REG - Apax Global Alpha Ld - 2023 Interim Report and Accounts
06/09/2023 07:15
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230906:nRSF4823La&default-theme=true
RNS Number : 4823L Apax Global Alpha Limited 06 September 2023
Apax Global Alpha Limited
Interim Report 2023
Introduction
Apax Global Alpha Limited ("AGA" or the "Company") aims to offer shareholders
superior long-term returns by providing access to Apax Private Equity Funds
where value creation is accelerated through business improvement
About AGA 02
Providing public market access to Apax Private Equity Funds and a portfolio of
debt investments
CHAIRMAN'S STATEMENT 07
Creating long-term value for shareholders
Responsible investing 08
Committed to delivering sustainable returns
Investment manager's report - market review 10
"All-weather" investment strategy well suited for the current market
environment
investment manager's report - portfolio review 16
Resilient performance driven by earnings growth across the Private Equity
portfolio
financial statements 26
Strong balance sheet and good visibility on future calls from Apax Private
Equity Funds
About AGA
Public market access to private equity
AGA offers public market access to Apax Private Equity Funds (or the "Apax
Funds") and their global portfolio of mostly private companies.
AGA also holds a portfolio of Derived Debt(1) ("Debt portfolio" or "Debt
Investments") which provides robustness to the Company's balance sheet and
generates additional returns and income towards the dividend.
AGA has a premium listing and is a constituent of the FTSE 250 Index (LSE:
APAX).
30 june 2023 HIGHLIGHTS
H1 2023 Total NAV Return(2)
2.4%
Adjusted NAV(3)
€1,299m
Market capitalisation at 30 June 2023
£907m
Interim dividend
5.70p
Adjusted NAV(3) per share
€2.64/£2.27
Share price at 30 June 2023
£1.85
AGA shareholders
AGA invests as a Limited Partner into the Apax Funds Apax
Global Alpha
APAX FUNDS Portfolio of predominantly debt instruments
Global Buyout 25 debt positions
Digital Growth 3 Equity positions
Mid-Market Israel
Global Impact
Portfolio Companies
79
1. Excludes three positions in Derived Equity valued at €13.8m
2. Total NAV Return is an Alternative Performance Measure ("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 pages 28 and 47.
3. Adjusted NAV reflects Total NAV of € 1,301.8m, before performance
fee reserve of €3.1m at 30 June 2023. Further details can be seen on pages
28 and 46
About AGA
Accessing a portfolio of hidden gems
AGA's objective is to provide shareholders with superior long-term returns
through capital appreciation and regular dividends
12-15%
Target ANnual Total NAV Return across economic cycles
5%
of NAV p.a. dividend policy
Access to a portfolio of hidden gems, mostly private companies which
shareholders can't buy elsewhere
Exposure to 79 portfolio companies and a portfolio of predominantly debt
instruments
Mostly private companies in the Tech & Digital, Services, Healthcare, and
Internet/Consumer sectors
Blue-chip investment advisor with more than 50 years of experience
"All-weather" investment strategy well-suited to generate alpha
Value creation in Private Equity driven by operational improvement
Private Equity portfolio diversified across sectors, strategies, and fund
vintages
Robust balance sheet, strengthened by portfolio of debt investments
Well capitalised and with good visibility on future calls from the Private
Equity Funds
Debt portfolio generating additional returns and a steady flow of income to
support dividend
Key highlights
Resilient performance against an uncertain market backdrop driven by continued
earnings growth across the Private Equity Funds' portfolio companies
AGA's Invested Portfolio as at 30 june 2023
71%
Private equity
29% 28% Debt investments
Derived investments
1% Equity investments
We believe the Apax Funds' focus on driving alpha through operational
improvement, coupled with a deep sector expertise, and prudent balance sheet
management, positions the Company well for the second half of 2023.
Tim Breedon CBE
Chairman
Private Equity
Companies
79
Portfolio
14% 4.4x 16.3x
LTM EBITDA GROWTH(1) NET DEBT/EBITDA(1) VALUATION MULTIPLE(1)
To 30 June 2023 At 30 June 2023 At 30 June 2023
Exits
24%
AVERAGE UPLIFT(4)
in H1 2023
Derived Investments
Debt Portfolio(2)
Portfolio
13%
yield to maturity
At 30 June 2023
Income
11%
Income yield
At 30 June 2023
Capital Management(3)
€38m
Realised proceeds and income
in H1 2023
1. Please refer to pages 13 and 17 for further details on calculations
2. Excludes three positions in Derived Equity valued at €13.8m
3. Realised proceeds and income includes income relating to debt
investments and derived equity as well as bank interest received
4. Average uplift to latest unaffected valuations for full and partial
exits in the first six months of 2023. See further details on page 19
Strategic report
contents
Chairman's Statement 07
Responsible Investing 08
Investment Manager's Report
- Market review 10
- Performance review 14
- Portfolio review 16
Statement of Directors' Responsibilities 25
Chairman's statement
Resilient performance in challenging market conditions
The first six months of 2023 saw continuing macroeconomic challenges arising
from geopolitical instability, inflation concerns, and tight labour markets.
Central banks raised interest rates aggressively in the face of high inflation
allied to strong wage growth and employment levels. Meanwhile, yield curves
flattened indicating that while the peak in the current tightening cycle is
close to being reached, rates are expected to remain higher for longer as a
result of elevated core inflation expectations. Perhaps surprisingly given the
uncertain market environment and higher discount rates, public equity markets
rallied led by a rise in cyclical and large tech stocks.
Results
Total NAV Return for AGA was 2.4% for the six months to 30 June 2023. Adjusted
NAV was €1.3bn which translates to €2.64 cents/£2.27 pence Adjusted NAV
per share as at 30 June 2023.
Overall performance was supported by growth in the Private Equity portfolio
and strong returns from the Company's Debt Investments. In Private Equity,
Total NAV Return was 1.9% in the six months to 30 June 2023, driven by
continued growth in the underlying portfolio. Meanwhile, the Debt portfolio
returned 5.3% in the same period.
Portfolio update
At 30 June 2023, AGA was 93% invested, split 71% in Private Equity and 28% in
Debt Investments, with the remaining 1% invested across three Derived Equity
positions.
In Private Equity, the Apax Funds continued to focus on target sectors and on
generating alpha by buying under-optimised assets where business improvement
can lead to an acceleration in financial performance as well as an increase in
relative valuation multiples compared to peers. Whilst earnings growth across
the Private Equity portfolio slowed somewhat in Q2 2023, the portfolio
remained resilient with average LTM EBITDA growth of 14% at 30 June 2023.
Leverage across the Apax Funds' portfolio reduced slightly to 4.4x at 30 June
2023. As highlighted at AGA's Capital Markets Day which was held in June this
year, the Apax Funds' portfolio is well-positioned to weather the current
interest rate environment. Over three quarters of portfolio companies have
debt maturities extending beyond 2027 whilst a similar proportion of debt
outstanding is at a fixed rate.
Despite a generally more difficult exit environment, AGA has received c.€35m
of distributions in the past six months predominantly from three exits in the
Private Equity portfolio. These were achieved at an average uplift of 24% to
unaffected valuations. In the last five years AGA has received total
distributions from the Apax Funds of €998m compared to calls of €651m.
In terms of investment activity, the Apax Funds remained cautious when
assessing new opportunities and in the first six months of the year AGA
deployed c.€11m across three new private equity investments. The pipeline
for new deals is improving with a further two investments post period-end.
Turning to AGA's Debt portfolio, this consists of carefully selected
investments primarily in first and second lien loans designed to complement
the Private Equity portfolio. At 30 June 2023, this portfolio had a yield to
maturity of 13.3% and consisted almost exclusively of floating rate
instruments.
Liquidity, commitments, and funding
The Board takes a prudent approach to liquidity and capital management and
AGA's liquidity position remains healthy in light of uncertain markets.
Net cash, together with the undrawn revolving credit facility ("RCF") and
capital invested in Debt and the remaining Derived Equity investments, leaves
AGA with resources of €693m and therefore well-positioned to meet future
Private Equity calls. Unfunded commitments, including recallable distributions
from the Apax Funds, reduced by €20m to €985m at 30 June 2023.
RCF RENEWAL
On 5 September 2023 AGA entered into a new multi-currency RCF of €250m with
SMBC Bank International plc and JPMorgan Chase Bank, N.A., London Branch,
replacing the facility held with Credit Suisse AG, London Branch. The new RCF
has an initial term of 2.5 years, and the interest rate charged will be SOFR
or Euribor plus a margin between 300-335bps. The existing RCF was undrawn at
30 June 2023.
Dividend
The Board has a policy to paying 5% of NAV per annum in dividends and, since
IPO in 2015, AGA has paid out €411m in dividends to shareholders.
In line with this policy the Board has approved an interim dividend for 2023
of 5.7 pence per share. The dividend will be paid on 3 October 2023 to
shareholders on the register of members on 15 September 2023. The shares will
trade ex-dividend on 14 September 2023.
