after ten years as Chief Executive Officer of the firm (2003-2013).
In 1990, he co-founded Apax Partners in Germany as Managing Director. His
investment experience has been primarily in the telecommunications and service
industries.
Martin began his career at The Boston Consulting Group ("BCG") in Germany, and
left as a Partner and Vice President of BCG Worldwide in 1986. He joined
Daniel Swarovski Corporation, Austria's largest private industrial company,
first as President of Swarovski Inc (US) and later as Director of the
International Holding in Zurich.
Current appointments
Director of the General Partners of the Apax Private Equity Funds.
Qualifications
A graduate of Georgetown University, an MBA from the Harvard Business School
and a PhD in Economics from the Leopold-Franzens University in Innsbruck.
Jeremy Latham
Director
Tenure
1 month
Skills and experience
Jeremy Latham has held directorships for regulated financial services
businesses since 2008 and has worked in the financial services sector for 20
years, 15 of which he has spent specialising in private equity.
Jeremy has extensive knowledge of the regulatory environment including
compliance and anti-money laundering regulation and has working knowledge of
listed and unlisted open and closed ended Investment schemes, including equity
funds, hedge funds, private equity funds and unit trusts.
Current appointments
Director of Apax Partners Guernsey Limited and a Director of the General
Partners of the Apax Private Equity Funds.
Qualifications
Jeremy is a Fellow of the Association of Chartered Certified Accountants
(FCCA).
Mark Despres
Director
Tenure
6 years, 4 months
Skills and experience
Mark has been employed in the wealth management industry in both Guernsey and
London for over 22 years, principally as an investment manager to a number of
listed companies, open-ended funds, and institutional and private client
portfolios.
Previously Mark held senior positions at investment managers Collins Stewart
and Spearpoint Limited, including head of Fixed Income at Spearpoint Limited
from 2007 to 2012. He was also a member of the fixed income, asset allocation
and performance measurement and monitoring committees at both companies.
Current appointments
Director of Apax Partners Guernsey Limited.
Qualifications
First class honours degree in Mathematics from Royal Holloway University of
London and a Member of the Chartered Institute for Securities and Investment.
governance \ Investment advisor's AGA Investment Committee
Andrew Sillitoe
Co-CEO | Apax Partners Chairman of the Investment Committee
Tenure
6 years, 8 months
Skills and experience
Andrew Sillitoe joined Apax Partners in 1998 and has focused on the Tech
sector in that time. Andrew has been involved in a number of deals, including
Orange, TIVIT, Intelsat, Inmarsat and King Digital Entertainment PLC.
Current appointments
Co-CEO of Apax and a Partner in its Tech team. Member of the Apax Executive,
Allocation, and Investment Committees.
Qualifications
MA in Politics, Philosophy and Economics from Oxford University and an MBA
from INSEAD.
Mitch Truwit
Co-CEO | Apax Partners
Tenure
6 years, 8 months
Skills and experience
Mitch Truwit joined Apax Partners in 2006 and has been involved in a number of
transactions including HUB International, Advantage Sales and Marketing,
Bankrate, Dealer.com, Trader Canada, Garda and Answers.
Current appointments
Co-CEO of Apax and a Partner in its Services team. Member of the Apax
Executive, Allocation and Investment Committees and a Trustee of the Apax
Foundation.
Qualifications
BA in Political Science from Vassar College and an MBA from Harvard Business
School.
Ralf Gruss
Partner | Apax Partners
Tenure
6 years, 8 months
Skills and experience
Ralf Gruss joined Apax Partners in 2000 and is a former member of the Apax
Partners Services team. Ralf has been involved in a number of deals, including
Kabel Deutschland, LR Health and Beauty Systems and IFCO Systems.
Current appointments
Chief Operating Officer and a Partner at Apax and Member of the Allocation and
Credit Investment Committees.
Qualifications
Diploma in Industrial Engineering and Business Administration from the
Technical University in Karlsruhe. He also studied at the University of
Massachusetts and the London School of Economics.
Roy Mackenzie
Partner | Apax Partners
Tenure
3 years, 7 months
Skills and experience
Roy Mackenzie joined Apax Partners in 2003. He led the investments in Sophos
and Exact and was responsible for Apax's investment in King Digital
Entertainment. In addition, Roy worked on the investments in Epicor, NXP and
Duck Creek.
Current appointments
Partner at Apax in its Tech team. Member of the Apax Investment Committees.
Qualifications
M.Eng in Electrical Engineering from Imperial College, London and an MBA from
Stanford Graduate School of Business.
Salim Nathoo
Partner | Apax Partners
Tenure
2 years, 9 months
Skills and experience
Salim Nathoo joined Apax Partners in 1999 specialising in the Tech &
Telecom space. He has both led and participated in a number of key deals
including ThoughtWorks, Candela, TietoEVRY, GlobalLogic, Sophos and Inmarsat.
Current appointments
Partner at Apax in its Tech team. Member of the Apax Investment Committees.
Qualifications
MA in Mathematics from the University of Cambridge and an MBA from INSEAD.
governance \ Corporate Governance statement
An effective Board
Our Board is composed of highly skilled professionals who bring a range of
expertise, perspectives and corporate experience to our boardroom (see pages
36 to 37). In accordance with the AIC Code, the role of the Board is to
promote the long-term sustainable success of the Company, generate value for
shareholders and contribute to wider society.
The Board conducts regular detailed reviews of the Company's strategy. The
next strategy review is scheduled for H2 2022 and will include high-level
exploratory discussions to challenge whether the strategy remains fit for
purpose.
Compliance with the AIC Code, The UK Code, and the GFSC Code
Compliance with the principles and recommendations of the AIC Code enables the
Directors to satisfy the requirement to comply with the UK Code and the GFSC
Code where relevant.
As an externally managed investment company the UK Code provisions relating to
the role of the Chief Executive, Executive Directors' remuneration, employees,
and need for an internal audit function are not relevant to AGA and the
Company has therefore not reported further in respect of these provisions.
This position is reassessed on an annual basis.
An external evaluation of the Board was undertaken in 2021 which concluded
that the Board continued to display a strong corporate governance culture and
a high degree of Board effectiveness.
Considering the nature, scale, and complexity of the Company, AGA has
made certain exceptions to the AIC Code, including:
Management Engagement Committee
AGA does not have a Management Engagement Committee and the Board fulfils
these functions and regularly reviews the performance of the Investment
Manager and relevant fee arrangements.
Nomination Committee
All duties expected of the Nomination Committee are carried out by the Board
and the establishment of a separate Nomination Committee is considered to be
unnecessarily burdensome given the scale and nature of the Company's
activities and the current composition of the Board.
Remuneration Committee
The Company does not have a Remuneration Committee as it does not have any
executive officers. The remuneration policy states that the fees payable to
the Directors should reflect the time they spend on the Company's affairs and
the responsibilities they bear. The fees should also be sufficient to attract,
retain, and motivate Directors of a quality required to run the Company
successfully. The Board as a whole considers matters relating to the
Directors' remuneration and it is satisfied that any relevant issues that
arise can be appropriately considered by the Board or by the Company's
shareholders at AGMs.
Responsibilities
The Board
The Board is primarily responsible for setting the Group's strategy for
delivering long-term value to our shareholders and other stakeholders,
providing effective challenge to the Investment Manager concerning the
execution of the strategy and ensuring the Group maintains an effective risk
management and internal control system.
The Investment Manager
AGA has entered into an Investment Management Agreement with AGML to manage
the investments of the Company on a discretionary basis.
AGML is responsible for the implementation of the investment policy of the
Company and has overall responsibility for the management of the assets and
investments of the Company.
AGML reports to the Board at each quarterly Board meeting regarding the
performance of the Company's investment portfolio, which provides the Board
with an opportunity to review and discuss the implementation of the investment
policy of the Company. In addition, the Board attends regular meetings with
AGML in order to review the performance of the underlying investments and
portfolio outlook.
The Board reviewed and evaluated the performance of AGML during the year to 31
December 2021 and has determined that it is in the interests of the
shareholders to continue with AGML's appointment as Investment Manager.
Biographies of the Directors of AGML are available on page 40 and the
Company's website at:
www.apaxglobalalpha.com/who-we-are/leadershipteam/investment-
manager-board-of-directors
The Investment Advisor and AGA Investment Committee
AGML draws on the resources and expertise of Apax for investment advice
through an Investment Advisory Agreement and the AGA Investment Committee. The
AGA Investment Committee is composed of several senior team members from Apax.
Biographies of the members of the AGA Investment Committee are available on
page 39 and the Company's website at:
www.apaxglobalalpha.com/who-we-are/leadership-team/the-investment-advisor
Statement of Independence
AGA's Board of Directors is comprised entirely of independent Non-Executive
Directors. As such it complies with the AIC Code's recommendation regarding
Board composition which sets out that, at least half the Board of Directors of
a UK-listed company, excluding the Chairman, should comprise Non-Executive
Directors determined by the Board to be independent in character and judgement
and free from relationships or circumstances that may affect, or could appear
to affect, the Directors' judgement.
In addition to this provision, a majority of the Board of Directors should be
independent of the Investment Manager and this was found to be the case in the
period.
Independence is determined by ensuring that, apart from receiving fees for
acting as Directors or owning shares, Non-Executive Directors do not have any
other material relationships with, nor derive additional remuneration from, or
as a result of transactions with, the Company, its promoters, its management
or its partners, which in the opinion of the Board may affect, or could appear
to affect, the independence of their judgement. All of AGA's Directors are
considered to be independent of the Investment Manager.
The AIC Code also recommends that the Chairman should meet certain
independence criteria as set out in the AIC Code on appointment.
Board Evaluation
An external evaluation of the Board was undertaken in the period. Overall, the
review concluded that the Company has a well-functioning and effective Board,
a strong corporate governance culture, and Directors who are diligent and
independent in their outlook. There were a small number of recommendations as
to how the Board could improve further the quality of its oversight of the
business of the Company and these will be considered for implementation in
2022.
Disclosure of dividend information
The Company targets the payment of a dividend equal to 5% of NAV per annum.
This dividend policy should not be taken as an indication of the Company's
expected future performance or results over any period and does not constitute
a profit forecast. It is intended to be a target only and there is no
guarantee that it can or will be achieved. Accordingly, prospective or current
investors should not place any reliance on the target dividend payment stated
above in making an investment decision in relation to the Company.
As a non-UK issuer, the Company does not require approval from shareholders
for the payment of dividends in accordance with The Companies (Guernsey) Law,
2008 and the Articles of Incorporation of the Company.
However, in response to feedback from shareholders, an ordinary resolution is
proposed at each AGM concerning approval of the dividend policy of the
Company.
EU Alternative Investment Fund Managers Directive ("AIFMD")
Please refer to page 82 for further information in respect of the AIFMD.
The unregulated collective investment schemes and close substitutes instrument
2013 ("NMPI Rules")
Information regarding the Company's status under the NMPI Rules is available
on its website at: www.apaxglobalalpha.com/governance/documents-administration
Modern Slavery Act Statement
As an externally managed investment company, the Company relies on the
adequacy of controls of the Investment Manager (and, in turn, the Investment
Advisor) with regard to the prevention of slavery and human trafficking, in
accordance with the UK Modern Slavery Act 2015. See
AGA's website for more information:
https://www.apaxglobalalpha.com/site-tools/modern-slavery-statement/
(https://www.apaxglobalalpha.com/site-tools/modern-slavery-statement/)
Stakeholder engagement
As highlighted in the Section 172 statement on page 8, the Company does not
have any employees and is entirely externally managed. Therefore, the primary
stakeholders consist of the Company's shareholders.
The Board is committed to a culture of openness and regular dialogue with
shareholders, and it seeks to take into account the needs and priorities of
shareholders during all discussions and decision making.
Throughout the year the Board ensures that Directors are available for
effective engagement, whether at the AGM or other investor relations events.
The Chairman holds one-to-one meetings with shareholders, including as part of
an annual Chairman's roadshow, and the Senior Independent Director is
available on request. Due to restrictions relating to Covid-19 at the start
of 2021, these meetings were conducted virtually.
As part of the ongoing engagement, Apax provides a comprehensive investor
relations service on behalf of AGA. The Board receives regular reports,
updates and research notes published by financial institutions on the Company
from the investor relations team. Shareholder views and feedback are
communicated to the Board to help develop a balanced understanding of their
issues and concerns. In addition, the Company's Broker, Jefferies
International, regularly presents to the Directors at quarterly Board
meetings.
Contact details for shareholder queries can be found on page 80 and the
Company's website at: www.apaxglobalalpha.com/contact-us
Investor engagement activities during the year included the following:
01
Quarterly results
The Company reports formally to shareholders four times a year, with updates
on transactions and significant events provided on an ongoing basis.
Shareholders may obtain up-to-date information on the Company through the
Company's website at: www.apaxglobalalpha.com
During 2021, the Company undertook a thorough review of its written material
and reports and, as a consequence, refreshed the look and feel of the reports
to enable shareholders to develop a fuller understanding of the Company's
strategy and performance. Additionally, AGA started publishing a quarterly
factsheet, providing investors with additional resource and a snapshot
overview of the Company's performance.
02
The Annual General Meeting ("AGM")
The AGM presents investors with an opportunity to ask Board members questions,
and to cast their votes. Due to Covid-19 the format of the 2021 AGM changed
with shareholders being able to dial in remotely and submit questions in
advance. We expect to host the 2022 AGM in person.
See page 34
03
AGA website
To give all shareholders access to the Company's announcements, all material
information reported via the London Stock Exchange's regulatory news service
is published on the Company's website at: www.apaxglobalalpha.com/news/rns
During 2021, the Company updated its website to provide investors with more
detailed information on the Group's strategy and performance as well as making
it more accessible, with additional investor resources such as regular
transaction announcements, case studies and sector videos.
04
Investor meetings, presentations and capital markets events
Apax maintains a comprehensive programme of meetings between the senior
management of Apax on behalf of AGA and institutional investors, fund
managers, and equity analysts. In 2021 Apax retained the services of RMS
Partners to work alongside Apax's investor relations team and the broker to
support ongoing engagement with existing and potential shareholders.
Due to restrictions relating to Covid-19, the Company did not host a capital
markets day in 2021 but it expects to host one in the second quarter of 2022
and more information will be available nearer the time.
KEY ACTIVITIES OF THE BOARD
The Board met five times during the year. Additional meetings were arranged as
necessary for the Board to properly discharge its duties.An overview of some
of the Board's activities is provided below.
Principal strategic objectives
1 Deliver over-the-cycle net target Total NAV Return of 12-15%, including
a dividend of 5% of NAV
2 Continue to invest in Private Equity, providing shareholders with
exposure to the Apax Funds for long-term growth
3 Provide balanced exposure to Derived Investments
4 Remain fully invested
Strategy and financing
- Reviewed the impact of Covid-19 on the Company
- Regularly reviewed the Company's strategy and financial position,
including:
• Renewed the Company's Revolving Credit Facility
• Assessed and approved a commitment of $90m to the Apax Digital
Fund II
- Reviewed and published the Company's Responsible Investment policy
- Made a commitment to offset the Company's carbon footprint
Risk Management
- Reviewed the Company's risk appetite statement and principal risks
- Performed a review of the Company's internal financial controls
Stakeholder engagement
- Virtually hosted the AGM on4 May 2021
- Hosted a Chairman's roadshow following Full Year Results in March
- Provided shareholders with detailed information around the
Discontinuation Resolution put forward at the 2021 AGM
- Reviewed the Company's investor engagement programme and regular
investor relations reports
Governance
- Participated in an external evaluation of the Board's
effectiveness to identify areas for improvement and inform training plans
- Undertook a formal annual review of key service providers
- Received an update from the Company Secretary on regulatory and
corporate governance matters
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Board x x x x x
committee meetings
Key RCF renewal FY20 Results • AGM Interim Results Q3 Results
announcements
• Q1 Results
• Commitment to
ADF II
governance \ Directors' duties
In 2021, the Board of the Company was composed of five independent
Non-Executive Directors. The Board considers that the range and experience of
its members is sufficient to fulfil its role effectively and provide the
required level of leadership, governance and assurance.
The terms and conditions of appointment for Non-Executive Directors are
outlined in their letters of appointment, and are available for inspection at
the Company's registered office during normal business hours and at the AGM
for 15 minutes prior to and during the AGM.
Role Role overview Responsibilities
Chairman of The Chairman is responsible for the leadership of the Board, the creation of - chairing the Board and general meetings of the Company, including
The Board of Directors conditions necessary for overall Board and individual Director effectiveness setting the agenda of such meetings;
and ensuring a sound framework of corporate governance, which includes a
channel for shareholder communication. - promoting the highest standards of integrity, probity and
corporate governance throughout the Company, and in particular at Board level;
Tim Breedon fulfils the
role of independent - ensuring that the Board receives accurate, timely and clear
Non-Executive Chairman information;
of the Board of Directors.
- ensuring effective engagement between the Board, the Company's
shareholders and other key stakeholders;
- facilitating the effectiveness of the contributions and
constructive relationships between the Directors of the Company;
- ensuring that any incoming Directors of the Company participate in
a full, formal and tailored induction programme; and
- ensuring that the performance of the Board, its Committees
and individual Directors are evaluated at least once a year.
Chairman of The Chairman of the Audit Committee is appointed by the Board of Directors. - overseeing the selection and review processes for the external
the Audit Committee The role and responsibility of the Chairman of the Audit Committee is to set auditor, considering and making recommendations to the Board on the
the agenda for meetings of the Audit Committee and, in doing so, take appointment, reappointment and removal of the external auditor and the
responsibility for ensuring that the Audit Committee fulfils its duties under remuneration of the external auditor as well as on the annual audit plan,
its terms of reference which include, but are not limited to, those listed including all proposed materiality levels;
Susie Farnon fulfils the role of Chairman of the Audit Committee. under "responsibilities".
- reviewing in detail the content of the interim report and this
annual report, the work of the service providers in producing them and the
results of the external audit;
The Audit Committee is appointed under terms of reference from the Board Overall responsibility for the Company's risk management and control systems
of Directors, available on the Company's website at: lies with the Board. - reviewing the findings of the audit with the external auditor;
www.apaxglobalalpha.com/ investors/resultsreports-presentations including a discussion of the major issues arising from the audit;
- assessing the independence and objectivity of the external auditor
on at least an annual basis, taking into consideration the level of non-audit
services;
- reviewing and considering, as appropriate, the rotation of the
external audit partner and tender of the external audit firm;
- reviewing and recommending to the Board for approval, the audit,
audit-related and non-audit fees payable to the external auditor and approving
their terms of engagement;
- reviewing the Company's internal control and financial and
operational risk; management systems; whistleblowing; and fraud
Non-Executive The Non-Executive Directors have a responsibility to ensure that they allocate Shareholders are provided with the opportunity to re-elect the Non-Executive
Directors sufficient time to the Company to perform their responsibilities effectively. Directors on an annual basis at the AGM of the Company and to review their
remuneration in doing so. The role of the Non-Executive Directors includes,
but is not limited to:
Accordingly, Non-Executive Directors are required to make sufficient effort to - constructively challenging and developing proposals on strategy;
attend Board or Committee meetings, to disclose other significant commitments
to the Board before accepting such commitments and to inform the - appointing service providers based on agreed goals
Board of any subsequent changes. and objectives;
In determining the extent to which another commitment proposed by a - monitoring the performance of service providers; and
Non-Executive Director would have an impact on their ability to sufficiently
discharge their duties to the Company, the Board will give consideration to - satisfying themselves of the integrity of the financial
the extent to which the proposed commitment may create a conflict with: information and that financial controls and systems of risk management are
robust and defensible.
- their time commitment to the Company;
- a direct competitor of the Company, the Investment Manager or the
Investment Advisor;
- a significant supplier or potential significant supplier to the
Company; and
- the Investment Manager or other related entity operating in
substantially the same investment markets as the Company.
