REG - Apax Global Alpha Ld - 2022 Annual Report and Accounts
02/03/2023 07:00
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RNS Number : 5944R Apax Global Alpha Limited 02 March 2023
Apax Global Alpha
Annual Report & Accounts 2022
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 a portfolio of
predominantly debt 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 NAV(1)
€1.3bn
Invested Portfolio
Private Equity / Derived Investments
71% / 29%
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
HOW WE ADD VALUE
Our investment approach provides investors with access to a range of Private
Equity Funds advised by Apax. Apax focuses on generating alpha through
business improvement, leveraging their deep sector insights, operational
expertise and digital know-how to add value to portfolio companies.
In addition, the Derived Investments portfolio provides flexible capital
management for the Company, targeting superior risk-adjusted returns and
generating a steady flow of income to support dividends.
Sectors covered
4
Investment advisor experience
50
years
SEE BUSINESS MODEL
See page 6
1. Adjusted NAV is an Alternative Performance Measure ("APM"). It
represents NAV of €1,299.4m adjusted for the performance fee reserve at year
end. As the reserve was nil in the current period, NAV and Adjusted NAV were
the same. Further details can be seen on page 60.
Apax Global Alpha Limited
Apax Global Alpha Limited aims to provide shareholders with superior long-term
returns through capital appreciation and regular dividends
Contents
Overview
Key Highlights 02
Strategic Report
Chairman's Statement 04
AGA's Business Model
- How we add value 06
- About Apax and Q&A 08
Stakeholder engagement 10
Responsible Investing 12
Investment Manager's Report
- Market review 16
- Performance review 18
- Portfolio overview 20
- Private Equity 21
- Derived Investments 28
Risk Management Framework 32
Governance Report
Chairman's Introduction 36
Governance at a glance 37
AGA Board of Directors 38
Investment Manager Board 40
Investment Advisor's AGA
Investment Committee 41
Corporate Governance Statement 42
- Key Activities of the Board 44
Directors' Duties 46
Governance Framework 48
Audit Committee Report 49
Directors' Remuneration Report 51
Directors' Report 52
Viability Statement 54
Statement of Directors' Responsibilities 55
Financial Statements
Independent auditor's report 56
Statement of financial position 60
Statement of profit or loss and other comprehensive income 61
Statement of changes in equity 62
Statement of cash flows 63
Notes to the financial statements 64
Shareholder information
Administration 82
Investment policy 83
AIFMD 84
Quarterly returns since 1Q17 86
Portfolio allocations since 1Q17 88
Glossary 89
overview \ Key highlights
AGA's Invested Portfolio as at 31 December 2022
71%
private equity
29%
DErived investments
FY 2022 HIGHLIGHTS
FY 2022 Total NAV Return(1)
(7.4)%
FY 2022 dividends
11.82p
Adjusted NAV(2) as at 31 December 2022
€1,299m
Adjusted NAV(2) per share as at 31 December 2022
€2.65 / £2.34
"Portfolio Company operating performance was not enough to fully offset weaker
valuation multiples, in particular, in the Apax funds' listed holdings."
Tim Breedon CBE
Chairman
PRVATE EQUITY
Portfolio Transformation Exits
79 companies 18.5%
7
LTM EBITDA growth³
Invested across the four Apax sectors
15% average uplift for 2022³
10 new investments in 2022 21.5%
17% average Gross IRR³
LTM revenue growth³
3.1x average Gross MOIC³
DERIVED INVESTMENTS: Derived Debt(4)
Portfolio Income Capital Management
24 debt investments 12.1% €30.1m
Debt Investments yield to maturity Realised proceeds and income in 2022
Invested across the four Apax sectors 9.9%
99% floating rate instruments Debt Investments income yield €57.2m
97% first/second lien secured loans Invested in 2022
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 60
2. Adjusted NAV is an APM. NAV and Adjusted NAV of €1,299.4m were
the same at 31 December 2022 as performance fee reserve was nil at year end.
Further details can be seen on page 60
3. Please refer to page 25 for further details on calculations
4. Excludes 5 positions in Derived Equity valued at €23.6m
Strategic Report \ Chairman's statement
Resilient portfolio company performance in challenging market conditions
2022 saw a fundamental change in global economic conditions. The conflict in
Ukraine compounded existing supply chain disruption, and triggered a sharp
upward movement in energy prices. In the face of escalating inflationary
pressures and tight labour markets, central banks began to raise interest
rates aggressively, with the Federal Funds rate rising from 0.0-0.25% to
4.25-4.5% during the course of the year, bringing the era of "cheap money" to
an abrupt end. Increased discount rates and lower projected levels of economic
growth contributed to a de-rating of many previously favoured sectors in
equity markets, including Technology. The lack of availability and higher cost
of leverage finance also dampened Private Equity transaction activity.
RESULTS
Against this market backdrop, Total NAV Return for AGA in 2022 was (7.4)%. In
Private Equity, Total NAV Return was (11.3)%, whilst Derived Investments
supported overall performance with a Total Return of 1.9%. At 31 December
2022, the Company's Adjusted NAV was €1,299m and Adjusted NAV per share was
€2.65 (£2.34).
In Private Equity, portfolio companies continued to deliver growth and
operational improvements in 2022, reflecting the resilience of their business
models. However, this was not enough to fully offset negative movements in
valuation multiples. The main driver was multiple contraction in the Apax
Funds' listed holdings, which contributed over three quarters of the overall
downward valuation movement.
The majority of these listed holdings are from IPOs that took place in 2020
and 2021 and which, together with subsequent secondary sales, have already
returned distributions totalling 3.4x initial costs to AGA. Whilst the
subsequent fall in the share prices of these companies is disappointing, they
do demonstrate that the decision to monetise a large proportion of these
holdings at a time of sky-high public market valuations was the correct one.
Opportunities still exist to create further value in this part of the
portfolio, as shown by the sale in January 2023 of the residual holding in
Duck Creek at a 57% premium to its year-end market value.
AGA's Derived Debt portfolio, which makes up 94% of Derived Investments,
delivered a Total NAV Return of 2.7% in 2022. This portfolio enhances the
robustness of AGA's balance sheet and supports unfunded commitments to the
Apax Private Equity Funds whilst also providing an additional source of
"alpha" for AGA and a steady flow of income to support dividends. The
portfolio is invested across Apax's core sectors and, over the last five
years, has developed a solid track-record of performance, achieving a 31.2%
cumulative constant currency Total Return, versus 17.7% for the S&P/LSTA
Leveraged Loan Index.
PORTFOLIO UPDATE
At 31 December 2022, AGA was 95% invested, split 71% in Private Equity and 29%
in Derived Investments.
The Private Equity portfolio continues to be diversified across the four core
Apax sectors: Tech & Digital (37%), Services (31%), Healthcare (12%), and
Internet/Consumer (20%). Within these sectors, the focus remains on
sub-sectors which have a high concentration of businesses with strong economic
motors such as software, tech-enabled services, med-tech, route-based
businesses, residential services, and online marketplaces. This sector-led
approach provides a deep understanding of companies' specific markets,
creating a flywheel effect where repeatable playbooks can be used to help a
range of similar companies achieve business improvement and transformative
growth.
2022 saw seven full Private Equity exits, resulting in distributions of
€227.8m, to AGA. These exits were achieved at an average uplift of 15% to
previously Unaffected Valuations demonstrating that, despite market
conditions, buyers can still be found for high-quality assets.
LIQUIDITY, COMMITMENTS, AND FUNDING
Following earlier commitments, there were several large capital calls during
2022, mainly from Apax X. In addition to meeting these calls, our balance
sheet strength allowed us to make commitments to three new Apax funds: $700m
to Apax XI, $60m to the Apax Global Impact Fund, and $40m to AMI Opportunities
II. The Board takes a prudent approach to liquidity and capital management
with rigorous scenario modelling and stress testing being done prior to
agreeing any new commitments to Apax Funds.
AGA has had a €250m revolving credit facility with Credit Suisse AG, London
Branch, since November 2018 which featured an evergreen term, with a rolling
minimum notice period of two years. In early 2023, the Company received formal
notice from the lenders that the facility will revert to a conventional
fixed-term arrangement with an expiry date of 10 January 2025. The Board and
the Investment Manager remain confident that the Company's approach to balance
sheet management provides comfort over existing and future planned
commitments.
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 5.82 pence per share, bringing the full year dividend to 11.82
pence per share. The final dividend is expected to be paid on 3 April 2023 to
shareholders on the register of members on 10 March 2023. The shares will
trade ex-dividend on 9 March 2023.
RESPONSIBLE INVESTING PROGRESS
In 2022, both AGA and Apax continued to progress their sustainability
initiatives. This is done not only with a view to meeting enhanced reporting
requirements, but also to generate value through the management of risk and
the identification of return-enhancing opportunities. A major focus for Apax
in the year was to further deepen its ESG involvement with portfolio companies
around carbon measurement. Further details can be found on pages 12 to 15 of
this report.
GOVERNANCE
During 2022, the Board commissioned an independent investor perception study
in order to improve our understanding of current shareholder views. The
results were discussed at our October Strategy Day. The Board was content that
the current strategy and investment policy remain fit-for-purpose and
initiatives were agreed to address a number of the findings in the report.
OUTLOOK
The Apax Funds have continued to identify attractive investment opportunities,
generate outperformance through business improvement, and agree exits at
attractive prices. Whilst no investment strategy can be totally immune to the
current macroeconomic headwinds, we believe that the Apax Funds have the right
investment approach for the current market conditions.
Tim Breedon CBE
Chairman
1 March 2023
Strategic Report \ AGA's Business model
How we add value
Our objective is to provide shareholders with superior long-term returns
through capital appreciation and regular dividends.
Investment approach focused on business improvement
Private Equity
€871m
Private Equity Adjusted NAV as at 31 December 2022
Derived Investments
€364m
Derived Investments Adjusted NAV as at 31 December 2022
DIVIDENDS paid SINCE IPO
€378m
Dividends paid to shareholders since IPO
APAX TRACK RECORD and Experience
● 50 years of investment experience
● Over $60bn aggregate funds raised since inception
● Deep sector insights having focused on four core sectors for over 30 years
- Tech & Digital, Services, Healthcare and Internet/Consumer
● 170 investment professionals across seven offices worldwide
● Dedicated Operational Excellence Practice who bring functional expertise
and a focus on digital transformation to the fore
INVESTMENT APPROACH focused on business improvement
● Focus on opportunities in four key sectors where Apax has deep experience
and vast networks
● Investing in good-quality companies in target sub-sectors
● Support companies in driving operational improvements
● Business improvement rewarded at exit with premium valuations
● Strong track record of responsible investing and focus on delivering
sustainable returns
UNDERPINNED BY ACTIVE BALANCE SHEET MANAGEMENT
CAPITAL FLEXIBILITY
● Capital not invested in Private Equity is invested predominantly into debt
instruments in the Derived Investments portfolio
● This portfolio enhances the robustness of the balance sheet and supports
AGA's unfunded commitments to the Apax Private Equity Funds
● Creates a steady flow of income to support dividends and additional
'alpha' for AGA
CAPITAL APPRECIATION AND REGULAR DIVIDENds
VALUE CREATION
● Targets Total Returns between 12-15% p.a. across economic cycles
● Dividend policy set at 5% of NAV p.a.
About Apax
"We celebrated our 50th anniversary in October 2022. This milestone is an
important reminder that longevity in the private equity business is predicated
on strong values and governance."
Mitch Truwit
Co-CEO of Apax
OUR INVESTMENT ADVISOR - APAX
Apax is a sector-focused, global investment advisor focusing on
alpha-generation through business improvement.
Sector focus
Founded 50 years ago, Apax focuses on opportunities in four key sectors - Tech
& Digital, Services, Healthcare, and Internet/Consumer - helping to build
future market leaders through operational expertise and digital acceleration.
Global reach
The firm has raised and advised funds with aggregate commitments of more than
$60bn, and operates out of seven offices globally: London, New York, Tel Aviv,
Mumbai, Shanghai, Hong Kong and Munich.
Synergistic strategies
Over time, Apax has expanded and developed synergistic strategies that enhance
the capabilities of the firm as a whole. Alongside the firm's flagship Apax
Global Buyout, these include Apax Digital Growth, Apax Global Impact, Apax
Mid-Market Israel, and Apax Credit, which are all fully integrated within the
global Apax platform. Each strategy follows a unique path but shares core
principles. They all focus on target areas of expertise; they benefit from the
power of the global platform, and where relevant, leverage the Operational
Excellence Practice's deep operating capabilities to improve outcomes and
enhance growth across the portfolio.
'Mining the Hidden Gems'
Apax's success in private equity is driven by its distinctive investment
strategy - 'Mining the Hidden Gems' - which is centred on unlocking value in
businesses operating in 'coveted categories'. Apax generally seeks to identify
high-quality sub-sectors within the economy where its investment teams have
significant experience and expertise, and where successful businesses often
trade for very high multiples. Rather than targeting these readily
identifiable businesses, Apax seeks to identify 'un-polished' assets or
'hidden gems' where they can visualise potential, allowing the Apax Funds
generally to purchase at reduced entry valuations. Following acquisition, Apax
focuses on 'value mining' to improve these businesses, combining sub-sector
know-how and best practice with operational and digital expertise, including
through input from the Operational Excellence Practice. Finally, Apax Funds
seek to reap the rewards of the strategy by generally selling improved, or
more 'polished', businesses which are intrinsically more valuable than they
were at the time of acquisition.
Operational excellence
This approach is underpinned by Apax's Operational Excellence Practice, a team
of 28 operating specialists with deep operational, tech and digital experience
who work alongside Apax's team of 170 investment professionals to drive
transformational change within the portfolio companies of Apax Funds.
Q&A with Apax's Co-CEOs Andrew Sillitoe and Mitch Truwit
"We made an important choice around a decade ago, to be led by returns rather
than AUM."
Andrew Sillitoe
Co-CEO of Apax
Q Reflecting on Apax's 50-years, what are your take-aways?
M This milestone highlights that longevity in private equity is
predicated on strong values and governance, and continued investment in the
team. It takes focus and discipline to 'stick to your knitting' and to avoid
the temptation of step function increases in fund size, accelerated investment
pace, and product proliferation for scale's sake.
By employing our sub-sector playbooks methodically, dedicating teams to each
strategy and expanding only into adjacencies that leverage our core private
equity capabilities, we seek to deliver both exceptional investment returns
and to build strong, enduring companies, including our own firm.
Q What is your perspective on current market conditions?
A It is difficult to overstate the change in the investment
environment. We have moved rapidly from an era of low inflation and negative
real interest rates to one of high inflation and positive rates. Inputs, like
labour and energy, are no longer cheap and plentiful. Supply chains are
disrupted, and globalisation is giving way to regionalisation. During the
'super cycle' of cheap money, the easiest way to earn returns was to buy the
most highly rated companies and sectors and watch them become ever more highly
rated. No longer is this the case.
Q How does Apax think about investing in the current environment?
M We believe our strategy is well suited to the current environment.
We focus on diversification across 'coveted categories' in our four sectors
where we have deep insights and expertise. Within this, the type of businesses
we look for have similar characteristics in terms of strong economic motors
and the ability to generate 'alpha' through transformation.
Q Can you provide examples of what you look for in new investments?
A Investing in this environment requires deeper asset insight and
increased margins of safety. We are focused on three imperatives when
assessing new opportunities. Firstly, the business should be able to pass on
input cost inflation in a timely manner. Secondly, we need to gain confidence
in an acceptable level of resilience to weakening demand. And finally, the
business needs to have sufficient inherent agility to change costs and
operational inputs to respond to changing demand and supply conditions.
Q What does that mean for deal activity?
M We took a more cautious approach towards investments than many
during 2022.
The bar has been kept high, but we are building an exciting pipeline and are
happy that new funds have been raised for the different strategies which can
now be deployed. In terms of exit activity, demand remains strong for the Apax
Funds' assets, with recent exits being achieved at significant uplifts.
Q What gives you comfort about where Apax is today?
A A decade ago we made an important choice to be led by returns
rather than Assets Under Management ("AUM"). This has led to a disciplined
growth in fund sizes and a prudent pacing of investments, and to a narrow set
of product extensions that are synergistic and support the mission of
generating strong returns.
The Apax investment approach is rooted in a desire to seek assets in
categories of significant prior investment experience that are
under-optimised, and to unlock their full potential through business
transformation. We believe our approach is capable of generating traditional
private equity returns throughout different economic cycles.
And finally, our organisation is built around a large, experienced team: all
our equity partners have invested through the cycle, including during the
global financial crisis.
Q What is your outlook for Apax in 2023?
M We're pleased with the performance of the portfolio to date, but
remain vigilant to any signs of weakness. The Apax Funds portfolio companies
have generally been bought at discounts vs peers and have many levers to make
improvement to offset market multiple declines. Whilst our investment appetite
remains cautious, we have new funds in each strategy and believe we are well
positioned.
Strategic Report \ Stakeholder engagement
Stakeholder engagement
The Board is committed to promoting the long-term success of the Company
whilst conducting business in a fair, ethical and transparent manner.
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, and take a long-term view on consequences
of the decisions they make, as well as aiming to maintain a reputation for
high standards of business conduct and fair treatment.
"Good governance leads to better decision-making and the ability to identify
and address potential risks, ultimately leading to better outcomes. It also
promotes transparency and accountability."