Outlook
Whilst no investment strategy can be totally immune to the current
macroeconomic headwinds, we believe that the Apax Funds' focus on driving
alpha through operational improvement, coupled with our prudent approach to
balance sheet management, positions AGA well for the second half of 2023.
Tim Breedon CBE
Chairman
5 September 2023
Responsible Investing
Delivering value sustainably
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.
Environment, Social, and Governance ("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. This is incorporated into Apax's data platform alongside
financial data, allowing the team to gain greater insights from across the
portfolio. Learn more about the Apax intelligence platform on p.23.
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.
The consequences of the rapid development being seen in the field of
artificial intelligence has been a major focus area for Apax in the first half
of 2023. A cross-disciplinary working group has been set up to assess the
implications of, and opportunities resulting from, this technology. The focus
is centred on i) investment strategy, ii) portfolio company value creation,
and iii) internal Apax processes.
To learn more about how Apax works with portfolio companies to turn ideas into
action, listen to Apax's podcast episode with Karin Witton, Global Head of
Sustainability at Apax IX portfolio company Tosca, a leading provider of
supply chain solutions and reusable packaging. Karin offers a whistle-stop
tour into her career in sustainability, her efforts at Tosca and how she is
helping make an already sustainable business more so.
CASE STUDY
Podcast episode with Karin Witton, Tosca
Dalia Rahman, ESG specialist in Apax's Operational Excellence Practice, speaks
to Karin Witton, Global Head of Sustainability at Apax IX portfolio company
Tosca, a leading provider of supply chain solutions and reusable packaging.
Listen to Apax podcast on turning ideas into action with Karin Witton.
https://www.apax.com/news-views/turning-ideas-into-action-lessons-on-sustainability-from-tosca-s-karin-witton/
(https://www.apax.com/news-views/turning-ideas-into-action-lessons-on-sustainability-from-tosca-s-karin-witton/)
Key highlights
Apax's interactive ESG data analytics platform helps drive faster, data-driven
decisions at portfolio companies
Read Apax's Sustainability Report:
https://www.apax.com/reports/apax-sustainability-report-edition-2023-v2/index.html#page=1
(https://www.apax.com/reports/apax-sustainability-report-edition-2023-v2/index.html#page=1)
10th
SUSTAINABILITY REPORT PUBLISHED
130+
eSG KPIs collected
60%
OF MAJORITY OWNED PORTFOLIO COMPANIES IN APAX IX AND X HAVE COMPLETED APAX'S
CARBON BASELINING EXERCISE
Investment Manager's Report
Market review
AGA's performance was resilient in challenging markets in the first six months
of 2023
OVERVIEW AND OUTLOOK
The economic outlook remains uncertain and short-term interest rates are
likely to stay high in major economies with the timing of the pivot unclear.
Higher borrowing costs are weighing on economic demand and whilst consumer
spending has remained resilient, there are mixed signals from several
confidence indicators. That said, with headline inflation and the labour
market easing somewhat, the second half of 2023 should bring more clarity on
the path of the global economy.
Forecasts for GDP have slightly improved, and developed markets are expected
to grow by 1.4% in 2023 and 1.5% in 2024. However, euro area growth remains
weak at 0.6% in 2023, and the outlook for the US uncertain.
What this means
AGA's portfolio is diversified by sector 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 moderate compared to recent years.
PRIVATE EQUITY MARKETS
Against a continued uncertain macroeconomic backdrop where valuations remained
elevated, the cost of capital expensive, and visibility on prospective
earnings muddy, private equity firms continued to act with caution in H1 2023.
Whilst pipelines for new investments picked up, the exit environment remained
difficult. Nevertheless, private market valuations have proven more stable
than public markets, likely as a result of longer-term perspectives, exit
optionality and capital at private equity firms' disposal.
Private equity activity should continue to pick up once there is less
uncertainty. In the near term, inflation easing could bolster transaction
activity, but it could also see another pullback from a slowing economy.
What this means
The Apax Funds' focus on alpha generation through business improvement and on
coveted categories means that they are generally less exposed to cyclical
trends. This investment strategy provides comfort in these uncertain times,
with the Apax Funds having a built-in buffer against declining valuations by
virtue of an average discount of 24% versus peers on entry multiples in the
last three flagship funds(1).
The Private Equity portfolio is also relatively lowly levered, with c.75% of
debt outstanding at a fixed rate and with long-dated maturities meaning it is
more insulated from short-term movements in credit markets.
Looking at the pipeline, the Apax Funds have continued to identify attractive
investment opportunities with two new investments post period-end.
The pace of realisations is likely to remain below the peak seen in 2021 but
given the high-quality nature and vintage diversification of the Private
Equity portfolio, we expect continued demand for portfolio companies of the
Apax Funds, even in a more challenging environment.
1 Average discount vs peers on entry multiples for Apax VIII, IX,
and Apax X
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
H123 76
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
H123 16
Source: LCD
PUBLIC EQUITY MARKETS
The current cycle is proving complex to extrapolate with previously reliable
gauges of bull and bear markets providing limited guidance as to what the
future may hold.
Whilst still below the 2021 peak, equity markets have rebounded strongly in
the first half of the year with the S&P 500 up 15.9% and the Europe STOXX
600 up 8.7%. What started as a rally driven by a handful of big stocks has
turned into a cross-sector surge, ignoring more traditional recession alarms.
What this means
Public equity exposure in AGA's portfolio is mostly from residual look-through
holdings in previously IPO'd Private Equity portfolio companies. These
holdings represent approximately 7% of Adjusted NAV at 30 June 2023. The
divergence in performance across stocks paints a mixed picture for these
listed holdings, with some weighing on the Private Equity funds' performance.
Listed investments are valued at the closing share price at period-end.
Apax will seek to maximise the value of the Apax Funds' public company
positions. 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.53% premium to the
unaffected share price at 30 December 2022.
CREDIT MARKETS
European and North American broadly traded secondary loan markets have seen
significant tightening of spreads in the first half of 2023. Three-year
spreads for trading US 1L loans tightened by c.84bps to an average of 532bps
over Libor and EU loans tightened by c.116bps to c.589bps over Euribor.
Although overall spreads are still elevated versus recent years, higher
quality credits have in general tightened more.
What this means
Whilst primary leveraged buyout issuances are yet to recover to historic
levels, there remains a strong pipeline of primary opportunities to support
M&A financing and public-to-private transactions.
The majority of positions within AGA's Debt portfolio are in lower-risk first
and second lien loans, providing a margin of safety to potential issuers'
declining credit quality.
28%
OF INVESTED PORTFOLIO IN DEBT investments
13%
Yield to maturity
INFLATION
Inflationary pressures persisted in the first half of 2023 but there are signs
of cooling with headline inflation easing somewhat. There are early signs of
the labour market easing, albeit with mixed signals from confidence
indicators.
US inflation has been moving closer to the Fed's 2% target after peaking at
more than 9% last year. The Consumer Price Index fell sharply to 3.0% in June,
highlighting the Fed's relative success at cooling down inflation. However,
the US Core PCE Index, which measures inflation excluding food and energy,
proved stickier and only fell modestly to 4.1%.
Euro area inflation has also cooled but remains higher than in the US. Euro
area inflation fell from its peak of 10.6% in October last year, initially
driven by a drop in energy inflation, to 5.3% in July. Core inflation, which
was unchanged at 5.5% in July, has been more persistent and started to
moderate only recently.
Whilst the cooling has allowed the Fed to slow down in tightening monetary
policy and the ECB to signal a possible rate hike pause in September, price
growth has yet to fall further. US and euro area core inflation remain well
above central banks' target of 2%.
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 which has led to a decline in margins. More broadly going forward,
inflation could also have an impact on demand as buyers purchase less.
INTEREST RATES
Rate increases have continued into 2023 as central banks look to control
inflation. The Fed's latest rate increase took benchmark borrowing costs to
their highest level in more than 22 years. The ECB deposit facility rate is at
a record high last reached in 2001.
As at June 2023, most policymakers projected the benchmark rate peaking at
5.5% to 5.75%, with the Fed Funds Rate increasing from 5.25% to 5.5% in July.
In August 2023 the ECB's deposit facility rate stood at 3.75% and the Bank of
England confirmed a 14th consecutive increase, raising rates to 5.25%.
Whilst headline inflation has eased, indications from central banks suggest
borrowing costs will remain high for some time with the timing of a pivot
unclear.
What this means
Whilst the cost of borrowing has increased, the Apax Funds have relatively low
levels of leverage at 4.4x net debt/EBITDA on average. Apax's Capital Markets
team also sought to actively refinance portfolio companies when the cost of
debt was "cheap" and 83% of portfolio companies have maturities extending
beyond 2027, limiting the impact of interest rate rises in the near term. Apax
is closely monitoring the capital structures in the portfolio to minimise the
impact, and portfolio companies are taking early action where necessary.