Senior The position of the SID provides shareholders with someone to whom they can - The role of the SID includes, but is not limited to:
Independent turn if they have concerns which they cannot address through the normal
Director channels, for example with the Chairman. The SID is available as an - providing a sounding board for the Chairman and serving
intermediary between fellow Directors and the Chairman. The role serves as an as an intermediary for the other Directors when necessary;
important check and balance in the governance process.
- being available to shareholders if they have concerns about
Susie Farnon fulfils contact through the normal channel of the Chairman, or have failed to resolve,
the role of Senior Independent Director ("SID"). through the normal channels, or for which such contact is inappropriate;
- meeting with the other Non-Executive Directors at least annually
to appraise the Chairman's performance and on such other occasions as may be
deemed appropriate;
- taking responsibility for the orderly succession process for
the Chairman, as appropriate; and
- maintaining Board and Company stability during times of
crisis and conflict.
governance \ Governance FRAMEWORK
Governance Systems
The Board has considered the current recommendations of the AIC Code and has
adopted various policies, procedures and control systems; a summary of each of
these is available on the Company's website at:
https://www.apaxglobalalpha.com/governance/documents-administration/
In summary, these principally include:
- a schedule of matters reserved for the Board which includes, but
is not limited to:
· strategy and management;
· structure and capital;
· financial reporting and controls;
· internal and risk management controls;
· contracts and expenditure;
· Board membership and other appointments;
· corporate governance matters; and policies and codes.
- a Board management policy which includes, but is not limited to:
· succession planning, including Board composition and diversity
guidelines;
· Director induction and training; and
· Board evaluation.
- a conflicts of interests policy;
- a disclosure panel policy;
- an anti-bribery and corruption policy;
- a share dealing code;
- an insider dealing and market abuse policy;
- a policy on the provision of non-audit services; and
- a Responsible Investment policy
Administrator and Secretary
The Company has appointed Aztec Financial Services (Guernsey) Limited ("Aztec
Group") as Administrator and Company Secretary of the Company.
The Administrator is responsible for the Company's general administrative
requirements such as the calculation of the Net Asset Value and Net Asset
Value per share and maintenance of the Company's accounting and statutory
records. The Administrator may delegate certain accounting and bookkeeping
services to Apax Partners Fund Services Limited or other such parties and/or
Group entities, as directed by the Company.
The Administrator is licensed by the GFSC under the Protection of Investors
(Bailiwick of Guernsey) Law to act as "designated administrator" under that
law and provide administrative services to closed-ended investment funds.
In fulfilling the role of Company Secretary, Aztec Group has due regard to the
provisions of the GFSC Code and the AIC Code and statutory requirements in
this respect.
Registrar
Link Asset Services ("Link") has been appointed as Registrar of the Company.
The Registrar is licensed by the GFSC under the POI Law to provide registrar
services to closed-ended investment funds.
Information and Support
The Board ensures that it receives, in a timely manner, information of an
appropriate quality to enable it to adequately discharge its responsibilities.
Papers are provided to the Directors in advance of the relevant Board or
Committee meeting to enable them to make further enquiries about any matters
prior to the meeting, should they so wish. This also allows Directors who are
unable to attend to submit views in advance of the meeting.
The Company Secretary takes responsibility for the distribution of board
papers and aims to circulate such papers at least five working days prior to
board or committee meetings. The Board has adopted electronic board pack
software which aids in the efficiency and adequacy of delivery of board
papers.
Ongoing charges
Ongoing charges to 31 December 2021 were 1.3% (31 December 2020: 1.5%). The
Company's ongoing charges are calculated in line with guidance issued by the
AIC. They comprise of recurring costs such as administration costs, management
fees paid to AGML and management fees paid to the underlying Private Equity
funds' general partners. They specifically exclude deal costs, taxation,
financing costs, performance fees and other non-recurring costs. Ongoing
charges is an APM, and a reconciliation to the costs per the financial
statement can be found on page 87.
Management and Performance Fees
Management fees to 31 December 2021 represented 1.0% of NAV and performance
fees were 0.6% of NAV. Management fees represent fees paid to both the
Investment Manager and the Apax Funds. No fees are paid to the Investment
Manager on Apax Funds where the Company already pays a fee.
Revolving Credit Facility
In January 2021, AGA reached an agreement with Credit Suisse AG, London
Branch, to amend the terms of its Revolving Credit Facility ("RCF"). The
revised agreement converts the previous facility, which was due to expire on 5
November 2021, to an evergreen structure whereby either party is required to
give two years' notice to terminate the agreement. The amended RCF remains
undrawn at €140m and will continue to be used for the Company's general
corporate purposes, including short-term financing of investments such as the
drawdown on commitments to the Apax Funds.
Key Information Document
In accordance with the EU Packaged Retail and Insurance-based Investment
Products Directive which came into effect as of 1 January 2018, AGA's latest
Key Information Document is available on the Company's website at:
www.apaxglobalalpha.com/ investors/keyinformation-document-kid
Board Attendance
A summary of the Directors' attendance at meetings which they were eligible to
attend is provided below. Eligibility to attend the relevant meetings is
shown in brackets.
Role TOTAL TOTAL AUDIT
BOARD COMMITTEE
Tim Breedon 5 (5) N/A
Susie Farnon 5 (5) 7 (7)
Chris Ambler 5 (5) 7 (7)
Mike Bane 5 (5) 7 (7)
Stephanie Coxon 5 (5) 7 (7)
1. The Board will appoint committees of the Board on occasion to deal with
specific operational matters; these committees are not established under
separate terms of reference as their appointment is conditional upon terms
resolved by the Board in formal Board meetings and authority conferred to such
committees will expire upon the due completion of the duty for which they have
been appointed. Such committees are referred to as "other" committee meetings
2. The Chairman of the Company, Tim Breedon, whilst not required to attend
meetings of the Audit Committee, does so on occasion, particularly where
financial reports are being reviewed.
Frequency and Attendance at Board and Committee Meetings
The Board aims to meet formally at least four times a year and met five times
in the year from 1 January 2021 to 31 December 2021.
The Audit Committee aims to meet formally at least four times a year as
appropriate in terms of the financial cycle of the Company and met seven times
in the year from 1 January 2021 to 31 December 2021.
Election and Re-election of Directors at the 2022 AGM
In accordance with the Company's Articles of Incorporation and the principles
of the AIC Code, all Directors of the Company will offer themselves for
re-election at the 2022 AGM.
Following the successful evaluation of the Board as noted on page 41, it is
proposed to shareholders that each of Tim Breedon, Susie Farnon, Chris
Ambler, Mike Bane, and Stephanie Coxon, be re-elected at the 2022 AGM.
IPO Lock-up arrangements
Certain existing and former Apax employees acquired shares in the Company
under a share-for-share exchange agreement at IPO. Those shareholders were
subject to certain lock-up arrangements in respect of the shares issued to
them for a period of either five or ten years.
The five-year lock-up period expired on 15 June 2020, and those shares are
therefore no longer subject to the lock-up arrangements. On the sixth
anniversary of AGA's IPO on 15 June 2021, a tranche of 20% of the Company's
ordinary shares held by Apax executives was released from the 10-year lock-up.
governance \ AUDIT COMMITTEE REPORT
I am pleased to present the Audit Committee report for 2021 detailing the
activities undertaken this year to fulfil its responsibilities.
Susie Farnon
Non-Executive Director
The main areas of activity for the Audit Committee HAVE BEEN:
- reviewing in detail the content of the interim report and this
annual report, the work of the service providers in producing them and the
results of the external audit;
- considering those areas of judgement or estimation arising from
the application of International Financial Reporting Standards to the
Company's activities and documenting the rationale for the decisions made and
estimation techniques selected. This includes the valuation of investments;
- keeping under review the policy on the supply of non-audit
services by the external auditor, which has taken into account ethical
guidance and related legislation;
- conducting an annual review of the audit quality and performance
of the external auditor, which has included a general review of the
coordination of the external audit function with the activities of the
Company, any appropriate internal controls, and the suitability and
independence of the external auditor;
- keeping under review the risk review and control framework with
the assistance of the Investment Manager and the Company Secretary;
- meeting with the external auditor, KPMG Channel Islands Limited
("KPMG"), to review and discuss their independence, objectivity and proposed
scope of work for their review of the interim report and their audit of this
annual report and accounts; and
- meeting with the Company's principal service providers to review
the controls and procedures operated by them to ensure that the Company's
operational risks are properly managed and that its financial reporting is
complete, accurate and reliable.
The scope of the Committee with respect to internal control does not include
controls relating to risks arising from the Company's investment portfolio.
Such risks are overseen directly by the Board, which sets policies in this
area to govern the day-to-day management of these risks by the Investment
Manager.
Membership and attendance
The Audit Committee membership currently consists of Susie Farnon, Chris
Ambler, Mike Bane, and Stephanie Coxon. A summary of meetings held during the
year and attendance at those meetings is available on page 46.
The Chairman of the Company, Tim Breedon, whilst not required to attend
meetings of the Audit Committee, does so on occasion, particularly in meetings
where financial reports are reviewed.
Role of the Audit Committee
The Audit Committee is appointed under terms of reference from the Board of
Directors, available on the Company's
website at:
https://www.apaxglobalalpha.com/governance/documents-administration/
Review of areas for judgement or estimation
The Audit Committee has determined that the key area for judgement and
estimation is the fair value of the Company's investment portfolio. For
investments not traded in an active market, the fair value is determined by
using valuation techniques and methodologies, as deemed appropriate by the
Investment Manager. These assumptions may give rise to valuations that differ
from amounts realised in the future. The Audit Committee has also considered
the calculation of the performance fee to be an area of judgement given the
complexity of the calculation. Further details and considerations of the
Committee are set out below.
Valuation of investments
The valuation of investments is a significant area of judgement in the
preparation of the financial statements and performance reporting and
represents a particular focus for the Audit Committee. The Audit Committee is
satisfied that it is reasonable overall and has been prepared in accordance
with the Company's stated accounting policies.
The majority of Derived Equity Investments held by the Company, and certain
investments underlying the Company's Private Equity positions, are quoted and
have a ready market, leaving the focus of the Audit Committee on the other
Private Equity and Derived Debt Investments which are illiquid and valued
less easily.
At each quarterly valuation point, and particularly at the year end, members
of the Audit Committee reviewed the detailed valuation schedules prepared by
the Investment Manager.
Discussions were also held with the Investment Manager, Investment Advisor and
the external auditor (in respect of the interim and year end valuations only).
The aim of these reviews and discussions was to ensure, as far as possible,
that the valuations were prepared in line with the valuation process and
methodology set out in the Company's accounting policies. No material
discrepancies were identified.
The valuation of the Derived Investments and Private Equity has been reviewed
by the external auditor who has reported to the Committee and the Board on
whether, in their opinion, the valuations used are reasonable and in
accordance with the stated accounting policies.
Performance fee
The basis for calculation of the performance fee due to the Investment Manager
is summarised in the notes to the financial statements. Although this fee may
not always be material to the financial performance or position of the
Company, it is payable to the Investment Manager, and therefore the Audit
Committee considers it important by nature.
The Audit Committee generally commissions a specific report on the calculation
of the fee prior to payment. At 31 December 2021, a performance fee of €8.4m
was payable.
External Audit
KPMG has been the Company's external auditor since 2015. During the year, and
up to the date of this report, the Audit Committee has met formally with KPMG
on 4 occasions and, in addition, the Chairman and other members of the Audit
Committee met them informally on a number of occasions during the period.
These informal meetings have been held to ensure the Audit Committee is kept
up to date with the progress of their work and that their formal reporting
meets the Audit Committee's needs.
The formal meetings included detailed reviews of the proposed scope of the
work to be performed by the auditor in their review of the Company's report
for the period to 30 June 2021 and in their audit for the year ended 31
December 2021. They also included detailed reviews of the results of this
work, their findings and observations. I am pleased to report that there are
no matters arising that should be brought to the attention of shareholders.
The Audit Committee has also reviewed KPMG's report on their own independence
and objectivity, including their team structure for the audit of the Company
and of the underlying Apax Funds, and the level of non-audit services provided
by them. In addition, the Audit Committee assessed the audit quality and
effectiveness of KPMG as the Company's external auditor.
The Company has a policy in place to ensure the independence and integrity of
the external auditor, where non-audit services are to be provided by them. In
the first instance, all non-audit services require pre-approval of the
Chairman of the Audit Committee and/or the Chairman of the Board. Full
consideration of the financial and other implications on the independence of
the auditor arising from any such engagement are considered before proceeding.
Note 6 of the financial statements includes a summary of fees paid to KPMG.
The Audit Committee has concluded that KPMG are independent and objective,
carry out their work to a high standard and provide concise and useful
reporting. Accordingly, the Audit Committee has recommended to the Board that
KPMG be put forward to shareholders for reappointment at the next AGM.
Risk management, internal controls and corporate risks
An outline of the risk management framework and principal risks is
provided on pages 30 to 33.
The Audit Committee has kept, and continues to keep, under review financial
risks, operational risks and emerging risks, which includes reviewing and
obtaining assurances from key service providers in respect of the controls for
which they are responsible. The Audit Committee has not identified any areas
of concern as a result.
Service providers
The Audit Committee has met regularly with the key service providers (besides
KPMG) involved in the preparation of the Company's reporting to its
shareholders and in the operation of controls on its behalf, the Administrator
and sub-Administrator, both of whom have attended each formal Audit Committee
meeting as well as other informal meetings. Through these meetings, supported
by review and challenge of supporting documentation, the Audit Committee has
satisfied itself, as far as is possible in the circumstances of a Company with
outsourced functions, that financial and operational risks facing the Company
are appropriately managed and controlled.
Adjusted and unadjusted differences in the financial statements
The external auditor, KPMG, has reported to the Audit Committee that they
found no reportable differences during the course of their audit work.
Whistleblowing
The Company does not have any employees Each of the service providers
has whistleblowing policies in place.
Anti-bribery and corruption
The Company has a zero tolerance approach to bribery and corruption, in line
with the UK Bribery Act 2010. An anti-bribery and corruption policy has been
adopted and is kept under review.
Annual Report
The Audit Committee members have each reviewed this annual report and earlier
drafts of it in detail, comparing its content with their own knowledge of the
Company, reporting requirements and shareholder expectations. Formal meetings
of the Audit Committee have also reviewed the report and its content and have
received reports and explanations from the Company's service providers about
the content and the financial results.
The Audit Committee has concluded that the annual report, taken as a whole,
is fair, balanced and understandable, and that the Board can reasonably and
with justification make the statement of Directors' responsibilities on page
53.
OBJECTIVES FOR 2022
- Keep under review the risk governance framework
- Keep under review the external auditor's services
governance \ DIRECTORS' REMUNERATION REPORT
Directors are remunerated in the form of fixed fees.
Provisions relating to Executive Directors' remuneration are not deemed
relevant to AGA, being an externally managed investment company with a Board
comprised wholly of Non-Executive Directors.
In particular, the Company's day-to-day management and administrative
functions are outsourced to third parties. As a result, the Company has no
Executive Directors, employees, or internal operations. The Company has
therefore not reported further in respect of these provisions.
Remuneration report
The Directors who served in the period from 1 January 2021 to 31 December
2021 received the fees detailed in the table below.
No taxable benefits were paid to Directors in respect of this period and no
remuneration above that was paid to the Directors for their services.
Remuneration paid reflects the duties and responsibilities of the Directors
and the value of their time. No element of the Directors' remuneration is
performance related.
Directors' fees and expenses
Fees are pro-rated where an appointment takes place during a financial year.
None of the fees disclosed below were payable to third parties by the
Company. Chris Ambler is obliged to pay 20% of the fee he receives from the
Company for his services as a Non-Executive Director to a third party,
being the company to which he is appointed as an Executive Director.
The Directors are entitled to be reasonably reimbursed for expenses incurred
in the exercise of their duties as Directors. The Board currently comprises
five Directors following the appointment of Stephanie Coxon in 2020. This
appointment took the Company to the limit of the aggregate remuneration fee
cap specified in the Company's Articles despite there having been no change to
individual Directors' fees since IPO. Although there is no current intention
to increase fees payable to Directors, the Company is seeking shareholder
approval to increase the remuneration cap by £80,000 to £395,000 in order
to provide flexibility as it commences planning for the retirement of several
long-standing members of the Board over the coming years.
Expenses paid to the Directors in the period are listed in the table below.
DIRECTORS' FEES AND EXPENSES FOR THE YEAR TO 31 DECEMBER 2021
DIRECTOR FEES EXPENSES (GBP) FEES EXPENSES (EUR)
(GBP) (EUR)
Tim Breedon 125,000 157 146,379 187
Susie Farnon 55,000 - 64,407 -
Chris Ambler 45,000 176 52,696 209
Mike Bane 45,000 - 52,696 -
Stephanie Coxon 45,000 - 52,696 -
Total 315,000 333 368,874 396
DIRECTORS' holdings at 31 DECEMBER 2021
DIRECTOR CLASS OF SHARE SHARES HELD VOTING RIGHTS % OF VOTING RIGHTS
DIRECT INDIRECT DIRECT INDIRECT
Tim Breedon Ordinary shares of NPV¹ 70,000 70,000 - 0.014% 0.000%
Susie Farnon Ordinary shares of NPV¹ 43,600 43,600 - 0.009% 0.000%
Chris Ambler Ordinary shares of NPV¹ 27,191 27,191 - 0.006% 0.000%
Mike Bane Ordinary shares of NPV¹ 18,749 18,749 - 0.004% 0.000%
Stephanie Coxon Ordinary shares of NPV¹ 10,000 10,000 - 0.002% 0.000%
1. No par value
governance \ DIRECTORS' REPORT
The Directors submit their annual report together with the audited financial
statements of the Company for the year ended 31 December 2021.
The Company's registered office and principal place of business is East Wing,
Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1 3PP.
Listing on the London Stock Exchange
On 15 June 2015, the entire issued ordinary share capital of the Company was
admitted to the Premium Listing segment of the Official List of the Financial
Conduct Authority and to unconditional trading on the London Stock Exchange's
Main Market for listed securities.
Dividend
The Directors have approved a dividend of 6.36 pence per share as a final
dividend in respect of the financial period ended 31 December 2021 (2020: 5.28
pence). An interim dividend of 5.97 pence was paid on 17 September 2021 (2020:
4.87 pence).
Board of Directors
Biographies of the Board of Directors, including details of their relevant
experience, are available on the Company's website at:
www.apaxglobalalpha.com/who-we- are/leadership-team/board-of-directors
The Non-Executive Directors do not have service agreements.
Power of Directors
The business of the Company is managed by the Directors who may exercise all
the powers of the Company, subject to any relevant legislation, any directions
given by the Company by passing a special resolution and to the Company's
Articles of Incorporation (the "Articles"). The Articles, for example, contain
specific provisions concerning the Company's power to borrow money and issue
shares.
Appointment and removal of Directors
Rules relating to the appointment and removal of the Directors are contained
within the Company's Articles of Incorporation, which can be found in full on
the Company's website at:
https://www.apaxglobalalpha.com/governance/documents-administration/
Amendment of Articles of incorporation
The Company may only make amendments to the Articles of Incorporation of the
Company by way of special resolution of the shareholders, in accordance with
The Companies (Guernsey) Law, 2008, as amended.
Employees
The Company does not have any direct employees.
Political Donations and Expenditure
The Company has made no political donations in the period since incorporation
or since admission.
Share Capital
As at the date of this report, the Company had an issued share capital of
€873.8m. The rights attaching to the shares are set out in the Articles of
Incorporation. There are no restrictions on the transfer of ordinary shares in
the capital of the Company other than those which may be imposed by law from
time to time. There are no special control rights in relation to the Company's
shares and the Company is not aware of any agreements between holders of
securities that may result in restrictions on the transfer of securities or on
voting rights, except for the lock-ups agreed at the time of admission as set
out in the prospectus. In accordance with the Disclosure Guidance and
Transparency Rules, Board members and certain employees of the Company's
service providers are required to seek approval to deal in the Company's
shares.