$60m
Commitment in March 2022 to the Apax Global Impact Fund
Investors
Why they are important
Shareholder support and engagement are critical to the continued success of
the business and the achievement of our objectives. We believe shareholders
value the strong financial performance of the Company, prudent balance sheet
management, and commitment to the highest standards of corporate governance.
A resolution to continue the life of AGA is put to shareholders every three
years. Having been approved by shareholders at its Annual General Meeting
("AGM") in 2021, a similar resolution will be put to shareholders at the AGM
in 2024.
· Contact details for shareholder queries can be found on page 82 and on
the Company's website at:
www.apaxglobalalpha.com/contact-us
How the Board engages
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, Capital Markets Day, or other
investor relations events. The Chairman holds one-to-one meetings with
shareholders on an ad-hoc basis and as part of an annual corporate governance
roadshow. The Senior Independent Director, Susie Farnon, is available for
investor meetings on request.
As part of the ongoing engagement, AGA has retained Apax to provide
comprehensive investor relations services. In addition, the Company's
corporate broker, Jefferies International Limited, further supports
shareholder engagement. The Board receives regular reports and updates from
the Apax investor relations team and the corporate broker.
Shareholder views and feedback are regularly sought and communicated to the
Board to help develop a balanced understanding of their issues and concerns.
During 2022, a detailed investor perception study was conducted by an
independent third party. Feedback from this was considered at the Board
Strategy Day and is discussed further on page 47.
Key activities during the year
AGM
The AGM presents investors with the opportunity to ask Board members
questions, and to cast their votes. The 2022 AGM was conducted both in person
and via a dial-in format to encourage attendance. The same format will be
adopted in 2023.
Publications
The Company reports formally to shareholders four times a year, with updates
on transactions and significant events presented on an ongoing basis.
Shareholders may obtain up-to-date information on the Company through its
website at www.apaxglobalalpha.com
Events
Apax maintains a comprehensive investor engagement programme with investors
and equity analysts. This includes presentations, roadshows, attendance at
conferences, and other events. The Board always welcomes feedback at these
meetings.
Community & environment
Why they are important
The Board believes that investing responsibly is important in protecting and
creating long-term value. The Board recognises that the incorporation of
material ESG considerations can help inform the assessment of overall risk and
opportunities.
AGA does not itself invest directly in Private Equity portfolio companies.
However, the Board recognises the importance of portfolio companies themselves
having proper policies and procedures in place regarding their employees,
suppliers, customers and other stakeholders.
How the Board engages
The Board relies upon its Responsible Investment policy and the practices of
the Investment Manager and Apax. The Board receives updates on Apax's ESG
activities.
Apax integrates ESG considerations throughout the investment process and works
closely with portfolio companies on ESG matters. There has been a substantial
focus on measuring the impact on society and delivering sustainable financial
returns while encouraging sustainable business practices. The Operational
Excellence Practice helps deal teams identify key ESG risks and value creation
opportunities whilst also delivering ESG-related value creation or risk
mitigation directly to portfolio companies.
AGA's approach to ESG for Derived Investments primarily focuses on due
diligence carried out before investment and in the context of Apax's broader
approach to ESG.
Key activities during the year
The Board was pleased to announce a $60m commitment in March 2022 to the Apax
Global Impact Fund. This Fund will build on Apax's strong ESG credentials and
closely align with their sector-driven strategy, seeking out opportunities to
support companies which deliver positive tangible societal and/or
environmental impact whilst targeting private equity-style returns.
The Investment Manager hosted the 2022 Board Strategy Day for the Chairman and
Non-Executive Directors. ESG was a key item on the agenda with a series of
in-depth presentations and subsequent discussions covering guidance on
evolving reporting requirements and best practice, as well as in-depth
insights into the ESG activities across Apax and within the underlying
portfolio companies.
Service providers
Why they are important
In addition to supporting the Company to deliver on our objectives, effective
relationships with service providers help the Company achieve its investment
objectives and to operate in an efficient and compliant manner.
How the Board engages
The Board maintains an ongoing dialogue with its service providers and
receives regular updates from them, both formally at Board and Audit Committee
meetings and informally outside the Board and Audit Committee meeting
schedule.
All service providers are subject to an annual evaluation process by the
Board.
Key activities during the year
Details of the responsibilities of the Investment Manager, Investment Advisor,
Link Asset Services (Registrar), and Aztec Financial Services (Guernsey) Ltd
(Company Secretary) can be found on page 82.
Other service providers include our corporate broker, lenders, auditors,
counsel, and other advisors.
Strategic Report \ Responsible Investing
Committed to creating long‑term value and delivering sustainable returns
The Board believes that responsible investment is important in protecting and
creating long-term value. The Board relies upon its Responsible Investment
policy and the expertise and practices of Apax to ensure it delivers returns
ethically and responsibly.
ESG considerations have been a core part of the investment process for Apax
and the Apax Funds' portfolio companies for over a decade. The focus of Apax's
ESG programme 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.
Apax actively participates in industry-leading platforms and the firm's
approach has been recognised by the Principles for Responsible Investment
("PRI"). Apax is a member of the BVCA Responsible Investment Advisory Group,
the Thirty Percent Coalition and the Sustainable Markets Initiative Private
Equity Taskforce, as well as a signatory to ILPA Diversity in Action Group,
and the initiative Climat International.
RESPONSIBLE INVESTMENT HIGHLIGHTS 2022
In 2022, both AGA and Apax continued to progress their sustainability
initiatives.
Apax actively engaged with portfolio companies in its most recent funds, AIX
and AX, on carbon emission measurement. The goal of this engagement is to
support companies in the process of calculating their carbon emissions across
Scopes 1, 2 and 3, measured according to the Greenhouse Gas ("GHG") Protocol.
At year end 2022, more than 60% of all majority-owned portfolio companies in
both funds had completed this measurement, with the remaining companies on
track to be completed before mid-year 2023.
Through this Apax driven programme, portfolio companies obtain an in-depth
understanding of their most material sources of carbon emissions, which in
turn is used to inform the strategies which portfolio companies will have to
put in place to reduce their carbon footprint and contribute to climate action
initiatives. It also establishes a process that enables portfolio companies to
continue measuring their emissions in future years and prepares them for the
increased reporting requirements from regulators, customers and other
stakeholders such as debt providers.
As the EU regulatory framework Sustainable Finance Disclosure Regulation
("SFDR") came into force, Apax worked closely with external counsel in 2022 to
ensure that it is meeting the necessary regulatory requirements for its
existing funds. Influenced by the ambition to maintain its leadership role in
advancing sustainability within private markets, Apax decided that its latest
buyout Fund, Apax XI, will align with Article 8 and will promote a number of
specific sustainability objectives.
Apax has also been continuing to refine its industry-leading ESG data
platform. The platform contains Apax's full 130+ ESG indicator set and Apax
has been further developing the capabilities of the platform, ensuring it
provides up-to-date and relevant data to enable investors in its Funds to
access information for their own analytical and reporting requirements.
Apax has participated in a number of collaborative initiatives throughout the
course of the year. Most notably, the rapidly growing membership base of the
initiative Climat International was hosted by the firm for their annual drinks
reception in September. Apax has also been involved in the Sustainable Markets
Initiative Private Equity Taskforce, as part of which Apax co-CEO Andrew
Sillitoe participates in quarterly sessions on core topics regarding ESG in
private equity.
AGA'S ESG POLICY
Visit: https://www.apaxglobalalpha.com/media/2371/aga-esg-policy-2022.pdf
AGA'S MODERN SLAVERY AND HUMAN TRAFFICKING STATEMENT
Visit: https://www.apax.com/uk-slavery-act/
"ESG is embedded throughout the Apax Funds' investment process."
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.
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' majority owned
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 areas where the Apax
investment teams, together with the OEP, can drive improvements and create
value ahead of exit.
measuring and monitoring
The Apax ESG indicators show how the Apax Funds' portfolio companies address
the UN's SDGs
Select example KPIs from Apax's comprehensive monitoring programme are set out
below:
environment
· Electricity and fuel consumption
· Renewable energy
· Business travel
· Carbon emissions
· Paper and recycled paper usage
· Waste management
· Water usage and reduction
social
· Workforce composition
· Employee satisfaction
· Employee development
· Inclusion and diversity
· Workplace harassment
· Employee engagement
· Health and safety
· Community contributions
governance
· Board composition
· Corporate governance
· Risk management
· Compliance
· Anti-corruption practices
· Whistleblowing
· Information risk management
Spotlight on sustainability
OUTLOOK AND FOCUS AREAS 2023
Responsible Investing continues to be an area of focus for the Board and the
Investment Manager. Apax remains engaged in progressing important initiatives,
particularly around climate, and diversity and inclusion.
Outlook for 2023
Looking to the year ahead, Apax will continue engaging with Fund portfolio
companies to ensure that the remaining companies in AIX and AX undergo carbon
emission measurement, and that this also takes place for companies which will
enter the portfolio in the future. To further support this process, Apax has a
selection of carbon offset providers which portfolio companies can utilise as
part of their decarbonisation strategies.
One of the main focuses for the year will be on new regulatory requirements.
2023 is set to be a transitioning year, where much of the alternative assets
community, including Apax, will have to report under EU SFDR for the first
time. This will be a key focus as Apax strives to ensure that it meets its own
requirements and importantly can also provide limited partners in the Funds
with the data they need for their own reporting. In anticipation of the
increasing data needs of stakeholders, the team at Apax has carefully reviewed
its comprehensive ESG data platform to ensure that it is optimised for
upcoming regulations.
In part driven by the Corporate Sustainability Reporting Directive (''CSRD'')
regulation, the Apax portfolio is also facing increasing ESG-related
regulations. Apax will be engaging with the companies which have already set
targets, whilst also supporting those which are beginning to define their own
sustainability strategies. This includes facilitating best practice sharing,
which will enable those which have already developed a sustainability strategy
to share their advice and experience on building out their own sustainability
processes. Apax is anticipating a busy year ahead and is confident that it is
in a position to support the portfolio so that companies can be well-prepared
to meet these evolving requirements.
APAX'S SUSTAINABILITY REPORT
Visit: https://www.apax.com/create/responsibility/sustainability/
APAX's MODERN SLAVERY STATEMENT
Visit:
https://www.apax.com/media/2534/modern-slavery-and-human-trafficking-statement-2021.pdf
"Apax has focused on embedding strong ESG practices within the firm and the
Apax Funds' portfolio companies for well over a decade."
Seth Brody
Partner and Global Head of Apax's Operational Excellence Practice
Case study
Toi Toi & Dixi
Tackling sustainability through innovation in route-based business models.
Sub-sector: Route-based businesses
Year of investment: 2019
Fund: Apax IX
Status: Current
Overview
In 2019, the Apax Funds acquired Toi Toi & Dixi (or "Toi Toi", previously
the ADCO Group), the European leader in route-based sanitation services for
portable toilets and sanitary equipment. The company covers the entire value
chain from production, rental, cleaning, and waste-disposal, servicing
everything from public events and construction sites to parks and swimming
venues.
The benefit of a repeatable playbook
The Apax Funds have a long and successful track record of partnering with
route-based businesses. Through repeat investments in the same sub-sector, the
Services team has developed a 'playbook' of value creation initiatives to
enhance the profitability of these businesses.
Toi Toi is an example of a route-based business. These business models are
predicated on physically visiting one customer after another to deliver a
product or service, typically via vans driving a route from a warehouse or
depot. While the costs of each route are mostly fixed, revenue, and therefore
profit, per route can be maximised through increasing the number of customers
visited as well as cross-sell and up-sell, and pricing initiatives.
Tackling the sustainability challenge
The majority of Toi Toi's CO(2) emissions, like many density-driven
businesses, come from its extensive vehicle service fleet. In fact, with
approximately 77 million kilometres covered per year the company's service
fleet accounts for 37.4% of its CO(2) footprint. The company is committed to
progressively minimising these emissions and, for more than 20 years, it has
been working on route optimisation for its service vehicle journeys, which has
significantly helped reduce the average distance between stops.
Toi Toi is also currently reviewing the electrification of its entire fleet.
However, it has very specific needs for electric vehicles, and can't use a
ready plug and play solution. Therefore, Toi Toi is developing its own
prototype within its fleet development department. This approach is indicative
of the company's innovative approach to tackling sustainability challenges
head-on, often using in-house resources to find solutions to industry-wide and
company-specific issues more quickly. Through its R&D work, Toi Toi has
implemented innovative solutions across the spectrum from water disposal to
tackling carbon emissions, and it secured ten patents in 2021 alone.
strategic report \ Investment Manager's report
Market review
Overview AND outlook
Global growth slowed sharply through 2022, reflecting significant factors,
including a diminished post-Covid-19 reopening boost, fiscal and monetary
tightening, the cost-of-living crisis, and the Russia-Ukraine war. With
inflation forecast to remain elevated in the near term and the ongoing
uncertainty around the geopolitical environment, we expect market volatility
to continue into 2023.
The economic outlook is still highly uncertain, with a high chance of outcomes
differing by geography. The consensus is for developed markets to fall into a
mild recession or very low growth in 2023, but some economists are more
pessimistic about the outlook. Energy market dynamics are expected to be just
as challenging for Europe in 2023 as they were in 2022. Energy prices combined
with higher interest rates pose a risk to industrial production and consumer
disposable income. Whilst the US is more insulated from the energy crisis,
growth is expected to slow as inflation and higher interest rates weigh on
demand for goods and services. Asia should benefit from China reopening post
the zero-Covid policy and India continues with robust growth.
Forecasts for GDP have softened, and developed markets are expected to grow by
0.5% in 2023 and 1.6% in 2024.
What this means
AGA's portfolio is diversified by sector, investment style, and vintage. The
Apax Funds' strategy of buying and transforming companies in sub-sectors with
strong economic motors is well-suited to the current environment as it is less
reliant on cyclical growth, high leverage and financial engineering.
The Apax Funds' demonstrated ability to buy companies at a discount to
comparable companies and close the gap on exit by transforming businesses
provides a margin of safety if valuations continue to fall significantly,
although activity is likely to remain more subdued compared with recent years.
equity MARKETS
Unsurprisingly, 2022 saw significant volatility across equity markets. The
S&P 500 declined by 19.4% over the course of 2022 - its worst year since
2008 when the index dropped by 38.5%. The Europe STOXX 600 fell by 12.9%,
while the FTSE 100 was more resilient, recording a modest gain of 0.9%.
A combination of global factors led to a broad-based sell-off in equity
markets which persisted throughout the year and has left some stocks with
solid earnings potential trading at low valuations, albeit many valuations are
still elevated by long-term historical standards.
What this means
Weaker share prices have had an impact on AGA's listed holdings, which are
primarily the residual look-through holdings in previously IPO'd Private
Equity portfolio companies which represented 10% of Adjusted NAV at 31
December 2022. Listed investments are valued at the closing share price at
period end. Current market conditions therefore introduce more volatility into
the Net Asset Value of the portfolio.
Apax will seek to maximise the value of the Apax Funds' public company
positions, potentially by looking at strategic options. As an example, the
sale of Duck Creek in which the Apax Funds held a c.20% stake, was announced
in January 2023 at a c.57% premium to the unaffected share price at 30
December 2022.
Lower public market valuations also provide an opportunity for potential
public to private deals which we expect to be a theme in 2023.
CREDIT MARKETS
Inflation led to a rise in short and long-term government bond yields in 2022.
These interest rate movements impacted both high yield and loan markets: high
yield instruments (which are mostly fixed rate) traded off first, and spreads
for loans (which are mostly floating rate) widened materially. Loan markets
are currently pricing in a likely increase in the default rate. In addition,
loan markets have arguably dislocated with liquidity (measured in loan
outflows) reducing in H2 2022, placing further pressure on loan prices.
Whilst spreads have slightly tightened in Q4 2022, we expect market volatility
to continue into 2023.
What this means
The majority of positions within AGA's Derived Debt portfolio are floating
rate, and thus the income generated by the portfolio benefits from rising
rates. Furthermore, the portfolio primarily consists of lower-risk first and
second lien loans, providing a margin of safety to potential issuers'
declining credit quality. The recent spread widening provides attractive entry
points for new Derived Debt transactions.
The Private Equity portfolio is relatively lowly levered and has long-dated
maturities meaning it is more insulated from short-term movements in credit
markets.
INTEREST RATES
Rate increases were a regular feature in 2022 as central banks tried to cool
down inflation. The Fed increased interest rates seven times in 2022,
including four consecutive 0.75% increases. The last time the Fed hiked rates
by 0.75% was in 1994. The European Central Bank (''ECB'') raised interest
rates four times, the first increases it had made since 2011.
We expect central banks to maintain their restrictive policy stance until
there is sufficient evidence that core inflation is on a sustained downward
path to 2%. As at January 2023 the Fed Funds Rate was 4.5% to 4.75%, with
policymakers projecting interest rates peaking between 5% and 6%. The ECB's
deposit facility rate now stands at 2.5% with two more increases expected in
the first half of 2023. Rate cuts by the Fed or ECB are not expected until
2024, and market expectations of rate cuts could prove to be premature meaning
higher rates for longer.