In the Debt portfolio, 99% of AGA's investments are floating rate notes which
benefit from increasing interest rates.
Although AGA's RCF 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 30 June 2023.
4.4x
average leverage across the Private Equity portfolio companies(1)
99%
of AGA's debt INVESTMENTS ARE FLOATING RATE
1. Net debt/EBITDA multiple excluded 28 companies where EBITDA
is not meaningful such as financial services or companies with negative
EBITDA, or high growth business valued on a revenue basis. Due to these
adjustments, the comparatives may not be on a like-for-like basis
Performance review
Earnings growth across the Private Equity Funds' portfolio companies was a key
driver of AGA's overall performance in the first six months of 2023
2.4%
H1 2023 TOTAL NAV RETURN
€2.64/£2.27
ADJUSTED NAV PER SHARE
AT 30 JUNE 2023
The Company achieved a Total Adjusted NAV Return of 2.4% (3.6% constant
currency) in the first six months of 2023. This was primarily driven by value
creation across the Private Equity portfolio companies as well as strong
returns from the Debt portfolio.
Earnings growth remained a key driver of value creation in Private Equity
despite some slow-down in earnings in Q2 2023. Average LTM EBITDA growth
across the Private Equity portfolio companies remained robust at 14.1% as at
30 June 2023. There were also some FX headwinds as a result of the euro
strengthening against the dollar.
In the Private Equity portfolio, average leverage levels reduced to 4.4x
whilst valuation multiples came down by 0.9x to 16.3x in the six months to 30
June 2023. This multiple decline was primarily driven by multiple compression
from Paycor and Thoughtworks, both publicly listed companies in which the Apax
Funds remain shareholders following their IPOs in 2021.
STRONG PIPELINE BUT CONTINUED caution AROUND NEW INVESTMENTS
Against the current market backdrop, the Apax Funds continued to take a
cautious approach to new investments. Three new investments were made in the
six months to 30 June 2023. The Apax Global Impact fund invested in Swing
Education, an online marketplace that connects schools and substitute
teachers, the Apax Digital Fund II in Magaya, a leading digital freight
software platform, and the AMI Opportunities Fund invested in Zoo Eretz,
Israel's leading pet products wholesaler and retailer.
In May Apax XI announced that it had signed its first investment in IBS
Software, a provider of modern software solutions to the global travel and
logistics industry. In July, Apax XI also agreed to invest in Palex, a leading
distributor of medical technology equipment and solutions in Southern Europe.
Despite the more challenging environment for exits, the Apax Funds have
continued to successfully exit businesses in the first half of 2023, achieving
an average uplift of 24%(1) across three full exits.
DEBT PORTFOLIO ENHANCING RETURNS
The Debt portfolio delivered a Total Return of 5.3%(2) in the six months to 30
June 2023. This portfolio enhances the robustness of AGA's balance sheet and
generates income towards the dividend and additional returns. This portfolio
is a valuable source of additional liquidity for AGA and also supports
unfunded commitments to the Apax Private Equity Funds, reducing cash drag for
the Company.
99% of Debt Investments are floating rate and the portfolio continued to
benefit from rising base rates, generating an income yield of 11.4% at 30 June
2023.
H1 2023 TOTAL NAV RETURN CONTRIBUTIONS (%)
Private Equity 2.0%
Derived Debt 2.1%
Derived Equity 0.1%
Cost and other movements (0.4)%
Performance fee adjustments3 (0.2)%
FX (1.2)%
Total NAV Return4 2.4%
1. 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 IPOs includes proceeds received and the closing fair value at
period-end
2. On a constant currency basis, Total NAV Return was 6.9% for H1 2023
3. Performance fee adjustment accounting for the movement in the
performance fee reserve at 30 June 2023
4. Total NAV Return means the movement in the Adjusted NAV per share
over the period plus any dividends paid
COMPARABLES-BASED 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, including the positions in previously IPO'd portfolio companies,
is valued at the closing share price of the portfolio company as at 30 June
2023.
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 30 June 2023: 4.4x(1)).
Equity values are also net of NAV facilities used in some of the underlying
holding structures. These have been put in place 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 30 June 2023, the total of these
facilities on a look-through basis was c.8% of Adjusted NAV.
In the Derived Investments portfolio, Debt Investments are valued with
reference to observable broker quotes where available and models using market
inputs. Equity positions are valued based on share prices or using comparable
multiples.
COMMITMENTS AND FUNDING
As at 30 June 2023, AGA was a limited partner in 11 Apax Funds, providing
exposure to 79 underlying portfolio companies.
Outstanding commitments to the Apax Funds (together with recallable
distributions) reduced by €20m in the six months to 30 June 2023 to €985m
at the end of the period.
As most of the Apax Funds operate capital call facilities to bridge capital
calls from 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 cash (including net current assets) of €87.4m and
its RCF of €250m was undrawn.
H1 2023 ADJUSTED NAV DEVELOPMENT (€M)
Adjusted NAV at 31 December 2022 1,299.4
Private Equity 26.5
Derived Debt 26.8
Derived Equity 1.3
Cost and other movements (3.9)
Dividends paid (32.5)
Performance fee adjustments2 (3.1)
FX (15.8)
Adjusted NAV at 30 June 2023 1,298.7
1. Net debt/EBITDA multiple excluded 28 companies where EBITDA is not
meaningful such as financial services or companies with negative EBITDA, or
high growth business valued on a revenue basis. Due to these adjustments, the
comparatives may not be on a like-for-like basis
2. Performance fee adjustment accounting for the movement in the
performance fee reserve at 30 June 2023
INVESTED PORTFOLIO BY SECTOR AT 30 JUNE 2023
39%
Tech & Digital
Private Equity 25% Derived Investments 14%
28%
Services
Private Equity 22% Derived Investments 6%
17%
Healthcare
Private Equity 9% Derived Investments 8%
16%
Internet/Consumer
Private Equity 15% Derived Investments 1%
Portfolio review
AGA aims to offer shareholders superior long-term returns by providing access
to Apax Private Equity Funds where value creation is accelerated through
business improvement
71%
PRIVATE EQUITY
28%
debt
AGA offers access to a portfolio of hidden gems. These are mostly private
companies that shareholders can't buy elsewhere. These companies typically
operate globally across the core Apax sectors of tech & digital, services,
healthcare, and internet/consumer. As at 30 June 2023, these companies were
performing well with average LTM EBITDA growth of 14%.
The Apax Funds' investment strategy is an "all-weather" strategy, focused on
generating alpha through operational impact and it does not rely on tailwinds
from financial markets. In fact, 84% of value creation(1) comes from operating
improvements.
AGA also has a portfolio of Debt Investments. This is a unique feature of AGA
and adds robustness to the Company's balance sheet and reduces cash drag. This
portfolio generates income towards the dividend and additional returns for the
Company. At 30 June 2023, the portfolio had an average yield to maturity of
13.3% and, with the vast majority of Debt Investments being floating rate, it
generated an income yield of 11.4%.
AGA's investment strategy has delivered total returns of c.69% over the last
five years or 12% on an annualised basis. AGA has also returned cash to
shareholders in the form of a dividend and, since IPO, the Company has paid
out c.32% of its 30 June 2023 NAV in dividends to shareholders.
1. 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
PRIVATE EQUITY
1.9%
Private Equity H1 2023 Total return
14.1%
LTM EBITDA growth(1)
TO 30 JUNE 2023
16.0%
LTM revenue growth(1)
TO 30 JUNE 2023
16.3X
LTM VALUATION MULTIPLE(1)
At 30 JUNE 2023
The Apax Funds' investment strategy of "mining the hidden gems" means that
they are generally less exposed to cyclical end markets and more exposed to
businesses benefiting from secular growth trends and with strong underlying
economic motors. The funds seek to generate alpha through significant business
quality improvement; buying under-optimised assets where potential can be
visualised, and then obtain an acceleration in financial performance as well
as an increase in relative valuation multiples as that potential is unlocked.
The composition of the current Private Equity portfolio is well diversified
across the four core Apax sectors of tech & digital, services, healthcare,
and internet/consumer, with a focus on a small number of 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, 8 were invested before 2017, 30 in
the 2017-2019 period, and 41 investments are from 2020 and later. Hence
companies across the portfolio are at different stages of their investment
cycle.
CONTINUED MOMENTUM IN PRIVATE EQUITY
The Private Equity portfolio, which represented 71% of AGA's Invested
Portfolio at 30 June 2023, delivered a Total Return of 1.9% in the first six
months, driven by earnings growth across the Funds' portfolios. While there
was some slowdown in growth in Q2 2023, reflecting ongoing macroeconomic
uncertainty, average LTM EBITDA growth across the Private Equity portfolio
companies remained robust at 14% at 30 June 2023.