Allotment of shares and pre-emption rights
Details of the Company's ability to allot shares and pre-emption rights are
included in the Articles of Incorporation.
Voting Rights
In a general meeting of the Company, on a show of hands, every member who is
present in person or by proxy and entitled to vote shall have one vote. On a
poll, every member who is present in person or by proxy shall have one vote
for every share of which they are the holder.
Restrictions on voting
Unless the Directors otherwise determine, a shareholder shall not be entitled
to vote either personally or by proxy:
- if any call or other sum currently payable to the Company in
respect of that share remains unpaid; or
- having been duly served with a notice requiring the disclosure of
a member's interests given under article 10 of the Articles of Incorporation
of the Company, and has failed to do so within 14 days, in a case where the
shares in question represent at least 0.25% of the number of shares in issue
of the class of shares concerned, or within 28 days, in any other case, from
the date of such notice.
Directors' interest in shares
The Directors' share interests in the Company are detailed on the prior page.
Material interests in shares
The Company has been notified in accordance with DTR 5 of the Disclosure
Guidance and Transparency Rules of the interests in its issued ordinary shares
as at 31 December 2021 detailed in the table on page 51.
Significant agreements
The following agreements are considered significant to the Company:
- AGML as Investment Manager under the terms of the Investment
Management Agreement;
- Aztec Group as Administrator, Company Secretary and Depositary
under the Administration Agreement and Depositary Agreement;
- Link as Registrar under the Registration Agreement;
- Jefferies International as corporate broker; and
- KPMG as appointed external auditor.
Compensation for loss of office
There are no agreements between the Company and its Directors providing for
compensation for loss of office that occurs because of a change of control.
Disclosures required under listing rule 9.8 4R
There are no disclosures required under Listing Rule section 9.8.4R.
Events after the reporting period
The Audit Committee noted that there was one post-balance sheet events:
- on 2 March 2021, the Board of Directors announced a dividend of
6.36 pence per share in respect of the financial period ended 31 December
2021.
TABLE OF SHAREHOLDERS OVER 5% AT 31 DECEMBER 2021¹
Shareholder CLASS OF SHARE SHARES HELD VOTING RIGHTS % OF VOTING RIGHTS
DIRECT INDIRECT DIRECT INDIRECT THRESHOLD
Witan Ordinary 30,400,000 30,400,000 - 6.2% - 5%
Investment Trust
shares of NPV²
Berlinetta Limited Ordinary 28,974,827 28,974,827 - 5.9% - 5%
shares of NPV²
1. The figures shown above reflect the position of the shareholders as
most recently disclosed to and by the Company pursuant to DTR 5.1
(Notification of the acquisition or disposal of major shareholdings) and may
not reflect the actual or current position of the shareholders as at the date
of this report
2. No par value
Going Concern
After making enquiries and given the nature of the Company and its
investments, the Directors, after due consideration, conclude that the Company
should be able to continue for the foreseeable future.
In reaching this conclusion, the Board is mindful of the nature of the
Company's assets and ability to meet its liabilities as they fall due.
Further details of the Board's considerations in relation to going concern are
set out in note 2 to the financial statements.
Accordingly, they are satisfied that it is appropriate to adopt the going
concern basis in preparing these financial statements.
Disclosure of information to the Auditor
Having made enquiries of fellow Directors and key service providers, each of
the Directors confirms that:
- to the best of their knowledge and belief, there is no relevant
audit information of which the Company's auditor is unaware; and
- they have taken all the steps a Director might reasonably be
expected to have taken to be aware of relevant audit information and to
establish that the Company's auditor is aware of that information.
Reappointment of Auditor
Resolutions for the reappointment of KPMG Channel Islands Limited as the
auditor of the Company and to authorise the Directors to determine its
remuneration are to be proposed at the next AGM.
AGM
The next AGM will be held on 5 May 2022 at 3:00pm (UK time) at East Wing,
Trafalgar Court, Les Banques, St Peter Port, Guernsey, Channel Islands GY1
3PP.
The notice, agenda and form of proxy will be circulated to shareholders at
least 21 working days prior to the AGM and will be made available on the UK
National Storage Mechanism and the Company's website at:
www.apaxglobalalpha.com/investors/ results-reportspresentations
Subject to Guernsey government guidance in respect of Covid-19, we hope to
welcome shareholders to attend the AGM in person. Shareholders will also be
able to dial in remotely to listen to the AGM and can submit questions in
advance to the Company Secretary by email at: AGA-admin@aztecgroup.co.uk
The Directors' report has been approved by the Board and is signed on its
behalf by:
Tim Breedon CBE
Chairman
1 March 2022
governance \ Viability statement
As stated on page 2 the investment objective of the Company is to provide
shareholders with capital appreciation from its investment portfolio and
regular dividends. The Company's investment performance depends upon the
performance of its portfolio of Private Equity and Derived Investments. The
Directors, in assessing the viability of the Company, have paid particular
attention to the risks faced by the Company in seeking to achieve its stated
objectives. The principal risks are set out on pages 31 to 33. The Board has
established a risk management framework within which the Investment Manager
operates and which is intended to identify, measure, monitor, report and,
where appropriate, mitigate the risks to the Company's investment objective.
The Directors confirm that their assessment of the emerging and principal
risks facing the Company was robust and in doing so they have considered
models projecting future cash flows during the three years to 31 December
2024. These models have also been stress tested to reflect the impact on the
portfolio of some severe but plausible scenarios similar to those experienced
by investment markets recently and historically. The projections consider cash
balances, covenants, limits, the split of the investment portfolio, and
commitments to existing and future Apax Funds. The stress testing examines the
potential impact of the key principal risks occurring individually and
together.
These projections are based on the Investment Manager's expectations of future
investment performance, income and costs. The viability assessment covers a
period of three years, which reflects the average holding period of Derived
Investments and the expected period between the launch of new buyout funds by
Apax Partners.
The Company also has access to a significant credit facility to enable it to
manage cash demands without resorting to urgent sales of its less liquid
portfolio assets; As at 31 December the RCF was undrawn. Diversification of
the portfolio, split between Private Equity and Derived Investments, also
helps the Company withstand risks it is most likely to meet.
The continuation of the Company in its present form is dependent on the
Investment Management Agreement ("IMA") with the Investment Manager remaining
in place. The Directors note that the IMA with the Investment Manager is
terminable with a minimum of one year's notice by either party. The Directors
have no current reason to assume that either the Company or the Investment
Manager would serve notice of termination of the IMA during the three-year
period covered by this viability statement. The initial term of the IMA was
six years and it was automatically renewed on 15 June 2021 for another six
years.
The Articles require that the Directors put a discontinuation resolution to
the AGM every three years, and a resolution was put forward at the 2021 AGM.
The Directors were pleased with the result of the 2021 resolution, where 99.8%
of votes cast supported a continuation of the Company.
The Directors, having duly considered the risks facing the Company, their
mitigation and the cash flow modelling, have a reasonable expectation that the
Company will be able to continue in operation and meet its liabilities as they
fall due over the three-year period of their assessment. For more information
on how AGA is satisfied with its ability to operate as a going concern, see
page 62.
governance \ STATEMENT OF DIRECTORS' RESPONSIBILITIES
Annual Report and Financial Statements
The Directors are responsible for preparing the annual report and financial
statements in accordance with applicable law and regulations.
Company Law requires the Directors to prepare financial statements for each
financial year. Under that law they are required to prepare financial
statements that show a true and fair view. The Directors have chosen to
prepare the financial statements in accordance with International Financial
Reporting Standards ("IFRS") as adopted by the EU to meet the requirements of
applicable law and regulations.
Under Company Law, the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Company and of the profit or loss of the Company for that
period. In preparing these financial statements, the Directors are required
to:
- select suitable accounting policies and apply them consistently;
- make judgements and estimates that are reasonable, relevant and
reliable;
- state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements;
- assess the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
- use the going concern basis of accounting unless they either
intend to liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
The Directors are responsible for keeping proper accounting records, that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and to
enable them to ensure that the financial statements comply with the Companies
(Guernsey) Law, 2008 (as amended). They are responsible for such internal
control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or
error. They have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Company and to prevent
and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in Guernsey governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Responsibility Statement of the Directors in respect
of the Annual Financial Report
The annual report and financial statements are the responsibility of, and have
been approved by the Directors who confirm, to the best of their knowledge
and belief, that they have complied with the above requirements in preparing
the financial statements.
During the course of this assessment, the Directors have received input from
the Audit Committee, the Investment Manager, the Investment Advisor, the
Company Secretary and Administrator, and the Directors confirm that:
- the annual report includes a fair review of the development and
performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties that the Company faces;
- the financial statements, prepared in accordance with IFRS adopted
by the EU, give a true and fair view of the assets, liabilities, financial
position and results of the Company, taken as a whole, as required by DTR
4.1.6, and are in compliance with the requirements set out in the Companies
(Guernsey) Law 2008 (as amended); and
- the annual report and financial statements, taken as a whole,
provide the information necessary to assess the Company's position and
performance, business model and strategy, and is fair, balanced and
understandable.
Signed on behalf of the Board of Directors
Tim Breedon CBE
Chairman
1 March 2022
Susie Farnon
Audit Committee Chairman
1 March 2022
financial statements \ Independent Auditor's Report
to the members of Apax Global Alpha Limited
Our opinion is unmodified
We have audited the financial statements of Apax Global Alpha Limited (the
"Company"), which comprise the statement of financial position as at 31
December 2021, the statements of profit or loss and other comprehensive
income, changes in equity and cash flows for the year then ended, and notes,
comprising significant accounting policies and other explanatory information.
In our opinion, the accompanying financial statements:
- give a true and fair view of the financial position of the Company
as at 31 December 2021, and of the Company's financial performance and cash
flows for the year then ended;
- are prepared in accordance with International Financial Reporting
Standards as adopted by the EU; and
- comply with the Companies (Guernsey) Law, 2008.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) ("ISAs (UK)") and applicable law. Our responsibilities are described
below. We have fulfilled our ethical responsibilities under, and are
independent of the Company in accordance with, UK ethical requirements
including the FRC Ethical Standard as required by the Crown Dependencies'
Audit Rules and Guidance. We believe that the audit evidence we have obtained
is a sufficient and appropriate basis for our opinion.
Key Audit Matters: our assessment of the risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were
of most significance in the audit of the financial statements and include the
most significant assessed risks of material misstatement (whether or not due
to fraud) identified by us, including those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these
matters. In arriving at our audit opinion above, the key audit matter was as
follows (unchanged from 2020):
The risk Our response
Valuation of Financial ASSETS AND LIABILITIES held at fair value through Basis: Our audit procedures included:
profit or loss ("Investments")
As at 31 December 2021, the Company had invested the equivalent of 90% of its
net assets in private equity funds advised by the Company's Investment Advisor
("Private Equity Investments") and in equities and debt in public and private Internal Controls:
Financial assets - €1,349,477,000; companies ("Derived Investments").
We assessed the design and implementation of the Investment Manager's review
Financial liabilities - (€1,067,000) control in relation to the valuation of Investments.
The Company's holdings in Private Equity Investments (representing 75% of
Investments) are valued based on the net asset values provided by the
(2020 Financial assets - €1,107,723,000) underlying funds' general partners, adjusted if considered necessary by the Challenging managements' assumptions and inputs including use of KPMG
Board of Directors, including any adjustment necessary for carried interest. valuation specialists:
(2020 Financial liabilities - €nil)
For Private Equity Investments, we agreed the fair values to capital accounts
or other similar statements ("Statements") received from the underlying funds'
The Company's holdings in quoted equities (representing 2% of Investments) are general partners. For the majority of Private Equity Investments, we obtained
Refer to page 48 of the Audit Committee Report, note 3 (Subsequent measurement valued based on the bid or last traded price depending upon the convention of the coterminous audited financial statements and agreed the audited net asset
of financial instruments), note 4 (Critical accounting estimates and the exchange on which the investment is quoted. value to the Statements. In order to assess whether the fair value required
judgements), note 8 (Investments) and note 13 (Fair value estimation).
adjustment, we considered: the basis of preparation together with accounting
policies applied; and whether the audit opinion was modified.
The Company's holdings in unquoted debt and equities (representing 23% of
Investments) are valued based on models that take into account the factors
relevant to each investment and use relevant third party market data where For Derived Investments, we used our own valuation specialist to independently
available. price 100% of quoted equities and 97% of unquoted debt based on third party
data sources.
Risk:
Assessing disclosures:
The valuation of the Company's Investments is considered a significant area of
our audit, given that it represents the majority of the net assets of the We also considered the Company's disclosures (see note 4) in relation to the
Company and in view of the significance of estimates and judgements that may use of estimates and judgements regarding the fair value of investments and
be involved in the determination of fair value. the Company's investment valuation policies adopted and fair value disclosures
in note 3, note 8 and note 13 for compliance with International Financial
Reporting Standards as adopted by the EU.
Our application of materiality and an overview of the scope of our audit
Materiality for the financial statements as a whole was set at €27,700,000,
determined with reference to a benchmark of net assets of €1,490,067,000 of
which it represents approximately 2% (2020: 2%).
In line with our audit methodology, our procedures on individual account
balances and disclosures were performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the risk that individually
immaterial misstatements in individual account balances add up to a material
amount across the financial statements as a whole. Performance materiality for
the Company was set at 75% (2020: 75%) of materiality for the financial
statements as a whole, which equates to €20,700,000. We applied this
percentage in our determination of performance materiality because we did not
identify any factors indicating an elevated level of risk.
We reported to the Audit Committee any corrected or uncorrected identified
misstatements exceeding €1,300,000, in addition to other identified
misstatements that warranted reporting on qualitative grounds.
Our audit of the Company was undertaken to the materiality level specified
above, which has informed our identification of significant risks of material
misstatement and the associated audit procedures performed in those areas as
detailed above.
Going concern
The directors have prepared the financial statements on the going concern
basis as they do not intend to liquidate the Company or to cease its
operations, and as they have concluded that the Company's financial position
means that this is realistic. They have also concluded that there are no
material uncertainties that could have cast significant doubt over its ability
to continue as a going concern for at least a year from the date of approval
of the financial statements (the "going concern period").
In our evaluation of the directors' conclusions, we considered the inherent
risks to the Company's business model and analysed how those risks might
affect the Company's financial resources or ability to continue operations
over the going concern period. The risks that we considered most likely to
affect the Company's financial resources or ability to continue operations
over this period were:
- availability of capital to meet operating costs and other
financial commitments;
- the recoverability of financial assets subject to credit risk
We considered whether these risks could plausibly affect the liquidity in the
going concern period by comparing severe, but plausible downside scenarios
that could arise from these risks individually and collectively against the
level of available financial resources indicated by the Company's financial
forecasts.
We considered whether the going concern disclosure in note 2 to the financial
statements gives a full and accurate description of the directors' assessment
of going concern.
Our conclusions based on this work:
- we consider that the directors' use of the going concern basis of
accounting in the preparation of the financial statements is appropriate;
- we have not identified, and concur with the directors' assessment
that there is not, a material uncertainty related to events or conditions
that, individually or collectively, may cast significant doubt on the
Company's ability to continue as a going concern for the going concern period;
and
- we have nothing material to add or draw attention to in relation
to the directors' statement in the notes to the financial statements on the
use of the going concern basis of accounting with no material uncertainties
that may cast significant doubt over the Company's use of that basis for the
going concern period, and that statement is materially consistent with the
financial statements and our audit knowledge.
However, as we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent with judgements
that were reasonable at the time they were made, the above conclusions are not
a guarantee that the Company will continue in operation.
FRAUD AND BREACHES OF LAWS AND REGULATIONS - ABILITY TO DETECT
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud ("fraud risks") we
assessed events or conditions that could indicate an incentive or pressure to
commit fraud or provide an opportunity to commit fraud. Our risk assessment
procedures included:
- enquiring of management as to the Company's policies and
procedures to prevent and detect fraud as well as enquiring whether management
have knowledge of any actual, suspected or alleged fraud;
- reading minutes of meetings of those charged with governance; and
- using analytical procedures to identify any unusual or unexpected
relationships.
As required by auditing standards, we perform procedures to address the risk
of management override of controls, in particular the risk that management may
be in a position to make inappropriate accounting entries. On this audit we do
not believe there is a fraud risk related to revenue recognition because the
Company's revenue streams are simple in nature with respect to accounting
policy choice, and are easily verifiable to external data sources or
agreements with little or no requirement for estimation from management. We
did not identify any additional fraud risks.
We performed procedures including:
- identifying journal entries and other adjustments to test based on
risk criteria and comparing the identified entries to supporting
documentation; and
- incorporating an element of unpredictability in our audit
procedures.
Identifying and responding to risks of material misstatement due to
non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected
to have a material effect on the financial statements from our sector
experience and through discussion with management (as required by auditing
standards), and from inspection of the Company's regulatory and legal
correspondence, if any, and discussed with management the policies and
procedures regarding compliance with laws and regulations. As the Company is
regulated, our assessment of risks involved gaining an understanding of the
control environment including the entity's procedures for complying with
regulatory requirements.
The Company is subject to laws and regulations that directly affect the
financial statements including financial reporting legislation and taxation
legislation and we assessed the extent of compliance with these laws and
regulations as part of our procedures on the related financial statement
items.
The Company is subject to other laws and regulations where the consequences of
non-compliance could have a material effect on amounts or disclosures in the
financial statements, for instance through the imposition of fines or
litigation or impacts on the Company's ability to operate. We identified
financial services regulation as being the area most likely to have such an
effect, recognising the regulated nature of the Company's activities and its
legal form. Auditing standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry of management and
inspection of regulatory and legal correspondence, if any. Therefore if a
breach of operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or
regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk
that we may not have detected some material misstatements in the financial
statements, even though we have properly planned and performed our audit in
accordance with auditing standards. For example, the further removed
non-compliance with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely the inherently limited
procedures required by auditing standards would identify it.
In addition, as with any audit, there remains a higher risk of non-detection
of fraud, as this may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls. Our audit procedures
are designed to detect material misstatement. We are not responsible for
preventing non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the annual report but does not include
the financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and we do not
express an audit opinion or any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Disclosures of emerging and principal risks and longer term viability
We are required to perform procedures to identify whether there is a material
inconsistency between the directors' disclosures in respect of emerging and
principal risks and the viability statement, and the financial statements and
our audit knowledge. We have nothing material to add or draw attention to in
relation to:
- the directors' confirmation within the Viability Statement (page
52) that they have carried out a robust assessment of the emerging and
principal risks facing the Company, including those that would threaten its
business model, future performance, solvency or liquidity;
- the emerging and principal risks disclosures describing these
risks and explaining how they are being managed or mitigated;
- the directors' explanation in the Viability Statement (page 52) as
to how they have assessed the prospects of the Company, over what period they
have done so and why they consider that period to be appropriate, and their
statement as to whether they have a reasonable expectation that the Company
will be able to continue in operation and meet its liabilities as they fall
due over the period of their assessment, including any related disclosures
drawing attention to any necessary qualifications or assumptions.
We are also required to review the Viability Statement, set out on page 52
under the Listing Rules. Based on the above procedures, we have concluded that
the above disclosures are materially consistent with the financial statements
and our audit knowledge.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a material
inconsistency between the directors' corporate governance disclosures and the
financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the following is
materially consistent with the financial statements and our audit knowledge:
- the directors' statement that they consider that the annual report
and financial statements taken as a whole is fair, balanced and
understandable, and provides the information necessary for shareholders to
assess the Company's position and performance, business model and strategy;
- the section of the annual report describing the work of the Audit
Committee, including the significant issues that the audit committee
considered in relation to the financial statements, and how these issues were
addressed; and
- the section of the annual report that describes the review of the
effectiveness of the Company's risk management and internal control systems.