What this means
Higher interest rates will increase the cost of debt within the Apax Funds
portfolio companies, however, much of the portfolio debt is either rate hedged
or is fixed rate, limiting the impact of interest rate rises in the short
term. Apax is closely monitoring the capital structures in the portfolio to
minimise the impact, and portfolio companies are taking early action where
necessary. At the portfolio level, the capital structures of the Apax Funds
are well-positioned with long-dated maturities and reasonably low leverage
when compared to the industry average.
Although AGA's revolving credit facility is floating rate, exposing it to
interest rate increases, the potential impact is limited as it is not used for
structural leverage and was undrawn at year end.
INFLATION
Inflation reached a 40-year high in 2022 and has proven more persistent than
was initially expected. Consumer confidence is weak, but labour markets remain
tight, putting upward pressure on wage growth.
Inflationary pressures have also widened; prices for many goods and services
increased sharply alongside food and energy prices. The US Core PCE Index,
which measures inflation excluding food and energy, grew by 4.4% year-on-year
in 2022.
There are indications that headline inflation may have peaked. The US Core PCE
Index fell to a four-month low in November, and Eurozone inflation dropped for
the second consecutive month in December. Eurozone headline inflation was down
to 9.2% year-on-year in December, with energy prices declining largely due to
a warmer winter. That said, prices of goods and services are expected to
remain above the longstanding 2% central bank targets for the foreseeable
future.
Inflation should moderate as the economy slows, labour markets cool down, and
supply chain pressures ease. S&P Global Market Intelligence forecasts US
inflation at 3.9% in 2023, while in the Eurozone, it projects inflation at
5.1% in 2023.
What this means
Most of the portfolio companies have strong market positions and
correspondingly have pricing power to pass on higher costs to customers,
thereby minimising the impact on the bottom line. In addition, the Apax Funds'
portfolio is relatively less exposed to businesses with higher energy costs
and with more blue collar labour where we have seen the highest inflation.
However, for a limited number of portfolio companies (e.g. healthcare
services) there are timing delays between increased input costs and price
adjustments due to the nature of their businesses and structure of contracts
which has led to a decline in margins. More broadly going forward, inflation
could also have an impact on demand as buyers purchase less.
Apax works closely with portfolio companies to monitor and manage the impact
of inflation on earnings.
PRIVATE EQUITY MARKETS
The private equity market slowed down in H2 2022 in part due to inflationary
pressures, higher cost of debt, and geopolitical turmoil. Sponsors have become
increasingly cautious, and credit providers have scaled back their lending and
increased the cost for leveraged buyout deals.
These disruptions created a challenging exit environment for existing
portfolio companies and made it more difficult for managers to deploy capital.
However, we expect sponsors to continue to pursue high-quality assets even in
a demanding environment.
Private market valuations have proven more stable than public markets so far.
We believe private equity valuations are more resilient than public market
valuations, as private equity investors have significant amounts of capital at
their disposal and are generally under less pressure to sell, given the
long-term nature of the industry. In addition, private equity can maximise
exit optionality, finding the right buyer for an asset at the right time. This
makes it possible to achieve premium exits even in difficult markets as
evidenced by the sales in 2022 of MyCase, an Apax X investment, for a 49%
premium to March 2022 Unaffected Valuations and the sale of Boasso for a 33%
premium to June 2022 Unaffected Valuations.
With private markets tending to lag public markets when the cycle turns, we
expect private markets to adjust as they have in the past. Private equity
activity should pick up once there is less uncertainty about valuations and
macroeconomic conditions have stabilised. Private equity has previously
demonstrated outperformance following periods of heightened volatility.
PRIVATE EQUITY TRANSACTION VOLUMES
TOTAL US PRIVATE EQUITY TRANSACTION VALUE ($BN)
H119 111
H219 139
H120 100
H220 86
H121 177
H221 186
H122 147
H222 39
Source: LCD
TOTAL US PRIVATE EQUITY TRANSACTION VOLUME (TRANSACTION COUNT)
H119 55
H219 54
H120 30
H220 43
H121 77
H221 70
H122 44
H222 7
Source: LCD
What this means
The Apax Funds have continued to identify attractive investment opportunities.
A benefit of the declining equity markets is that valuations for new private
equity deals may become more favourable, albeit with some lag compared to the
decline in public markets.
While there is therefore still scope for exit activity, the pace of
realisations will likely reduce when compared to recent years. However, given
the high-quality nature and vintage diversification of the Private Equity
portfolio, we expect there to be continued demand for portfolio companies of
the Apax Funds, even in a more challenging environment.
Due to the impact of volatility on the market appetite for new IPOs, this exit
route is less relevant in the current environment.
The Apax Funds' demonstrated an ability to buy companies in sub-sectors with
strong economic motors at a discount to comparable companies, and close the
gap on exit by transforming business performance, providing a margin of safety
if valuation levels continue to deteriorate.
APAX GLOBAL ALPHA
Performance review
Total NAV Return
(7.4)%
Adjusted NAV
€1,299m
Adjusted NAV per share
€2.65/£2.34
1. Includes proceeds received from pre-IPO funding rounds, dividends,
primary and secondary offerings of shares in companies to 31 December 2022,
from companies that listed in 2020 and 2021
TOTAL NAV RETURN CONTRIBUTIONS (%)
Private Equity (9.5)%
Derived Debt (0.4)%
Derived Equity (0.2)%
Cost and other movements (0.6)%
Performance fee adjustments(2) 0%
FX 3.3%
Total NAV Return(3) (7.4)%
2. Performance fee adjustment accounting for the movement in the
performance fee reserve at 31 December 2022
3. 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 at 31 December 2021 1,481.7
Private Equity (141.8)
Derived Debt (5.5)
Derived Equity (2.4)
Cost and other movements (9.8)
Dividends paid (71.1)
Performance fee adjustments(4) 0.0
FX 48.3
Adjusted NAV at 31 December 2022 1,299.4
4. Performance fee adjustment accounting for the movement in the
performance fee reserve at 31 December 2022
PERFORMANCE HIGHLIGHTS
As highlighted in our market review, we have witnessed a fundamental change in
the macro and investment environment during 2022. Against this challenging
backdrop, the Total NAV Return for AGA in 2022 was (7.4)% ((10.7)% constant
currency). Total NAV Return in Private Equity was (11.3)% ((14.8)% constant
currency), with Derived Investments supporting overall performance with a
Total Return of 1.9% ((2.2)% constant currency). The largest driver of Total
NAV Return was weaker valuation multiples, in particular, for the Apax Funds'
listed holdings. This was partially offset by continued good operating
performance across the portfolio companies. We believe the Apax Funds' focus
on driving alpha through operational improvements, coupled with a deep sector
focus and our prudent management of the balance sheet, helped AGA navigate a
challenging year and positions the Company well as we go into 2023.
Earnings growth remains a key driver of value creation, helping offset
negative movements in valuation multiples in particular from the listed
holdings
Operationally, the Private Equity portfolio performed well in 2022 with
average EBITDA growth across the portfolio of 18.5%. However, this was not
enough to fully offset negative movements in valuation multiples. The main
driver was multiple contraction for the Apax Funds' listed holdings which
contributed c. 80% to the (29.8)% multiple contraction.
The majority of these listed holdings are from IPOs that took advantage of
attractive valuations achievable in public markets in 2020 and 2021 and,
together with subsequent secondary sales, have already returned distributions
totalling 3.4x initial costs(¹) to AGA.
1. Includes proceeds received from pre-IPO funding rounds, dividends,
primary and secondary offerings of shares in companies to 31 December 2022,
from companies that listed in 2020 and 2021
Continued exit activity at attractive uplifts to Unaffected Valuations
Despite the uncertain macro-environment, the Apax Funds continued to
successfully exit businesses during 2022, achieving an average uplift of 15%
across seven full exits. AGA received a total of €227.8m in distributions in
2022.
Post period end, AGA announced the public to private exit from Duck Creek
Technologies, which delivered an uplift of 57% to Unaffected Valuation based
on share price at 30 December 2022.
Derived Debt cushioned returns and supported new commitments made to Apax
Private Equity Funds
Derived Debt, where AGA deploys capital not invested in Private Equity,
delivered a Total Return of 2.7% in the period. This portfolio enhances the
robustness of AGA's balance sheet and supports unfunded commitments to the
Apax Private Equity Funds whilst also providing an additional source of alpha
for AGA and a steady flow of income to support dividends.
PORTFOLIO HIGHLIGHTS
Following additional calls to fund investments previously made in Private
Equity, AGA was 95% invested at 31 December 2022. AGA's Invested Portfolio
consisted of €871.0m in Private Equity (71%) and €364.2m in Derived
Investments (29%).
We have continued to follow our approach of increasing commitments to Private
Equity, whilst reducing the exposure to Derived Equity in parallel. As a
consequence, our Derived Investment portfolio now predominantly consists of
Derived Debt (94% of Derived Investments). The Private Equity portfolio
remains well-diversified by sector, investment vintage, and geography.
Valuation methodology
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 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, largely being positions in
previously IPO'd portfolio companies, is valued at the closing share price of
the portfolio company as at 30 December 2022.
Equity values are calculated based on a relevant earnings metric multiplied by
applicable valuation multiples, and after taking into account portfolio
company debt (average at 31 December 2022: 4.8x).
Equity values are also net of NAV facilities used in some of the underlying
holding structures. These have been put in place primarily for Apax IX and
Apax X, and both to replace more volatile margin loan structures and to
generally optimise cashflows to investors and rebalance risk. At 31 December
2022, the total of these facilities on a look-through basis were c.7% of
Adjusted NAV.
In the Derived Investments portfolio, Derived Debt positions are valued with
reference to observable broker quotes where available and models using market
inputs. Derived Equity positions are valued based on share prices or using
comparable multiples.
COMMITMENTS AND FUNDING
As at 31 December 2022, AGA was a limited partner in 11 Apax Funds, providing
exposure to 79 underlying portfolio companies.
Following previous commitments and the related anticipated capital calls, a
significant proportion of AGA's cash holdings from earlier in the year have
been deployed into the Private Equity portfolio during the second half of
2022. This has moved the Company to being more fully invested at 95% (FY21:
90%).
During 2022, AGA made commitments to three new funds: $700m (split 70:30
between the US Dollar and Euro tranches) to the new global buyout fund Apax
XI, $60m to the Apax Global Impact Fund, and $40m to the AMI Opportunities
Fund II.
Outstanding commitments to the Apax Funds (together with recallable
distributions) amounted to €1.0bn at 31 December 2022. These include the new
commitments referred to above. As most of the Apax Funds operate capital call
facilities to bridge capital calls from its investors for periods of up to 12
months, AGA has significant visibility on future calls resulting from these
commitments, facilitating the Company's liquidity planning.
At the period end, AGA had net current assets inclusive of cash of €64.2m
and its revolving credit facility of €250m was undrawn. As previously
announced, AGA has received notice that the facility has reverted to a
conventional fixed-term arrangement with an expiry date of 10 January 2025.
During 2022, the average management fee paid to the Apax Funds and AGML was
1.5% of AGA's NAV. There is no layering of fees through the AGA structure;
where the Apax Funds are subject to management fee payments, there is no
additional fee charged to the Company.
AGA Assets and Commitments (€m)
as at 31 December 2022
Private Derived Investments NCAs(1) RCF Total
Equity
Balance sheet 871 364 64 250 1,549
Unfunded commitments 1,005
1. NCA: Net current assets (inclusive of cash and excluding financial
liabilities at FVTPL)
APAX GLOBAL ALPHA
Portfolio overview
Invested portfolio split by sector
40%
tech & DIGITAL
Private Equity 26%
Derived Investments 14%
28%
SERVICES
Private Equity 22%
Derived Investments 6%
17%
healthcare
Private Equity 9%
Derived Investments 8%
15%
Internet/Consumer
Private Equity 14%
Derived Investments 1%
PORTFOLIO OVERVIEW AT 31 DECEMBER 2022
Portfolio by geography
December 2022 December 2021
North America 62% 64%
Europe 14% 15%
United Kingdom 11% 9%
Israel 3% 3%
India 4% 4%
China 1% 1%
Rest of World 5% 4%
PORTFOLIO BY CURRENCY
December 2022 December 2021
USD 66% 67%
EUR 13% 15%
GBP 10% 7%
INR 2% 2%
HKD 1% 0%
Other 8% 9%
Private Equity is well-diversified by sector, fund vintage, and geography
The Private Equity portfolio is well-diversified across the four core Apax
sectors, with a focus on seven main sub-sectors that display attractive
characteristics or compelling investment themes.
In addition, the portfolio shows a good diversification across investment
vintages. Of the 79 portfolio companies, 11 were invested before 2017, 30 were
acquired in the 2017-2019 period, and 38 investments are from 2020 and later.
This implies that companies across the portfolio are at different stages of
their investment cycle.
For example, some companies are in the early stages of their transformation
journey, with the focus being on the 100-day planning and putting in place
value creation initiatives. Meanwhile, others are in the midst of their
transformation process, executing on operational improvements and other
organic and inorganic value creation initiatives. And lastly, there are a
number of companies where the initial investment thesis has been achieved and
the focus has turned to identifying and executing the most attractive route to
exit.
For further details on Private Equity, see the "Private Equity Portfolio
Review".
Derived Investments is a diversified portfolio of investments that generates
income and provides an additional source of alpha for AGA, leveraging Apax's
sector know-how
Derived Investments, which are predominantly investments in Derived Debt,
target the same sectors as the Private Equity funds and leverage the deep
sector know-how of the Apax investment teams. The Derived Debt portfolio
consists of 24 positions. Derived Debt instruments are almost exclusively
floating rate instruments, which largely insulates the portfolio from duration
risk, and AGA benefitted from rising base rates during the year.
For further details on Derived Investments, see the "Derived Investments
Portfolio Review".
PRIVATE EQUITY
Fund lifecycle
INVESTMENT PHASE
41%
Apax X
AGA NAV: €364.6m
Distributions(1): €27.1m
% of AGA PE portfolio: 42%
Vintage: 2020
Commitment: €199.8m+$225.0m
Invested and committed: 92%
Fund size: $11.7bn
Apax Digital II
AGA NAV: €0.9m
Distributions(1): €0.0m
% of AGA PE portfolio: 0%
Vintage: 2021
Commitment: $90.0m
Invested and committed: 10%
Fund size: $1.9bn
Apax XI
AGA NAV: €(3.4)m
Vintage: 2022
Commitment: €198.4m+$490.0m
Invested and committed: 0%
Fund size: TBC(2)
AMI II
AGA NAV: €(0.7m)
Vintage: 2022
Commitment: $40.0m
Invested and committed: 0%
Fund size: TBC(2)
Apax Global Impact
AGA NAV: €(2.0m)
Vintage: 2022
Commitment: $60.0m
Invested and committed: 16%
Fund size: TBC(2)
MATURITY PHASE
46%
Apax IX
AGA NAV: €325.3m
Distributions(1): €376.7m
% of AGA PE portfolio: 37%
Vintage: 2016
Commitment: €154.5m+$175.0m
Invested and committed: 93%
Fund size: $9.5bn
AMI
AGA NAV: €23.4m
Distributions(1): €39.7m
% of AGA PE portfolio: 3%
Vintage: 2015
Commitment: $30.0m
Invested and committed: 87%
Fund size: $0.5bn
Apax Digital
AGA NAV: €48.1m
Distributions(1): €20.2m
% of AGA PE portfolio: 6%
Vintage: 2017
Commitment: $50.0m
Invested and committed: 97%
Fund size: $1.1bn
HARVESTING PHASE
13%
Apax VIII
AGA NAV: €88.6m
Distributions(1): €565.3m
% of AGA PE portfolio: 10%
Vintage: 2012
Commitment: €159.5m+$218.3m
Invested and committed: 110%
Fund size: $7.5bn
Apax Europe VII
AGA NAV: €23.8m
Distributions(1): €91.4m
% of AGA PE portfolio: 3%
Vintage: 2007
Commitment: €86.1m
Invested and committed: 108%
Fund size: €11.2bn
Apax EUROPE VI
AGA NAV: €2.2m
Distributions(1): €13.7m
% of AGA PE portfolio: 0%
Vintage: 2005
Commitment: €10.6m
Invested and committed: 107%
Fund size: €4.3bn
1. Represents distributions received by AGA since 15 June 15
2. Fund has yet to hold its final close
private equity
Portfolio review
Investment strategy focused on business improvement.
Portfolio highlights
Private Equity Total Return
(11.3)%
% of Invested Portfolio
71%
PORTFOLIO COMPANY
LTM EBITDA growth
18.5%
LTM revenue growth
21.5%
No. of portfolio companies
79
AGA FY 2022 PRIVATE EQUITY PERFORMANCE
Movement in underlying portfolio companies' earnings 22.9%
Movement in net debt(1) (9.4)%
Movement in comparable companies' valuation multiple(2) (28.9)%
One-off and other(3) (0.1)%
Management fees and carried interest accrued by the Apax Funds 0.7%
Movement in performance fee reserve(4) -
FX 3.5%
LTM Total Return (11.3)%
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 2022
Overall, performance was resilient in the face of challenging markets.
PRIVATE EQUITY PERFORMANCE
The Private Equity portfolio, which represented 71% of AGA's Invested
Portfolio at 31 December 2022, delivered a Total Return of (11.3)% in the
year. As illustrated in the chart, operationally, the portfolio performed well
in 2022 and Apax's focus on business improvement helped drive EBITDA growth
across the portfolio companies throughout the year. However, it was not enough
to offset the overall effect of multiple contraction, primarily in the Apax
Funds' listed holdings.