Valuation multiples came down slightly from 17.2x at 2022 year-end to 16.3x¹
at the end of June 2023. This decline is primarily driven by multiple
compression from Paycor and Thoughtworks, two publicly listed holdings.
However, there were also instances where the set of comparable companies used
to value a portfolio company was adjusted to account for an impact of M&A.
An example of this is Vyaire which divested its consumables business in March
2023.
At 30 June 2023, and following the exit of Duck Creek to Vista in Q1 2023,
listed companies represented 10% of AGA's Private Equity portfolio, down from
14% at the end of 2022.
The majority of these positions stem from IPOs where the Apax Funds 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 costs(2) to AGA.
Looking at the current Private Equity portfolio, the capital structures of the
Apax Funds' portfolio companies are well-positioned with long-dated maturities
and reasonably low leverage at 4.4x¹ net debt/EBITDA on average.
H1 2023 Private Equity Adjusted NAV development (€M)
Adjusted NAV at 31 December 20223 871.0
Calls 6.9
Distributions (35.0)
Unrealised movements 26.5
Performance fee adjustment4 -
FX (10.5)
Adjusted NAV at 30 June 20233 858.9
1. Gross Asset Value weighted average of the respective metrics across
the portfolio. LTM Revenue growth and LTM EBITDA growth rates excludes 24
companies where EBITDA is not meaningful such as financial services or high
growth business with fluctuations in EBITDA. Due to these adjustments, the
comparatives may not be on a like-for-like basis
2. Includes proceeds received from pre-IPO funding rounds, dividends,
primary and secondary offerings of shares in companies to 30 June 2023, from
companies that listed in 2020 and 2021
3. Includes AGA's exposure to carried interest holdings in AEVII and
AEVI which were respectively valued at €15.4m and €1.5m at 30 June 2023
(€15.6m and €1.5m respectively at 31 December 2022)
4. Performance fee adjustment accounting for the movement in the
performance fee reserve at 30 June 2023
Case study
The Apax Funds' investment strategy in action
The Apax Funds' investment strategy allows for repeatable success. The teams'
experience and expertise investing in online marketplaces is one example of
how this strategy creates a flywheel effect.
Watch this short video to learn how the Apax Funds' strategy can enable
companies to jump the learning curve to execute faster and more efficiently.
https://vimeo.com/833296068/018b89528e
(https://vimeo.com/833296068/018b89528e)
NAV PERFORMANCE
At 30 June 2023 Private Equity Adjusted NAV was €858.9m, down slightly from
€871.0m at 31 December 2022, largely due to distributions coming back to AGA
as the Funds completed three full exits in the first half of 2023.
At 30 June 2023, AGA was a limited partner in 11 Apax Private Equity Funds.
The largest exposure was to Apax IX and Apax X which are both fully invested.
Performance for Apax X was up in the period whilst a decline in Paycor's share
price impacted performance for Apax IX in the second quarter. Apax XI, the
latest global buyout fund to which AGA has made a commitment of $700m, made
its first two investments post period-end. For more details on the individual
funds see p. 22.
At the portfolio company level, the strongest valuation gains were from Duck
Creek (+€11.1m), Cadence Education (+€7.2m), and Rodenstock(+€6.1m). The
largest valuation declines came from Thoughtworks (-€17.4m), MatchesFashion
(-€6.6m), and Trade Me (-€3.3m).
PRIVATE EQUITY PERFORMANCE (%)
Movement in underlying portfolio companies' earnings 14.6%
Movement in net debt1 (2.5)%
Movement in comparable companies' valuation multiple(2) (7.5)%
One-off and other(3) (2.2)%
Management fees and carried interest accrued by the Apax Funds (3.3)%
Movement in performance fee reserve4 -
FX (3.1)%
LTM Total Return (4.0)%
L6M Total Return 1.9%
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 30 June 2023
TRANSACTION ACTIVITY
Against an uncertain market backdrop, the Apax Funds continued to take a more
cautious approach to new investments.
On a look-through basis, AGA deployed €11.4m(1) across three new investments
in the first six months of 2023, including the first standalone investment for
the Apax Global Impact Fund, to which AGA has committed $60m.
In a bilateral deal, AGI acquired a minority stake in Swing Education, a
pioneering online marketplace that connects schools and substitute teachers.
The Company's mission aligns with Apax Global Impact's objective to "expand
access to quality education for all" and falls into AGI's "Social and Economic
Mobility" impact theme. The team is attracted by the organic opportunity in
both existing and new markets and, in the near term, there are multiple levers
of growth that can be used to make Swing into a scaled, high-quality platform.
In January, ADF II agreed to acquire Magaya, a leading digital freight
software platform that automates critical workflows for logistics providers.
The AMI Opportunities Fund II, to which AGA has committed $40m, also made its
first investment in Zoo Eretz, Israel's leading pet products wholesaler and
retailer.
The pipeline of new investments remains healthy and, in May and July, Apax XI
signed its first two investments in IBS Software, a provider of modern
software solutions to the global travel and logistics industry, and Palex, a
distributor of medical technology equipment and solutions in Southern Europe.
Turning to exits, and in what is generally a difficult exit environment, the
Apax Funds realised three investments at an average uplift of 24%(2) to
previous unaffected valuations and an average Gross MOIC of 2.2x in the first
six months of 2023. AGA received total distributions of €35m in the six
months period, primarily from these three exits.
In Q2 2023, the AMI Opportunities Fund sold its remaining stake in Global-e, a
leading provider of cross-border e-commerce solutions. The transaction
delivered a gross MOIC of 35.6x and a total Gross IRR of 172%. AMI invested
$20.5m in Global-e in mid-2018 and partnered with the OEP to help management
accelerate growth and improve its internal operational processes.
Following the announcement at signing in November 2021, Apax IX completed its
partial exit from Inmarsat following the sale to Viasat. Apax IX will continue
to own c.8% of the shares in the combined Nasdaq-listed company.
Earlier in the year, Vista acquired Duck Creek Technologies from Apax VIII.
This deal closed in March 2023 and delivered a total return of 5.2x(3) Gross
MOIC and 38% Gross IRR. The business was originally carved out from Accenture,
upgraded and transformed, listed on NASDAQ and then taken private by Vista.
Apax VIII also sold its remaining position in Shriram Finance, a leading
non-bank finance company focused on the micro enterprises segment in India,
delivering a total Gross MOIC of 0.8x. This disappointing result was linked,
in part, to unforeseen regulatory changes in the Indian government's
demonetisation effort, as well as the Covid-19 impact on Shriram's
micro-enterprise customer segment.
new investments €M(1) exits Gross Gross Uplifts/
MOIC(3) IRR(3) (Discount)(2)
Magaya 6.9 Q1 Duck Creek 5.2x 38% 53%
(ADF II) Digital freight software platform (AVIII) Software provider to property and casualty insurers
Zoo Eretz 2.5 Shriram 0.8x -4% (16%)
(AMI II) Israel's leading pet products wholesaler and retailer (AVIII) Non-bank finance company focused on the micro enterprises segment in
India
Swing Education 2.0 Q2 Global-e 35.6x 172% 12%
(AGI) Online marketplace that connects schools and substitute teachers (AMI) Provider of cross-border e-commerce solutions
Total 11.4 Average 2.2x 19% 24%
1. Represents AGA's look-through cost to investments acquired by the
Apax Funds during H1 2023. For Apax Funds which are yet to hold their final
close, these amounts remain subject to change due to equalisation adjustments
2. 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
3. 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. For some portfolio companies, this
represents returns calculated in the funds underlying currency (e.g. AMI based
on USD returns) or based on individual fund sleeves, e.g. AVIII EUR
AGA deploys money not invested in Private Equity into Debt Investments
AGA invests as a Limited Partner in the Apax Private Equity Funds. In simple
terms, when the funds sell portfolio companies AGA receives distributions from
these Private Equity Funds (net of fees and carried interest). AGA also
receives income from its Debt portfolio and the Company has a RCF which
provides a further source of capital. AGA uses this capital to pay expenses,
including the RCF commitment fee, and any interest due as well as semi-annual
dividend to shareholders. Any excess cash is invested into Debt Investments to
generate additional returns for AGA. The debt portfolio is also used to fund
existing commitments and when assessing new commitments to the Apax Private
Equity Funds.
Derived investments
5.3%
Debt portfolio H1 2023 Total Return
13.3%
yield to maturity
AT 30 JUNE 2023
Capital not invested in Private Equity is primarily invested in Debt
Investments (96% of the Derived Investment Portfolio).
This portfolio is a valuable source of liquidity and enhances the robustness
of AGA's balance sheet, providing additional returns for AGA and a steady flow
of income to support dividends.
In the first six months of 2023, the Debt portfolio achieved a Total Return of
5.3% (6.9% constant currency) and, over the last five years, the Debt
portfolio has achieved a 46.8% cumulative constant currency Total Return. This
represents an outperformance of 24.4% compared to the S&P/LSTA Leveraged
Loan Index which delivered 22.4% for the same five-year period. This
performance is equivalent to an alpha of 4.9% p.a.
