REG - Apax Global Alpha Ld - 2022 Final Results
02/03/2023 07:01
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RNS Number : 5867R Apax Global Alpha Limited 02 March 2023
(LSE: APAX)
Apax Global Alpha Limited
Full year Results for the year ended 31 December 2022
Key highlights
· AGA's Adjusted NAV was €1.3bn (FY21: €1.5bn) in 2022, and Total NAV
Return(1) was (7.4)% ((10.7)% constant currency).
· Operationally, the Private Equity portfolio performed well in 2022, with
average EBITDA growth of 18.5%(2). However, this was not enough to fully
offset negative movements in valuation multiples.
· Negative movements in valuation multiples were primarily from multiple
contraction for the Apax Funds' listed holdings which represented 14% of the
Private Equity portfolio at 31 December 2022 but contributed c. 80% to the
multiple decline in Private Equity. This led to a Total Return in Private
Equity decline by (11.3)% in 2022.
· Derived Investments, which mainly consist of debt, delivered a Total Return of
1.9% in 2022, cushioning overall Total Return. This portfolio absorbs cash not
invested in Private Equity, enhances the robustness of AGA's balance sheet and
provides a steady flow of income to support dividends and an additional source
of alpha for AGA.
· Despite a challenging market backdrop, the Apax Funds continued to focus on
opportunities where value creation could be achieved through operational
improvement. The Apax Funds completed ten new Private Equity investments in
the period in which, on a look-through basis, AGA deployed €132.8m.
· Demand for high-quality assets remained strong and the Apax Funds completed
seven full exits in the period at an average uplift of 15.1% to last
Unaffected Valuations(3).
· The Board takes a disciplined approach to liquidity and capital management
with rigorous scenario modelling and stress testing when agreeing new
commitments to the Apax Funds. As a result, AGA was pleased to make
commitments to three new funds during 2022: €700m to Apax XI, $60m to Apax
Global Impact, and $40m to Apax Mid-Market Opportunities II.
· Dividend of 11.82p per share declared for the full year 2022, in line with
AGA's dividend policy of distributing 5% of NAV per annum.
Tim Breedon CBE, Chairman of Apax Global Alpha, said:
"Whilst 2022 saw a marked change in the macro environment, the Apax Funds have
continued to identify attractive investment opportunities, generate alpha
through business improvement, and exit at attractive prices. Whilst no
investment strategy can be totally immune to the current macro headwinds, we
believe that the Apax Funds have the right investment approach for the current
market conditions."
Financial highlights
· AGA was 95% invested as at 31 December 2022 and had unfunded commitments to
the Apax Funds (together with recallable distributions) of €1.0bn.
· At 31 December 2022, AGA's invested portfolio consisted of €871.0m in
Private Equity (71%) and €364.2m in Derived Investments (29%).
· Following earlier commitments, as anticipated there were several large capital
calls towards the end of 2022, largely from Apax X. After these calls, net
cash was €64m, and the €250m revolving credit facility ("RCF") remained
undrawn as at 31 December 2022.
· In early 2023, AGA received formal notice that the RCF will revert to a
conventional fixed-term arrangement with an expiry date of 10 January 2025.
FY 2022 FY 2022 FY 2021 FY 2022
€ £ € £
Adjusted NAV(4) 1,299m 1,150m 1,482m 1,247m
Adjusted NAV(4) per share 2.65 2.34 3.02 2.54
NAV(4) per share 2.65 2.34 3.03 2.55
Exposure FY 2022 FY 2022
constant currency
Total NAV Return(1) (7.4)% (10.7)%
Total Return(1) - Private Equity 67% (11.3)% (14.8)%
Total Return(1) - Derived Debt 26% 2.7% (1.7)%
Total Return(1) - Derived Equity 2% (6.8)% (7.9)%
Cash & Others 5%
Portfolio highlights
· Invested portfolio split across four key sectors: Tech & Digital (40%),
Services (28%), Healthcare (17%), and Internet/Consumer (15%).
· In Private Equity, the portfolio is well diversified across vintages: 14%
invested before 2017, 38% were acquired in the 2017-2019 period, and 48% of
investments are from 2020 and later
· The Private Equity portfolio delivered a Total Return(1) of (11.3)% ((14.8)%
constant currency) in the period. This reflected resilient trading performance
with LTM Revenue and EBITDA growth of 21.5%(2) and 18.5%(2) respectively
across the Private Equity portfolio demonstrating their robust business models
and the benefit of the Apax Funds' investment approach, offset by the impact
of multiple compression on valuations, in particular from the publicly listed
holdings held.
· At 31 December 2022, 14% of the Private Equity Invested Portfolio was in
publicly listed holdings. These reflect residual stakes in previously IPO'd
portfolio companies which, together with secondary sales, have already
returned distributions totalling 3.4x initial costs(5) to AGA. There is
further potential to create value from these holdings, as shown by the sale in
January 2023 of the residual holding in Duck Creek at a 57% premium to its
end-year market value.
· In Private Equity, seven full exits were completed during the period with a
weighted average uplift of 15.1% compared to last Unaffected Valuations(3).