We are required to review the part of Corporate Governance Statement
relating to the Company's compliance with the provisions of the UK Corporate
Governance Code specified by the Listing Rules for our review. We have nothing
to report in this respect.
We have nothing to report on other matters on which we are required to report
by exception
We have nothing to report in respect of the following matters where the
Companies (Guernsey) Law, 2008 requires us to report to you if, in
our opinion:
- the Company has not kept proper accounting records; or
- the financial statements are not in agreement with the accounting
records; or
- we have not received all the information and explanations, which
to the best of our knowledge and belief are necessary for the purpose of
our audit.
Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 53, the directors
are responsible for: the preparation of the financial statements including
being satisfied that they give a true and fair view; such internal control as
they determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error;
assessing the Company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and using the going concern
basis of accounting unless they either intend to liquidate the Company or to
cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue our opinion in an auditor's report. Reasonable
assurance is a high level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC's website
at www.frc.org.uk/auditorsresponsibilities.
The purpose of this report and restrictions on its use by persons other than
the Company's members as a body
This report is made solely to the Company's members, as a body, in accordance
with section 262 of the Companies (Guernsey) Law, 2008. Our audit work has
been undertaken so that we might state to the Company's members those matters
we are required to state to them in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members, as
a body, for our audit work, for this report, or for the opinions we have
formed.
Deborah Smith
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants and Recognised Auditors
Guernsey
1 March 2022
financial statements \ Statement of financial position
At 31 December 2021
Notes 31 December 2021 31 December 2020
€'000 €'000
Assets
Non-current assets
Financial assets held at fair value through profit or loss ("FVTPL") 8(a) 1,349,477 1,107,723
Total non-current assets 1,349,477 1,107,723
Current assets
Cash and cash equivalents 108,482 124,569
Investment receivables 33,603 1,338
Other receivables 1,347 -
Total current assets 143,432 125,907
Total assets 1,492,909 1,233,630
Liabilities
Financial liabilities held at FVTPL 8(a) 1,067 -
Investment payables 67 30,965
Accrued expenses 1,708 1,481
Total current liabilities 2,842 32,446
Total liabilities 2,842 32,446
Capital and retained earnings
Shareholders' capital 14 873,804 873,804
Retained earnings 607,873 327,380
Total capital and retained earnings 1,481,677 1,201,184
Share-based payment performance fee reserve 10 8,390 -
Total equity 1,490,067 1,201,184
Total shareholders' equity and liabilities 1,492,909 1,233,630
On behalf of the Board of Directors
Tim Breedon Susie Farnon
Chairman Chair of the Audit Committee
1 March 2022 1 March 2022
Notes 31 December 2021 31 December 2021 31 December 2020 31 December 2020
€ £ equivalent1 € £ equivalent1
Net Asset Value ("NAV") ('000) 1,490,067 1,253,638 1,201,184 1,073,546
Performance fee reserve 10 (8,390) (7,059) - -
Adjusted NAV ('000)2 1,481,677 1,246,579 1,201,184 1,073,546
NAV per share 3.03 2.55 2.45 2.19
Adjusted NAV per share2 3.02 2.54 2.45 2.19
31 December 2021 31 December 2020
% %
Total NAV Return3 28.7% 14.8%
1. The sterling equivalent has been calculated based on the GBP/EUR
exchange rate at 31 December 2021 and 31 December 2020, respectively
2. Adjusted NAV is the NAV net of the share-based payment performance fee
reserve. Adjusted NAV per share is calculated by dividing the Adjusted NAV by
the total number of shares
3. Total NAV Return for the year means the return on the movement in the
Adjusted NAV per share at the end of the year together with all the dividends
paid during the year divided by the Adjusted NAV per share at the beginning of
the year. Adjusted NAV per share used in the calculation is rounded to 5
decimal places
The accompanying notes form an integral part of these financial statements.
financial statements \ Statement of profit or loss and other comprehensive
income
For the year ended 31 December 2021
Notes Year ended Year ended
31 December 2021 31 December 2020
€'000 €'000
Income
Investment income 26,853 18,106
Net gains on financial assets at FVTPL 8(b) 337,190 153,518
Net losses on financial liabilities at FVTPL 8(c) (1,067) -
Realised foreign currency (losses)/gains (1,488) 1,224
Unrealised foreign currency gains/(losses) 787 (3,743)
Total income 362,275 169,105
Operating and other expenses
Performance fee 10 (8,390) (46)
Management fee 9 (3,782) (2,853)
Administration and other operating expenses 6 (2,707) (2,363)
Total operating expenses (14,879) (5,262)
Total income less operating expenses 347,396 163,843
Finance costs 11 (2,269) (1,751)
Profit before tax 345,127 162,092
Tax charge 7 (223) (109)
Profit after tax 344,904 161,983
Other comprehensive income - -
Total comprehensive income attributable to shareholders 344,904 161,983
Earnings per share (cents) 15
Basic and diluted 70.23 32.98
Adjusted1 69.79 32.98
The accompanying notes form an integral part of these financial statements.
1. The Adjusted earnings per share has been calculated based on the profit
attributable to ordinary shareholders adjusted for the total accrued
performance fee at 31 December 2021 and 31 December 2020, respectively, as per
note 15 and the weighted average number of ordinary shares
financial statements \ Statement of changes in equity
For the year ended 31 December 2021
For the year ended 31 December 2021 Notes Shareholders' capital Retained earnings TotaL Capital and retained earnings Share-based payment performance fee reserve €'000 Total
€'000 €'000 €'000 €'000
Balance at 1 January 2021 873,804 327,380 1,201,184 - 1,201,184
Total comprehensive income attributable to shareholders - 344,904 344,904 - 344,904
Share-based payment performance fee reserve movement 10 - - - 8,390 8,390
Dividends paid 16 - (64,411) (64,411) - (64,411)
Balance at 31 December 2021 873,804 607,873 1,481,677 8,390 1,490,067
For the year ended 31 December 2020 Notes Shareholders' capital Retained earnings TotaL Capital and retained earnings Share-based payment performance fee reserve €'000 Total
€'000 €'000 €'000 €'000
Balance at 1 January 2020 873,804 218,272 1,092,076 6,893 1,098,969
Total comprehensive income attributable to shareholders - 161,983 161,983 - 161,983
Share-based payment performance fee reserve movement 10 - - - (6,893) (6,893)
Dividends paid 16 - (52,875) (52,875) - (52,875)
Balance at 31 December 2020 873,804 327,380 1,201,184 - 1,201,184
The accompanying notes form an integral part of these financial statements.
financial statements \ Statement of cash flows
For the year ended 31 December 2021
Notes Year ended Year ended
31 December 2021 31 December 2020
€'000 €'000
Cash flows from operating activities
Interest received 25,553 18,024
Interest paid (1,750) (259)
Dividends received 906 1,060
Operating expenses paid (6,191) (5,460)
Tax received 3 17
Capital calls paid to Private Equity Investments (199,941) (55,651)
Capital distributions received from Private Equity Investments 275,140 207,270
Purchase of Derived Investments (274,417) (69,126)
Sale of Derived Investments 230,511 89,641
Net cash from operating activities 49,814 185,516
Cash flows used in financing activities
Financing costs paid (2,104) (1,706)
Dividends paid (64,584) (51,805)
Purchase of own shares - (6,970)
Revolving credit facility drawn - 6,106
Revolving credit facility repaid - (6,106)
Net cash used in financing activities (66,688) (60,481)
Cash and cash equivalents at the beginning of the year 124,569 3,277
Net (decrease)/increase in cash and cash equivalents (16,874) 125,035
Effect of foreign currency fluctuations on cash and cash equivalents 787 (3,743)
Cash and cash equivalents at the end of the year 12(b) 108,482 124,569
The accompanying notes form an integral part of these financial statements.
financial statements \ Notes to the financial statements
1 Reporting entity
Apax Global Alpha Limited (the "Company" or "AGA") is a limited liability
Guernsey company that was incorporated on 2 March 2015. The address of the
Company's registered office is PO Box 656, East Wing, Trafalgar Court, Les
Banques, St Peter Port, Guernsey GY1 3PP. The Company invests in Private
Equity funds, listed and unlisted securities including debt instruments.
The Company's main corporate objective is to provide shareholders with capital
appreciation from its investment portfolio and regular dividends. The
Company's operating activities are managed by its Board of Directors and its
investment activities are managed by Apax Guernsey Managers Limited (the
"Investment Manager") under an investment management agreement. The Investment
Manager obtains investment advice from Apax Partners LLP (the "Investment
Advisor").
2 Basis of preparation
Statement of compliance
The financial statements, which give a true and fair view, have been prepared
in compliance with the Companies (Guernsey) Law, 2008 and in accordance with
International Financial Reporting Standards as adopted by the European Union
("IFRS"). They are for the year from 1 January 2021 to 31 December 2021 and
were authorised for issue by the Board of Directors of the Company on 1 March
2022.
Basis of measurement
The financial statements have been prepared on the historic cost basis except
for financial assets and financial liabilities, which are measured at FVTPL.
Functional and presentation currency
The financial statements are presented in euro (€), which is the Company's
functional and presentation currency. All amounts are stated to the nearest
one thousand euro unless otherwise stated.
investment entity
The Company has determined that it meets the definition of an investment
entity which is mandatorily exempted from consolidation in accordance with
IFRS 10 "Consolidated Financial Statements" and amendments to IFRS 10. As a
result, the Company's unconsolidated subsidiary investments which it formed in
October 2021 are accounted for as investments at FVTPL.
Under the definition of an investment entity, the entity should satisfy all
three of the following tests:
· obtains funds from one or more investors for the purpose of providing
these investors with investment management services;
· commits to its investors that its business purpose is to invest funds
solely for returns from capital appreciation; investment income, or both
(including having an exit strategy for investments); and
· measures and evaluates the performance of substantially all of its
investments on a fair value basis.
As the Company meets all the requirements of an Investment Entity as per IFRS
10 "Consolidated Financial Statements", it is required to hold all
subsidiaries at fair value rather than consolidating them on a line-by-line
basis. See note 4 for further details.
Going concern
The Directors consider that it is appropriate to adopt the going concern basis
of accounting in preparing the financial statements. In reaching this
assessment, the Directors have considered a wide range of information relating
to present and future conditions, (for at least 12 months from 1 March 2022,
the authorisation date of these financial statements), including the statement
of financial position, future projections (which include highly stressed
scenarios), cash flows, revolving credit facility, net current assets and the
longer-term strategy of the Company. The impact of Covid-19, in addition to
other wider market concerns such as the impact of inflation was also
considered by the Directors; and whilst the long-term effect remains to be
seen, it was noted that the impact on the Company has been limited to date, as
the underlying portfolio is invested in sectors which have been relatively
less affected. The Directors have a reasonable expectation based on their
assessment of reasonably possible outcomes, that the Company has sufficient
liquidity, including the undrawn revolving credit facility, to meet current
and expected obligations up to the going concern horizon.
3 Accounting policies
The accounting policies adopted by the Company and applied consistently in
these financial statements are set out below and overleaf:
Initial recognition of financial instruments
The Company designates all financial assets and financial liabilities, except
loans payable, other payables, investment receivables, other receivables and
cash, at FVTPL. These are initially recognised at cost which equates to the
best indicator of fair value on the trade date, the date on which the Company
becomes a party to the contractual provisions of the instrument. All
transaction costs are immediately recognised in profit or loss. Financial
assets or financial liabilities not at FVTPL are initially recognised at cost
plus transaction costs that are directly attributable to their acquisition or
issue.
Subsequent measurement of financial instruments
Fair value is a market-based measurement, that estimates the price at which an
asset could be sold or a liability transferred, in an orderly transaction
between market participants, on the measurement date. When available, the
Company measures the fair value of an instrument using quoted prices in an
active market for that instrument. A market is regarded as "active" if quoted
prices are readily and regularly available and represent actual and regularly
occurring market transactions on an arm's length basis. If a market for a
financial instrument is not active, then the Company establishes fair value
using an alternative valuation technique.
The Company uses alternative valuation techniques, taking into account the
International Private Equity and Venture Capital Valuation ("IPEV")
guidelines, in the absence of an active market. Valuation techniques include,
but are not limited to, market multiples, using recent and relevant arm's
length transactions between knowledgeable, willing parties (if they are
available), reference to the current fair value of other instruments that are
substantially the same, statistical methods, discounted cash flow analyses and
option pricing models. The chosen valuation technique seeks to maximise the
use of market inputs and incorporates factors that market participants might
consider in setting a price.
Inputs to valuation techniques aim to reasonably represent market expectations
and measures of the risk-return factors inherent in the financial instrument.
The Company calibrates valuation techniques where possible using prices from
observable current market transactions in the same instrument or based on
other available observable market data.
The Company has two main investment portfolios that are split between "Private
Equity Investments" and "Derived Investments". Private Equity Investments
comprise primary and secondary commitments to, and investments in, existing
Private Equity funds advised by the Investment Advisor.
Derived Investments comprise investments in debt, equities and investments in
subsidiaries. At each reporting date these are measured at fair value, and
changes therein are recognised in the statement of profit or loss and other
comprehensive income.
Fair values of the Private Equity portfolio are generally considered to be the
Company's attributable portion of the NAV of the Private Equity funds, as
determined by the general partners of such funds, adjusted if considered
necessary by the Board of Directors, including any adjustment necessary for
carried interest. The general partners consider the IPEV guidelines when
valuing the Private Equity funds.
The fair value of unlisted debt investments (for which there are insufficient,
reliable pricing data) is calculated based on models that take into account
the factors relevant to each investment and use relevant third-party market
data where available. The fair value of unlisted equities and equities not
traded in an active market, is calculated based on comparable company
multiples and precedent transaction analysis. The Company reviews and
considers the appropriateness of the fair value analysis prepared by the
Investment Manager and Investment Advisor when determining the fair value for
such assets.
The fair value of investments in subsidiaries is considered to be the NAV of
the underlying subsidiaries calculated by measuring the fair value of the
subsidiaries' assets and liabilities at fair value in accordance with the
Company's accounting policies. The fair value of the underlying investments
held are included within the Derived Investments disclosures as relevant.
The fair value of investments traded in an active market is determined by
taking into account the latest market bid price available, or the last traded
price depending upon the convention of the exchange on which the investment is
quoted.
Derecognition of financial instruments
The Company derecognises a financial asset when the contractual rights to the
cash flows from the financial asset expire or it transfers the financial asset
and the transfer qualifies for derecognition in accordance with IFRS 9
"Financial Instruments: Recognition and Measurement". The Company uses the
first-in first-out method to determine realised gains and losses on
derecognition. A financial liability is derecognised when the obligation
specified in the contract is discharged, cancelled or expired.
Share-based payments
The Company applies the requirements of IFRS 2 "Share-based Payment" in
respect to its performance fee. The Company maintains a separate performance
fee reserve in equity, showing the expected performance fee calculated on a
liquidation basis on eligible assets. This is revised at each reporting period
and the movement is credited or expensed through the statement of profit or
loss and other comprehensive income. Further details are given in note 10.
Operating segments
The criteria for identifying an operating segment in accordance with IFRS 8
"Operating Segments" are that the chief operating decision maker of
the Company regularly reviews the performance of these operating segments and
determines the allocation of resources based on these results. It is
determined that the Company's Chief Operating Decision Maker is the Board of
Directors. As previously noted, the Company invests into two separate
portfolios, Private Equity Investments and Derived Investments. These have
been identified as segments on the basis that the Board of Directors uses
information based on these segments to make decisions about assessing
performance and allocating resources. The Company has a third administration
segment for central functions which represents general administration costs
that cannot be specifically allocated to the two portfolios. The analysis of
results by operating segment is based on information from the Company's
management accounts. The segmental analysis of the Company's results and
financial position is set out in note 5.
Investment receivables
Investment receivables are recognised initially at fair value and subsequently
measured at amortised cost. At each reporting date, the Company shall measure
the loss allowance on investment receivables at an amount equal to the
lifetime expected credit losses if the credit risk has increased significantly
since initial recognition. If, at the reporting date, the credit risk had not
increased significantly since initial recognition, the Company shall measure
the loss allowance at an amount equal to 12-month expected credit losses.
Significant financial difficulties of the counterparty, probability that the
counterparty will enter bankruptcy or financial reorganisation and default in
payments are all considered indicators that a loss allowance may be required.
Changes in the level of impairment are recognised in the statement of profit
or loss and other comprehensive income. Investment receivables are also
revalued at the reporting date if held in a currency other than euro.
Liabilities
Liabilities, other than those specifically accounted for under a separate
policy, are stated at the amounts which are considered to be payable in
respect of goods or services received up to the reporting date on an accruals
basis.
Investment payables
Investment payables are recognised in the Company's statement of financial
position when it becomes party to a contractual provision for the amount
payable. Investment payables are held at their nominal amount. Investment
payables are also revalued at the reporting date if held in a currency other
than euro.
Loans payable
Loans payable are held at amortised cost. Amortised cost for loans payable is
defined as the amount at which the loan is measured at initial recognition,
less principal repayments, plus or minus the cumulative amortisation using the
effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and cash held in money market
funds with original maturities of three months or less.
Interest income
Interest income comprises interest income on cash and cash equivalents and
interest earned on financial assets on the effective interest rate basis.
Dividend income
Dividend income is recognised in the statement of profit or loss and other
comprehensive income on the date that the Company's right to receive payment
is established, which in the case of listed securities is the ex-dividend
date. For unlisted equities, this is usually the date on which the payee's
Board approve the payment of a dividend. Dividend income of €1.0m (31
December 2020: €1.1m) from equity securities designated at FVTPL is
recognised in the statement of profit or loss and other comprehensive income
in the current year.
Net changes on investments at FVTPL
Unrealised gains and losses
Net change in Derived Investments at FVTPL includes all unrealised changes in
the fair value of investments (financial assets and financial liabilities),
including foreign currency movements, since the beginning of the reporting
period or since designated upon initial recognition as held at FVTPL and
excludes dividend and interest income.
Net change in the fair value of Private Equity Investments is calculated based
on the movement of fair value since the beginning of the reporting period
adjusted for all calls paid and distributions received. Distributions received
from Private Equity Investments are treated as unrealised movements until the
commitment for primary investments, or cost and undrawn commitment for
secondary investments, have been fully repaid.
Realised gains and losses
Realised gains and losses from financial assets and financial liabilities at
FVTPL represents the gain or loss realised in the period. The unit of account
for Derived Investments is the individual share or debt nominal which can be
sold on an individual basis. The unit of account for Private Equity
Investments is commitment. The resulting accounting treatment for the realised
gains and losses is based on these units of account.
The realised gain or loss for Derived Investments is calculated based on the
carrying amount of a financial instrument at the beginning of the reporting
period, or the transaction price if it was purchased in the current reporting
period, and its sale or settlement price. Realised gains and losses on
disposals of these investments are calculated using the first-in first-out
method. Realised gains on the Private Equity portfolio are recognised when the
commitment on primary investments or the cost and undrawn commitment for
secondary investments has been fully repaid.
Distributions received in excess of the commitment for a primary investment or
the cost and undrawn amount for a secondary investment are recognised as
realised gains in the statement of profit or loss and other comprehensive
income.
Brokerage fees and other transaction costs
Brokerage fees and other transaction costs are costs incurred to acquire
investments at FVTPL. They include fees and commissions paid to agents,
brokers and dealers. Brokerage fees and other transaction costs, when
incurred, are immediately recognised in the statement of profit or loss and
other comprehensive income as an expense.
Other expenses
Fees and other operating expenses are recognised in the statement of profit or
loss and other comprehensive income on an accruals basis.
Provisions and contingent liabilities
Provisions are recognised when the Company has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate of the amount of the obligation can be
made. Contingent liabilities are possible obligations whose existence will be
confirmed only by uncertain future events or present obligations where the
transfer of economic benefit is uncertain or cannot be reliably measured.