At 31 December 2022, listed companies represented 14% of AGA's Private Equity
portfolio, down from 25% at the end of 2021, reflecting the decline in fair
market values. The majority of these IPOs took advantage of attractive
valuations achievable in public markets in 2020 and 2021 and, together with
subsequent secondary sales, have already returned 3.4x initial costs¹ to AGA.
1. Includes proceeds received from pre-IPO funding rounds, dividends,
primary and secondary offerings of shares in companies to 31 December 2022,
from companies that listed in 2020 and 2021
PORTFOLIO COMPANY PERFORMANCE
The Private Equity portfolio continues to perform well operationally. On
average, revenue grew by 21.5% over the last twelve months, and EBITDA grew by
18.5%.
Capital structures are well-positioned with long-dated maturities and
reasonably low leverage. Approximately two thirds of portfolio debt is rate
hedged or fixed rate, limiting the impact of interest rate rises in the short
term. More than 78% of portfolio company debt matures in 2027/2028 or later.
Some of the Private Equity portfolio companies also have portable capital
structures that make the companies more appealing to buyers. As the Apax
Funds' investment strategy relies less on financial leverage to drive returns,
average net debt/EBITDA levels across the Private Equity portfolio companies
remained moderate at 4.8x.
SECTOR UPDATE
The Private Equity portfolio is well-diversified across the four core Apax
sectors, with 37% in Tech & Digital, 31% in Services, 12% in Healthcare,
and 20% in Internet/Consumer. Performance in 2022 differed by sub-sector and,
sometimes, even within the same sub-sector.
In Software, there was some weakness in new bookings as 2022 progressed,
however retention rates remain high overall due to the sticky nature of the
products provided. While there has been a decline in valuation multiples of
the public portfolio, private valuations remain robust - a fact reinforced by
the successful sale of legal software company MyCase to AffiniPay, at a
significant uplift of 49% to its previous fair market value. In tech-enabled
services, good growth continued, despite some evidence of increased delays in
projects. In telecoms, underlying performance has also been strong and
valuations are stable given the defensive nature of this sub-sector.
In Services, the core sub-sectors are: route-based businesses, outsourced
sales and marketing, and residential services. Companies in these sub-sectors
saw strong earnings performance and demonstrated their resilience in a
downturn given the largely non-discretionary nature of the services. Due to
the strength of their business models, the Apax Funds' portfolio companies
were also largely able to pass on cost inflation.
In Healthcare, across medical technology, healthcare services, and pharma,
underlying demand tends to be less cyclical, and the Private Equity portfolio
is proving highly resilient, despite some inflationary pressures. The medical
technology portfolio companies continue to grow, benefitting from strong
demand although the focus remains on lingering supply chain issues which
create a more complex operating environment. In healthcare services, despite
increasing labour costs, portfolio companies are still seeing strong demand
for services.
Portfolio companies in online marketplaces continued to experience strong
performance in 2022. These companies are generally resilient given their
market leadership positions, despite some exposure to the cycle. In consumer
packaged goods, portfolio companies continue to see increasing distribution
for their premium, branded consumables, and have so far largely been insulated
from the slow-down with all existing investments delivering significant
year-on-year growth.
PORTFOLIO YEAR-OVER-YEAR LTM REVENUE GROWTH(1):
December 2022: 21.5% vs December 2021: 20.2%
Number of investments within the associated band
December 2022 >15% 60% 28
December 2021 72% 30
December 2022 5% to <15% 24% 14
December 2021 18% 12
December 2022 0% to <5% 12% 7
December 2021 4% 5
December 2022 <0 4% 5
December 2021 6% 4
PORTFOLIO YEAR-OVER-YEAR LTM EBITDA GROWTH(1):
December 2022: 18.5% vs December 2021: 35.3%
Number of investments within the associated band
December 2022 >15% 60% 26
December 2021 68% 27
December 2022 5% to <15% 12% 9
December 2021 13% 10
December 2022 0% to <5% 7% 4
December 2021 3% 2
December 2022 <0 21% 15
December 2021 16% 12
NET DEBT/EBITDA MULTIPLE(1):
December 2022: 4.8X vs December 2021: 4.2X
Number of investments within the associated band
December 2022 <6x 38% 14
December 2021 30% 13
December 2022 4x to <6x 30% 12
December 2021 20% 12
December 2022 2x to <4x 11% 8
December 2021 18% 8
December 2022 <2x 21% 16
December 2021 32% 16
ENTERPRISE VALUE/EBITDA VALUATION MULTIPLE(1):
December 2022: 17.2X vs December 2021: 23.2X
Number of investments within the associated band
December 2022 >14x 66% 29
December 2021 69% 27
December 2022 12x to <14x 16% 5
December 2021 7% 4
December 2022 10x to <12x 7% 5
December 2021 6% 5
December 2022 <10x 11% 11
December 2021 18% 13
1. 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 and companies where EBITDA is not meaningful for company
specific reasons
HIGHLIGHTS
Total new investment(1)
€132.8m
Distribution from Apax funds
€227.8m
Average uplift on exits
15.1%
Average Gross MOIC
on FY2022 exits
3.1x
NAV performance
Whilst continued good operating performance across the portfolio saw earnings
growth contribute 22.9% to the Private Equity Total Return, it was not
sufficient to fully offset the negative movements in valuation multiples. At
31 December 2022 Private Equity Adjusted NAV was €871.0m, compared to
€1,012.9m in 2021, with c.80% of the multiple contraction due to negative
valuation movements in the Apax Funds' listed holdings.
At the portfolio company level, the strongest valuation gains were from Toi
Toi & Dixi (€19.5m), Assured Partners (€11.6m), and AffiniPay (MyCase)
(€11.3m).
The largest valuation declines came from the Apax Funds' listed holdings which
were previously IPO'd, with Thoughtworks declining the most at €92.4m. These
are companies where substantial value has already been extracted at IPO and
subsequent secondary sales, and where the Apax Funds have remained a
shareholder. As these companies are valued using the closing share price at
year end, valuations for these companies are more susceptible to equity market
volatility.
Post year end, the public to private exit from Duck Creek Technologies, put a
spotlight on the value differential achievable for high-quality companies in
the private markets versus their trading levels in public markets. The exit
delivered an uplift of 57% to Unaffected Valuations based on share price at 30
December 2022.
TRANSACTION Activity
Despite a more challenging market backdrop, AGA invested €132.8m¹ on a
look-through basis in ten new investments in 2022.
Demand for high-quality assets that have completed their transformation
journeys under the Apax Funds' ownership saw seven full exits from the Private
Equity portfolio during the year, resulting in total distributions of
€227.8m to AGA during the period. In 2022, full exits were achieved at an
average uplift(2) to previous Unaffected Valuations(3) of 15%.
All full Private Equity exits were to corporate or financial buyers.
Additionally there were three minor partial exits through sell downs of
publicly held shares.
1. AGA's investment cost on a look-through basis
2. 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 Valuation(3) 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 2022. For investments where
there were subsequent partial realisations since December 2021, uplift was
calculated by taking proceeds received in FY 2022 plus remaining fair value at
31 December 2022 compared to fair value at 31 December 2021
3. 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)
PRIVATE EQUITY ADJUSTED NAV DEVELOPMENT (€M)
Adjusted NAV at 31 December 2021 1,012.9
Calls 194.4
Distributions (227.8)
Unrealised movements (141.8)
Performance fee adjustment(1) -
FX 33.3
Adjusted NAV at 31 December 2022(2) 871.0
1. Performance fee adjustment accounting for the movement in the
performance fee reserve at 31 December 2022
2. Includes AGA's exposure to carried interest holdings in AEVII and
AEVI which were respectively valued at €15.6m and €1.5m at 31 December
2022
New Investments(1) €m Exits GROSS GROSS
IRR(2)
MOIC(2)
Alcumus 16.6 Q1 3 Unilabs 3.1x 25%
2 (Apax X) Global leader in technology-led risk management and compliance (Apax IX & Apax Europe VI) Leading pan-European provider of laboratory and
solutions imaging diagnostics services
1 YunZhangFang 0.9
(ADF) Leading SaaS company in China providing accounting and tax solutions
1 T-Mobile Netherlands 19.7
(Apax X) Leading European telecommunications operator
4 Ole Smoky Distillery 10.4
(Apax X) One of the fastest-growing spirits companies in the US
1 Infinity Labs 3.3 Q2 1 AffiniPay (MyCase) 3.9x 125%
(AMI) Leading computer programming training provider in Israel (Apax X) Provider of legal practice management software
1 Xeneta 3.6 Q3 1 Attenti 1.6x 11%
(ADF II) Leading ocean and air freight rate benchmarking and market analytics (Apax X) Global leader in technology-led risk management and compliance
platform solutions
1 EcoOnline 19.0 1 Lever 1.4x 55%
(Apax X) European EHS SaaS market leader developing software to create safer (ADF) Leading talent acquisition suite that helps talent teams to reach their
and sustainable workplaces while ensuring compliance and environmental hiring goals and to connect companies with top talent
sustainability
4 Pickles Auctions 10.9 2 Boasso Global 2.1x 11%
(Apax X) Australia's leading marketplace for used vehicles, salvage, (Apax VIII) Operator of the largest tank truck network in North America
industrial, agricultural, and general goods
3 Kepro 3.0x 22%
(Apax IX) Provider of beneficiary eligibility and medical cost containment
services
2 Authority Brands 28.7 Q4 2 Authority Brands 3.1x 35%
(Apax X) Leading franchisor of home services in the US, Canada, and Latin (Apax IX) Leading franchisor of home services in US, Canada and Latin America
America
1 ClearBank 5.2
(ADF & ADF II) Large next-generation clearing and embedded banking
platform in the UK
Sectors
1 Tech & Digital 2 Services 3 Healthcare 4 Internet/Consumer
1. Represents AGA's look-through cost to investments acquired by the
Apax Funds during FY 2022. Excluded from the amounts disclosed in the table
above is €14.5m which mainly relates to AGI's purchase of Bonterra and
Eating Recovery Center earlier in 2022, in addition to some follow-ons
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. For some portfolio companies, these represent
returns calculated based on individual fund sleeves, e.g. AIX EUR
Case studies
The flywheel effect is best illustrated through case studies where the benefit
of Apax's sector focus, "Mining the Hidden Gems" strategy, and repeatable
playbook, result in substantial value creation.
tech & Digital
Name: Lever
Year of investment: 2021
Fund: Apax Digital Fund
Status: Realised
Date of exit: August 2022
Exit with strong uplift
Lever is a leading talent acquisition software provider that makes it easy for
companies to connect with top talent. One of the only platforms to provide
talent acquisition leaders with complete applicant tracking systems and
candidate relationship capabilities on a single native platform, the company
serves more than 5,000 clients globally.
Leveraging Apax's expertise in human capital technology and enterprise
software, experience in scaling global software companies and Apax's
Operational Excellence Practice ("OEP"), Apax identified the opportunity to
back a leading innovative player in a growing market. The Apax Digital Fund
("ADF") solely led Lever's $50m Series D funding round in November 2021. In
July 2022, ADF and the Board agreed to sell Lever to human capital management
software business Employ (parent company of Jobvite, JazzHR, and NXTThing).
Value Creation
• Strategic operational development to accelerate Lever's growth
trajectory, including lead generation and go-to-market optimisation, R&D
and product improvement.
• Enhancement of senior management through support with recruitment of
Head of Demand Generation, Head of Product and CFO role, as well as
introduction of a new board member.
• Re-acceleration of growth coming out of Covid-19, with strong
performance year-on-year in FY 2022.
Gross MOIC¹
1.4x
Gross IRR¹
55%
Services
Sub-sector: Residential services
Year of investment: 2021
Fund: Apax X
Status: Current
Diving deeper into an attractive Services sub-sector
The residential services sub-sector encompasses a range of businesses
addressing home repair and maintenance needs, ranging from utility line
protection to tree care and beyond.
The space is attractive due to its highly fragmented nature, dominated by
unsophisticated, hyper-local "mom-and-pop" providers.
This allows Apax to utilise its distinctive playbook to unlock and accelerate
growth. At the heart of this transformation is a focus on digital acceleration
and building scale.
THE PLAYBOOK IN ACTION - SAVATREE
The Apax Fund X acquired SavATree, a leading US arboriculture services
provider in 2021.
Arboriculture services is a classic example of the residential services
sector, being fragmented and under-penetrated, making it ripe for
consolidation, with significant growth potential in the near-term.
The investment thesis was to back a high-quality business which was ideally
positioned to execute on a "good-to-great" transformation.
Since initial investment, the transformation has helped to deliver robust
performance, even in a challenging environment, focused on:
• Organic growth acceleration and digitalisation by leveraging Apax's
Operational Excellence Practice's digital playbook, with a focus on digital
marketing and search engine optimisation, to fuel growth and capture market
share.
• Margin improvement through unlocking cross-sell opportunities and
optimising route density and pricing strategy.
• Expanding the internal M&A team, positioning SavATree as a
platform for sector consolidation.
Equity invested in sub-sector²
$2.5bn
(4 deals)
1. Represents Gross IRR and Gross MOIC calculated based on the
expected cash flows and remaining fair value if applicable. For Lever, these
represent returns calculated based on USD cash flows
2. This represents total equity invested by the Apax Funds across four
investments in this sub-sector
Healthcare
Name: Kepro
Year of investment: 2017
Fund: Apax IX
Status: Realised
Date of exit: November 2022
Exit with significant uplift
Kepro is a leading provider of technology-enabled solutions in healthcare
services. Kepro partners with government and private healthcare players to
maximise healthcare quality, improve accuracy and increase efficiency.
Apax IX acquired Kepro in 2017 with the original investment thesis of backing
a leading player in an attractive, fragmented market which was benefitting
from increased outsourcing by government players looking to ensure
cost-efficient quality and compliance.
Over the past five years, Apax IX has helped transform the business into a
national, tech-enabled market leader that was coveted by strategic players in
the government services sector.
Value Creation
• Revamped the management team, including CEO, CFO, Chief Growth
Officer, Chief Legal & Compliance Officer, Chief Product Officer, and
Chief Human Resources Officer.
• Focused Kepro on higher value clinical solutions and contracts that
could benefit from Kepro's in-house technology capabilities, which were
bolstered with investment; added a software-only product offering.
• Drove accelerated new contract wins, improved retention, and higher
NPS through a collaboration between: (i) the strengthened management team;
(ii) highly relevant board members; and (iii) Apax's Operational Excellence
Practice.
• Executed three strategic acquisitions at attractive entry multiples
which were sourced through the Apax network.
Gross MOIC¹
3.0x
Gross IRR¹
22%
Internet/Consumer
Name: Pickles Auctions
Year of investment: 2022
Fund: Apax X
Status: Current
Pickles operates Australia's leading auction marketplaces for motor vehicles,
salvage cars and industrial equipment. The company's trusted marketplaces
offer thousands of quality assets every week and work with major clients
including the Australian government, state governments, insurers, financial
institutions, fleet leasing companies, banks and not-for-profit organisations.
Leveraging significant global experience in online marketplaces, Apax
identified Pickles as an attractive investment opportunity for Apax X by
virtue of its leading market position in Australia, strong brand and
reputation for customer service, and diversification across multiple
verticals.
Investment Thesis
• Support a high-quality market leader with a strong runway for
growth, which is in the early stages of a meaningful digital transformation.
• Apply best practices developed in prior Apax Funds' investments and
utilise additional capital to fuel future growth.
• Leverage the digital expertise of Apax's Operational Excellence
Practice to accelerate the company's digitalisation strategy, supported by the
introduction of a new tech platform, which should streamline operations and
accelerate product and service delivery.
1. Represents Gross IRR and Gross MOIC calculated based on the
expected cash flows and remaining fair value if applicable. For Kepro, these
represent returns calculated based on AIX euro cash flows only
DERIVED INVESTMENTS
Portfolio review
HIGHLIGHTS
Derived Investments
FY 2022 Total Return
1.9%
Derived Debt
FY 2022 Total Return
2.7%
% of NAV at 31 December 2022
28%
Total new investment
€57.2m
Realised proceeds and income
€30.1m
DERIVED INVESTMENTS PERFORMANCE
Capital not invested in Private Equity is primarily invested in debt (Derived
Debt makes up 94% of the Derived Investment Portfolio). This portfolio
enhances the robustness of AGA's balance sheet and supports unfunded
commitments to the Apax Private Equity Funds whilst also providing an
additional source of alpha for AGA and a steady flow of income to support
dividends.
In the year to 31 December 2022, the Derived Investments portfolio achieved a
Total Return of 1.9% ((2.2)% constant currency) with Derived Debt generating a
Total Return of 2.7% ((1.7)% constant currency).
Over the last five years, the Derived Debt portfolio has achieved a 31.2%
cumulative constant currency Total Return, versus 17.7% for the S&P/LSTA
Leveraged Loan Index.
Derived Equity, which has reduced to 6% of Derived Investments, achieved a
Total Return of (6.8)% ((7.9)% constant currency) in FY 2022.