PORTFOLIO OVERVIEW
As at 30 June 2023, AGA held €341.7m of Debt Investments, representing 28%
of the Total Invested Portfolio.
The portfolio primarily comprises Debt Investments in companies and sectors
where Apax can leverage insights from its private equity activities. Whilst
individual investments are identified through a bottom-up process, the
portfolio is actively managed top down from a risk and liquidity perspective.
The Debt portfolio is robust with exposure to positions where the outlook is
more uncertain actively being reduced.
The largest position in the portfolio represents only 2% of AGA's NAV, and 64%
of the Debt Investments are invested in first lien loans. First lien loans, in
particular syndicated loans, tend to be more readily tradeable when compared
to Debt Investments that are more junior in the capital structure, and we
believe the current proportion of first lien loans held is appropriate in the
context of the Private Equity commitments made by AGA.
AGA's Debt Portfolio consists of carefully selected positions to complement
the Private Equity portfolio and at 30 June 2023 it had an average yield to
maturity of 13.3%. 99% of Debt Investments are in floating rate loans and the
portfolio generated an 11.4% average income yield at 30 June 2023, which
contributes towards the dividend.
Derived Equity now makes up a very small part of the portfolio and at 30 of
June 2023, the portfolio held three positions valued at €13.8m.
DERIVED DEBT SOURCED FROM APAX INSIGHTS(1)
72%
PRIVATE EQUITY STYLE DILIGENCE where the majority of positions are sourced
from private equity style diligence.
18%
CURRENT APAX FUNDS OWNERSHIP are positions where the Apax Funds also hold an
equity interest.
10%
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
H1 2023 Debt performance (%)
Income 5.0%
Realised gains -
Unrealised losses 2.6%
Performance fee adjustment(2) (0.7)%
FX (1.6)%
Total return 5.3%
2. Performance fee adjustment accounting for the movement in the
performance fee reserve at 30 June 2023
Private equity lifecycle as at 30 June 2023
Investment phase Maturity phase Harvesting phase
45% 45% 10%
APAX X APAX IX APAX VIII
AGA NAV: €394.0m AGA NAV: €309.5m AGA NAV: €62.8m
Distributions(1): €27.1m Distributions(1): €376.7m Distributions(1): €595.5m
% of AGA PE portfolio: 46% % of AGA PE portfolio: 36% % of AGA PE portfolio: 7%
Vintage: 2020 Vintage: 2016 Vintage: 2012
Commitment: €199.8m + $225.0m Commitment: €154.5m + $175.0m Commitment: €159.5m + $218.3m
Invested and committed: 93% Invested and committed: 94% Invested and committed: 110%
Fund size: $11.7bn Fund size: $9.5bn Fund size: $7.5bn
APAX XI AMI APAX EUROPE VII
AGA NAV: (€8.2m) AGA NAV: €26.1m AGA NAV: €23.5m
Vintage: 2022 Distributions(1): €44.6m Distributions(1): €91.4m
Commitment: €198.4m + $490.0m % of AGA PE portfolio: 3% % of AGA PE portfolio: 3%
Invested and committed: 0% Vintage: 2015 Vintage: 2007
Fund size: TBC(2) Commitment: $30.0m Commitment: €86.1m
Invested and committed: 88% Invested and committed: 108%
Fund size: $0.5bn Fund size: €11.2bn
APAX DIGITAL II APAX DIGITAL APAX EUROPE VI
AGA NAV: €0.5m AGA NAV: €51.4m AGA NAV: €2.2m
Distributions(1): €0.0m Distributions(1): €20.2m Distributions(1): €13.7m
% of AGA PE portfolio: 0% % of AGA PE portfolio: 6% % of AGA PE portfolio: 0%
Vintage: 2021 Vintage: 2017 Vintage: 2005
Commitment: $90.0m Commitment: $50.0m Commitment: €10.6m
Invested and committed: 18% Invested and committed: 103% Invested and committed: 107%
Fund size: $1.9bn Fund size: $1.1bn Fund size: €4.3bn
AMI II
AGA NAV: (€1.1m)
Vintage: 2022
Commitment: $40.0m
Invested and committed: 6%
Fund size: TBC(2)
APAX GLOBAL IMPACT
AGA NAV: (€1.8m)
Vintage: 2022
Commitment: $60.0m
Invested and committed: 18%
Fund size: TBC(2)
( )
1. Represents all distributions received by AGA since 15 June 2015
2. Apax XI, AMI II and Apax Global Impact have yet to hold their final
closes
Top 30 Private Equity Investments
AGA's Indirect Exposure
PORTFOLIO COMPANY SECTOR GEOGRAPHY VALUATION €M % OF TOTAL NAV
Assured Partners Services North America 62.5 5%
Toi Toi & Dixi (ADCO Group) Services Europe 48.2 4%
Candela Healthcare North America 41.3 3%
PIB Group* Services Europe 39.8 3%
Trade Me* Internet/Consumer Rest of world 36.5 3%
Bonterra Tech & Digital North America 34.0 3%
Paycor Tech & Digital North America 31.9 2%
Cole Haan Internet/Consumer North America 30.3 2%
SavATree Services North America 29.8 2%
Authority Brands Services North America 28.9 2%
Cadence Education Internet/Consumer North America 28.3 2%
Vyaire Medical* Healthcare North America 28.1 2%
Safetykleen Europe Services Europe 25.6 2%
Oncourse Home Solutions Services North America 25.4 2%
T-Mobile Netherlands Tech & Digital Europe 25.0 2%
Rodenstock Healthcare Europe 24.4 2%
Lutech Tech & Digital Europe 21.0 2%
Lexitas Services North America 20.6 2%
Infogain* Tech & Digital North America 20.1 2%
Ole Smoky Distillery Internet/Consumer North America 19.9 2%
EcoOnline Tech & Digital Europe 18.6 1%
Openlane Internet/Consumer North America 15.7 1%
Healthium Healthcare Rest of world 15.2 1%
Alcumus Services Europe 15.1 1%
InnovAge Healthcare North America 14.9 1%
Tosca Services Services North America 14.8 1%
ECI Tech & Digital North America 14.7 1%
Wehkamp Internet/Consumer Europe 14.6 1%
Eating Recovery Center Healthcare North America 14.5 1%
Nulo Internet/Consumer North America 14.3 1%
TOTAL TOP 30-GROSS VALUES 774.0 59%
Other investments 300.2 23%
Carried interest (145.2) (11%)
Capital call facilities and other (70.1) (5%)
TOTAL PRIVATE EQUITY 858.9 66%
* Denotes overlap with Derived Investments portfolio
Case study
THE POWER OF DATA
Apax has developed several proprietary analytical tools that enable the firm
to unleash the power of data to drive unique insights. These tools provide a
critical competitive advantage for Apax and the companies it works with,
unlocking angles for operational impact and accelerated performance.
Watch this short video to find out more: https://vimeo.com/821720078
Debt Investments
Debt Investments holdings(1)
PORTFOLIO COMPANY SECTOR instrument GEOGRAPHY VALUATION €M % OF TOTAL NAV
HelpSystems Tech & Digital 1L term loan North America 28.4 2%
Precisely Software Tech & Digital 1l + 2L term loan North America 25.4 2%
PIB Group* Services 1L term loan United Kingdom 23.1 2%
Aptean Tech & Digital 1l + 2L term loan North America 21.7 2%
Confluence Tech & Digital PIK + 2L term loan North America 20.9 2%
Mitratech Tech & Digital 1l + 2L term loan North America 20.5 2%
Accentcare Healthcare 1L term loan North America 18.6 1%
Therapy Brands Tech & Digital 1l + 2L term loan North America 18.1 1%
Neuraxpharm Healthcare 1L term loan Europe 14.8 1%
Infogain* Tech & Digital RCF + 1L term loan North America 14.8 1%
MDVIP Healthcare 2L term loan North America 13.6 1%
Alexander Mann Solutions Services 1L term loan United Kingdom 13.5 1%
Vyaire Medical* Healthcare 1L term loan North America 13.1 1%
WIRB-Copernicus Group Healthcare 1L term loan North America 13.1 1%
Trade Me* Internet/Consumer 2L term loan Rest of World 11.6 1%
PCI Healthcare 1L term loan North America 10.6 1%
Mindbody* Tech & Digital Convertible debt North America 9.5 1%
Navicure Healthcare 1L term loan North America 8.9 1%
PSSI Services 1L term loan North America 7.5 1%
Southern Veterinary Partners Healthcare 2L term loan North America 7.1 1%
Veritext Services 2L term loan North America 6.8 1%
Radwell Services 1L term loan North America 5.9 <1%
Parts Town Services 1L term loan North America 5.8 <1%
Syndigo Tech & Digital 2L term loan North America 4.2 <1%
Theramex Tech & Digital 1L term loan United Kingdom 4.2 <1%
Total DEBT Investments 341.7 26%
* Denotes overlap with Private Equity portfolio
1. AGA retains a small portfolio of Derived Equity Investments
totalling €13.8m at 30 June 2023
Statement of Directors' responsibilities
Statement of principal risks, emerging risks and uncertainties
As an investment company with an investment portfolio comprising financial
instruments, the principal risks associated with the Company's business
largely relate to financial risks, strategic and business risks, and operating
risks. A detailed analysis of the Company's principal risks and uncertainties
is set out on pages 32 to 35 of the Annual Report and Accounts 2022 and they
have not changed materially since the date of the report. The Company has not
identified any new principal risks or emerging risks that will impact the
remaining six months of the financial year.