Contingent liabilities are not recognised but are disclosed unless the
probability of their occurrence is remote.
Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency
of the Company at the exchange rates at the date of the transactions. Monetary
assets and liabilities denominated in foreign currencies at the reporting date
are translated to the functional currency at the exchange rate at that date.
For loans payable, the foreign currency gain or loss is the difference between
the amortised cost in the functional currency at the beginning of the period,
adjusted for interest payments during the period, and the amortised cost in
foreign currency translated at the exchange rate at the end of the reporting
period. Foreign currency differences arising on the repayments or
retranslation are recognised in the statement of profit or loss and other
comprehensive income.
Non-monetary assets and liabilities denominated in foreign currencies that are
measured at fair value are retranslated to the functional currency at the
exchange rate at the date that the fair value was determined. Non-monetary
items that are measured in terms of historical cost in foreign currency are
translated using the exchange rate at the date of the transaction. Foreign
currency differences arising on retranslation of non-investment assets are
recognised in the statement of profit or loss and other comprehensive income.
For financial assets and financial liabilities held at FVTPL, foreign currency
differences are reported as part of their net changes at FVTPL.
Taxation
The Company may incur withholding taxes imposed by certain countries on
investment income or capital gains taxes upon realisation of its investments.
Such income or gains are recorded gross of withholding taxes and capital gains
taxes in the statement of profit or loss and other comprehensive income.
Withholding taxes and capital gains taxes are shown as separate items. Where
applicable, tax accruals are raised by the Company based on an investments
expected hold period.
Shareholders' capital and reserves
Shareholders' capital
Shareholders' capital issued by the Company is recognised as the proceeds or
fair value received. Incremental costs directly attributable to the issue, net
of tax effects, are recognised as a deduction from equity. Ordinary shares
have been classified as equity as they do not meet the definition of
liabilities in IAS 32.
Dividends
Dividends on ordinary shares are recognised in equity in the period in which
they become payable, which is when they are approved by the Company's Board of
Directors.
Earnings per share
Earnings per share is calculated based on the profit attributable to ordinary
shareholders and the weighted average number of ordinary shares in issue
during the year.
Diluted earnings per share is calculated based on the profit attributable to
ordinary shareholders and the weighted average number of ordinary shares in
issue during the year adjusted for items that would cause a dilutive effect on
the ordinary shares.
Adjusted earnings per share is calculated based on the profit attributable to
ordinary shareholders and the weighted average number of ordinary shares in
issue during the year adjusted for the performance fee.
Accounting standards and interpretations not yet adopted
The Company has applied all new and amended standards with an effective date
from 1 January 2021. Additionally, it has reviewed and assessed changes to
current accounting standards issued by the IASB with an effective date from 1
January 2022; none of these have had or are expected to have a material impact
on the Company's financial statements.
4 Critical accounting estimates and judgements
In preparing the financial statements, the Company makes judgements and
estimates that affect the reported amounts of assets, liabilities, income and
expenses. Actual results could differ from those estimates. Estimates and
judgements are continually evaluated and are based on the Board of Directors
and Investment Managers' experience and their expectations of future events.
Revisions to estimates are recognised prospectively.
(i) Judgements
The judgement that has the most significant effect on the amounts recognised
in the Company's financial statements relates to investment assets and
liabilities. These have been determined to be financial assets and liabilities
held at FVTPL and have been accounted for accordingly. See note 3 for further
details. The Company also notes that the assessment of the Company as an
investment entity is an area of judgement.
(ii) Estimates
The estimate that has the most significant effect on the amounts recognised in
the Company's financial statements relates to financial assets and financial
liabilities held at FVTPL other than those traded in an active market.
The Investment Manager is responsible for the preparation of the Company's
valuations and meets quarterly to discuss and approve the key valuation
assumptions. The meetings are open to the Board of Directors and the
Investment Advisor to enable them to challenge the valuation assumptions and
the proposed valuation estimates and to the external auditor to observe. On a
quarterly basis, the Board of Directors review and approve the final NAV
calculation before it is announced to the market.
The Investment Manager also makes estimates and assumptions concerning the
future and the resulting accounting estimates will, by definition, seldom
equal the related actual results. The assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets and
liabilities are outlined in note 13.
(ii) ASSESSMENT OF THE COMPANY AS AN INVESTMENT ENTITY
The Board of Directors believe that the Company meets the definition of an
investment entity per IFRS 10 as the following conditions exist:
· the Company has obtained funds from investing shareholders for the
purpose of providing them with professional investment and management
services;
· the Company's business purpose, which was communicated directly to
investors, is investing for returns from capital appreciation and investment
income; and
· all of the Company's investments are measured and evaluated on a fair
value basis
As the Company believes it meets all the requirements of an investment entity
as per IFRS 10 "Consolidated Financial Statements", it is required to measure
all subsidiaries at fair value rather than consolidating them on a
line-by-line basis.
5 Segmental analysis
The segmental analysis of the Company's results and financial position, which
is prepared using the accounting policies in note 3, is set out below. There
have been no changes to segments in the current or prior year.
The investment segments follow different investment strategies as approved by
the Chief Operating Decision Maker, the Board of Directors, which monitors the
portfolio allocation to ensure that it is in line with the investment
strategy.
Reportable segments
Statement of profit or loss and other comprehensive income Private Equity Investments €'000 Derived Investments €'000 Central Total
for the year ended 31 December 2021 functions1 €'000
€'000
Investment income/(expense) - 27,350 (497) 26,853
Net gains on financial assets at FVTPL 300,820 36,370 - 337,190
Net losses on financial liabilities at FVTPL (1,067) - - (1,067)
Realised foreign exchange losses - (1,317) (170) (1,487)
Unrealised foreign currency gains - - 787 787
Total income/(loss) 299,753 62,403 120 362,276
Performance fees2 - (8,390) - (8,390)
Management fees (149) (3,632) - (3,782)
Administration and other operating expenses - (357) (2,350) (2,707)
Total operating expenses (149) (12,379) (2,350) (14,879)
Total income less operating expenses 299,604 50,024 (2,230) 347,397
Finance costs - - (2,269) (2,269)
Profit/(loss) before taxation 299,604 50,024 (4,499) 345,128
Tax charge - (223) - (223)
Total comprehensive income attributable to shareholders 299,604 49,801 (4,499) 344,905
Statement of financial position at 31 December 2021 Private Equity Investments €'000 Derived Investments €'000 Cash and Total
other NCAs3 €'000
€'000
Total assets 1,013,922 370,467 108,520 1,492,909
Total liabilities (1,067) (67) (1,708) (2,842)
NAV 1,012,855 370,400 106,812 1,490,067
Statement of profit or loss and other comprehensive income Private Equity Investments €'000 Derived Investments €'000 Central Total
for the year ended 31 December 2020 functions1 €'000
€'000
Investment income/(expense) - 18,360 (254) 18,106
Net gains/(losses) on financial assets at FVTPL 173,658 (20,140) - 153,518
Realised foreign exchange gains - 210 1,014 1,224
Unrealised foreign currency losses - - (3,743) (3,743)
Total income/(loss) 173,658 (1,570) (2,983) 169,105
Performance fees2 (46) - - (46)
Management fees (161) (2,692) - (2,853)
Administration and other operating expenses - (301) (2,062) (2,363)
Total operating expenses (207) (2,993) (2,062) (5,262)
Total income less operating expenses 173,451 (4,563) (5,045) 163,843
Finance costs - - (1,751) (1,751)
Profit/(loss) before taxation 173,451 (4,563) (6,796) 162,092
Tax charge - (109) - (109)
Total comprehensive income attributable to shareholders 173,451 (4,672) (6,796) 161,983
Statement of financial position at 31 December 2020 Private Equity Investments €'000 Derived Investments €'000 Cash and Total
other NCAs3 €'000
€'000
Total assets 788,307 320,754 124,569 1,233,630
Total liabilities - (32,446) - (32,446)
NAV 788,307 288,308 124,569 1,201,184
1. Central functions represents interest income earned on cash balances
and general administration and finance costs that cannot be allocated to
investment segments
2. Represents the movement in each respective portfolio's overall
performance fee reserve
3. NCAs refers to net current assets of the Company
Geographic information
Statement of profit or loss and other comprehensive income North America Europe BRIC1 Rest of Total
€'000
€'000
World
€'000
for the year ended 31 December 2021 €'000
€'000
Investment income/(expense) 21,343 3,471 359 1,680 26,853
Net gains on financial assets at FVTPL 161,351 136,685 257 38,897 337,190
Net losses on financial liabilities at FVTPL (1,067) - - - (1,067)
Realised foreign exchange (losses)/gains (1,227) (173) 15 (102) (1,487)
Unrealised foreign currency gains - 787 - - 787
Total income 180,400 140,770 631 40,475 362,276
Performance fee (5,454) (1,597) (89) (1,250) (8,390)
Management fee (2,664) (871) (64) (183) (3,782)
Administration and other operating expenses - (2,707) - - (2,707)
Total operating expenses (8,118) (5,175) (153) (1,433) (14,879)
Total income less operating expenses 172,282 135,595 478 39,042 347,397
Finance costs - (2,269) - - (2,269)
Profit before tax 172,282 133,326 478 39,042 345,128
Tax charge (85) (141) 3 - (223)
Total comprehensive income attributable to shareholders 171,197 133,185 481 39,042 344,905
Statement of financial position at 31 December 2021 North America Europe BRIC1 Rest of Total
€'000
€'000
World
€'000
€'000
€'000
Total assets 793,678 646,403 11,333 41,495 1,492,909
Total liabilities (1,134) (1,708) - - (2,842)
NAV 792,544 644,695 11,333 41,495 1,490,067
Statement of profit or loss and other comprehensive income North America Europe BRIC1 Rest of Total
€'000
€'000
World
€'000
for the year ended 31 December 2020 €'000
€'000
Investment income/(expense) 14,028 2,709 258 1,111 18,106
Net gains/(losses) on financial assets at FVTPL 82,727 74,941 (7,767) 3,617 153,518
Realised foreign exchange gains/(losses) 907 359 (25) (17) 1,224
Unrealised foreign currency losses - (3,743) - - (3,743)
Total income 97,662 74,266 (7,534) 4,711 169,105
Performance fee - (46) - - (46)
Management fee (2,034) (582) (69) (167) (2,853)
Administration and other operating expenses - (2,363) - - (2,363)
Total operating expenses (2,034) (2,991) (69) (167) (5,262)
Total income less operating expenses 95,628 71,275 (7,603) 4,544 163,843
Finance costs - (1,751) - - (1,751)
Profit/(loss) before tax 95,628 69,524 (7,603) 4,544 162,092
Tax 17 (126) - - (109)
Total comprehensive income attributable to shareholders 95,645 69,398 (7,603) 4,544 161,983
Statement of financial position at 31 December 2020 North America Europe BRIC1 Rest of Total
€'000
€'000
World
€'000
€'000
€'000
Total assets 657,572 509,771 15,603 50,684 1,233,630
Total liabilities (30,965) (1,481) - - (32,446)
NAV 626,607 508,290 15,603 50,684 1,201,184
1. BRIC = Brazil, Russia, India and China. AGA holds Derived Investments
directly in India and China only
6 Administration and other operating expenses
Year ended Year ended
31 December 2021 31 December 2020
€'000
€'000
Directors' fees 369 337
Administration and other fees 672 611
Corporate and investor relations services fee 9 532 401
Deal transaction, custody and research costs 357 301
General expenses 548 521
Auditors' remuneration
Statutory audit 165 146
Other assurance services - interim review 46 46
Other assurance services - agreed upon procedures 18 -
Total administration and other operating expenses 2,707 2,363
The Company has no employees and there were no pension or staff cost
liabilities incurred during the period.
7 Taxation
The Company is exempt from taxation in Guernsey under the provisions of the
Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and is charged an annual
exemption fee of £1,200 (31 December 2020: £1,200).
The Company may be required, at times, to pay tax in other jurisdictions as a
result of specific trades in its investment portfolio. During the year ended
31 December 2021 the Company had a net tax expense of €0.2m (31 December
2020: €0.1m), mainly related to the sale of listed equities in India and tax
incurred on debt interest in the United Kingdom. No deferred income taxes were
recorded as there are no timing differences.
8 Investments
(a) Financial instruments held at FVTPL
Year ended Year ended
31 December 2021 31 December 2020
€'000
€'000
Private Equity Investments 1,012,855 788,307
Private Equity financial assets 1,013,922 788,307
Private Equity financial liabilities (1,067) -
Derived Investments 335,555 319,416
Debt1 304,609 275,739
Equities 30,946 43,677
Closing fair value 1,348,410 1,107,723
Financial assets held at FVTPL 1,349,477 1,107,723
Financial liabilities held at FVTPL (1,067) -
1 Included in debt above and throughout the financial statements is the
fair value of the debt investment held by the subsidiary, see note 8(d) for
further details
Year ended Year ended
31 December 2021 31 December 2020
€'000
€'000
Opening fair value 1,107,723 1,108,477
Calls 199,941 55,651
Distributions (275,146) (207,280)
Purchases 243,450 87,400
Sales (263,681) (90,043)
Net gains on financial assets at FVTPL 337,190 153,518
Net losses on financial liabilities at FVTPL (1,067) -
Closing fair value 1,348,410 1,107,723
Financial assets held at FVTPL 1,349,477 1,107,723
Financial liabilities held at FVTPL (1,067) -
(b) Net gains on financial assets at FVTPL
Year ended Year ended
31 December 2021
31 December 2020
€'000 €'000
Private Equity financial assets
Gross unrealised gains 284,904 178,865
Gross unrealised losses (42,487) (105,349)
Total net unrealised gains on Private Equity financial assets 242,417 73,516
Private Equity financial assets
Gross realised gains 58,404 100,142
Total net realised gains on Private Equity financial assets 58,404 100,142
Net gains on Private Equity financial assets 300,821 173,658
Derived investments
Gross unrealised gains 38,661 13,231
Gross unrealised losses (5,861) (42,495)
Total net unrealised gains/(losses) on Derived Investments 32,800 (29,264)
Total net gains/(losses) on Derived Investments 36,369 (20,141)
Total net gains on investments at fair value through profit or loss 337,190 153,518
(c) Net losses on financial liabilities at FVTPL
Year ended Year ended
31 December 2021
31 December 2020
€'000
€'000
Private Equity financial liabilities
Gross unrealised losses (1,067) -
Total net unrealised losses on Private Equity investments (1,067) -
(d) Investments in subsidiaries
The Company established two wholly owned subsidiaries during the year for
investment purposes. In accordance with IFRS 10, these subsidiaries have been
determined to be controlled subsidiary investments, which are measured at fair
value through profit or loss and are not consolidated. The fair value of these
subsidiary investments, as represented by their NAV, is determined on a
consistent basis to all other investments measured at fair value through
profit or loss.
The table below describes these unconsolidated subsidiaries. The maximum
exposure is the loss in the carrying amount of the financial assets held.
Name of Subsidiary Formation date Type of fund proportion of ownership interest and voting power held Principal place of business and place of incorporation NAV included in investments at FVTPL
€'000
Alpha US holdings L.P. 21 October 2021 Special purpose entity 100% United States of America 8,908
Alpha US GP LLC 12 October 2021 Special purpose entity 100% United States of America -
The Company transferred an investment in a Derived Investments to this new
subsidiary during the year. Net flows from subsidiaries are summarised
below. Total fair value has also been included in Debt above as related to the
debt portfolio.
Year ended Year ended
31 December 2021 31 December 2020
€'000
€'000
Opening fair value - -
Transfer of asset 8,623 -
Fair value movement on investment subsidiaries 285 -
Closing fair value 8,908 -
Debt investment held at FVTPL 8,908 -
Other NCA's - -
Closing fair value 8,908 -
(e) Involvement with unconsolidated structured entities
The Company's investments in Private Equity funds are considered to be
unconsolidated structured entities. Their nature and purpose is to invest
capital on behalf of their limited partners. The funds pursue sector-focused
strategies, investing in four key sectors: Tech, Services, Healthcare and
Consumer. The Company commits to a fixed amount of capital, which may be drawn
(and returned) over the life of the fund. The Company pays capital calls when
due and receives distributions from the funds, once an asset has been sold.
Note 12 summarises current outstanding commitments and recallable
distributions to the eight underlying Private Equity Investments held. The
fair value of these was €1,012.9m at 31 December 2021 (31 December 2020:
€788.3m), whereas total value of the Private Equity funds was €25.3bn (31
December 2020: €18.8bn). During the year, the Company did not provide
financial support and has no intention of providing financial or other
support to these unconsolidated structured entities.
9 Related party transactions
The Investment Manager was appointed by the Board of Directors under a
discretionary Investment Management Agreement ("IMA") dated 22 May 2015 and
amendments dated 22 August 2016 and 2 March 2020, which sets out the basis for
the calculation and payment of the management fee.
Management fees earned by the Investment Manager increased in the year to
€3.8m (31 December 2020: €2.9m), of which €0.9m was included in accruals
at 31 December 2021. Following the amendment approved by the Board on 2 March
2020, the revised management fee is calculated in arrears at a rate of 0.5%
per annum on the fair value of non-fee paying private equity investments and
equity investments and 1.0% per annum on the fair value of debt investments.
The Investment Manager is also entitled to a performance fee. The revised
performance fee is calculated based on the overall gains or losses net of
management fees and Direct Deal costs (being costs directly attributable to
due diligence and execution of investments) in each financial year. When the
Portfolio Total Return hurdle is met a performance fee is payable. Further
details are included in note 10.
The IMA has an initial term of six years and automatically continues for a
further three additional years unless prior to the fifth anniversary the
Investment Manager or the Company (by a special resolution) serves written
notice to terminate the IMA. The Company is required to pay the Investment
Manager all fees and expenses accrued and payable for the notice period
through to the termination date.
The Investment Advisor has been engaged by the Investment Manager to provide
advice on the investment strategy of the Company. An Investment Advisory
Agreement ("IAA"), dated 22 May 2015 and an amendment dated 22 August 2016,
exists between the two parties. Though not legally related to the Company, the
Investment Advisor has been determined to be a related party. The Company paid
no fees and had no transactions with the Investment Advisor during the year
(31 December 2020: €Nil).
The Company has an Administration Agreement with Aztec Financial Services
(Guernsey) Limited ("Aztec") dated 22 May 2015. Under the terms of the
agreement, Aztec has delegated some of the Company's accounting and
bookkeeping to Apax Partners Fund Services Limited ("APFS"), a related party
of the Investment Advisor, under a sub-administration agreement dated 22 May
2015. A fee of € 0.5m (31 December 2020: €0.5m) was paid by the Company in
respect of administration fees and expenses, of which €0.3m (31 December
2020: €0.3m) was paid to APFS. Additionally, following the approval of the
amended fee structure on 2 March 2020, with an effective date from 1 January
2020, the Company entered into a new service agreement with Apax Partners LLP
and its affiliate, APFS, with a fee calculated as 0.04% of the Invested
Portfolio per annum for corporate and investor services. During the year a fee
of €0.5m (31 December 2020: €0.4m) was paid by the Company to APFS.
The table below summarises shares held by Directors:
31 December 2021 % of total shares in issue 31 December 2020 % of total shares in issue
Tim Breedon 70,000 0.014% 70,000 0.014%
Susie Farnon 43,600 0.009% 43,600 0.009%
Chris Ambler 27,191 0.006% 27,191 0.006%
Mike Bane 18,749 0.004% 18,749 0.004%
Stephanie Coxon 10,000 0.002% 10,000 0.002%
A summary of the Directors fees and expenses is set out on page 49 of the
report.
10 Performance fee
31 December 2021 31 December 2020
€'000
€'000
Opening performance fee reserve - 6,893
Performance fee charged to statement of profit or loss and other comprehensive 8,390 46
income
Performance fee settled - (6,939)
Closing performance fee reserve 8,390 -
The performance fee is payable on an annual basis once the hurdle threshold is
met by eligible portfolios. Performance fees are only payable to the extent
they do not dilute the returns below the required benchmark for each
respective portfolio as detailed in the table below. Additionally, net losses
are carried forward and netted against future gains. The table below
summarises the performance fee hurdles and percentage payable by eligible
portfolio.