Gross IRR(6) and Gross MOIC(6) in 2022 were 17.1% and 3.1x respectively.
· AGA's debt portfolio, which makes up 94% of Derived Investments, delivered a
Total NAV Return of 2.7% in 2022.
· 99% of the Derived Debt investments are invested in floating rate loans,
reducing duration risk. With increasing base rates, the portfolio generates a
9.9% income yield.
· The average yield to maturity of the portfolio increased to 12.1% at 31
December 2022 (FY21: 6.2%).
· The Derived Debt portfolio has outperformed the S&P/LSTA leveraged loan
index(7) with a five-year cumulative return on a constant currency basis of
31.2% compared to 17.7%.
· €57.2m was deployed in Derived Debt in 2022. There were no new investments
in Derived Equity.
For further information regarding the announcement of AGA's FY 2022 Results,
including the Company's results presentation and details for today's analyst
and investor webcast at 9.30am (UK time), please visit www.apaxglobalalpha.com
(http://www.apaxglobalalpha.com/shareholder-information/results-and-publications)
.
Contact details
Katarina Sallerfors, Investor Relations - AGA
Telephone: +44 207 666 6526
Email: Katarina.sallerfors@apax.com
APPENDIX
Movements in NAV
Adjusted NAV movements (€m) Private Equity Derived Investments Cash Treasury Shares Facility drawn Other(8) Total
Adjusted NAV at 31.12.21 1,012.9 327.2 108.5 - - 33.1 1,481.7
+ Investments 194.4 57.2 (248.0) - - (3.6) -
- Distributions/ divestments (227.8) (10.5) 271.0 - - (32.7) -
+ Interest and dividend income - - 25.3 - - (0.3) 25.0
+/- Gains/(losses) (141.8) (32.9) - - - - (174.7)
+/- FX gains/(losses)(9) 33.3 14.8 0.2 - - - 48.3
+/- Costs and other movements - - (9.5) - - (0.3) (9.8)
- Dividends paid - - (71.1) - - - (71.1)
+/- Performance fee reserve(10) - 8.4 - (8.4) - - -
+/- Shares purchased - - (8.4) 8.4 - - -
+/- Revolving credit facility - - - - - - -
drawn/repaid
Adjusted NAV at 31.12.22 871.0 364.2 68.0 - - (3.8) 1,299.4
Private Equity - operational metrics
Private Equity - operational metrics FY 22 FY 21
Portfolio year-over-year LTM revenue growth(2) 21.5% 20.2%
Portfolio year-over-year LTM EBITDA growth(2) 18.5% 35.3%
Enterprise Value / EBITDA valuation multiple(2) 17.2x 23.2x
Net debt / EBITDA multiple(2) 4.8x 4.2x
Derived Investments - operational metrics
Derived Investments - operational metrics FY 22 FY 21
Debt average income yield to maturity(11) 12.1% 6.2%
Debt average years to maturity 5.1 6.1
Debt average income yield(12) 9.9% 5.4%
Other Invested Portfolio highlights
Invested Portfolio analysis(13) €m €m % %
- AEVI 2.2 0%
- AEVII 23.8 2%
- AVIII 88.6 7%
- AIX 325.4 26%
- AX 364.7 30%
- AXI (3.4) 0%
- AMI 23.4 2%
- AMI II (0.7) 0%
- ADF 48.1 4%
- ADF II 0.9 0%
- AGI (2.0) 0%
Private Equity 871.0 71%
- Derived Debt 340.6 27%
- Derived Equity 23.6 2%
Derived Investments 364.2 29%
Total 1,316.9 100%
Footnotes
1 "Total NAV Return" means the movement in the Adjusted NAV per share over the
quarter plus any dividends paid. "Total Return" reflects the sub-portfolio
performance on a stand-alone basis. It excludes items at the overall AGA level
such as cash, management fees, and costs
2 Gross Asset Value weighted average of the respective metric across the
portfolio. LTM Revenue growth and LTM EBITDA growth rates exclude companies
where EBITDA is not meaningful such as financial services or high growth
business with fluctuations in EBITDA. Net debt/EBITDA multiple and EV/EBITDA
valuation multiple excluded companies where EBITDA is not meaningful such as
financial services or high growth business valued on a revenue basis.
3 Valuation uplifts on exits are calculated based on the total actual or
estimated sales proceeds and income as appropriate since the last Unaffected
Valuation. 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). Where applicable, average uplifts of partial exits and IPO's
includes proceeds received and the closing fair value at period end.
4 Adjusted NAV reflects Total NAV of €1,299.4m, before performance fee reserve
of €0.0m
5 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
6 Private Equity Aggregate Gross IRR and Gross MOIC calculated based on the
expected aggregate cash flows in euro across all funds for the deals signed
and/or IPO'd in the period. Gross IRR represents concurrent Gross IRR.
7 Source: Bloomberg
8 Other reflects net current liabilities.
9 FX on cash includes the revaluation of cash balances and net gain or losses
arising from the differences in exchange rates between transaction dates and
settlement dates, and unrealised net gains or losses arising from the
translation into euro of assets and liabilities (other than investments) which
are not denominated in euro
10 Movement in the performance fee reserve reflects the performance fee reserve
accrued by the Company's at 31 December 2022. This does not represent the
underlying Private Equity portfolio's carried interest.