PORTFOLIO OVERVIEW
As at 31 December 2022, AGA held €364.2m of Derived Investments,
representing 29% of the Total Invested Portfolio. The portfolio increased over
the year as capital not invested in Private Equity was deployed into new
Derived Debt instruments and the portfolio benefitted from exchange rate
gains, primarily due to its exposure to the US dollar. The portfolio primarily
comprises Derived Debt positions in companies and sectors where Apax can
leverage insights into sectors and companies from its private equity
activities.
The Derived Debt portfolio at 31 December 2022 has a total value of €340.6m
and now represents most of our Derived Investments. Whilst individual
investments are identified through a bottom-up process, we actively manage the
portfolio top down from a risk and liquidity perspective.
The largest position in the portfolio represents only 2% of AGA's NAV, and 64%
of the Derived Debt investments are invested in 1L loans. 1L loans tend to be
more readily tradeable when compared to debt instruments that are more junior
in the capital structure, and we believe the current proportion of 1L loans
held is appropriate in the context of the Private Equity commitments made by
AGA.
As 99% of the Derived Debt investments are invested in floating rate loans,
duration risk is minimised and with increasing base rates, the portfolio now
generates a 9.9% income yield. The rise in interest rates and widening of
spreads in the market saw a negative movement in the fair value of the
portfolio whilst the average yield to maturity of the overall portfolio almost
doubled to 12.1% at 31 December 2022, compared with prior year end (6.2% at 31
December 2021).
Derived Equity was valued at €23.6m at year end.
Investment activity
In managing AGA's Derived Debt portfolio, we focus on absorbing capital
returned from Private Equity investments, whilst at the same time managing
overall liquidity and risk. As we expected significant calls from the Private
Equity portfolio during the year, we maintained higher liquidity balances
during the first half of 2022, despite markets offering very attractive
pricing levels, in particular for 1L loans.
When making new investments, our focus remained on more liquid loans,
reflecting additional commitments made by AGA to new Apax Funds. In total, we
deployed €57.2m into new Derived Debt investment during 2022.
Derived debt sourced from Apax insights(1):
72%
Private Equity style diligence
Majority sourced from private equity style diligence
18%
Current Apax Funds Ownership
Current Apax Funds ownership are positions where the Apax Funds also hold an
equity interest
10%
Prior Apax Funds Ownership
Prior Apax Funds ownership are positions where AGA purchased the debt
subsequent to Apax Funds holding an equity interest
1. Apax insights detailed in the chart show sourcing of credit
investments since 2019
DERIVED INVestments PERFORMANCE (%)
Income 7.0%
Realised gains (0.1)%
Unrealised losses (9.1)%
Performance fee adjustment(1) 0.0%
FX 4.1%
Total return 1.9%
1. Performance fee adjustment accounting for the movement in the
performance fee reserve at 31 December 2022
2. Represents Gross IRR and Gross MOIC calculated based on the
aggregate concurrent euro cash flows since inception of deals fully realised
during FY 2022
3. New investments excludes drawdowns on the Infogain RCF of €1.5m
during the period. Exits excludes repayments of €0.7m on the same RCF
investment
New Investments³ €m
Tech & Digital
Aptean - 1L term loan + 2L term loan (follow-on) 8.6
Provider of industry-specific ERP, supply chain & compliance software
Precisely Software - 2L term loan 13.7
Pharmaceutical company focused on women's health products
Theramex - 1L term loan 4.0
Pharmaceutical company focused on women's health products
Add-on investments €m
HelpSystems - 1L term loan 7.9
Provider of software solutions to IT departments
Mitratech - 1L term loan + 2L term loan 10.1
Provider of end-to-end software products for legal & compliance
professionals.
Therapy Brands - 1L term loan + 2L term loan 5.3
Provider of fully-integrated practice management and EHR solutions for mental
and behavioural health providers
NEW INVESTMENTS €m
Services
Radwell - 1L term loan 6.1
Distributor of replacement parts for automated manufacturing lines
Exits GROSS
MOIC²
Services
Hightower - Senior unsecured note 14.6% 1.1x
Provider of investment services
Repco - Significant partial - Listed Equity Housing finance company (17.9)% 0.4x
Internet/Consumer
Answers - Equity (41.6)% 0.1x
Social content publisher and cloud platform
Private Equity
Top 30 Private Equity Investments - AGA's Indirect Exposure
Portfolio company Sector Geography Valuation % of
€m total NAV
Assured Partners Services North America 62.0 5%
Toi Toi & Dixi Services Europe 46.7 4%
Candela Healthcare North America 43.7 3%
PIB Group* Services United Kingdom 40.2 3%
Trade Me* Internet/Consumer Rest of World 39.8 3%
Paycor Tech & Digital North America 34.5 3%
Bonterra Tech & Digital North America 33.9 3%
Cole Haan Internet/Consumer North America 32.0 2%
Thoughtworks Tech & Digital North America 31.5 2%
SavATree Services North America 28.4 2%
Authority Brands (AX) Services North America 27.7 2%
Vyaire Medical* Healthcare North America 24.2 2%
T-Mobile Netherlands Tech & Digital Europe 24.0 2%
Lexitas Services North America 23.6 2%
Safetykleen Europe Services Europe 22.1 2%
Cadence Education Internet/Consumer North America 21.1 2%
Infogain* Tech & Digital North America 20.8 2%
Duck Creek Technologies Tech & Digital North America 20.5 2%
American Water Resources Services North America 20.1 2%
EcoOnline Tech & Digital Europe 19.3 2%
Ole Smoky Distillery Internet/Consumer North America 18.1 1%
Rodenstock Healthcare Europe 17.8 1%
Healthium Healthcare India 15.6 1%
Tosca Services Services North America 15.2 1%
InnovAge Healthcare North America 14.5 1%
ECI Tech & Digital North America 14.4 1%
KAR Global Internet/Consumer North America 14.4 1%
Fractal Analytics Tech & Digital India 14.4 1%
Nulo Internet/Consumer North America 14.0 1%
Shriram Finance Services India 13.7 <1%
Total top 30 - gross values 768.2 59%
Other investments 301.4 23%
Carried interest (144.4) (11%)
Capital call facilities and other (54.2) (4%)
Total Private Equity 871.0 67%
Derived Investments: Derived DebT(2)
( )
Top Derived Debt holdings²
Instrument Sector Geography Valuation % of
€m total NAV
HelpSystems 1L term loan Tech & Digital North America 28.6 2%
Precisely Software 1l + 2L term loan Tech & Digital North America 22.4 2%
Confluence PIK + 2L term loan Tech & Digital North America 22.1 2%
Aptean 1l + 2L term loan Tech & Digital North America 21.6 2%
PIB Group* 1L term loan Services United Kingdom 21.5 2%
Mitratech 1l + 2L term loan Tech & Digital North America 20.4 2%
Therapy Brands 1l + 2L term loan Tech & Digital North America 18.0 1%
PSSI 1L term loan Services North America 17.0 1%
AccentCare (2021) 1L term loan Healthcare North America 15.9 1%
Infogain* RCF + 1L term loan Tech & Digital North America 15.4 1%
Vyaire Medical* 1L term loan Healthcare North America 15.0 1%
Neuraxpharm 1L term loan Healthcare Europe 14.6 1%
MDVIP 2L term loan Healthcare North America 13.5 1%
Alexander Mann Solutions 1L term loan Services United Kingdom 13.3 1%
WIRB-Copernicus Group 1L term loan Healthcare North America 12.6 1%
Trade Me* 2L term loan Internet/Consumer Rest of World 11.9 1%
PCI 1L term loan Healthcare North America 10.5 1%
Mindbody* Convertible debt Tech & Digital North America 9.6 1%
Navicure 1L term loan Healthcare North America 9.0 1%
Veritext 2L term loan Services North America 6.8 1%
Southern Veterinary Partners 2L term loan Healthcare North America 6.7 1%
Radwell Parent 1L term loan Services North America 5.8 <1%
Syndigo 2L term loan Tech & Digital North America 4.3 <1%
Theramex 1L term loan Tech & Digital United Kingdom 4.1 <1%
Total Derived Debt 340.6 26%
* Denotes overlap with Private Equity or Derived Investments
portfolio
1. Represents the largest fair value movements in the underlying
Private Equity portfolio over the period adjusted for purchases and sales
2. Represents Derived Debt portfolio only. Table above excludes Derived
Equity positions which total €23.6m
strategic report \ 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 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 and Audit Committee consider 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.
The Board approves commitments to new Private Equity funds whilst the
remaining 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. 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. Earlier in the
year the Board identified inflation, geopolitical uncertainty and the
potential impact of real interest rate movements as an emerging risk which was
subsequently included in the principal risk disclosure in the interim accounts
and remains at year end. The previously included principal risks relating to
Covid-19 and regulatory, tax and legislative risks remain on the Company's
risk register but are no longer considered to be 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
the risk 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: Market risk
SB4: Economic environment
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 reflected the wider equity market contraction seen in · Performance, positioning and investment restrictions are analysed and ↑
2022. Total NAV Return for the period was (7.4)% - please refer to the monitored constantly by the Investment Manager
The target return and target dividend yield are based on estimates and performance review section from page 18 for further details.
assumptions.
· Investment performance is reviewed, challenged, and monitored by the
Board The Board continues to monitor emerging risks that may impact the
The actual rate of return and dividend yield may be lower than targets.
Company's performance
The Board has decided to maintain the dividend policy.
SB2 Discount to NAV The Company's shares continued to trade at a discount to NAV during the year, · The Board receives weekly reports from its corporate broker and updates ↑
with the rolling one-year discount exceeding 23% in the latter half of the from the Investment Advisor's investor relations team on a quarterly basis
Persistent high discount to NAV may create dissatisfaction amongst year. The increase is partly attributable to broader equity market volatility.
shareholders. The Board has assessed discount management strategies but after discussions · These reports provide insight into shareholder sentiment, movements in
with advisors has decided not to pursue share-buybacks at this point. This the NAV and share price discount and an assessment of discount management
continues to be closely monitored by the Board. strategies if required
SB3 Market risk Central banks increased interest rates during the year as they tried to cool · The Board has delegated viability / cash flow projections and modelling ↑
down inflation. to the Investment Manager. They include the impact of increased borrowings
Increases in borrowing costs negatively impact NAV.
under a number of stress test scenarios and note that even if fully drawn the
impact of increased borrowing costs are offset by the invested Derived Debt
portfolio
The Board noted that although AGA's revolving credit facility is floating
rate, the potential impact is limited as it is not used for structural
leverage and was undrawn at 31 December 2022. Additionally, the Company's
Derived Debt portfolio is primarily invested in floating rate instruments
which re-fix regularly and any upward changes to interest rates tend to have a
positive impact on interest income.
For more details on the potential impact on the underlying Private Equity
portfolio companies see market review on page 16.
SB4 ECONOMIC ENVIROnMENT Geopolitical uncertainty remains heightened and following pandemic-related · The Board receives quarterly reports from its manager and the Investment ↑
supply chain issues and increased demand, global inflation has risen to the Advisor on performance and asset allocation
Increasing inflation, geopolitical uncertainty, the potential impact of real highest level in years.
interest rate movements and economic growth conditions on equity valuations
· The underlying Private Equity portfolio is diversified across sub-sectors
could lead to increased NAV volatility which are less affected by the impacts of inflation and geopolitical
uncertainty
The Board identified this as an emerging risk at the start of the year and has
since included it as a principal risk. The Board noted that most of the
underlying Private Equity portfolio companies have to date been largely
protected from inflationary increases due to their respective business models.
This remains under regular review by the Investment Advisor.
OP1 Continuity risk During the year, the Company's key service providers reported that their · All key service providers have in place business continuity procedures ↔
business continuity plans remained in place and that they have remained which are tested on a regular basis and subject to minimum regulatory
Business continuity, including that provided by service providers, may be appropriate and effective. standards in their jurisdictions
impacted by a natural disaster, cyber-attack, infrastructure damage or other
"outside" factors.
OP2 Service provider risk Control failures at key service providers are reported and reviewed. No · The Board conducts a formal review of all key service providers on an ↓
material issues were brought to the Board's attention or identified as part of annual basis
Control failures at key service providers may result in decreased service the formal review conducted by the Board and no issues were reported resulting
quality, loss of information, information security breach, theft or fraud. in a reduction in the consequence rating. · 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 recognises the macroenvironment surrounding the Apax Funds has been · Cash flow modelling is prepared and tested under various stress test ↔
volatile and uncertainty remains going forward into the next year. However the scenarios
Decreases in the value of investments due to market weakness may affect the Apax Funds continued to see good levels of investment activity from
pace and value of realisations, leading to reduced liquidity and/or ability to acquisitions and disposals. · Revolving credit facility is available in the event of substantial
maintain credit facilities and meet covenant requirements.
liquidity issues.
· The investing Apax Funds operate capital call facilities which provide
The Derived portfolio has benefitted from the increased interest rates good visibility of future expected calls
resulting in higher levels of income for the Fund, remaining a reliable source
of cash income. · A higher proportion of the Derived Debt portfolio is invested in first
lien instruments which have better liquidity
· The majority of the Derived Debt portfolio is invested in floating rate
The Board regularly assesses liquidity in highly stressed conditions as part instruments providing a strong income yield
of its assessment to continue as a going concern. Further details are given in
the viability statement on page 54 for further details.
FR2 Currency risk Appreciation of the US dollar against the euro led to stronger returns being · The Investment Manager has implemented an investment framework to manage ↔
reported in the year than were achieved by the investment portfolio in local and monitor the investment portfolio of the Company
The Company has established a global investment mandate and has appointed an currency terms. Please refer to note 12 on currency risk in the financial
Investment Manager whose policy is to not hedge currency exposures. Movements statements where the Company's sensitivity to movements in exchange rates has · Currency exposure analysis and monitoring forms part of the investment
in exchange rates create NAV volatility when the value of investments is been assessed. framework
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 basis ↔
based on NAV statements provided by the Apax Funds. The Company's Debt
Risk of error, process failure or incorrect assumptions lead to incorrect portfolio is valued based on broker quotes and/or models which use market · The review process includes a meeting with the Board and Investment
valuation of portfolio holdings. inputs. Advisor where the key assumptions are challenged and explained
· AGA valuations are reviewed by the Company's auditors in June and audited
in December each year
Governance \ Chairman's introduction
Long-term success
DEAR SHAREHOLDER,
On behalf of the Board, I am pleased to introduce the Company's corporate
governance statement on pages 42 to 45.
PROMOTING LONG-TERM SUCCESS
2022 was a year of significant geopolitical uncertainty, substantial change in
economic conditions, and resultant market volatility.
I can 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 10. This
was also confirmed by the internal Board evaluation conducted in 2022, more
details of which can be found on page 43.
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 strategy and investment policy of the
Company and overseeing its day-to-day activities.
Biographies of the Board of Directors, including details of their relevant
experience and current appointments, are available on pages 38 and 39 and the
Company's website at: www.apaxglobalalpha.com/who-we-are/board-of-directors/
At 31 December 2022, the Board was composed of 60% male and 40% female
Directors.
AGM
To encourage shareholder attendance and participation, shareholders were
invited to attend the 2022 AGM both in person and via a telephone dial-in
facility.
Looking ahead to our eighth AGM in 2023, this will be held on 3 May 2023 at
11.15am (UK time) at East Wing, Trafalgar Court, Les Banques, St Peter Port,
Guernsey, Channel Islands, GY1 3PP.
Shareholders will again be able to attend the AGM either in person, or via a
telephone dial-in to listen to the AGM. Questions can be submitted 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"), provides 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 2023
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.
Number of Board members Percentage of the board Number of senior
positions on the board (CEO, CFO, SID and chair)
Male 3 60% N/A - as an externally managed company, AGA does not have any employees
Female 2 40%
Minority ethnic background - -
The Board acknowledges the importance of diversity for the effective
functioning of the Board which helps create an environment for successful and
effective decision making. The Board currently comprises of 40% women and
Susie Farnon is the Senior Independent Director and Chair of the Audit
Committee, which satisfies two of the diversity targets of the Listing Rules.
In relation to the diversity target on ethnic diversity, the Board is focused
on addressing this target, which is expected to come through succession of the
Board and is a matter kept under close review by the Board. The Board has
adopted a Board Management Policy that considers the issues relating to
diversity. In view of the nature, scale and complexity of the Company, the
Board believes a formal diversity policy for the Company is not necessary at
this time. Diversity of the Board is further considered on at least an annual
basis through the Board evaluation process.
Board Diversity
Female 40%
Male 60%
MAJOR BOARD ACTIVITIES IN 2022
Major decisions taken by the Board and its Committees during 2022 included:
· An assessment and approval of a commitment of $700m to the Apax XI Fund
· An assessment and approval of a commitment of $60m to the Apax Global
Impact Fund
· An assessment and approval of a commitment of $40m to the AMI
Opportunities Fund II
· Commissioned an in-depth investor perception study and reviewed the
findings
· A review of the strategy and whether it remains fit for purpose
· Amendment of the Company's Revolving Credit Facility
Board independence
100%
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 Total Audit Committee
Board
Tim Breedon 5 (7) n/a
Susie Farnon 7 (7) 8 (8)
Chris Ambler 7 (7) 8 (8)
Mike Bane 7 (7) 8 (8)
Stephanie Coxon 6 (7) 8 (8)
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
ELECTION AND RE-ELECTION OF DIRECTORS AT THE 2023 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 2023 AGM.