Statement of Directors' responsibilities in respect of the Interim Report and
Accounts
The Directors confirm that to the best of their knowledge:
· the condensed interim financial statements have been prepared in
accordance with IAS 34 interim financial reporting as required by DTR4.2.4R;
· the Chairman's statement and Investment Manager's report (together
constituting the Interim Management report), together with the statement of
principal risks and uncertainties, include a fair review of the information
required by DTR4.2.7R, being an indication of important events that have
occurred during the period and their impact on these condensed interim
financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
· the condensed interim financial statements provide a fair review of
the information required by DTR4.2.8R, being related party transactions that
have taken place in the first six months of the current financial year and
that have materially affected the financial position or performance of the
Company during that period, and any changes in the related party transactions
described in the last annual report and accounts that could materially affect
the financial position or performance of the Company during that period.
Please refer to note 9 of the condensed interim financial statements.
Signed on behalf of the Board of Directors
Tim Breedon CBE
Chairman
5 September 2023
Signed on behalf of the Audit Committee
Susie Farnon
Chair of the Audit Committee
5 September 2023
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.
Financial statements
contentS
Independent review report 27
Condensed statement of financial position 28
Condensed statement of profit or loss and other comprehensive income 29
Condensed statement of cash flows 29
Condensed statement of changes in equity 30
Notes to the condensed interim financial statements 31
Independent Review Report
to Apax Global Alpha Limited
Conclusion
We have been engaged by Apax Global Alpha Limited (the "Company") to review
the condensed set of financial statements in the half-yearly financial report
for the six months ended 30 June 2023 of the Company, which comprises the
condensed statement of financial position, the condensed statement of profit
or loss and other comprehensive income, the condensed statement of changes in
equity, the condensed statement of cash flows and the related explanatory
notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2023 is not prepared, in all
material respects, in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU and the Disclosure and Guidance and Transparency Rules ("the
DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued by the Financial
Reporting Council for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures.
We read the other information contained in the half-yearly financial report
and consider whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
CONCLUSIONS RELATED TO GOING CONCERN
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Scope of review section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the entity to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the entity will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
interim financial report in accordance with the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the Company are
prepared in accordance with International Financial Reporting Standards as
adopted by the EU. The directors are responsible for preparing the condensed
set of financial statements included in the half-yearly financial report in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
In preparing the half-yearly financial report, the directors are responsible
for 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.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the scope of review paragraph of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our
engagement letter to assist the Company in meeting the requirements of the DTR
of the UK FCA. Our review has been undertaken so that we might state to the
Company those matters we are required to state to it in this 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 for our review work,
for this report, or for the conclusions we have reached.
Deborah Smith
for and on behalf of
KPMG Channel Islands Limited
Chartered Accountants, Guernsey
5 September 2023
Condensed Statement of Financial Position
As at 30 June 2023 (Unaudited)
Notes 30 June 31 December 2022
2023 €'000
€'000
Assets
Non-current assets
Financial assets held at fair value through profit or loss ("FVTPL") 8(a) 1,225,429 1,241,200
Total non-current assets 1,225,429 1,241,200
Current assets
Cash and cash equivalents 86,353 67,966
Investment receivables 2,493 1,699
Other receivables 433 429
Total current assets 89,279 70,094
Total assets 1,314,708 1,311,294
Liabilities
Financial liabilities held at FVTPL 8(a) 11,024 6,063
Investment payables - 3,980
Accrued expenses 1,921 1,875
Total current liabilities 12,945 11,918
Total liabilities 12,945 11,918
Capital and retained earnings
Shareholders' capital 14 873,804 873,804
Retained earnings 424,890 425,572
Total capital and retained earnings 1,298,694 1,299,376
Share-based payment performance fee reserve 10 3,069 -
Total equity 1,301,763 1,299,376
Total shareholders' equity and liabilities 1,314,708 1,311,294
On behalf of the Board of Directors
Tim Breedon
Chairman
5 September 2023
Susie Farnon
Chair of the Audit Committee
5 September 2023
Notes 30 June 2023 30 June 2023 31 December 2022 31 December 2022
€ £ equivalent(1) € £ equivalent(1)
Net Asset Value ("NAV") ('000) 1,301,763 1,118,566 1,299,376 1,150,390
Performance fee reserve 10 (3,069) (2,637) - -
Adjusted NAV ('000)(2) 1,298,694 1,115,929 1,299,376 1,150,390
NAV per share 2.65 2.28 2.65 2.34
Adjusted NAV per share(2) 2.64 2.27 2.65 2.34
six months ended six months ended
30 june 30 june
2023 2022
% %
Total NAV Return(3) 2.4% (3.5%)
1. The sterling equivalent has been calculated based on the GBP/EUR
exchange rate at 30 June 2023 and 31 December 2022, 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 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. Adjusted NAV per share used in the calculation is
rounded to five decimal places
The accompanying notes form an integral part of these financial statements.
Condensed Statement of Profit or Loss and Other Comprehensive Income
Six months ended 30 June 2023 (Unaudited)
Notes six months ended six months ended
30 june 30 june
2023 2022
€'000 €'000
Income
Investment income 18,933 9,206
Net gains/(losses) on financial assets at FVTPL 8(b) 26,465 (55,086)
Net losses on financial liabilities at FVTPL 8(c) (5,937) (2,045)
Realised foreign currency losses (50) (254)
Unrealised foreign currency gains 297 1,197
Total income/(loss) 39,708 (46,982)
Operating and other expenses
Performance fee 10 (3,069) (22)
Management fee 9 (1,821) (1,808)
Administration and other operating expenses 6 (1,385) (1,358)
Total operating expenses (6,275) (3,188)
Total income/(loss) less operating expenses 33,433 (50,170)
Finance costs 11 (1,572) (1,784)
Profit/(Loss) before tax 31,861 (51,954)
Tax charge 7 (81) (113)
Profit/(Loss) after tax for the period 31,780 (52,067)
Other comprehensive income - -
Total comprehensive income/(loss) attributable to Shareholders 31,780 (52,067)
Earnings/(Loss) per share (cents) 15
Basic and diluted 6.47 (10.60)
Adjusted(1) 6.45 (10.60)
1. The Adjusted earnings per share has been calculated based on the
profit attributable to ordinary shareholders adjusted for the total accrued
performance fee at 30 June 2023 and 30 June 2022 respectively as per note 15
and the weighted average number of ordinary shares
The accompanying notes form an integral part of these condensed interim
financial statements.
Condensed Statement of Cash Flows
Six months ended 30 June 2023 (Unaudited)
NOTEs six months six months
ended ended
30 June 30 June
2023 2022
€'000 €'000
Cash flows from operating activities
Interest received 17,818 9,701
Interest paid - (428)
Dividends received 148 123
Operating expenses paid (3,058) (2,953)
Capital calls paid to Private Equity Investments (6,898) (36,407)
Capital distributions received from Private Equity Investments 35,003 116,888
Purchase of Derived Investments (9,885) (38,028)
Sale of Derived Investments 19,059 38,906
Net cash from operating activities 52,187 87,802
Cash flows used in financing activities
Financing costs paid (1,606) (1,554)
Dividends paid (32,491) (37,275)
Purchase of own shares 10 - (8,412)
Revolving credit facility drawn 11 55,000 -
Revolving credit facility repaid 11 (55,000) -
Net cash used in financing activities (34,097) (47,241)
Cash and cash equivalents at the beginning of the period 67,966 108,482
Net increase in cash and cash equivalents 18,090 40,561
Effect of foreign currency fluctuations on cash and cash equivalents 297 1,197
Cash and cash equivalents at the end of the period 86,353 150,240
The accompanying notes form an integral part of these condensed financial
statements.