11 Gross Asset Value weighted average of the respective metric across the Derived
Debt portfolio.
12 Gross Asset Value weighted average of the current full year income (annual
coupon/clean price as at the respective date) for each debt position in the
Derived Debt portfolio as at the respective date
13 Invested Portfolio excludes cash and cash equivalents, revolving credit
facility drawn and net current assets, including these the NAV was €1,299.4m
and Adjusted NAV was €1,299.4m reflecting adjustment of €0.0m for the
estimated performance fee reserve accrued.
Notes
1. Note that references in this announcement to Apax Global Alpha Limited have
been abbreviated to "AGA" or "the Company". References to Apax Partners LLP
have been abbreviated to "Apax" or "the Investment Adviser"
2. Please be advised that this announcement may contain inside information as
stipulated under the Market Abuse Regulations (EU) NO. 596/2014 ("MAR")
3. This announcement is not for release, publication or distribution, directly or
indirectly, in whole or in part, into or within the United States or to "US
persons" (as defined in Regulation S under the United States Securities Act of
1933, as amended (the "Securities Act")) or into or within Australia, Canada,
South Africa or Japan. Recipients of this announcement in jurisdictions
outside the UK should inform themselves about and observe any applicable legal
requirements in their jurisdictions. In particular, the distribution of the
announcement may be restricted by law in certain jurisdictions
4. The information presented herein is not an offer for sale within the United
States of any equity shares or other securities of Apax Global Alpha Limited
("AGA"). AGA has not been and will not be registered under the US Investment
Company Act of 1940, as amended (the "Investment Company Act"). In addition,
AGA's shares (the "Shares") have not been and will not be registered under the
Securities Act or any other applicable law of the United States. Consequently,
the Shares may not be offered or sold or otherwise transferred within the
United States, or to, or for the account or benefit of, US Persons, except
pursuant to an exemption from the registration requirements of the Securities
Act and under circumstances which will not require AGA to register under the
Investment Company Act. No public offering of the Shares is being made in the
United States
5. This announcement may include forward-looking statements. The words "expect",
"anticipate", "intends", "plan", "estimate", "aim", "forecast", "project" and
similar expressions (or their negative) identify certain of these
forward-looking statements. These forward-looking statements are statements
regarding AGA's intentions, beliefs or current expectations concerning, among
other things, AGA's results of operations, financial condition, liquidity,
prospects, growth and strategies. The forward-looking statements in this
presentation are based on numerous assumptions regarding AGA's present and
future business strategies and the environment in which AGA will operate in
the future. Forward-looking statements involve inherent known and unknown
risks, uncertainties and contingencies because they relate to events and
depend on circumstances that may or may not occur in the future and may cause
the actual results, performance or achievements of AGA to be materially
different from those expressed or implied by such forward looking statements.
Many of these risks and uncertainties relate to factors that are beyond AGA's
ability to control or estimate precisely, such as future market conditions,
currency fluctuations, the behaviour of other market participants, the actions
of regulators and other factors such as AGA's ability to continue to obtain
financing to meet its liquidity needs, changes in the political, social and
regulatory framework in which AGA operates or in economic or technological
trends or conditions. Past performance should not be taken as an indication or
guarantee of future results, and no representation or warranty, express or
implied, is made regarding future performance. AGA expressly disclaims any
obligation or undertaking to release any updates or revisions to these
forward-looking statements to reflect any change in AGA's expectations with
regard thereto or any change in events, conditions or circumstances on which
any statement is based after the date of this announcement, or to update or to
keep current any other information contained in this announcement.
Accordingly, undue reliance should not be placed on the forward-looking
statements, which speak only as of the date of this announcement.
About Apax Global Alpha Limited
AGA is a Guernsey registered closed-ended collective investment scheme
incorporated as a non-cellular company that listed on the London Stock
Exchange on 15 June 2015. It is regulated by the Guernsey Financial Services
Commission.
AGA's objective is to provide shareholders with capital appreciation from its
investment portfolio and regular dividends. The Company is targeting an
annualised Total Return, across economic cycles, of 12-15% (net of fees and
expenses) including a dividend yield of 5% of Net Asset Value.
The investment policy of the Company is to make Private Equity investments in
Apax Funds, and Derived Investments which are investments in equities and debt
derived from the insights gained via Apax's Private Equity activities.
Further information regarding the Company and its publications are available
on the Company's website at www.apaxglobalalpha.com.
About Apax Partners LLP
Apax Partners LLP ("Apax") is a leading global private equity advisory firm.
For 50 years, Apax has worked to inspire growth and
ideas that transform businesses. The firm has raised and advised funds with
aggregate commitments of more than $65 billion. The Apax
Funds invest in companies across four global sectors of Tech, Services,
Healthcare, and Internet/Consumer. These funds provide long-term equity
financing to build and strengthen world-class companies. For further
information about Apax, please visit www.apax.com.
Apax is authorised and regulated by the Financial Conduct Authority in the UK.
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