NET PORTFOLIO TOTAL RETURN HURDLE¹ PERFORMANCE FEE RATE
Derived Debt 6% 15%
Derived Equity 8% 20%
Eligible Private Equity 8% 20%
1. Net Portfolio Total Return means the sub-portfolio performance in a
given period, is calculated by taking total gains or losses and dividing them
by the sum of Gross Asset Value at the beginning of the period and the
time-weighted net invested capital. The time-weighted net invested capital is
the sum of investments made during the period less realised proceeds received
during the period, both weighted by the number of days the capital was at work
in the portfolio. Net Portfolio Total Return is gross of performance fees but
net of management fees and relevant Direct Deal costs
The performance fee is payable to the Investment Manager by way of ordinary
shares of the Company. The mechanics of the payment of the performance fee are
explained in the prospectus. In accordance with IFRS 2 "Share-based Payment",
performance fee expenses are charged through the statement of profit or loss
and other comprehensive income and allocated to a share-based payment
performance fee reserve in equity.
In the year ended 31 December 2021, the performance fee payable to the
Investment Manager was €8.4m. This is expected to be funded from purchase of
shares by the Company in the market and then subsequently transferred to the
Investment Manager to settle the performance fee accrued at 31 December 2021
(31 December 2020: €0.0m).
At 31 December 2021, management's best estimate of the expected performance
fee was calculated on the eligible portfolio on a liquidation basis.
11 Revolving credit facility and finance costs
On 19 January 2021, AGA amended the terms of its Revolving Credit Facility
("RCF") agreement with Credit Suisse AG, London Branch. The revised agreement
converts the previous facility, which was due to expire on 5 November 2021, to
an evergreen structure whereby either party is required to give 2 years notice
to terminate the agreement. The amended revolving credit facility remains at
€140.0m with the margin increasing from 210 bps to 230 bps (over Risk Free
Rate "RFR" or Euribor depending on the currency drawn) and the non-utilisation
fee decreasing to c.100 bps per annum on an initial blended basis from 120 bps
per annum. Additionally, there was a one-off commitment fee of €0.7m
incurred related to this refinancing.
Summary of finance costs are detailed below:
Year ended Year ended
31 December 2021
31 December 2020
€'000
€'000
Interest paid - 6
Arrangement fee 700 -
Non-utilisation fee 1,569 1,745
Total finance costs 2,269 1,751
Under the Loan Agreement, the Company is required to provide Private Equity
Investments as collateral for each utilisation. The loan-to-value must not
exceed 35% of the eligible Private Equity NAV, which the Company met
throughout the year. There were no covenant breaches during the year either.
As at 31 December 2021 the facility was unutilised (31 December 2020: €Nil).
12 Financial risk management
The Company holds a variety of financial instruments in accordance with its
Investment Management strategy. The investment portfolio comprises Private
Equity Investments and Derived Investments as shown in the table below:
31 December 2021 31 December 2020
Private Equity Investments 75% 71%
Private Equity financial assets 75% 71%
Private Equity financial liabilities 0% 0%
Derived Investments 25% 29%
Debt 23% 25%
Equities 2% 4%
Total 100% 100%
Private Equity Investments have a limited lifecycle as the average legal term
of a fund is ten years, unless extended by investor consent. The Company
actively manages Derived Investments and realises these as opportunities
arise.
The Company's overall risk management programme seeks to maximise the returns
derived for the level of risk to which the Company is exposed and seeks to
minimise potential adverse effects on the Company's financial performance.
Investments made by the Company potentially carry a significant level of risk.
There can be no assurance that the Company's objectives will be achieved or
that there will be a return of capital invested.
The management of financial risks is carried out by the Investment Manager
under the policies approved by the Board of Directors. The Investment Manager
regularly updates the Board of Directors, a minimum of four times a year, on
its activities and any material risk identified.
The Investment Manager manages financial risk against an investment reporting
and monitoring framework tailored to the Company. The framework monitors
investment strategy, investment limits and restrictions as detailed in the
prospectus along with additional financial metrics deemed to be fundamental in
the running and monitoring of the Invested Portfolio. The Invested Portfolio
is monitored in real time which enables the Investment Manager to keep a close
review on performance and positioning.
The Company's activities expose it to a variety of financial risks: credit
risk, liquidity risk and market risk including price risk, foreign currency
risk and interest rate risk. The Company is also exposed to operational risks
such as custody risk. Custody risk is the risk of loss of securities held in
custody occasioned by the insolvency or negligence of the custodian. Although
an appropriate legal framework is in place that mitigates the risk of loss of
title of the securities held by the custodian, in the event of failure, the
ability of the Company to transfer the securities might be impaired. At 31
December 2021 and 31 December 2020, the Company's custodians were ING and
HSBC, both with A- credit ratings.
The Company considers concentration risk and noted that though it follows a
sector-focused strategy, with four key sectors, both the Private Equity
Investments' underlying portfolios and Derived Investments are diversified as
they are split across a number of sub-sectors, operate in a number of
different geographic regions and are also diversified by vintage.
Credit risk
Credit risk is the risk of financial loss to the Company if a counterparty to
a financial instrument fails to meet its contractual obligations. This risk
arises principally from the Company's investment in debt, cash and cash
equivalents, investment receivables and other receivables.
31 December 2021 % of NAV 31 December 2020 % of NAV
€'000 €'000
Debt investments 304,609 20% 275,739 23%
Cash and cash equivalents 108,482 7% 124,569 10%
Investment receivables 33,603 2% 1,338 0%
Other receivables 1,347 0% - 0%
Total 448,041 29% 401,646 33%
(a) Debt investments
The Investment Manager manages the risk related to debt investments by
assessing the credit quality of the issuers and monitoring this through the
term of investment. The credit quality of the Company's debt investments is
summarised in the table below:
Rating (S&P) 31 December 2021 % of Debt investments % of NAV 31 December 2020 % of Debt investments % of NAV
€'000 €'000
B 34,242 11% 2% 28,223 10% 2%
B- 116,077 38% 8% 57,431 21% 5%
CCC+ 34,675 11% 2% 61,558 22% 5%
CCC 42,447 15% 3% 44,345 17% 4%
N/R1 77,168 25% 5% 84,182 30% 7%
Total 304,609 100% 20% 275,739 100% 23%
1. Not currently rated by S&P
The Investment Manager also reviews the debt investments' industry sector
concentration. The Company was exposed to concentration risk in the following
industry sectors:
31 December 2021 % of Debt investments % of NAV 31 December 2020 % of Debt investments % of NAV
€'000 €'000
Tech & Digital 122,051 40.1% 8% 130,677 47% 11%
Services 65,436 21.5% 4% 59,117 22% 5%
Healthcare 104,634 34.4% 7% 85,945 31% 7%
Internet/Consumer 12,488 4% 1% - 0% 0%
Total 304,609 100% 20% 275,739 100% 23%
(b) Cash and cash equivalents
The Company limits its credit risk exposure in cash and cash equivalents by
depositing cash with adequately rated institutions. No allowance for
impairment is made for cash and cash equivalents.
The exposure to credit risk to cash and cash equivalents is set out below:
Credit rating 31 December 2021 31 December 2020
€'000 €'000
Cash held in banks A 316 70
Cash held in banks A- 205 254
Cash held in banks BBB+ 19,455 43,437
Cash held in money market funds AAA 88,506 80,808
Total 108,482 124,569
The Company's cash is held with RBS International, HSBC, ING and JP Morgan,
Goldman Sachs and Deutsche Bank money market funds.
(c) Investment receivables and other receivables
The Company monitors the credit risk of investment receivables, where the
majority had a credit rating of CCC+ at year end, and other receivables on
an ongoing basis. These assets are not considered impaired nor overdue for
repayment.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its
financial obligations as they fall due. Such obligations are met through a
combination of liquidity from the sale of investments, revolving credit
facility as well as cash resources. In accordance with the Company's policy,
the Investment Manager monitors the Company's liquidity position on a regular
basis; the Board of Directors also reviews it, at a minimum, on a quarterly
basis.
The Company invests in two portfolios, Private Equity Investments and Derived
Investments. Each portfolio has a different liquidity profile.
Derived Investments in the form of listed securities are considered to be
liquid investments that the Company may realise on short notice. These are
determined to be readily realisable, as the majority are listed on major
global stock exchanges. Derived Investments in the form of debt and unlisted
equity have a mixed liquidity profile as some positions may not be readily
realisable due to an inactive market or due to other factors such as
restricted trading windows during the year. Debt investments held in actively
traded bonds are considered to be readily realisable.
The Company's Private Equity Investments are not readily realisable although,
in some circumstances, they could be sold in the secondary market, potentially
at a discounted price. The timing and quantum of Private Equity distributions
is difficult to predict, however, the Company has some visibility on capital
calls as the majority of the underlying funds operate capital call facilities.
These are typically drawn by the underlying funds for periods of c.12 months
to fund investments and fund operating expenses, and provide the Company with
reasonable visibility of calls for this period.
The table below summarises the maturity profile of the Company's financial
liabilities at 31 December 2021 based on contractual undiscounted repayment
obligations. The contractual maturities of most financial liabilities are less
than three months, with the exception of the revolving credit facility and
commitments to Private Equity Investments, where their expected cash flow
dates are summarised in the tables below.
The Company does not manage liquidity risk on the basis of contractual
maturity, instead the Company manages liquidity risk based on expected cash
flows.
31 December 2021
Up to 3-12 months €'000 1-5 years Total
3 months
€'000 €'000
€'000
Investment payables 67 - - 67
Accrued expenses 1,708 - - 1,708
Private Equity Investments outstanding commitments and recallable 33,322 160,963 190,989 385,274
distributions
Derived Investments commitments1 3,794 7,732 - 11,526
Total 38,891 168,695 190,989 398,575
1. Represents the undrawn amount outstanding on a number of delayed draw
debt commitments and a revolving credit facility position
31 December 2020
Up to 3-12 months €'000 1-5 years Total
3 months
€'000 €'000
€'000
Investment payables 30,965 - - 30,965
Accrued expenses 1,481 - - 1,481
Private Equity Investments outstanding commitments and recallable 53,543 60,590 344,698 458,831
distributions
Total 85,989 60,590 344,698 491,277
The Company has outstanding commitments and recallable distributions to
Private Equity Investments as summarised below:
31 December 2021 31 December 2020
€'000 €'000
Apax Europe VI 225 225
Apax Europe VII 1,030 1,030
Apax VIII 20,473 20,440
Apax IX 44,061 25,870
Apax X 207,523 379,355
AMI Opportunities 12,595 11,457
Apax Digital Fund 20,211 20,454
Apax Digital Fund II 79,156 -
Total 385,274 458,831
At 31 December 2021, the Company had undrawn commitments and recallable
distributions of €385.2m (31 December 2020: €458.8m), of which €194.3m
(31 December 2020: €114.1m) is expected to be drawn within 12 months. The
increase in expected calls due within 12 months is mainly due to Apax X.
Additionally, the Company expects draw downs of €11.5m from Derived
Investments in the next 12 months for delayed draw and revolving credit
facility debt positions held.
The Company has access to a short-term revolving credit facility upon which it
can draw up to €140.0m. The Company may utilise this facility in the short
term to bridge Private Equity calls and ensure that it can realise the Derived
Investments at the best price available. At 31 December 2021, the facility
remained undrawn (31 December 2020: €Nil).
At year end, the Company's investments are recorded at fair value. The
remaining assets and liabilities are of a short-term nature and their fair
values approximate their carrying values.
Market risk
Market risk is the risk that changes in market prices such as foreign currency
exchange rates, interest rates and equity prices will affect the Company's
income or the value of its investments. The Company aims to manage this risk
within acceptable parameters while optimising the return.
(a) Price risk
The Company is exposed to price risk on its Private Equity Investments and
Derived Investments. All positions within the portfolio involve a degree of
risk and there are a wide variety of risks that affect how the price of each
individual investments will perform. The key price risks in the Company's
portfolio include, but are not limited to: investment liquidity - where a
significant imbalance between buyers and sellers can cause significant
increases or decreases in prices; the risk that a company which has issued a
bond or a loan has its credit rating changed, which can lead to significant
pricing risk; and general investment market direction, where various factors
such as the state of the global economy or global political developments can
impact prices.
For the year ended 31 December 2021, the main price risks for the Company's
portfolio were market uncertainty due to the global Covid-19 pandemic and
economic uncertainty in Europe and the US together with uncertainty regarding
fiscal policy. The Investment Manager actively manages and monitors price
risk. The table below reflects the sensitivity of price risk of the Invested
Portfolio and the impact on NAV:
31 December 2021 Base case Bull case (+20%) Bear case
€'000
€'000 (-20%)
€'000
Financial assets 1,349,477 1,619,372 1,079,581
Financial liabilities (1,067) (853) (1,280)
Change in NAV and profit 269,682 (269,682)
Change in NAV (%) 18% -18%
Change in total income 74% -74%
Change in profit for the year 78% -78%
31 December 2020 Base case Bull case (+20%) Bear case
€'000
€'000 (-20%)
€'000
Financial assets 1,107,723 1,329,268 886,178
Change in NAV and profit 221,545 (221,545)
Change in NAV (%) 18% -18%
Change in total income 131% -131%
Change in profit for the year 137% -137%
(b) Currency risk
The Company is exposed to currency risk on those investments, cash, interest
receivable and other non-current assets which are denominated in a currency
other than the Company's functional currency, which is the euro. The Company
does not hedge the currency exposure related to its investments. The Company
regards its exposure to exchange rate changes on the underlying investments as
part of its overall investment return and does not seek to mitigate that risk
through the use of financial derivatives. The Company is also exposed to
currency risk on fees which are denominated in a currency other than the
Company's functional currency.
The Company's exposure to currency risk on net assets is as follows:
At 31 December 2021 EUR USD GBP INR HKD NZD CHF Total
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Financial assets and liabilities at FVTPL 499,938 790,630 34,337 4,225 6,792 12,488 - 1,348,410
Cash and cash equivalents 98,643 8,995 527 316 - - 1 108,482
Investment receivables - 33,603 - - - - - 33,603
Interest receivable - 980 - - - 329 - 1,309
Other receivables (1) - 39 - - - - 38
Investment payables - (67) - - - - - (67)
Accrued expenses (1,525) - (183) - - - - (1,708)
Total net foreign currency exposure 597,055 834,141 34,720 4,541 6,792 12,817 1 1,490,067
At 31 December 2020 EUR USD GBP INR HKD NZD CHF Total
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Financial assets and liabilities at FVTPL 412,497 646,226 20,741 8,462 7,070 12,727 - 1,107,723
Cash and cash equivalents 50,359 46,805 27,335 70 - - - 124,569
Investment receivables - 151 - - - - - 151
Interest receivable - 1,127 - - - 17 - 1,144
Other receivables 43 - - - - - - 43
Investment payables - (30,965) - - - - - (30,965)
Accrued expenses (1,212) (122) (147) - - - - (1,481)
Total net foreign currency exposure 461,687 663,222 47,929 8,532 7,070 12,744 - 1,201,184
The Company's sensitivity to changes in foreign exchange movements on net
assets is summarised below:
31 December 2021 Base case Bull case (+15%) Bear case
€'000
(-15%)
€'000
€'000
USD 834,141 959,262 709,020
GBP 34,720 39,928 29,512
INR 4,541 5,222 3,860
HKD 6,792 7,811 5,773
NZD 12,817 14,740 10,894
CHF 1 1 1
Change in NAV and profit 133,952 (133,952)
Change in NAV (%) 9% -9%
Change in total income 37% -37%
Change in profit for the year 39% -39%
31 December 2020 Base case Bull case (+15%) Bear case
€'000
(-15%)
€'000
€'000
USD 663,222 762,705 563,739
GBP 47,929 55,118 40,740
INR 8,532 9,812 7,252
HKD 7,070 8,131 6,010
NZD 12,744 14,656 10,832
CHF - - -
Change in NAV and profit 110,925 (110,925)
Change in NAV (%) 9% -9%
Change in total income 66% -66%
Change in profit for the year 68% -68%
(c) Interest rate risk
Interest rate risk arises from the effects of fluctuations in the prevailing
levels of market interest rates on financial assets and liabilities and future
cash flows. The Company holds debt investments, loans payable and cash and
cash equivalents that expose the Company to cash flow interest rate risk. The
Company's policy makes provision for the Investment Manager to manage this
risk and to report to the Board of Directors as appropriate.
The Company's exposure to interest rate risk was €413.1m (31 December 2020:
€400.3m). The analysis below assumes that the price remains constant for
both bull and bear cases. The impact of interest rate floors on the debt
portfolio have been included in the bear case and fixed rate debt positions
have been excluded from the below:
31 December 2021 Base case Bull case (+500bps) Bear case
€'000
€'000
(-500bps)
€'000
Cash and cash equivalents 108,482 113,906 103,058
Debt 304,609 319,839 304,609
Change in NAV and profit 20,655 (5,424)
Change in NAV (%) 1% 0%
Change in total income 6% -1%
Change in profit for the year 6% -2%
31 December 2020 Base case Bull case (+500bps) Bear case
€'000
€'000
(-500bps)
€'000
Cash and cash equivalents 124,569 130,797 118,341
Debt 275,739 289,526 275,739
Change in NAV and profit 20,015 (6,228)
Change in NAV (%) 2% -1%
Change in total income 12% -4%
Change in profit for the year 12% -4%
(d) Concentration risk
The Investment Manager also reviews the concentration risk of the Invested
Portfolio. The spread of the portfolio across the four key sectors is set out
below:
% of % of Debt investments % of Equity investments % of % of Debt investments % of Equity investments
Private Equity 31 December 2021 31 December 2021 Private Equity 31 December 2020 31 December 2020
31 December 2021 31 December 2020
Tech & Digital 41% 40% 0% 46% 47% 36%
Services 24% 21% 47% 27% 22% 39%
Healthcare 18% 35% 22% 15% 31% 16%
Internet/Consumer 17% 4% 22% 11% 0% 3%
Other 0% 0% 9% 1% 0% 6%
Total 100% 100% 100% 100% 100% 100%
Capital management
The Company's capital management objectives are to maintain a strong capital
base to ensure the Company will continue as a going concern, maximise capital
appreciation and provide regular dividends to its shareholders. The Company's
capital comprises of non-redeemable ordinary shares and retained earnings.
The ordinary shares are listed on the London Stock Exchange. The Board
receives regular reporting from its corporate broker which provides insight
into shareholder sentiment and movements in the NAV per share discount. The
Board monitors and assesses the requirement for discount management
strategies.
13 Fair value estimation
(a) Investments measured at fair value
IFRS 13 "Fair Value Measurement" requires the Company to classify fair value
measurements using a fair value hierarchy that reflects the significance of
the inputs used to make those measurements. The fair value hierarchy has the
following levels:
- Quoted prices (unadjusted) in active markets for identical assets
or liabilities (level 1).
- Valuation techniques based on observable inputs (other than quoted
prices included within level 1), that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is,
derived from prices). This category includes instruments valued using: quoted
market prices in active markets for similar but not identical instruments;
quoted prices for identical instruments in markets that are not considered to
be active; and, other valuation techniques where all the significant inputs
are directly or indirectly observable from market data (level 2).
- Valuation techniques for the asset or liability that are not based
on observable market data (that is, unobservable inputs) (level 3).
The level in the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level
input that is significant to the fair value measurement in its entirety. If a
fair value measurement uses observable inputs that require significant
adjustment based on unobservable inputs, that measurement is a level 3
measurement. Assessing the significance of a particular input to the fair
value measurement in its entirety requires judgement, considering factors
specific to the asset or liability.