Following the successful evaluation of the Board (see page 43), it is proposed
to shareholders that all Directors are re-elected at the 2023 AGM.
Governance \ AGA Board of Directors
Board Diversity
Female 40%
Male 60%
Tim Breedon
Chairman
Tenure
7 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
Senior Independent Director
Chair of Audit Committee
Tenure
7 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: Real Estate Credit Investments Ltd; Bailiwick
Investments Limited; Ruffer Investment Company Limited; and 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
7 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
4 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 25 years and has served as
President of the Guernsey Society of Chartered and Certified Accountants.
Current appointments
Non-Executive Chair of HICL Infrastructure plc; and Non-Executive Director of:
abrdn Property Income Trust Limited (formerly 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
2 years, 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; Board member of The Association of Investment Companies.
Qualifications
Fellow of the Institute of Chartered Accountants in England and Wales.
Governance \ INVESTMENT MANAGER BOARD
PAUL MEADER
Director
Tenure
7 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
7 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 year, 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
7 years, 4 months
Skills and experience
Mark Despres has been employed in the wealth management industry in both
Guernsey and London for over 20 years, principally as an investment manager to
a number of listed funds (both open- and closed-ended), 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
7 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,
Investment Committees.
Qualifications
MA in Politics, Philosophy and Economics from Oxford University and an MBA
from INSEAD.
Mitch Truwit
Co-CEO | Apax Partners
Tenure
7 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
7 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
4 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
3 years, 9 months
Skills and experience
Salim Nathoo joined Apax Partners in 1999 specialising in the Tech space. He
has both led and participated in a number of key deals including Thoughtworks,
Candela, EVRY, GlobalLogic, Sophos and Inmarsat.
Current appointments
Partner at Apax in its Tech team. Member of the Apax Allocation and 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
38 to 39). 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.
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 internal evaluation of the Board was undertaken in 2022, following the
external evaluation conducted in 2021 which concluded that the Board continued
to display a strong corporate governance culture and a high degree of
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. The Board as a whole
fulfils this function and regularly reviews the performance of the Investment
Manager, other service providers, 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 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 Company's strategy for
delivering long-term value to our shareholders and other stakeholders,
providing effective oversight of the Investment Manager with respect to the
execution of the investment strategy and ensuring the Company 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 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 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 2022 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/the-investment-manager/
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 41 and the Company's website at:
www.apaxglobalalpha.com/who-we-are/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 the Code stipulates that a majority of the Board
of Directors should be independent of the Investment Manager. AGA continued to
comply with this requirement throughout the reporting 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
In accordance with the Board management policy, the Company conducted an
internal Board evaluation exercise in 2022, having commissioned an external
review in 2021. The evaluation was managed by the Company Secretary and the
results indicated that the Board continues to operate effectively. 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 2023.
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 regarding 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 pages 84 and 85 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/
STAKEHOLDER ENGAGEMENT
As highlighted in the Section 172 statement on pages 10 and 11, the Company
does not have any employees and is entirely externally managed. Therefore, the
primary stakeholders consist of its shareholders, suppliers, community and the
environment.
Shareholder support and engagement is critical to the continued success of the
business and the achievement of our objectives. 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. Contact details for shareholder queries can
be found on page 82 and the Company's website at:
www.apaxglobalalpha.com/contact-us
In addition to assisting the Company to deliver on our objectives, effective
relationships with our service providers help the Company to operate in an
effective and compliant manner. Further details of our supplier engagement can
be found on page 10.
The Board believes investing responsibly is important in protecting and
creating long-term value. The Board recognises that the incorporation of
material ESG considerations can help inform the assessment of overall risk and
opportunities. Further details can be found on page 85 and in our Responsible
Investment policy which is available on our website at:
https://www.apaxglobalalpha.com/investment-portfolio/sustainability/
key activities of the board
The Board met seven 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 here.
PRINCIPAL STRATEGIC OBJECTIVES
1 Deliver over-the-cycle 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 Use Derived Investments as an effective capital management tool with an
attractive return
4 Remain fully invested whilst maintaining liquidity risk within appetite
JAN FEB MAR APR MAY
Board committee √ √ √ √
meetings
Key Dates FY21 Results Commitment AGM
to the AMI Opportunities
Commitment
Fund II Q1 Results
to Apax Global Impact Fund
RCF amendment
Dividend PAID √
JUN JUL AUG SEP OCT NOV DEC
Board committee √ √ √
meetings
KEY DATES Capital Markets Interim Results Strategy Day Q3 Results
Day
Commitment to Apax XI Fund
Dividend PAID √
STRATEGY AND FINANCING
· Held a strategy day with a range of key topics including:
· Review of the findings from perception study carried out by a
third-party provider
· High-level exploratory discussions to challenge whether the strategy
remains fit for purpose, including considering of alternative approaches
· ESG reporting requirements and best practice
· Deep-dive into ESG activities within Apax and how they work with
underlying portfolio companies on ESG matters
· Regularly reviewed the Company's strategy and financial position,
including:
· Amending the Company's Revolving Credit Facility increasing the funds
available from €140m to €250m reflecting the increased NAV and the greater
proportion of the invested portfolio in private equity
· Assessing and approving a commitment of $700m to the Apax XI Fund
· Assessing and approving a commitment of $60m to the Apax Global Impact
Fund
· Assessing and approving a commitment of $40m to the AMI Opportunities
Fund II
RISK MANAGEMENT
· Reviewed the Company's risk appetite statement and principal risks
· Performed a review of the Company's internal financial controls
STAKEHOLDER ENGAGEMENT
· Hosted the AGM on 6 May 2022
· Hosted a Chairman's corporate governance roadshow
· Conducted an independent investor perception study in order to improve
understanding and awareness of shareholder views, issues, and concerns
· Held a Capital Markets Day for investors
GOVERNANCE
· Participated in an internal evaluation of the Board's effectiveness to
identify areas for improvement and inform training plans
· Undertook a formal annual review of key service providers
· Regular updates from the Company Secretary on regulatory and corporate
governance matters
GOVERNANCE \ directors' duties
In 2022, 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 Board of Directors The Chairman is responsible for the leadership of the Board, the creation of · chairing the Board and general meetings of the Company, including
conditions necessary for overall Board and individual Director effectiveness setting the agenda of such meetings;
Tim Breedon fulfils the role of independent Non-Executive Chairman of the and ensuring a sound framework of corporate governance, which includes a
Board of Directors. channel for shareholder communication. · promoting the highest standards of integrity, probity and corporate
governance throughout the Company, and in particular at Board level;
· ensuring that the Board receives accurate, timely and clear
information;
· 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 is evaluated at least once a year.
Chairman of the Audit Committee The Chairman of the Audit Committee is appointed by the Board of Directors. · overseeing the selection and review processes for the external auditor,
The role and responsibility of the Chairman of the Audit Committee is to set considering and making recommendations to the Board on the appointment,
Susie Farnon fulfils the role of Chairman of the Audit Committee. the agenda for meetings of the Audit Committee and, in doing so, take reappointment and removal of the external auditor and the remuneration of the
responsibility for ensuring that the Audit Committee fulfils its duties under external auditor as well as on the annual audit plan, including all proposed
its terms of reference. materiality levels;
The Audit Committee is appointed under terms of reference from the Board of · reviewing in detail the content of the interim report and the annual
Directors, available on the Company's website at:
report, the work of the service providers in producing them and the results of
www.apaxglobalalpha.com/investors/results-reports-presentations the external audit;
· reviewing the findings of the audit with the external auditor;
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; and
· reviewing the Company's internal control and financial and operational
risk, management systems, whistleblowing, and fraud.
Non-Executive Directors The Non-Executive Directors have a responsibility to ensure that they allocate Shareholders are provided with the opportunity to re-elect the Non-Executive
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 Board of any · appointing service providers based on agreed goals and objectives;
subsequent changes. In determining the extent to which another commitment
proposed by a Non-Executive Director would have an impact on their ability to · monitoring the performance of service providers; and
sufficiently discharge their duties to the Company, the Board will give
consideration to the extent to which the proposed commitment may create a · satisfying themselves of the integrity of the financial information and
conflict with: 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 Independent Director The position of the SID provides shareholders with someone to whom they can The role of the SID includes, but is not limited to:
turn if they have concerns that have not or cannot be resolved through the
Susie Farnon fulfils the role of Senior Independent Director ("SID"). normal channel of the Chairman. The SID is available as an intermediary · providing a sounding board for the Chairman and serving as an
between fellow Directors and the Chairman. The role serves as an important intermediary for the other Directors when necessary;
check and balance in the governance process.
· being available to shareholders if they have concerns about contact
through the normal channel of the Chairman, or have failed to resolve, 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 2022 were 1.5% (31 December 2021: 1.3%). The
Company's ongoing charges are calculated in line with guidance issued by the
AIC. They comprise 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 included in the financial
statement can be found on page 90.
MANAGEMENT AND PERFORMANCE FEES
Management fees for the year to 31 December 2022 represented 1.5% of NAV and
there was no performance fee payable. 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
AGA has a Revolving Credit Facility ("RCF") agreement with Credit Suisse AG,
London Branch with an evergreen structure which was upsized during the year
from €140.0m to €250.0m. Post year end, in January 2023, AGA received
notice that the RCF will revert to a conventional fixed-term arrangement with
an expiry date of 10 January 2025. The amended RCF was undrawn at 31 December
2022 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 Regulation which came into effect as of 1 January 2018,
AGA's latest Key Information Document is available on the Company's website
at: https://www.apaxglobalalpha.com/investors/key-information-document/
In accordance with the UK Packaged Retail and Insurance-based Investment
Products Regulation (as retained and amended following the UK's exit from the
European Union), a new UK KID document was published in December 2022. In
addition, following the period end, a revised EU KID was published in January
2023.
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 (7) n/a
Susie Farnon 7 (7) 8 (8)
Chris Ambler 7 (7) 8 (8)
Mike Bane 7 (7) 8 (8)
Stephanie Coxon 6 (7) 8 (8)
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 seven times
in the year from 1 January 2022 to 31 December 2022.
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 eight times
in the year from 1 January 2022 to 31 December 2022.
ELECTION AND RE-ELECTION OF DIRECTORS AT THE 2023 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 2023 AGM.
Following the successful evaluation of the Board as noted on page 43, it is
proposed to shareholders that each of Tim Breedon, Susie Farnon, Chris Ambler,
Mike Bane, and Stephanie Coxon, be re-elected at the 2023 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 seventh
anniversary of AGA's IPO on 15 June 2022, a tranche of 20% of the Company's
ordinary shares held by Apax executives was released from the ten-year
lock-up.
GOVERNANCE \ AUDIT COMMITTEE REPORT
I am pleased to present the Audit Committee report for 2022 detailing the
activities undertaken this year to fulfil its responsibilities.
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; and
· keeping under review the ESG efforts and commitment to Responsible
Investing.
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 48.
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 overleaf.
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 2022, there was no performance fee
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 2022 and in their audit for the year ended 31
December 2022. 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 32 to 35.
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 55.
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 2022 to 31 December 2022
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. There has been no change to individual Directors' fees since
IPO.
However, the remuneration cap was increased to £395,000 at the 2022 AGM to
provide flexibility around the retirement of certain long-serving Board
members in due course.
Expenses paid to the Directors in the period are listed in the table below.
Remuneration Policy
The Company's remuneration policy is that fees payable to 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.
DIRECTORS' FEES AND EXPENSES FOR THE YEAR TO 31 DECEMBER 2022
DIRECTOR FEES EXPENSES (GBP) FEES EXPENSES (EUR)
(GBP) (EUR)
Tim Breedon 125,000 - 143,787 -
Susie Farnon 55,000 965 63,266 1,108
Chris Ambler 45,000 320 51,763 375
Mike Bane 45,000 - 51,763 -
Stephanie Coxon 45,000 703 51,763 805
Total 315,000 1,988 362,342 2,288
DIRECTORS' holdings at 31 DECEMBER 2022
DIRECTOR CLASS OF SHARE SHARES HELD VOTING RIGHTS % OF VOTING RIGHTS
DIRECT INDIRECT DIRECT INDIRECT
Tim Breedon Ordinary shares of NPV(1) 70,000 70,000 - 0.014% 0.000%
Susie Farnon Ordinary shares of NPV(1) 43,600 43,600 - 0.009% 0.000%
Chris Ambler Ordinary shares of NPV(1) 33,796 33,796 - 0.007% 0.000%
Mike Bane Ordinary shares of NPV(1) 18,749 18,749 - 0.004% 0.000%
Stephanie Coxon Ordinary shares of NPV(1) 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 2022.
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 5.82 pence per share as a final
dividend in respect of the financial period ended 31 December 2022 (2021: 6.36
pence). An interim dividend of 6.00 pence was paid on 23 September 2022 (2021:
5.97 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/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, 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 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 2022 detailed in the table on page 53.
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 were two post-balance sheet events:
· on 2 March 2023, the Board of Directors announced a dividend of 5.82
pence per share in respect of the financial period ended 31 December 2022.
· Notice was received from Credit Suisse AG, London Branch which converts
the current RCF agreement with an evergreen structure, which was upsized
during the year, to a conventional fixed-term arrangement with an expiry date
of 10 January 2025. The amended RCF was undrawn at 31 December 2022 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.
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 3 May 2023 at 11.15am (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-reports-presentations/
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 2023
Table of shareholders over 5% at 31 DECEMBER 2022(1)
DIRECTOR CLASS OF SHARE SHARES HELD VOTING RIGHTS % OF VOTING RIGHTS
DIRECT INDIRECT DIRECT INDIRECT THRESHOLD
Berlinetta Limited Ordinary shares of NPV(2) 28,984,912 28,984,912 - 5.9% - 5%
Witan Investment Trust Ordinary shares of NPV(2) 27,890,000 27,890,000 - 5.7% - 5%
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 dispsal 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
GOVERNANCE \ viability statement
"The Directors have duly considered the risks facing the Company."
As stated on page 1 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 32 to 35. 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
2025. 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 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 2022, the RCF was undrawn. The Directors
note that though the current RCF is expected to expire on 12 January 2025, it
is the Company's expectation that this would be refinanced in the normal
course of business ahead of expiry. Diversification of the portfolio, split
between Private Equity and Derived Investments, also helps the Company
withstand the 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 believe 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 last 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 next
resolution will be put forward at the 2024 AGM.
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 64.
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 2023
susie farnon
Non-Executive Director
1 March 2023
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 2022, 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 2022, 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 2021):
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 2022, the Company had invested the equivalent of 95% 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 - €1,241,200,000 companies ("Derived Investments").
We assessed the design and implementation of the Investment Manager's review
Financial liabilities - (€6,063,000) control in relation to the valuation of Investments.
The Company's holdings in Private Equity Investments (representing 71% of
Investments) are valued based on the net asset values provided by the
(2021 Financial assets - €1,349,477,000) 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:
(2021 Financial liabilities - (€1,067,000))
For Private Equity Investments, we agreed the fair values to capital account
or other similar statements ("Statements") received from the underlying funds'
The Company's holdings in quoted equities (representing 1% of Investments) are general partners. For the majority of Private Equity Investments, we obtained
Refer to page 50 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 28% 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 100% 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 €27,800,000,
determined with reference to a benchmark of net assets of €1,299,376,000, of
which it represents approximately 2% (2021: 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% (2021: 75%) of materiality for the financial
statements as a whole, which equates to €20,800,000. 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; and
· 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 any 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 54)
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 54) 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 54
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 55, 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 2023
financial statements \ Statement of financial position
At 31 December 2022
Notes 31 December 2022 31 December 2021
€'000 €'000
Assets
Non-current assets
Financial assets held at fair value through profit or loss ("FVTPL") 8(a) 1,241,200 1,349,477
Total non-current assets 1,241,200 1,349,477
Current assets
Cash and cash equivalents 67,966 108,482
Investment receivables 1,699 33,603
Other receivables 429 1,347
Total current assets 70,094 143,432
Total assets 1,311,294 1,492,909
Liabilities
Financial liabilities held at FVTPL 8(a) 6,063 1,067
Investment payables 3,980 67
Accrued expenses 1,875 1,708
Total current liabilities 11,918 2,842
Total liabilities 11,918 2,842
Capital and retained earnings
Shareholders' capital 14 873,804 873,804
Retained earnings 425,572 607,873
Total capital and retained earnings 1,299,376 1,481,677
Share-based payment performance fee reserve 10 - 8,390
Total equity 1,299,376 1,490,067
Total shareholders' equity and liabilities 1,311,294 1,492,909
On behalf of the Board of Directors
Tim Breedon Susie Farnon
Chairman Chair of the Audit Committee
1 March 2023 1 March 2023
Notes 31 December 2022 31 December 2022 31 December 2021 31 December 2021
€ £ equivalent(1) € £ equivalent(1)
Net Asset Value ("NAV") ('000) 1,299,376 1,150,390 1,490,067 1,253,638
Performance fee reserve 10 - - (8,390) (7,059)
Adjusted NAV ('000)(2) 1,299,376 1,150,390 1,481,677 1,246,579
NAV per share 2.65 2.34 3.03 2.55
Adjusted NAV per share(2) 2.65 2.34 3.02 2.54
31 December 2022 31 December 2021
% %
Total NAV Return(3) (7.4)% 28.7%
1. The sterling equivalent has been calculated based on the GBP/EUR
exchange rate at 31 December 2022 and 31 December 2021, 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 2022
Notes Year ended Year ended
31 December 2022 31 December 2021
€'000 €'000
Income
Investment income 24,476 26,853
Net (losses)/gains on financial assets at FVTPL 8(b) (119,740) 337,190
Net losses on financial liabilities at FVTPL 8(c) (6,063) (1,067)
Realised foreign currency gains/(losses) 1,276 (1,488)
Unrealised foreign currency (losses)/gains (74) 787
Total (loss)/income (100,125) 362,275
Operating and other expenses
Performance fee 10 (22) (8,390)
Management fee 9 (3,712) (3,782)
Administration and other operating expenses 6 (2,797) (2,707)
Total operating expenses (6,531) (14,879)
Total (loss)/income less operating expenses (106,656) 347,396
Finance costs 11 (3,150) (2,269)
(Loss)/profit before tax (109,806) 345,127
Tax charge 7 (231) (223)
(Loss)/profit after tax (110,037) 344,904
Other comprehensive income - -
Total comprehensive (loss)/income attributable to shareholders (110,037) 344,904
(Loss)/earnings per share (cents) 15
Basic and diluted (22.41) 70.23
Adjusted(1) (22.41) 69.79
The accompanying notes form an integral part of these financial statements.