Condensed Statement of Changes in Equity
Six months ended 30 June 2023 (Unaudited)
FOR THE Six months ended 30 June 2023 Notes Shareholders' capital Retained earnings Total Capital and Retained earnings Share-based payment performance fee reserve Total
€'000 €'000 €'000 €'000 €'000
Balance at 1 January 2023 873,804 425,572 1,299,376 - 1,299,376
Total comprehensive gain attributable to shareholders - 31,780 31,780 - 31,780
Share-based payment performance fee reserve movement 10 - - - 3,069 3,069
Dividends paid 16 - (32,462) (32,462) - (32,462)
Balance at 30 June 2023 873,804 424,890 1,298,694 3,069 1,301,763
For the year ended 31 December 2022 Notes Shareholders' capital Retained earnings Total Capital and Retained earnings Share-based payment performance fee reserve Total
€'000 €'000 €'000 €'000 €'000
Balance at 1 January 2022 873,804 607,873 1,481,677 8,390 1,490,067
Total comprehensive loss attributable to shareholders - (52,067) (52,067) - (52,067)
Share-based payment performance fee reserve movement 10 - - - (8,390) (8,390)
Dividends paid 16 - (37,418) (37,418) - (37,418)
Balance at 30 June 2022 873,804 518,388 1,392,192 - 1,392,192
Total comprehensive loss attributable to shareholders - (57,970) (57,970) - (57,970)
Share-based payment performance fee reserve movement 10 - - - - -
Dividends paid 16 - (34,846) (34,846) - (34,846)
Balance at 31 December 2022 873,804 425,572 1,299,376 - 1,299,376
The accompanying notes form an integral part of these condensed financial
statements.
Notes to the Condensed Interim 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 a discretionary investment management agreement.
The Investment Manager obtains investment advice from Apax Partners LLP (the
"Investment Advisor").
2 Basis of preparation
Statement of compliance
These condensed interim financial statements have been prepared in accordance
with IAS 34 "Interim Financial Reporting" as adopted by the European Union and
should be read in conjunction with the Annual Report and Accounts 2022 which
were prepared in accordance with International Financial Reporting Standards,
as adopted by the European Union ("IFRS"). They do not include all the
information required for a complete set of IFRS financial statements. However,
selected explanatory notes are included to explain events and transactions
that are significant to an understanding of changes in the Company's financial
position and performance since the last annual financial statements.
These condensed interim financial statements were authorised for issue by the
Company's Board of Directors on 5 September 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.
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 5 September
2023, the authorisation date of these financial statements), including the
condensed statement of financial position, future projections (which include
highly stressed scenarios), cash flows, revolving credit facility available,
net current assets, the longer-term strategy of the Company and the
discontinuation vote that will be presented at the next AGM. 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
There are no new standards or changes to standards since the Annual Report and
Accounts 2022 which significantly impact these condensed interim financial
statements. The accounting policies applied by the Company in these condensed
interim financial statements are consistent with those set out on pages 64 to
67 of the Annual Report and Accounts 2022.
4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
In preparing these condensed interim 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 Manager's 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 condensed interim financial statements relates to the
valuation of investment assets and liabilities. These have been determined to
be financial assets and liabilities held at FVTPL and have been accounted for
accordingly. 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 condensed financial statements relates to the valuation of
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 approve and
discuss 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 for the external auditors
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 believe that the Company meets the definition of an
investment entity per IFRS 10 as the following conditions exist:
· it has obtained funds from investing shareholders for the purpose
of providing them with professional investment and management services;
· its 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 is set
out below. There have been no changes to reportable segments since those
presented in the Annual Report and Accounts 2022.
Reportable segments
CONDENSED Statement of profit or loss and other comprehensive income Private Equity Investments €'000 Derived Investments €'000 Central Total
for the six months ended 30 June 2023 functions(1) €'000
€'000
Investment income - 18,933 - 18,933
Net gains on financial assets at FVTPL 22,022 4,443 - 26,465
Net losses on financial liabilities at FVTPL (5,937) - - (5,937)
Realised foreign exchange losses - (17) (33) (50)
Unrealised foreign currency gains - - 297 297
Total income 16,085 23,359 264 39,708
Performance fees(2) - (3,069) - (3,069)
Management fees (60) (1,761) - (1,821)
Administration and other operating expenses - (75) (1,310) (1,385)
Total operating expenses (60) (4,905) (1,310) (6,275)
Total income/(loss) less operating expenses 16,025 18,454 (1,046) 33,433
Finance costs - - (1,572) (1,572)
Profit/(Loss) before tax 16,025 18,454 (2,618) 31,861
Tax charge - (81) - (81)
Total comprehensive income/(loss) attributable to shareholders 16,025 18,373 (2,618) 31,780
CONDENSED Statement of financial position at 30 June 2023 Private Equity Investments €'000 Derived Investments €'000 Cash and Total
other NCAs³ €'000
€'000
Total assets 869,956 357,966 86,786 1,314,708
Total liabilities (11,024) - (1,921) (12,945)
NAV 858,932 357,966 84,865 1,301,763
CONDENSED Statement of profit or loss and other comprehensive income Private Equity Investments €'000 Derived Investments €'000 Central Total
for the six months ended 30 June 2022 functions(1) €'000
€'000
Investment income/(expense) - 9,596 (390) 9,206
Net losses on financial assets at FVTPL (53,154) (1,932) - (55,086)
Net losses on financial liabilities at FVTPL (2,045) - - (2,045)
Realised foreign exchange (losses)/gains - (453) 199 (254)
Unrealised foreign currency gains - - 1,197 1,197
Total (loss)/income (55,199) 7,211 1,006 (46,982)
Performance fees(2) - (22) - (22)
Management fees (79) (1,729) - (1,808)
Administration and other operating expenses - (96) (1,262) (1,358)
Total operating expenses (79) (1,847) (1,262) (3,188)
Total (loss)/income less operating expenses (55,278) 5,364 (256) (50,170)
Finance costs - - (1,784) (1,784)
(Loss)/Profit before tax (55,278) 5,364 (2,040) (51,954)
Tax charge - (113) - (113)
Total comprehensive (loss)/income attributable to shareholders (55,278) 5,251 (2,040) (52,067)
CONDENSED Statement of financial position at 31 December 2022 Private Equity Investments €'000 Derived Investments €'000 Cash and Total
other NCAs³ €'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
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
6 Administration and other operating expenses
Six months ended Six months ended
30 June 30 June
2023 2022
€'000 €'000
Directors' fees 181 184
Administration and other fees 332 348
Corporate and investor relations services fee 249 253
Deal transaction, custody and research costs 75 96
General expenses 489 430
Auditors' remuneration
Statutory audit - -
Other assurance services - interim review 59 47
Total administration and other operating expenses 1,385 1,358
The Company has no employees and there were no pension or staff cost
liabilities incurred during the period.
7 Taxation
The Company is exempt from taxation in Guernsey under the provisions of the
Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and is charged an annual
exemption fee of £1,200 (30 June 2022: £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 period ended
30 June 2023, the Company had a net tax expense of €81k (30 June 2022:
€111k), relating 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
Six months ended Year
30 June ended
2023 31 December
€'000 2022
€'000
Private Equity Investments 858,932 870,958
Private Equity financial assets 869,956 877,021
Private Equity financial liabilities (11,024) (6,063)
Derived Investments 355,473 364,179
Debt(1) 341,651 340,639
Equities 13,822 23,540
Closing fair value 1,214,405 1,235,137
Financial assets held at FVTPL 1,225,429 1,241,200
Financial liabilities held at FVTPL (11,024) (6,063)
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
Six months ended Year Six months ended
30 June ended 30 June
2023 31 December 2022
€'000 2022 €'000
€'000
Opening fair value 1,235,137 1,348,410 1,348,410
Calls 6,898 194,380 36,407
Distributions (35,009) (228,316) (116,888)
Purchases 5,913 57,186 37,678
Sales (19,062) (10,720) (6,428)
Net gain/(losses) on fair value on financial assets 26,465 (119,740) (55,086)
Net losses on fair value on financial liabilities (5,937) (6,063) (2,045)
Closing fair value 1,214,405 1,235,137 1,242,048
Financial assets held at FVTPL 1,225,429 1,241,200 1,244,093
Financial liabilities held at FVTPL (11,024) (6,063) (2,045)
(b) Net gains/(losses) on financial assets at FVTPL
Six months ended Six months ended
30 June 30 June
2023 2022
€'000 €'000
Private Equity financial assets
Gross unrealised gains 36,900 103,068
Gross unrealised losses (45,039) (156,496)
Net unrealised losses on Private Equity financial assets (8,139) (53,428)
Gross realised gains 30,161 275
Net realised gains on Private Equity financial assets 30,161 275
Net gains/(losses) on Private Equity financial assets 22,022 (53,153)
Derived Investments
Gross unrealised gains 15,058 16,005
Gross unrealised losses (7,708) (11,672)
Net unrealised gains on Derived Investments 7,350 4,333
Gross realised gains 84 665
Gross realised losses (2,991) (6,931)
Net realised losses on Derived Investments (2,907) (6,266)
Net gains/(losses) on Derived Investments 4,443 (1,933)
Net gains/(losses) on financial assets at FVTPL 26,465 (55,086)
(c) Net losses on financial liabilities at FVTPL
Six months ended Six months ended
30 June 30 June
2023 2022
€'000 €'000
Private Equity financial liabilities
Gross unrealised losses (5,937) (2,045)
Net unrealised losses on Private Equity financial liabilities (5,937) (2,045)
Net losses on financial liabilities at FVTPL (5,937) (2,045)
(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 9,414
Alpha US GP LLC 12 October 2021 Special purpose entity 100% United States of America -
The Company transferred an investment in a Derived Investment to Alpha US
Holdings L.P. during 2021. Net flows from subsidiaries are summarised below.