The determination of what constitutes "observable" requires significant
judgement by the Company. The Company considers observable data to be market
data that is readily available, regularly distributed or updated, reliable and
verifiable, not proprietary, and provided by independent sources that are
actively involved in the relevant market. The Company also determines if there
is a transfer between each respective level at the end of each reporting
period based on the valuation information available.
The following table analyses within the fair value hierarchy the Company's
financial assets and financial liabilities (by class) measured at fair value
at 31 December 2021:
Assets and liabilities Level 1 Level 2 Level 3 Total
€'000 €'000 €'000 €'000
Private Equity financial assets - - 1,013,922 1,013,922
Private Equity financial liabilities - - (1,067) (1,067)
Derived Investments 21,376 295,701 18,478 335,555
Debt - 295,701 8,908 304,609
Equities 21,376 - 9,570 30,946
Total 21,376 295,701 1,031,333 1,348,410
The following table analyses within the fair value hierarchy the Company's
financial assets and liabilities (by class) measured at fair value at 31
December 2020:
Assets Level 1 Level 2 Level 3 Total
€'000 €'000 €'000 €'000
Private Equity financial assets - - 788,307 788,307
Derived Investments 39,480 275,739 4,197 319,416
Debt - 275,739 - 275,739
Equities 39,480 - 4,197 43,677
Total 39,480 275,739 792,504 1,107,723
IFRS 13 requires the Company to describe movements in and transfers between
levels of the fair value hierarchy. The Company determines if there is a
transfer between each respective level at the end of each reporting period
based on the valuation information available.
There were no transfers to or from level 1, level 2 or level 3 during the
period.
(b) Significant unobservable inputs used in measuring fair value
The Company values debt instruments in the Derived Portfolio using third-party
market data and broker quotes where available. Where such information is not
available the Company uses models that take account of factors that are
relevant to each investment and that prioritise the use of observable inputs.
The Company values unquoted equities in the Derived Portfolio using recent
transaction data where applicable or models that utilise comparable company
multiples applied to budgeted and historical earnings.
The Company values its holdings in Private Equity based on the NAV statements
it receives from the respective underlying fund. The main inputs into the
valuation models used to value the underlying level 3 investments within the
Private Equity Funds are earnings multiples (based on the earnings multiples
of comparable listed companies). These are applied to the budgeted or
historical earnings of each investment. In addition, original transaction
price, recent transactions in the same or similar instruments and completed
third-party transactions in comparable instruments are also considered.
The fair value of investments in subsidiaries is considered to be the NAV of
the underlying subsidiaries which includes the fair value of investments held
net of other net current assets or liabilities. The fair value of the
underlying investments held are included within the Derived Investments
disclosures as relevant.
Movements in level 3 investments are summarised in the table below:
Year ended Year ended
31 December 2021
31 December 2020
Private Equity Investments €'000 Derived Investments €'000 Total Private Equity Investments €'000 Derived Investments €'000 Total
€'000 €'000
Opening fair value 788,307 4,197 792,504 766,278 2,554 768,832
Additions 199,941 8,623 208,564 55,651 - 55,651
Disposals and repayments (275,146) - (275,146) (207,280) - (207,280)
Realised gains on financial assets 58,404 - 58,404 100,142 - 100,142
Unrealised gains on financial assets 242,416 5,658 248,074 73,516 1,643 75,159
Unrealised losses on financial liabilities (1,067) - (1,067) - - -
Transfers into level 3 - - - - - -
Closing fair value 1,012,855 18,478 1,031,333 788,307 4,197 792,504
Financial assets held at FVTPL 1,013,922 18,478 1,032,400 788,307 4,197 792,504
Financial liabilities held at FVTPL (1,067) - (1,067) - - -
The unrealised gains attributable to only assets held at 31 December 2021 were
€248.1m (31 December 2020: €75.2m).
The table below sets out information about significant unobservable inputs
used in measuring financial instruments categorised as level 3 in the fair
value hierarchy:
Description Valuation technique Significant Sensitivity to changes in significant 31 December 2021 31 December 2020
unobservable inputs
Valuation
Valuation
unobservable inputs
€'000 €'000
Private Equity financial assets NAV adjusted for carried interest NAV The Company does not apply further discount or liquidity premiums to the 1,013,922 788,307
valuations as these are already captured
in the underlying valuation. This NAV is subject to changes in the valuations
of the underlying portfolio companies. These
can be exposed to a number of risks, including liquidity risk, price risk,
credit risk, currency risk and interest rate risk.
Private Equity financial liabilities
(1,067) -
A movement of 10% in the value of Private Equity Investments would move the
NAV at the year end by 6.8% (31 December 2020: 6.6%).
Debt The Company holds a convertible Probability of conversion On a look-through basis the Company held 1 debt position (31 December 2020: 0) 8,908 -
which had probability of conversion of 60% applied.
preferred instrument, the value of
which is determined by the probability weighted average of the instrument
converting or not converting at the valuation date A movement of 10% in the conversion percentage would result in a movement of
0.0% on NAV at year end.
Equities Comparable company earnings Comparable company multiples The Company held 2 equity positions 9,426 4,197
(31 December 2020: 3) of which 2 positions (31 December 2020: 3) were valued
multiples and/or precedent using comparable company multiples. The average multiple was 7.8x
(31 December 2020: 9.0x).
transaction analysis
A movement of 10% in the multiple applied would move the NAV at year end by
0.1% (31 December 2020: 0.1%).
14 Shareholders' capital
At 31 December 2021, the Company had 491,100,768 ordinary shares fully paid
with no par value in issue (31 December 2020: 491,100,768 shares). All
ordinary shares rank pari passu with each other, including voting rights and
there has been no change since 31 December 2020.
The Company has one share class; however, a number of investors are subject to
lock-up periods, which restricts them from disposing of ordinary shares issued
at admission. For investors which had five-year lock-up period at admission,
all of these shares have been released following the fifth anniversary on the
15 June 2020. For investors with ten-year lock-up periods, 20% of ordinary
shares were released from lock-up this year on 15 June 2021 with a further 20%
being released annually until 15 June 2025. Additionally, where the Company
awards the Investment Manager with performance shares - these are subject to a
one year lock-up from date of receipt.
15 Earnings and NAV per share
Earnings Year ended year ended
31 December 2021 31 December 2020
Profit or loss for the year attributable to equity shareholders: €'000 344,904 161,983
Weighted average number of shares in issue
Ordinary shares at end of year 491,100,768 491,100,768
Shares issued in respect of performance fee - -
Total weighted ordinary shares 491,100,768 491,100,768
Dilutive adjustments - -
Total diluted weighted ordinary shares 491,100,768 491,100,768
Effect of performance fee adjustment on ordinary shares
Performance shares to be awarded based on a liquidation basis1 3,109,665 -
Adjusted shares2 494,210,433 491,100,768
Earnings per share (cents)
Basic 70.23 32.98
Diluted 70.23 32.98
Adjusted 69.79 32.98
31 December 2021 31 December 2020
NAV €'000
NAV at end of year 1,490,067 1,201,184
NAV per share (€)
NAV per share 3.03 2.45
Adjusted NAV per share 3.02 2.45
1. The number of performance shares is calculated inclusive of deemed
realised performance shares that would be issued utilising the theoretical
performance fee payable calculated on a liquidation basis
2. The calculation of Adjusted Shares above assumes that new shares were
issued by the Company to the Investment Manager in lieu of the performance
fee. As per the prospectus, the Company may also purchase shares from the
market if the Company is trading at a discount to its NAV per share. In such a
case, the Adjusted NAV per share would be calculated by taking the NAV at the
year adjusted for the performance fee reserve and then divided by the current
number of ordinary shares in issue. At 31 December 2021, the Adjusted NAV per
share for both methodologies resulted in an Adjusted NAV per share of €3.02
(31 December 2020: €2.45) respectively.
At 31 December 2021, there were no items that would cause a dilutive effect on
earnings per share. The adjusted earnings per share has been calculated based
on the profit attributable to shareholders adjusted for the total accrued
performance fee at year end over the weighted average number of ordinary
shares. This has been calculated on a full liquidation basis.
16 Dividends
Dividends paid to shareholders during the year Year ended 31 December 2021 Year ended 31 December 2020
€'000 € £'000 £ €'000 € £'000 £
Final dividend paid for 2020/ 2019 30,005 6.11c 25,930 5.28p 26,356 5.59c 22,984 4.68p
Interim dividend paid for 2021/2020 34,406 7.05c 29,319 5.97p 26,519 5.40c 23,916 4.87p
Total 64,411 13.16c 55,249 11.25p 52,875 10.99c 49,900 9.55
Dividends to shareholders in respect of the year Year ended 31 December 2021 Year ended 31 December 2020
€'000 € £'000 £ €'000 € £'000 £
Final dividend proposed 37,275 7.59c 31,234 6.36p 30,006 6.11c 25,930 5.28p
Interim dividend paid 34,406 7.05c 29,319 5.97p 26,519 5.40c 23,916 4.87p
Total 71,681 14.64c 60,553 12.33p 56,525 11.51c 49,846 10.15p
On 1 March 2022, the Board approved the final dividend for 2021, 6.36 pence
per share (7.59 cents euro equivalent). This represents 2.5% of the Company's
euro NAV at 31 December 2021 and will be paid on 4 April 2022.
On 19 August 2021, the Board approved an interim dividend for the six months
ended 30 June 2021, 5.97 pence per share (7.05 cents euro equivalent). This
represents 2.6% of the Company's euro NAV at 30 June 2021 and was paid on 17
September 2021.
The Board considered the Company's future liquidity position and ability to
pay dividends and deemed it appropriate to maintain payment of the interim and
final dividend in respect of 2021.
17 Subsequent events
On 1 March 2022, the Board approved the final dividend for 2021, 6.36 pence
per share (7.59 cents euro equivalent). This represents 2.5% of the Company's
euro NAV at 31 December 2021 and will be paid on 4 April 2022.
financial statements \ Administration
Directors (all Non-Executive)
Tim Breedon CBE (Chairman)
Susie Farnon (Chair of the Audit Committee)
Chris Ambler
Mike Bane
Stephanie Coxon
Registered Office of the Company
PO Box 656
East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3PP
Channel Islands
Investment Manager
Apax Guernsey Managers Limited
Third Floor, Royal Bank Place
1 Glategny Esplanade
St Peter Port
Guernsey GY1 2HJ
Channel Islands
Investment AdvisOr
Apax Partners LLP
33 Jermyn Street
London
SW1Y 6DN
United Kingdom
www.apax.com
Administrator, Company Secretary and Depositary
Aztec Financial Services (Guernsey) Limited
PO Box 656
East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3PP
Channel Islands
Tel: +44 (0)1481 749 700
AGA-admin@aztecgroup.co.uk
www.aztecgroup.co.uk
Corporate Broker
Jefferies International Limited
100 Bishopsgate
London EC2N 4JL
United Kingdom
Registrar
Link Asset Services
Mont Crevelt House
Bulwer Avenue
St Sampson
Guernsey GY2 4LH
Channel Islands
Tel: +44 (0) 871 664 0300
enquiries@linkgroup.co.uk
www.linkassetservices.com
Independent Auditor
KPMG Channel Islands Limited
Glategny Court
St Peter Port
Guernsey GY1 1WR
Channel Islands
Association of Investment Companies - AIC
The AIC is the trade body for closed-ended investment companies. It helps its
member companies deliver better returns for their investors through lobbying,
media engagement, technical advice, training, and events.
www.theaic.co.uk
Dividend timetable
Announcement: 2 March 2022
Ex-dividend date: 10 March 2022
Record date: 11 March 2022
Payment date: 4 April 2022
EARNINGS RELEASES
Earnings releases are expected to be issued on or around 6 May and 4 November
2022. The interim results for the six months to 30 June 2022 are expected to
be issued around 19 August 2022.
Stock symbol
London Stock Exchange: APAX
Enquiries
Any enquiries relating to shareholdings on the share register (for example,
transfers of shares, changes of name or address, lost share certificates or
dividend cheques) should be sent to the Registrars at the address given above.
The Registrars offer an online facility at www.signalshares.com which enables
shareholders to manage their shareholding electronically.
Investor Relations
Enquiries relating to AGA's strategy and results or if you would like to
arrange a meeting, please contact:
Katarina Sallerfors
Investor Relations - AGA
Apax Partners LLP
33 Jermyn Street
London
SW1Y 6DN
United Kingdom
Tel: +44 (0) 207 872 6300
investor.relations@apaxglobalalpha.com
SHAREHOLDER INFORMATION
financial statements \ Investment policy
The Company's investment policy is to make (i) Private Equity Investments,
which are primary and secondary commitments to, and investments in, existing
and future Apax Funds and (ii) Derived Investments, which Apax will typically
identify as a result of the process that Apax Partners undertakes in its
private equity activities and which will comprise direct or indirect
investments other than Private Equity Investments, including primarily
investments in public and private debt, as well as limited investments in
equity, primarily in listed companies. For the foreseeable future, the Board
believes that market conditions and the relative attractiveness of investment
opportunities in private equity will cause the Company to hold the majority of
its investments in private equity assets. The investment mix will fluctuate
over time due to market conditions and other factors, including calls for and
distributions from Private Equity Investments, the timing of making and
exiting Derived Investments and the Company's ability to invest in future Apax
Funds. The actual allocation may therefore fluctuate according to market
conditions, investment opportunities and their relative attractiveness, the
cash flow requirements of the Company, its dividend policy and other factors.
Private Equity Investments
The Company expects that it will seek to invest in any new Apax Funds that are
raised in the future. Private Equity Investments may be made into Apax Funds
with any target sectors and geographic focus and may be made directly or
indirectly. The Company will not invest in third-party managed funds.
Derived Investments
The Company will typically follow the Apax Group's core sector and
geographical focus in making Derived Investments, which may be made globally.
Derived Investments may include among others: (i) direct and indirect
investments in equity and debt instruments, including equity in private and
public companies, as well as in private and public debt which may include
sub-investment grade and unrated debt instruments; (ii) co-investments with
Apax Funds or third parties; (iii) investments in the same or different types
of equity or debt instruments in portfolio companies as the Apax Funds and may
potentially include (iv) acquisitions of Derived Investments from Apax Funds
or third-parties; and (v) investments in restructurings; and (vi) controlling
stakes in companies.
Investment restrictions
The following specific investment restrictions apply to the Company's
investment policy:
- no investment or commitment to invest shall be made in any
Apax Fund which would cause the total amounts invested by the Company in,
together with all amounts committed by the Company to, such Apax Fund to
exceed, at the time of investment or commitment, 25% of the Gross Asset Value;
this restriction does not apply to any investments in or commitments to invest
made to any Apax Fund that has investment restrictions restricting it from
investing or committing to invest more than 25% of its total commitments in
any one underlying portfolio company;
- not more than 15% of the Gross Asset Value may be invested in any
one portfolio company of an Apax Fund on a look-through basis;
- not more than 15% of the Gross Asset Value may be invested in any
one Derived Investment; and
- in aggregate, not more than 20% of the Gross Asset Value is
intended to be invested in Derived Investments in equity securities of
publicly listed companies. However, such aggregate exposure will always be
subject to an absolute maximum of 25% of the Gross Asset Value.
The aforementioned restrictions apply as at the date of the relevant
transaction or commitment to invest. Hence, the Company would not be required
to effect changes in its investments owing to appreciations or depreciations
in value, distributions or calls from existing commitments to Apax Funds,
redemptions or the receipt of, or subscription for, any rights, bonuses or
benefits in the nature of capital or of any acquisition or merger or scheme of
arrangement for amalgamation, reconstruction, conversion or exchange or any
redemption, but regard shall be had to these restrictions when considering
changes or additions to the Company's investments (other than where these
investments are due to commitments made by the Company earlier).
The Company may borrow in aggregate up to 25% of Gross Asset Value at the time
of borrowing to be used for financing or refinancing (directly or indirectly)
its general corporate purposes (including without limitation, any general
liquidity requirements as permitted under its Articles of Incorporation),
which may include financing short-term investments and/or buybacks of ordinary
shares. The Company does not intend to introduce long-term structural gearing.
financial statements \ AIFMD
Alternative Investment Fund Managers Directive ("AIFMD")
Status and legal form
The Company is a non-EU Alternative Investment Fund ("AIF"), being
a closed-ended investment company incorporated in Guernsey and listed on the
London Stock Exchange. The Company's registered office is PO Box 656, East
Wing, Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1 3PP.
Remuneration disclosure
This disclosure contains general information about the basic characteristics
of AGML's (the "AIFM") remuneration policies and practices as well as some
detailed information regarding the remuneration policies and practices for
board directors whose professional activities have a material impact on the
risk profile of Apax Global Alpha Limited (the "AIF").
This disclosure is intended to provide the information contemplated by Section
XIII of the ESMA Guidelines on sound remuneration policies under the AIFMD and
paragraph 8 of the Commission Recommendation (2009/384/EC of 30 April 2009 on
remuneration policies in the financial services sector) taking into account
the nature, scale and complexity of the AIFM and the AIFs it manages. The AIFM
is a non-EU manager and the AIF is a non-EU closed-ended investment company
incorporated in Guernsey and listed on the London Stock Exchange.
The AIF is externally managed1 by the AIFM. The AIFM does not have any
employees, however it does have a board of directors comprising four people,
two of whom are employees of Apax Partners Guernsey Limited ("APG") and two of
whom are non-executive directors. No other persons are remunerated directly
from the AIFM for work in relation to the AIFM or the AIF. The directors of
the AIFM fall within the Directive definitions as senior management and
risk-takers as detailed below:
- "senior management" means the relevant persons responsible for the
supervision of the AIFM and for the assessment and periodical review of the
adequacy and effectiveness of the risk management process and policies of the
AIFM;
- "risk-takers" means all staff whose actions have a material impact
on the AIFM's risk profile or the risk profile of the AIF and, given the size
of the AIFM's operations, includes all staff of the AIFM who are involved
directly or indirectly in the management of the AIF.
General description of policy
The board of the AIFM has adopted a remuneration policy which applies to the
directors. The overarching aim of the policy is twofold: (i) to ensure that
there is no encouragement for risk-taking at the level of the AIF which is
inconsistent with the risk profile and investment strategy of the AIF and (ii)
to encourage proper governance, risk management and the use of sound control
processes. All directors are responsible for ensuring the AIF acts in
accordance with its investment policy and managing the AIFM's risks
effectively. The policy recognises that two of the directors are non-executive
directors and two directors are Apax employees (the "Apax directors").
Remuneration (which excludes carried interest) paid to the directors is not
based on, or linked to, the overall performance of the AIF. Other than
described below, there is no variable component in the remuneration paid to
any of the directors for their services on the board and thus the policy does
not seek to identify quantitative and qualitative criteria by which the
directors' performance can be assessed for the purposes of adjusting a
variable component of remuneration. Remuneration paid to the directors is
therefore not based on, or linked to, the overall performance of the AIF.
General description of remuneration governance
The remuneration process is overseen by the AIFM directors. The board of the
AIFM reviews the remuneration policy annually. The board of the AIFM ensures
that the policy is transparent and easy to understand.