1. The Adjusted earnings per share has been calculated based on the
(loss)/profit attributable to ordinary shareholders adjusted for the total
accrued performance fee at 31 December 2022 and 31 December 2021,
respectively, as per note 15 and the weighted average number of ordinary
shares in issue
financial statements \ Statement of changes in equity
For the year ended 31 December 2022
For the year ended 31 December 2022 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 2022 873,804 607,873 1,481,677 8,390 1,490,067
Total comprehensive income attributable to shareholders - (110,037) (110,037) - (110,037)
Share-based payment performance fee reserve movement 10 - - - (8,390) (8,390)
Dividends paid 16 - (72,264) (72,264) - (72,264)
Balance at 31 December 2022 873,804 425,572 1,299,376 - 1,299,376
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
The accompanying notes form an integral part of these financial statements.
Statement of cash flows
For the year ended 31 December 2022
Notes Year ended Year ended
31 December 2022 31 December 2021
€'000 €'000
Cash flows from operating activities
Interest received 23,577 25,553
Interest paid (521) (1,750)
Dividends received 1,815 906
Operating expenses paid (6,038) (6,191)
Tax received - 3
Capital calls paid to Private Equity Investments (194,380) (199,941)
Capital distributions received from Private Equity Investments 227,821 275,140
Purchase of Derived Investments (53,640) (274,417)
Sale of Derived Investments 43,228 230,511
Net cash from operating activities 41,862 49,814
Cash flows used in financing activities
Financing costs paid (2,822) (2,104)
Dividends paid (71,070) (64,584)
Purchase of own shares (8,412) -
Revolving credit facility drawn 11 17,393 -
Revolving credit facility repaid 11 (17,393) -
Net cash used in financing activities (82,304) (66,688)
Cash and cash equivalents at the beginning of the year 108,482 124,569
Net decrease in cash and cash equivalents (40,442) (16,874)
Effect of foreign currency fluctuations on cash and cash equivalents (74) 787
Cash and cash equivalents at the end of the year 12(b) 67,966 108,482
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 2022 to 31 December 2022 and
were authorised for issue by the Board of Directors of the Company on 1 March
2023.
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 in accordance with IFRS 10 "Consolidated Financial Statements" and is
therefore required to account for subsidiaries that also qualify as investment
entities at FVTPL. It does not consolidate such entities.
Under the definition of an investment entity, all three of the following tests
must be satisfied:
· 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.
The Directors consider that the Company meets the three requirements above and
has therefore accounted for its investment entity subsidiaries, which were
formed in October 2021, at FVTPL. 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 2023,
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 inflation and geopolitical
uncertainty was also considered by the Directors; and whilst the long-term
effect remains to be seen, it was noted that the direct impact on the
Company's ability to meet its liabilities as they fall due has been limited to
date. The Directors are satisfied, 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" 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 measures 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 has not
increased significantly since initial recognition, the Company measures 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 approves the payment of a dividend. Dividend income of €1.8m (31
December 2021: €1.0m) from equity securities designated at FVTPL has been
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 investment's
expected holding 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.
(LOSS)/Earnings per share
(Loss)/earnings per share is calculated based on the (loss)/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 2022. Additionally, it has reviewed and assessed changes to
current accounting standards issued by the IASB with an effective date from 1
January 2023; 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.
(iii) ASSESSMENT OF THE COMPANY AS AN INVESTMENT ENTITY
The Board of Directors believes 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 2022 functions(1) €'000
€'000
Investment income/(expense) - 24,953 (477) 24,476
Net losses on financial assets at FVTPL (101,900) (17,840) - (119,740)
Net losses on financial liabilities at FVTPL (6,063) - - (6,063)
Realised foreign exchange (losses)/gains - (544) 1,820 1,276
Unrealised foreign currency losses - - (74) (74)
Total (loss)/income (107,963) 6,569 1,269 (100,125)
Performance fees(2) - (22) - (22)
Management fees (143) (3,569) - (3,712)
Administration and other operating expenses - (166) (2,631) (2,797)
Total operating expenses (143) (3,757) (2,631) (6,531)
Total (loss)/income less operating expenses (108,106) 2,812 (1,362) (106,656)
Finance costs - - (3,150) (3,150)
(Loss)/profit before taxation (108,106) 2,812 (4,512) (109,806)
Tax charge - (231) - (231)
Total comprehensive (loss)/income attributable to shareholders (108,106) 2,581 (4,512) (110,037)
Statement of financial position at 31 December 2022 Private Equity Investments €'000 Derived Investments €'000 Cash and Total
other NCAs(3) €'000
€'000
Total assets 877,021 365,878 68,395 1,311,294
Total liabilities (6,063) (3,980) (1,875) (11,918)
NAV 870,958 361,898 66,520 1,299,376
( )
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 functions(1) €'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 fees(2) - (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 NCAs(3) €'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
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 BRIC(1) Rest of Total
€'000
€'000
World
€'000
for the year ended 31 December 2022 €'000
€'000
Investment income 19,893 2,984 389 1,210 24,476
Net (losses)/gains on financial assets at FVTPL (67,759) (44,137) 1,089 (8,933) (119,740)
Net losses on financial liabilities at FVTPL (4,379) (1,020) - (664) (6,063)
Realised foreign exchange (losses)/gains (533) 1,817 (2) (6) 1,276
Unrealised foreign currency losses - (74) - - (74)
Total (loss)/income (52,778) (40,430) 1,476 (8,393) (100,125)
Performance fee (13) 49 (46) (12) (22)
Management fee (2,830) (711) (50) (121) (3,712)
Administration and other operating expenses - (2,797) - - (2,797)
Total operating expenses (2,843) (3,459) (96) (133) (6,531)
Total (loss)/income less operating expenses (55,621) (43,889) 1,380 (8,526) (106,656)
Finance costs - (3,150) - - (3,150)
(Loss)/profit before tax (55,621) (47,039) 1,380 (8,526) (109,806)
Tax charge - (231) - - (231)
Total comprehensive (loss)/income attributable to shareholders (55,621) (47,270) 1,380 (8,526) (110,037)
Statement of financial position at 31 December 2022 North America Europe BRIC(1) Rest of Total
€'000
€'000
World
€'000
€'000
€'000
Total assets 752,094 511,671 12,179 35,350 1,311,294
Total liabilities (4,441) (6,813) - (664) (11,918)
NAV 747,653 504,858 12,179 34,686 1,299,376
Statement of profit or loss and other comprehensive income North America Europe BRIC(1) 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/(loss) before tax 172,282 133,326 478 39,042 345,128
Tax (85) (141) 3 - (223)
Total comprehensive income attributable to shareholders 172,197 133,185 481 39,042 344,905
Statement of financial position at 31 December 2021 North America Europe BRIC(1) 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
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 2022 31 December 2021
€'000
€'000
Directors' fees 362 369
Administration and other fees 692 672
Corporate and investor relations services fee 9 512 532
Deal transaction, custody and research costs 166 357
General expenses 838 548
Auditors' remuneration
Statutory audit 173 165
Other assurance services - interim review 54 46
Other assurance services - agreed upon procedures - 18
Total administration and other operating expenses 2,797 2,707
The Company has no employees and there were no pension or staff cost
liabilities incurred during the year.
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 2021: £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 2022, the Company had a net tax expense of €0.2m (31 December
2021: €0.2m), related to 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 2022 31 December 2021
€'000
€'000
Private Equity Investments 870,958 1,012,855
Private Equity financial assets 877,021 1,013,922
Private Equity financial liabilities (6,063) (1,067)
Derived Investments 364,179 335,555
Debt(1) 340,639 304,609
Equities 23,540 30,946
Closing fair value 1,235,137 1,348,410
Financial assets held at FVTPL 1,241,200 1,349,477
Financial liabilities held at FVTPL (6,063) (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 2022 31 December 2021
€'000
€'000
Opening fair value 1,348,410 1,107,723
Calls 194,380 199,941
Distributions (228,316) (275,146)
Purchases 57,186 243,450
Sales (10,720) (263,681)
Net (losses)/gains on financial assets at FVTPL (119,740) 337,190
Net losses on financial liabilities at FVTPL (6,063) (1,067)
Closing fair value 1,235,137 1,348,410
Financial assets held at FVTPL 1,241,200 1,349,477
Financial liabilities held at FVTPL (6,063) (1,067)
(b) Net gains on financial assets at FVTPL
Year ended Year ended
31 December 2022
31 December 2021
€'000 €'000
Private Equity financial assets
Gross unrealised gains 145,601 284,904
Gross unrealised losses (260,095) (42,487)
Total net unrealised (losses)/gains on Private Equity financial assets (114,494) 242,417
Private Equity financial assets
Gross realised gains 12,595 58,404
Total net realised gains on Private Equity financial assets 12,595 58,404
Net (losses)/gains on Private Equity financial assets (101,899) 300,821
Derived Investments
Gross unrealised gains 17,039 38,661
Gross unrealised losses (23,097) (5,861)
Total net unrealised (losses)/gains on Derived Investments (6,058) 32,800
Derived Investments
Gross realised gains 797 10,805
Gross realised losses (12,580) (7,236)
Total net realised (losses)/gains on Derived Investments (11,783) 3,569
Total net (losses)/gains on Derived Investments (17,841) 36,369
Total net (losses)/gains on investments at fair value through profit or loss (119,740) 337,190
(c) Net losses on financial liabilities at FVTPL
Year ended Year ended
31 December 2022
31 December 2021
€'000
€'000
Private Equity financial liabilities
Gross unrealised losses (6,063) (1,067)
Total net unrealised losses on Private Equity investments (6,063) (1,067)
(d) Investments in subsidiaries
The Company established two wholly owned subsidiaries in 2021 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 9,598
Alpha US GP LLC 12 October 2021 Special purpose entity 100% United States of America -
The fair value of the investment held by the subsidiary has been included in
Derived Debt Investments throughout the Annual Report. The Company transferred
an investment in a Derived Investment to Alpha US Holdings L.P. during the
prior year. Net movements from subsidiaries are summarised below.
Year ended Year ended
31 December 2022 31 December 2021
€'000
€'000
Opening fair value 8,908 -
Transfer of asset - 8,623
Fair value movement on investment subsidiaries 690 285
Closing fair value 9,598 8,908
Debt investment held at FVTPL 9,660 8,908
Other net current liabilities (62) -
Closing fair value 9,598 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 & Digital, 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. The liquidity risk section of note 12 summarises
outstanding commitments and recallable distributions to the 11 underlying
Private Equity Investments held which amounted to €1,005.1m at year end (31
December 2021: €385.3m). The fair value of these were €871.0m at 31
December 2022 (31 December 2021: €1,012.9m), whereas total value of the
Private Equity funds was €21.3bn (31 December 2021: €25.3bn). 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 decreased in the year to
€3.7m (31 December 2021: €3.8m), of which €0.9m was included in accruals
at 31 December 2022. The 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
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 arises. 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 2021: €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 2021: €0.5m) was paid by the Company in
respect of administration fees and expenses, of which €0.3m (31 December
2021: €0.3m) was paid to APFS. Additionally, the Company entered into a
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 2021:
€0.5m) was paid by the Company to APFS.
At 31 December 2022, the Company has an intercompany balance outstanding with
the subsidiary Alpha US Holdings L.P. of €0.06m. This relates to
administration fees incurred by the subsidiary and paid by the Company. See
note 8(d) for further details.
The table below summarises shares held by Directors:
31 December 2022 % of total shares in issue 31 December 2021 % 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 33,796 0.007% 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 51 of the
report.
10 Performance fee
31 December 2022 31 December 2021
€'000
€'000
Opening performance fee reserve 8,390 -
Performance fee charged to statement of profit or loss and other comprehensive 22 8,390
income
Performance fee settled (8,412) -
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 2022, there was no performance fee payable to
the Investment Manager as the performance hurdle was not met (31 December
2021: €8.4m).
11 Revolving credit facility and finance costs
AGA has a Revolving Credit Facility ("RCF") agreement with Credit Suisse AG,
London Branch with an evergreen structure whereby either party is required to
give two years notice to terminate the agreement. On 5 May 22, the RCF was
upsized from €140.0m to €250.0m which incurred a one-off commitment fee of
€0.9m. Post year end, in January 2023, AGA received notice that the RCF will
now revert to a conventional fixed-term arrangement with an expiry date of 10
January 2025. The credit facility remains at €250.0m for this period with
the margin remaining at 230 bps, (over Risk Free Rate "RFR" or Euribor
depending on the currency drawn) and the non-utilisation fee at c.100 bps per
annum on an initial blended basis. The facility was drawn twice during the
year and fully repaid by 31 December 2022.
Summary of finance costs are detailed below:
Year ended Year ended
31 December 2022
31 December 2021
€'000
€'000
Interest paid 114 -
Arrangement fee 900 700
Non-utilisation fee 2,136 1,569
Total finance costs 3,150 2,269
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. As at 31
December 2022 the facility was unutilised (31 December 2021: €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 2022 31 December 2020
Private Equity Investments 71% 75%
Private Equity financial assets 72% 75%
Private Equity financial liabilities -1% 0%
Derived Investments 29% 25%
Debt 27% 23%
Equities 2% 2%
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
and to meet calls from Private Equity Funds and other liabilities where
necessary.
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 2022 and 31 December 2021, 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
within each key sector, 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 2022 % of NAV 31 December 2021 % of NAV
€'000 €'000
Debt investments 340,639 26% 304,609 20%
Cash and cash equivalents 67,966 5% 108,482 7%
Investment receivables 1,699 1% 33,603 2%
Other receivables 429 0% 1,347 0%
Total 410,733 32% 448,041 29%
(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 2022 % of Debt investments % of NAV 31 December 2021 % of Debt investments % of NAV
€'000 €'000
B 39,211 12% 3% 34,242 11% 2%
B- 138,303 41% 11% 116,077 38% 8%
CCC+ 20,261 6% 2% 34,675 11% 2%
CCC 60,648 17% 5% 42,447 15% 3%
N/R(1) 82,216 24% 6% 77,168 25% 5%
Total 340,639 100% 26% 304,609 100% 20%
1. Not currently rated by S&P
The Investment Manager also reviews the debt investments' industry sector
direct concentration. The Company was exposed to concentration risk in the
following industry sectors. A wider analysis of key sector concentration risk
is included in note 12(d):
31 December 2022 % of Debt investments % of NAV 31 December 2021 % of Debt investments % of NAV
€'000 €'000
Tech & Digital 166,554 49% 13% 122,051 40% 8%
Services 64,545 19% 5% 65,436 22% 4%
Healthcare 97,631 29% 8% 104,634 34% 7%
Internet/Consumer 11,909 3% 1% 12,488 4% 1%
Total 340,639 100% 26% 304,609 100% 20%
(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 2022 31 December 2021
€'000 €'000
Cash held in banks A 3,397 316
Cash held in banks A- 582 205
Cash held in banks BBB+ 63,987 19,455
Cash held in money market funds AAA - 88,506
Total 67,966 108,482
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 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, commitments, and recallable distributions at 31 December 2022
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 2022
Up to 3-12 months €'000 1-5 years Total
3 months
€'000 €'000
€'000
Investment payables 3,980 - - 3,980
Accrued expenses 1,875 - - 1,875
Private Equity Investments outstanding commitments and recallable 15,816 85,302 904,030 1,005,148
distributions
Derived Investments commitments - 2,245 - 2,245
Total 21,671 87,547 904,030 1,013,248
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 commitments 3,794 7,732 - 11,526
Total 38,891 168,695 190,989 398,575
The Company has outstanding commitments and recallable distributions to
Private Equity Investments as summarised below:
31 December 2022 31 December 2021
€'000 €'000
Apax Europe VI 225 225
Apax Europe VII 1,030 1,030
Apax VIII 14,713 20,473
Apax IX 30,157 44,061
Apax X 107,914 207,523
Apax XI 656,143 -
AMI Opportunities 9,977 12,595
AMI Opportunities II 37,366 -
Apax Digital Fund 10,637 20,211
Apax Digital Fund II 80,938 79,156
Apax Global Impact 56,048 -
Total 1,005,148 385,274
At 31 December 2022, the Company had undrawn commitments and recallable
distributions of €1,005m (31 December 2021: €385.2m), with the increase
related to the new commitments to Apax XI, AMI Opportunities II and Apax
Global Impact ("AGI") during the year. Within 12 months, €101.1m (31
December 2021: €194.3m) is expected to be drawn mainly due to Apax X, AGI
and Apax Digital Fund II. Additionally, the Company expects draw downs of
€2.2m from Derived Investments in the next 12 months for delayed draw and
revolving credit facility debt positions held.