Remuneration framework - objectives
The remuneration of directors is described in the table below:
Type of Remuneration Purpose
Non-executive - a contractual arrangement is in place with each person for their
directors of the AIFM services
x2 persons - receive a set amount of remuneration each quarter
- the remuneration of these directors is detailed in the disclosed
remuneration value
APG employees as directors of the AIFM - the services provided by these directors is included within the
total fee payable for services provided by the administrator to the AIFM and
x2 persons the performance of these services forms part of the employee's duties
Variable remuneration - the AIFM may receive performance shares in the AIF (as part of its
performance fee shares awarded) and may choose to award a proportion of those
shares to the APG employees as Directors of the AIFM or to other employees of
the Apax Group on a discretionary basis
Quantitative disclosures
The table below shows the breakdown of remuneration for the fiscal year ended
31 December 2021, for the directors:
Total The total amount of fixed remuneration for the reporting period paid by the £155,000
AIFM to its directors
Performance shares The total number of performance shares awarded free from consideration during 5,094
the year
Carried interest Not applicable to the AIF2
1. From the Directive - "Depending on their legal form, it should be
possible for AIFs to be either externally or internally managed. An AIF should
be deemed externally managed when an external legal person has been appointed
as manager by or on behalf of the AIF, which through such appointment is
responsible for managing the AIF"
2. The AIF will not pay carried interest, which can be confirmed in its
prospectus
Material changes
There have been no material changes to the information disclosed under Article
23 of the AIFMD in the prospectus of the Company.
financial statements \ Quarterly returns since 1Q17
Total Return1 (euro) Return attribution
Private Derived Derived Equity Private Derived Derived Equity Performance fee Other2 Total NAV Return
Equity
Equity
Debt Debt
1Q17 1.6% 0.5% 4.7% 0.7% 0.2% 0.6% (0.3%) 0.2% 1.4%
2Q17 (2.7%) (7.7%) 11.4% (1.9%) (2.4%) 2.9% (0.6%) (0.2%) (2.1%)
3Q17 1.0% (1.4%) 0.2% 0.8% (0.3%) 0.2% (0.2%) (0.9%) (0.3%)
4Q17 3.4% 5.2% 3.4% 1.8% 1.0% 1.0% (0.4%) 0.2% 3.5%
1Q18 0.0% (1.7%) (0.2%) (0.3%) 0.0% (0.1%) 0.2% (0.4%) (0.7%)
2Q18 11.0% 2.5% (1.8%) 6.9% 0.7% (0.2%) (0.3%) (0.1%) 6.9%
3Q18 5.4% 1.5% (10.4%) 3.5% 0.2% (1.8%) 0.1% (0.2%) 1.8%
4Q18 (0.0%) 2.3% (3.9%) (0.0%) 0.2% (0.7%) (0.2%) 0.1% (0.7%)
1Q19 12.3% 4.8% 1.2% 7.9% 0.9% 0.1% 0.0% (0.2%) 8.7%
2Q19 7.1% 0.9% (0.4%) 4.8% 0.2% 0.0% (0.3%) (0.2%) 4.4%
3Q19 6.9% 6.0% (3.5%) 4.3% 1.4% (0.4%) (0.2%) (0.2%) 4.9%
4Q19 3.0% 1.8% 14.9% 2.5% 0.1% 1.3% (0.5%) 0.0% 3.4%
1Q20 (11.6%) (7.7%) (25.1%) (8.0%) (1.8%) (1.8%) 0.0% (0.3%) (11.9%)
2Q20 16.0% 7.0% 14.8% 11.1% 1.6% 0.7% 0.0% (0.2%) 13.3%
3Q20 12.4% 2.1% (2.4%) 8.4% 0.4% (0.1%) 0.0% (0.3%) 8.5%
4Q20 8.7% (0.1%) 36.1% 6.0% 0.0% 1.0% 0.0% (0.1%) 6.9%
1Q21 13.7% 6.4% 18.3% 8.5% 1.6% 0.7% (0.2%) (0.2%) 10.4%
2Q21 9.5% 1.4% 8.2% 6.1% 0.4% 0.3% (0.1%) (0.2%) 6.5%
3Q21 13.6% 3.4% 6.5% 9.1% 0.9% 0.3% (0.2%) (0.2%) 9.9%
4Q21 (0.6%) 2.7% (3.7%) (0.4%) 0.7% (0.1%) (0.1%) (0.2%) (0.1%)
2017 3.3% (2.0%) 24.2% 1.6% (0.7%) 4.3% (1.4%) (1.7%) 2.2%
2018 17.4% 4.5% (17.6%) 10.1% 1.2% (3.0%) 0.2% (1.4%) 7.1%
2019 33.9% 11.8% 9.1% 20.2% 2.7% 1.1% (1.0%) (0.3%) 22.7%
2020 25.4% 0.2% (3.8%) 15.9% 0.0% (0.2%) 0.0% (0.9%) 14.8%
2021 41.0% 13.4% 37.5% 25.0% 4.0% 1.3% (0.7%) (0.9%) 28.7%
Total Return1 (Constant currency) Return attribution
Private Derived Derived Equity Private Derived Derived Equity Performance fee Other2 FX3 Total NAV Return
Equity
Equity
Debt Debt
1Q17 2.0% 1.7% 4.5% 1.1% 0.7% 0.7% (0.3%) (0.2%) (0.6%) 1.4%
2Q17 1.5% (1.5%) 17.9% 0.7% (0.3%) 3.3% (0.5%) (0.6%) (4.8%) (2.1%)
3Q17 2.5% 1.7% 1.1% 1.3% 0.5% 0.5% (0.1%) (0.2%) (2.3%) (0.3%)
4Q17 4.5% 6.6% 3.9% 2.7% 1.4% 1.2% (0.4%) (0.2%) (1.1%) 3.5%
1Q18 1.3% 0.6% 2.4% 0.4% 0.4% 0.2% 0.3% (0.3%) (1.7%) (0.7%)
2Q18 8.9% (2.6%) (3.9%) 5.8% (0.2%) (0.6%) (0.3%) (0.5%) 2.7% 6.9%
3Q18 5.5% 1.0% (9.5%) 3.5% 0.1% (1.7%) 0.2% (0.2%) (0.1%) 1.8%
4Q18 (0.3%) 1.3% (4.9%) (0.2%) 0.1% (0.8%) (0.3%) 0.0% 0.5% (0.7%)
1Q19 10.0% 2.5% (1.5%) 6.4% 0.5% (0.2%) 0.0% (0.2%) 2.2% 8.7%
2Q19 8.0% 2.3% 0.8% 5.3% 0.5% 0.1% (0.3%) (0.2%) (1.0%) 4.4%
3Q19 4.8% 2.5% (5.1%) 3.1% 0.6% (0.6%) (0.2%) (0.3%) 2.3% 4.9%
4Q19 4.1% 3.7% 15.2% 3.2% 0.6% 1.3% (0.5%) 0.0% (1.2%) 3.4%
1Q20 (11.6%) (8.6%) (23.5%) (7.9%) (2.0%) (1.7%) 0.0% (0.2%) (0.1%) (11.9%)
2Q20 16.3% 8.4% 16.2% 11.4% 2.0% 0.8% 0.0% (0.2%) (0.6%) 13.3%
3Q20 15.9% 5.7% (1.0%) 10.7% 1.2% 0.0% 0.0% (0.2%) (3.2%) 8.5%
4Q20 11.0% 3.0% 37.2% 7.6% 0.7% 1.1% 0.0% (0.1%) (2.4%) 6.9%
1Q21 9.6% 2.5% 14.1% 6.0% 0.7% 0.6% (0.2%) (0.2%) 3.5% 10.4%
2Q21 10.2% 1.9% 9.2% 6.6% 0.5% 0.4% (0.1%) (0.2%) (0.7%) 6.5%
3Q21 11.8% 1.5% 5.4% 7.9% 0.5% 0.2% (0.2%) (0.1%) 1.6% 9.9%
4Q21 (2.3%) 1.0% (5.9%) (1.5%) 0.3% (0.1%) (0.2%) (0.2%) 1.6% (0.1%)
2017 10.0% 9.8% 35.7% 4.9% 2.1% 5.5% (1.3%) (1.0%) (8.0%) 2.2%
2018 15.9% 0.3% (17.4%) 9.2% 0.4% (2.9%) 0.2% (1.5%) 1.7% 7.1%
2019 31.7% 9.6% 5.5% 19.3% 2.2% 0.7% (0.7%) (1.0%) 2.2% 22.7%
2020 32.6% 7.4% 2.5% 20.6% 1.7% 0.1% 0.0% (0.8%) (6.8%) 14.8%
2021 34.6% 6.9% 30.2% 21.0% 2.3% 1.1% (0.7%) (0.9%) 5.9% 28.7%
NOTE: All quarterly information included in the tables above is unaudited
1. Total Return for each respective sub-portfolio has been calculated by
taking total gains or losses and dividing them by the sum of Adjusted NAV at
the beginning of the period and the
time-weighted net invested capital. The time-weighted net invested capital is
the sum of investments made during the period less realised proceeds received
during the period, both
weighted by the number of days the capital was at work in the portfolio
2. Includes management fees and other general costs. It also includes FX
on the euro returns table only
3. Includes the impact of FX movements on investments and FX on cash held
during each respective period
financial statements \ Portfolio allocation since 1Q17
Portfolio Allocation1 Portfolio NAV (EURo) NAV (EURO)
Private Derived Derived Net cash Private Derived Derived Net cash Total Total Adjusted
Equity
Equity
Equity
Equity
Debt and NCAs Debt and NCAs NAV NAV
1Q17 52% 30% 16% 2% 489.5 282.4 147.5 16.6 935.9 928.0
2Q17 50% 21% 13% 16% 457.6 195.3 119.5 148.0 920.4 908.1
3Q17 58% 21% 19% 1% 522.8 189.1 170.8 12.7 895.5 881.9
4Q17 63% 20% 14% 2% 590.2 188.4 132.1 19.2 929.9 912.4
1Q18 65% 15% 17% 3% 572.5 136.2 152.6 22.1 883.3 883.3
2Q18 67% 19% 17% (4%) 638.8 184.3 160.6 (35.8) 947.8 943.9
3Q18 68% 17% 17% (2%) 638.9 158.1 159.0 (16.3) 939.7 937.3
4Q18 64% 19% 15% 2% 591.5 178.3 142.3 18.7 930.8 930.8
1Q19 68% 18% 11% 3% 669.5 178.9 112 28.1 988.5 988.2
2Q19 56% 22% 12% 9% 582.9 232.1 123.3 96.2 1,034.5 1,031.9
3Q19 61% 24% 11% 4% 648.1 257.4 116.0 38.9 1,060.4 1,055.8
4Q19 70% 23% 8% (1%) 766.3 252.5 89.7 (9.5) 1,099.0 1,092.1
1Q20 69% 24% 4% 3% 643.1 221.4 44.3 27.4 936.2 936.2
2Q20 70% 22% 5% 3% 742.5 230.8 50.7 36.7 1,060.7 1,060.7
3Q20 70% 22% 3% 5% 784.1 243.4 32.3 64.3 1,124.1 1,124.1
4Q20 66% 23% 3% 8% 788.3 275.7 43.7 93.5 1,201.2 1,201.2
1Q21 64% 25% 4% 7% 830.7 322.8 46.1 99.9 1,299.5 1,296.6
2Q21 66% 28% 4% 2% 916.6 388.6 50.6 29.0 1,384.8 1,380.3
3Q21 68% 23% 3% 5% 1,016.1 348.8 51.5 73.2 1,489.6 1,483.0
4Q21 68% 20% 2% 10% 1,012.9 304.6 30.9 141.7 1,490.1 1,481.7
2017 56% 23% 16% 5% 515.0 213.8 142.5 49.1 920.4 907.6
2018 66% 18% 16% 0% 610.4 164.2 153.6 (2.8) 925.4 923.8
2019 64% 22% 11% 4% 666.7 230.3 110.2 38.4 1,045.6 1,042.0
2020 69% 23% 4% 5% 739.5 242.8 42.8 55.5 1,080.6 1,080.6
2021 67% 24% 3% 6% 944.1 341.2 44.8 86.0 1,416.0 1,410.4
1. For annual periods the average weighting over four quarters used
financial statements \ Glossary
ADF means the limited partnerships that constitute the Apax Digital Private
Equity fund.
ADFII means the limited partnerships that constitute the Apax Digital II
Private Equity fund.
Adjusted NAV calculated by adjusting the NAV at reporting periods, by the
estimated performance fee reserves.
Adjusted NAV per share calculated by dividing the Adjusted NAV by the number
of shares in issue.
AEVI means the limited partnerships that constitute the Apax Europe VI Private
Equity fund.
AEVII means the limited partnerships that constitute the Apax Europe VII
Private Equity fund.
AGML or Investment Manager means Apax Guernsey Managers Limited.
AIX means the limited partnerships that constitute the Apax IX Private Equity
fund.
AMI means the limited partnerships that constitute the AMI Opportunities Fund
focused on investing in Israel.
Apax Global Alpha or Company or AGA means Apax Global Alpha Limited.
Apax Group means Apax Partners LLP and its affiliated entities, including its
sub-advisors, and their predecessors, as the context may require.
Apax Partners or Apax or Investment Advisor means Apax Partners LLP.
Apax Private Equity Funds or Apax Funds means Private Equity funds managed,
advised and/or operated by Apax Partners.
APFS means Apax Partners Fund Services Limited.
APG means Apax Partners Guernsey Limited.
AVIII means the limited partnerships that constitute the Apax VIII Private
Equity fund.
AX means the limited partnerships that constitute the Apax X Private Equity
fund.
Aztec means Aztec Financial Services (Guernsey) Limited.
B2B means business to business.
Capital Markets Practice or CMP consists of a dedicated team of specialists
within the Apax Partners Group having in-depth experience of the leverage
finance debt markets, including market conditions, participants and
opportunities. The CMP was initially set up to support the investment advisory
teams within the Apax Group in structuring the debt component of a private
equity transaction. The CMP has over the years expanded its mandate to working
alongside the investment advisory teams to advise on Derived Debt Investments.
CEE Central and eastern Europe.
CSR Corporate social responsibility.
Custody risk is the risk of loss of securities held in custody occasioned by
the insolvency or negligence of the custodian.
Derived Debt Investments comprise debt investments held within the Derived
Investments portfolio.
Derived Equity Investments comprise equity investments held within the Derived
Investments portfolio.
Derived Investments comprise investments other than Private Equity
Investments, including primary investments in public and private debt, with
limited investments in equity, primarily in listed companies. In each case,
these are typically identified by Apax Partners as part of its private equity
activities.
Direct Deal costs means costs directly attributable to the due diligence and
execution of deals completed by the Company (such as broker fees and deal
research costs). For avoidance of doubt it excludes taxes payables and general
fund and administration costs.
EBITDA Earnings before interest, tax, depreciation and amortisation.
Eligible Portfolio means the Derived Debt, Derived Equity and Eligible Private
Equity portfolios.
Eligible Private Equity means the Private Equity portfolio eligible for
management fees and performance fee. It represents interests in Private Equity
Investments held that do not pay fees at the Apax Fund level.
ERP Enterprise resource planning.
ESG Environmental, social and governance.
EV Enterprise value.
FVTPL means fair value through profit or loss.
FX means foreign exchange.
Gross Asset Value or GAV means the Net Asset Value of the Company plus all
liabilities of the Company (current and non-current).
Gross IRR or Internal Rate of Return means an aggregate, annual, compound,
internal rate of return calculated on the basis of cash receipts and payments
together with the valuation of unrealised investments at the measurement date.
Foreign currency cash flows have been converted at the exchange rates
applicable at the date of receipt or payment. For Private Equity Investments,
IRR is net of all amounts paid to the underlying Investment Manager and/or
general partner of the relevant fund, including costs, fees and carried
interests. For Derived Investments, IRR does not reflect expenses to be borne
by the relevant investment vehicle or its investors including, without
limitation, performance fees, management fees, taxes and organisational,
partnership or transaction expenses.
Invested Portfolio means the part of AGA's portfolio which is invested in
Private Equity and Derived Investments, however excluding any other
investments such as legacy hedge funds and cash.
Investor relations team means such investor relations services as are
currently provided to AGA by the Investment Advisor.
IPO Initial public offering.
GTJA means Guotai Junan Securities.
KPI Key performance indicator.
LSE London Stock Exchange.
LTM Last twelve months.
Market capitalisation is calculated by taking the share price at the reporting
period date multiplied by the number of shares in issue. The euro equivalent
is translated using the exchange rate at the reporting period date.
MOIC Multiple of invested capital.
NBFC Non-bank financial company.
Net Asset Value or NAV means the value of the assets of the Company less its
liabilities as calculated in accordance with the Company's valuation policy.
NAV has no adjustments related to the IPO proceeds or performance fee
reserves.
NTM Next twelve months.
OCI Other comprehensive income.
Ongoing charges are the Company's ongoing charges which are calculated in line
with guidance issued by the AIC. They comprise of recurring costs such as
administration costs, management fees paid to AGML and management fees paid to
the underlying Private Equity funds' general partners. They specifically
exclude deal costs, taxation, financing costs, performance fees and other
non-recurring costs. A reconciliation between costs per the financial
statements and those used in the ongoing charges are set out below:
All in €'000 Total per excluded from aic ongoing charges included
Operating Costs statement of profit in aic ongoing charges
or loss
and oCI
Performance fee 8,390 8,390 -
Management fee 3,782 - 3,782
Admin and other expenses 2,707 357 2,350
2,350 - 2,350
Other admin and operating expenses
357 357 -
Deal transaction, custody and research costs
Total 14,879 8,747 6,132
Finance costs 2,269 2,269 -
Total costs 17,148 11,016 6,132
Look-through management fees¹ 11,415
Total Ongoing charges 17,547
Average NAV² 1,373,027
% of Average NAV 1.3%
1. Represents management fees to the Apax Funds
2. Represents the average of 5 quarter end reported NAV's from 31 December
2020 to 31 December 2021
Operational Excellence Practice
or OEP Professionals who support the Apax Funds' investment strategy by
providing assistance to portfolio companies in specific areas such as devising
strategies, testing sales effectiveness and cutting costs.
OTC Over-the-counter.
PCV means PCV Lux S.C.A.
PCV Group means PCV Lux S.C.A. and its subsidiaries. PCV Group was established
in August 2008. Irrespective of whether the text refers to AGA or PCV Group,
references to trading or performance prior to the IPO on 15 June 2015 refer to
trading as PCV Group.
P/E Price-to-earnings.
Performance fee reserve is the estimated performance fee reserve which
commenced accruing on 1 January 2015 in line with the Investment Management
Agreements of the PCV Group and AGA.
Portfolio Total Return means the sub-portfolio performance in a given period,
is calculated by taking total gains or losses and dividing them by the sum of
GAV at the beginning of the period and the time-weighted net invested capital.
The time-weighted net invested capital is the sum of investments made during
the period less realised proceeds received during the period, both weighted by
the number of days the capital was at work in the portfolio. Portfolio Total
Return is gross of performance fees but net of management fees and relevant
Direct Deal costs.
Private Equity Investments or Private Equity means primary commitments to,
secondary purchases of commitments in, and investments in, existing and future
Apax Funds.
Reporting period means the period from 1 January 2021 to 31 December 2021.
SMEs Small and mid-sized enterprises.
Total NAV Return for a year/period means the return on the movement in the
Adjusted NAV per share at the end of the period together with all the
dividends paid during the period, to the Adjusted NAV per share at the
beginning of the period/year. Adjusted NAV per share used in the calculation
is rounded to five decimal points.
Total Return under the Total Return calculation, sub-portfolio performance in
a given period can be evaluated by taking total net gains in the period and
dividing them by the sum of the Adjusted NAV at the beginning of the period as
well as the investments made during the period. However, in situations where
realised proceeds are reinvested within the same period, performance under
this calculation is, via the denominator, impacted by the reinvestment.
Therefore, starting from 2017 the Investment Manager will evaluate
sub-portfolio performance using an amended methodology. The revised
methodology takes total gains or losses and divides them by the sum of
Adjusted NAV at the beginning of the period and the time-weighted net invested
capital. The time weighted net invested capital is the sum of investments made
during the period less realised proceeds received during the period, both
weighted by the number of days the capital was at work in the portfolio. This
should provide a more reflective view of actual performance.
Total Shareholder Return or TSR for the period means the net share price
change together with all dividends paid during the period.
Unaffected Valuation is determined as the fair value in the last quarter
before exit, when valuation is not affected by the exit process (i.e. because
an exit was signed, or an exit was sufficiently close to being signed that the
Apax Funds incorporated the expected exit multiple into the quarter end
valuation).
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