The Company has access to a credit facility upon which it can draw up to
€250.0m (note 11). 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 2022, the facility was
undrawn (31 December 2021: €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 investment 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 2022, the main price risks for the Company's
portfolio were market uncertainty due to inflation and geopolitical
uncertainty. 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 2022 Base case Bull case (+20%) Bear case
€'000
€'000 (-20%)
€'000
Financial assets 1,241,200 1,489,440 992,960
Financial liabilities (6,063) (4,851) (7,276)
Change in NAV and profit 247,027 (247,027)
Change in NAV (%) 19% -19%
Change in total loss -247% 247%
Change in loss for the year -224% 224%
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%
(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 2022 EUR USD GBP INR HKD NZD CHF Total
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Financial assets and liabilities at FVTPL 429,859 753,388 31,199 351 8,431 11,909 - 1,235,137
Cash and cash equivalents 35,551 28,696 321 3,397 - - 1 67,966
Investment receivables - 632 - - - - - 632
Interest receivable - 1,067 - - - - - 1,067
Other receivables 351 - 78 - - - - 429
Investment payables (3,980) - - - - - - (3,980)
Accrued expenses (1,875) - - - - - - (1,875)
Total net foreign currency exposure 459,906 783,783 31,598 3,748 8,431 11,909 1 1,299,376
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
The Company's sensitivity to changes in foreign exchange movements on net
assets is summarised below:
31 December 2022 Base case Bull case (+20%) Bear case
€'000
(-20%)
€'000
€'000
USD 783,783 940,539 627,026
GBP 31,598 37,918 25,278
INR 3,748 4,498 2,998
HKD 8,431 10,117 6,745
NZD 11,909 14,291 9,527
CHF 1 1 1
Change in NAV and profit 167,895 (167,895)
Change in NAV (%) 13% -13%
Change in total loss -168% 168%
Change in loss for the year -153% 153%
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%
(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 €408.6m (31 December 2021:
€413.1m). 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 2022 Base case Bull case (+500bps) Bear case
€'000
€'000
(-500bps)
€'000
Cash and cash equivalents 67,966 71,364 64,568
Debt 340,639 357,671 328,035
Change in NAV and profit 20,430 (16,002)
Change in NAV (%) 2% -1%
Change in total loss -20% 16%
Change in loss for the year -19% 15%
31 December 2021 Base case Bull case (+500bps) Bear case (-500bps)
€'000
€'000
€'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%
(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 31 December 2022 % of Equity investments 31 December 2022 % of % of Debt investments 31 December 2021 % of Equity investments 31 December 2021
Private Equity Private Equity
31 December 2022 31 December
2021
Tech & Digital 37% 49% 0% 41% 40% 0%
Services 31% 19% 42% 24% 21% 47%
Healthcare 12% 29% 36% 18% 35% 22%
Internet/Consumer 20% 3% 9% 17% 4% 22%
Other 0% 0% 13% 0% 0% 9%
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 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 2022:
Assets and liabilities Level 1 Level 2 Level 3 Total
€'000 €'000 €'000 €'000
Private Equity financial assets - - 877,021 877,021
Private Equity financial liabilities - - (6,063) (6,063)
Derived Investments 18,390 330,979 14,810 364,179
Debt - 330,979 9,660 340,639
Equities 18,390 - 5,150 23,540
Total 18,390 330,979 885,768 1,235,137
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 2021:
Assets 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
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 2022
31 December 2021
Private Equity Investments €'000 Derived Investments €'000 Total Private Equity Investments €'000 Derived Investments €'000 Total
€'000 €'000
Opening fair value 1,012,855 18,478 1,031,333 788,307 4,197 792,504
Additions 194,380 - 194,380 199,941 8,623 208,564
Disposals and repayments (228,316) (7,098) (235,414) (275,146) - (275,146)
Realised gains/(losses) on financial assets 12,595 (6,931) 5,664 58,404 - 58,404
Unrealised (losses)/gains on financial assets (114,493) 10,361 (104,132) 242,416 5,658 248,074
Unrealised losses on financial liabilities (6,063) - (6,063) (1,067) - (1,067)
Transfers into level 3 - - - - - -
Closing fair value 870,958 14,810 885,768 1,012,855 18,478 1,031,333
Financial assets held at FVTPL 877,021 14,810 891,831 1,013,922 18,478 1,032,400
Financial liabilities held at FVTPL (6,063) - (6,063) (1,067) - (1,067)
The unrealised losses attributable to only assets and liabilities held at 31
December 2022 were €104.1m (31 December 2021: €248.1m).
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 2022 31 December 2021
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 877,021 1,013,922
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
A movement of 10% in the value of Private Equity Investments would move the (6,063) (1,067)
NAV at the year end by 6.7% (31 December 2021: 6.8%).
Debt The Company holds a convertible preferred instrument, the value of which is Probability of conversion On a look-through basis the Company held 1 debt position (31 December 2021: 1) 9,660 8,908
determined by the probability weighted average of the instrument converting or which had probability of conversion of 60% applied.
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 5,150 9,426
(31 December 2021: 2) which were valued using comparable company multiples.
multiples and/or precedent The average multiple was 8.5x (31 December 2021: 7.8x).
transaction analysis
A movement of 10% in the multiple applied would move the NAV at year end by
0.1% (31 December 2021: 0.1%).
14 Shareholders' capital
At 31 December 2022, the Company had 491,100,768 ordinary shares fully paid
with no par value in issue (31 December 2021: 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 2021.
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 periods at admission,
all of these shares have been released following the fifth anniversary on 15
June 2020. For investors with ten-year lock-up periods, 20% of ordinary shares
were released from lock-up on 15 June 2021, with a further 20% being released
annually until 15 June 2025. Additionally, performance shares awarded to the
Investment Manager 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 2022 31 December 2021
(Loss)/profit for the year attributable to equity shareholders: €'000 (110,037) 344,904
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 basis(1) - 3,109,665
Adjusted shares(2) 491,100,768 494,210,433
(Loss)/earnings per share (cents)
Basic -22.41 70.23
Diluted -22.41 70.23
Adjusted -22.41 69.79
31 December 2022 31 December 2021
NAV €'000
NAV at end of year 1,299,376 1,490,067
NAV per share (€)
NAV per share 2.65 3.03
Adjusted NAV per share 2.65 3.02
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-end adjusted for the performance fee reserve and then divided
by the current number of ordinary shares in issue. At 31 December 2022, there
was no performance fee accrued and therefore Adjusted NAV per share remained
the same as NAV per share at €2.65. In the prior year, the Adjusted NAV per
share for both methodologies resulted in an Adjusted NAV per share of €3.02
At 31 December 2022, there were no items that would cause a dilutive effect on
earnings per share (2021: Nil). 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 2022 Year ended 31 December 2021
€'000 € £'000 £ €'000 € £'000 £
Final dividend paid for 2021/2020 37,417 7.59c 31,234 6.36p 30,005 6.11c 25,930 5.28p
Interim dividend paid for 2022/2021 34,847 7.09c 29,466 6.00p 34,406 7.05c 29,319 5.97p
Total 72,264 14.68c 60,700 12.36p 64,411 13.16c 55,249 11.25p
Dividends to shareholders in respect of the year Year ended 31 December 2022 Year ended 31 December 2021
€'000 € £'000 £ €'000 € £'000 £
Final dividend proposed 32,462 6.61 28,582 5.82 37,275 7.59c 31,234 6.36p
Interim dividend paid 34,847 7.09 29,466 6.00 34,406 7.05c 29,319 5.97p
Total 67,309 13.70 58,048 11.82 71,681 14.64c 60,553 12.33p
On 1 March 2023, the Board approved the final dividend for 2022, 5.82 pence
per share (6.61 cents euro equivalent) (2021: 6.36 pence per share (7.59 cents
euro equivalent)). This represents 2.5% of the Company's euro NAV at 31
December 2022 and will be paid on 3 April 2023.
On 18 August 2022, the Board approved an interim dividend for the six months
ended 30 June 2022, 6.00 pence per share (7.09 cents euro equivalent) (2021:
5.97 pence per share (7.05 cents euro equivalent)). This represents 2.5% of
the Company's euro NAV at 30 June 2022 and was paid on 23 September 2022.
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 2022.
17 Subsequent events
On 2 March 2023, the Board announced the final dividend for 2022, 5.82 pence
per share (6.61 cents euro equivalent) (2021: 6.36 pence per share (7.59 cents
euro equivalent). This represents 2.5% of the Company's euro NAV at 31
December 2022 and will be paid on 3 April 2023.
In January 2023, AGA received notice from Credit Suisse AG, London Branch that
its RCF will now revert to a conventional fixed-term arrangement with an
expiry date of 10 January 2025. The credit facility remains at €250.0m for
this period with the margin remaining at 230 bps, (over Risk Free Rate "RFR"
or Euribor depending on the currency drawn) and the non-utilisation fee at
c.100 bps per annum on an initial blended basis.
shareholder \ 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 2023
Ex-dividend date: 9 March 2023
Record date: 10 March 2023
Payment date: 3 April 2023
EARNINGS RELEASES
Earnings releases are expected to be issued on or around 4 May and 2 November
2023. The interim results for the six months to 30 June 2022 are expected to
be issued around 6 September 2023.
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 \ 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.
shareholder \ 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 managed(1) 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; and
· "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 services
directors of the AIFM
· receive a set amount of remuneration each quarter
x2 persons
· the remuneration of these directors is detailed in the disclosed
remuneration value
APG employees as · the services provided by these directors is included within the total fee
directors of the AIFM payable for services provided by the administrator to the AIFM and the
performance of these services forms part of the employee's duties
x2 persons
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 2022, for the directors:
Total The total amount of fixed remuneration for the reporting period paid by the £163,114
AIFM to its directors
Performance shares The total number of performance shares awarded free from consideration during 4,698
the year
Carried interest Not applicable to the AIF(2)
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
Sustainable Risk finance disclosure regulation (2019/2088) (the "Disclosure
Regulation")
The AIFM makes the following disclosures in accordance with Article 6(1) and
Article 7(2) of the Disclosure Regulation:
Integration of Sustainability Risks
The policy of the AIFM on the integration of sustainability risks in its
investment decision-making process is to rely on the responsible investment
and sustainability policies and procedures of Apax Partners LLP (the
"Investment Advisor") as set out at:
https://www.apaxglobalalpha.com/investment-portfolio/sustainability/
In line with the above policy, the AIFM and the Investment Advisor on which
the AIFM relies, has determined that sustainability risks are relevant to the
AIF. It has reached this determination, having had regard to the types of
investments that may be made in accordance with AIF's investment policy and
objectives and has concluded that environmental or social characteristics and
sustainable investments are relevant but are not a key objective for the AIF.
It has therefore assessed that investments on behalf of AIF are likely to be
subject to specific sustainability risks and that the AIF returns may be
impacted.
The portfolio of the AIF comprises different direct and indirect investments
that may change over time as a result of specific investment decisions made
and accordingly the identification and assessments of risks, including
sustainability risks, will take place on an investment-by-investment basis.
The Investment Advisor's assessment (on which the AIFM relies) is that
integration of sustainability risks in investment decisions, combined with a
diversified portfolio, is appropriate for the AIF. In light of its investment
objective and strategy, this should help mitigate the potential material
negative impact of sustainability risks on the returns of the AIF. Although
there can be no assurance that all such risks will be mitigated in whole or in
part, nor identified prior to the date the risk materialises.
TRANSPARENCY OF ADVERSE SUSTAINABILITY IMPACTS
The Investment Advisor does not consider the adverse impacts of investment
decisions on sustainability factors in the manner prescribed by article 4 of
the Disclosure Regulation. Article 4 of the Disclosure Regulation requires
fund managers to make a clear statement as to whether or not they consider the
"principal adverse impacts" of investment decisions on sustainability factors.
Although the Investment Advisor takes sustainability and ESG very seriously
the Investment Advisor could not gather and/or measure all of the data on
which it expects to be obliged by article 4 of the Disclosure Regulation to
report, or could not do so systematically, consistently, and at a reasonable
cost to investors. This data gap is not expected to change in the short term.
This is because: (i) various underlying issuers (which may be global, and many
not public interest entities) are not obliged to, and overwhelmingly do not
currently, report by reference to the same data; or (ii) the underlying
investments and issuers are still in the process of considering their
mandatory data collection and disclosure requirements.
TAXONOMY REGULATION DISCLOSURE
The investments underlying this financial product do not take into account the
EU criteria for environmentally sustainable economic activities.
Material changes
Other than the new Disclosure Regulation, there have been no material changes
to the information disclosed under Article 23 of the AIFMD in the prospectus
of the Company.
Quarterly returns since 1Q17
Total Return(1) (euro) Return attribution
Private Derived Derived Equity Private Derived Derived Equity Performance fee Other(2) 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%)
1Q22 (3.1%) 2.8% (0.7%) (2.0%) 0.6% 0.0% (0.2%) (0.1%) (1.7%)
2Q22 (2.6%) 0.7% (10.0%) (1.8%) 0.1% (0.2%) 0.2% (0.2%) (1.9%)
3Q22 3.0% 6.0% (2.9%) 2.1% 1.6% (0.1%) (0.3%) (0.1%) 3.2%
4Q22 (8.2%) (6.2%) 8.0% (9.9%) 1.8% 0.5% 0.5% (0.2%) (7.3%)
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%
2022 (11.3%) 2.7% (7.4%) (7.3%) 0.6% (0.1%) 0.0% (0.6%) (7.4%)
Total Return(1) (Constant currency) Return attribution
Private Derived Derived Equity Private Derived Derived Equity Performance fee Other(2) FX(3) 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%)
1Q22 (5.4%) 0.3% (2.1%) (3.6%) 0.2% 0.0% (0.2%) (0.2%) 2.1% (1.7%)
2Q22 (6.1%) (3.7%) (12.5%) (3.9%) (1.0%) (0.3%) 0.2% (0.2%) 3.3% (1.9%)
3Q22 (1.6%) 0.4% (6.7%) (1.0%) 0.4% (0.1%) (0.3%) (0.2%) 4.4% 3.2%
4Q22 (2.1%) 1.1% 14.6% (1.5%) 0.0% 0.3% 0.3% (0.2%) (6.2%) (7.3%)
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%
2022 (14.8%) (1.7%) (8.6%) (9.5%) (0.4%) (0.2%) 0.0% (0.6%) 3.3% (7.4%)
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
Portfolio allocation since 1Q17
Portfolio Allocation(1) 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% 669.5 178.9 112.0 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
1Q22 65% 23% 2% 10% 918.4 327.1 30.7 145.7 1,421.9 1,419.6
2Q22 63% 24% 2% 11% 877.2 337.5 27.4 150.1 1,392.2 1,392.2
3Q22 66% 26% 2% 6% 922.4 369.6 24.9 89.3 1,406.2 1,402.1
4Q22 67% 26% 2% 5% 871.0 340.6 23.6 64.2 1,299.4 1,299.4
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
2022 65% 25% 2% 8% 897.2 343.7 26.7 112.3 1,379.9 1,378.3
1. For annual periods the average weighting over four quarters used
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.
AGI means the limited partnerships that constitute the Apax Global Impact
Fund.
AMI means the limited partnerships that constitute the AMI Opportunities Fund
focused on investing in Israel.
AMI II means the limited partnerships that constitute the AMI Opportunities II
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.
AXI means the limited partnerships that constitute the Apax XI Private Equity
fund.
Aztec means Aztec Financial Services (Guernsey) Limited.
B2B 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 leveraged
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.
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 and
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 fair value through profit or loss.
FX 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.
KPI Key performance indicator.
LSE London Stock Exchange.
LTM Last twelve months.
Market capitalisation is calculated by multiplying the share price at a
particular date by the number of shares in issue on the same date. The euro
equivalent is translated using the exchange rate at the reporting period date.
MOIC Multiple of invested capital.
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 accounting
policies.
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 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 is 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 22 22 -
Management fee 3,712 - 3,712
Admin and other expenses 2,797 166 2,631
Other admin and operating expenses 2,631 - 2,631
Deal transaction, custody and research costs 166 166 -
Total 6,531 188 6,343
Finance costs 3,150 3,150 -
Total costs 9,681 3,338 6,343
Look-through management fees(¹) 15,345
Total Ongoing charges 21,688
Average NAV² 1,401,952
% of Average NAV 1.5%
1. Represents management fees of the Apax Funds
2. Represents the average of 5 quarter end reported NAVs from 31
December 2021 to 31 December 2022
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 calculated 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,
and 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.
RCF Revolving Credit Facility.
Reporting period means the period from 1 January 2022 to 31 December 2022.
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, divided by 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 the 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.
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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. END FR UAOARORUORURRecent news on Apax Global Alpha
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