Total fair value has also been included in Debt above as related to the debt
portfolio.
Six months ended Year
30 June ended
2023 31 December
€'000 2022
€'000
Opening fair value 9,598 8,908
Transfer of asset - -
Fair value movement on investment subsidiaries (184) 690
Closing fair value 9,414 9,598
Debt investment held at FVTPL 9,495 9,660
Other NCAs (81) (62)
Closing fair value 9,414 9,598
(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 Internet/Consumer. The Company commits to a fixed amount of
capital, which may be drawn (and returned) over the life of the fund. The
Company pays capital calls when due and receives distributions from the funds,
once an asset has been sold. Note 12 summarises current outstanding
commitments and recallable distributions to the eleven underlying Private
Equity Investments held. The fair value of these was €858.9m at 30 June 2023
(31 December 2022: €871.0m), whereas the total value of the Private Equity
funds was €21.1bn (31 December 2022: €21.4bn). During the period, 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 in the period were €1.8m
(30 June 2022: €1.8m), of which €0.9m was included in accruals at 30 June
2023. 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 is payable. Further details are
included in note 10.
The IMA has an initial term of six years and automatically continues for a
further three additional years unless prior to the fifth anniversary the
Investment Manager or the Company (by a special resolution) serves written
notice to terminate the IMA. The Company is required to pay the Investment
Manager all fees and expenses accrued and payable for the notice period
through to the termination date.
The Investment Advisor has been engaged by the Investment Manager to provide
advice on the investment strategy of the Company. An Investment Advisory
Agreement ("IAA"), dated 22 May 2015 and an amendment dated 22 August 2016,
exists between the two parties. Though not legally related to the Company, the
Investment Advisor has been determined to be a related party. The Company paid
no fees and had no transactions with the Investment Advisor during the period
(30 June 2023: €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 €0.3m (30 June 2022: €0.3m) was paid by the Company in
respect of administration fees and expenses, of which €0.2m (30 June 2022:
€0.2m) was paid to APFS. Additionally, the Company paid a fee of €0.2m (30
June 2022: €0.3m) for corporate and investor services to Apax Partners LLP
and its affiliate APFS. This fee is calculated as 0.04% of the Invested
Portfolio per annum.
The table below summarises shares held by Directors:
30 June % of total shares in issue 31 December % of total shares in issue
2023 2022
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% 33,796 0.007%
Mike Bane 18,749 0.004% 18,749 0.004%
Stephanie Coxon 10,000 0.002% 10,000 0.002%
10 Performance fee
30 June 31 December 2022 30 June
2023 €'000 2022
€'000 €'000
Opening performance fee reserve - 8,390 8,390
Performance fee charged to condensed statement of profit or loss and other 3,069 22 22
comprehensive income
Performance fee paid - (8,412) (8,412)
Closing performance fee reserve 3,069 - -
The performance fee is payable on an annual basis once the respective hurdle
thresholds are 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.
Summary net portfolio total return Performance fee rate
hurdle(1)
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 period ended 30 June 2023, there was no performance fee payable to the
Investment Manager as the performance hurdle was not met in the year ended 31
December 2022.
At 30 June 2023 management's best estimate of the expected performance fee was
calculated on the eligible portfolio on a liquidation basis.
11 revolving Credit facility and finance costs
AGA has a Revolving Credit Facility ("RCF") agreement with Credit Suisse AG,
London Branch. In January 2023, AGA received notice that this facility would
revert to a fixed term facility 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 a blended basis.
The facility was drawn once during the period and fully repaid by 30 June
2023.
Summary of finance costs are detailed below:
Six months ended Six months ended
30 June 30 June
2023 2022
€'000 €'000
Interest paid 446 -
Non-utilisation fee 1,126 884
Commitment fee - 900
Total finance costs 1,572 1,784
Under the Loan Agreement, the Company is required to provide Private Equity
Investments as collateral for each utilisation and ensure that the
loan-to-value does not exceed 35% of the eligible Private Equity NAV. There
were no covenant breaches during the period. As at 30 June 2023 the facility
was unutilised.
12 Financial risk management
The Company holds a variety of financial instruments under IFRS 7 in
accordance with its Investment Management strategy. The investment portfolio
comprises Private Equity Investments and Derived Investments as shown in the
table below:
30 June 31 December
2023 2022
Private Equity Investments 71% 71%
Private Equity financial assets 72% 72%
Private Equity financial liabilities -1% -1%
Derived Investments 29% 29%
Debt 28% 27%
Equities 1% 2%
Total 100% 100%
The Company's activities expose it to a variety of financial risks: liquidity
risk, credit risk and market risk. There have been no material changes in the
Company's exposure to liquidity risk or credit risk, whilst market risk
changes were limited to changes in price risk in the period since 31 December
2022.
Market risk
The Company summarises market risk into four main components; price risk,
currency risk, interest rate risk and concentration risk. Currency movements
were in favour of the Company during the period and though interest rates have
continued to increase, it had a limited impact on the Company as it has no
outstanding borrowings, additionally the majority of the debt portfolio is
held in floating rate notes which have benefited from higher interest yields.
The Invested Portfolio's concentration was in line with year end and remains
diversified across four main sectors (Tech & Digital, Services,
Healthcare, and Internet/Consumer).
Market risk
The Company is exposed to price risk on both its Private Equity Investments
and Derived Investments and this exposure to price risk is actively monitored
by the Investment Manager. The table below reflects the blended sensitivity of
this price risk and the impact on NAV.
30 June 2023 Base case €'000 Bull case Bear case
(+20%) (-20%)
€'000 €'000
Financial assets 1,225,429 1,470,515 980,343
Financial liabilities (11,024) (8,819) (13,229)
Change in NAV and profit 242,881 (242,881)
Change in NAV (%) 19% -19%
Change in total income 612% -612%
Change in profit for the period 764% -764%
31 December 2022 Base case €'000 Bull case (+20%) Bear case (-20%)
€'000 €'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 income -247% 247%
Change in profit for the year -224% 224%
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, primarily in the form of debt has 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 and listed securities 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 up to 12 months
to fund investments and fund operating expenses, and provide the Company with
reasonable visibility of calls for this period.
The table below summarises the maturity profile of the Company's financial
liabilities at 30 June 2023 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,
commitments to Private Equity Investments and Derived Debt commitments, where
their expected cash flow dates are summarised in the following tables.
The Company does not manage liquidity risk on the basis of contractual
maturity, instead the Company manages liquidity risk based on expected cash
flows.
30 June 2023
Up to 3-12 months €'000 1-5 years Total
3 months €'000 €'000
€'000
Accrued expenses 1,921 - - 1,921
Private Equity Investments outstanding commitments and recallable 40,368 128,678 815,943 984,989
distributions
Derived Debt commitments 225 6,565 - 6,790
Total 42,514 135,243 815,943 993,700
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 Debt commitments - 2,245 - 2,245
Total 21,671 87,547 904,030 1,013,248
The Company's outstanding commitments and recallable distributions to Private
Equity Investments are summarised below:
30 June 31 December 2022
2023 €'000
€'000
Apax Europe VI 225 225
Apax Europe VII 1,030 1,030
Apax VIII 14,562 14,713
Apax IX 29,864 30,157
Apax X 106,898 107,914
Apax XI 647,583 656,143
AMI Opportunities 6,200 9,977
AMI Opportunities II 36,667 37,366
Apax Digital Fund 8,504 10,637
Apax Digital Fund II 79,424 80,938
Apax Global Impact 54,032 56,048
Total 984,989 1,005,148
At 30 June 2023, the Company had undrawn commitments and recallable
distributions of €985.0m (31 December 2022: €1,005.1m). Within 12 months,
€169.0m (31 December 2022: €101.1m) is expected to be drawn mainly due to
Apax X, AGI and Apax Digital Fund II. Additionally, the Company expects
drawdowns of €6.8m 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 30 June 2023, the facility was
undrawn (31 December 2022: €Nil).
At period 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.
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. When considering share buybacks, the Board will also take into
account market sentiment and the trading of its peer group.
13 Fair value estimation
(a) Financial instruments measured at fair value
IFRS 13 "Fair Value Measurement" ("IFRS 13") 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 liabilities (by class) measured at fair value at 30 June
2023:
Assets Level 1 Level 2 Level 3 Total
€'000 €'000 €'000 €'000
Private Equity financial assets - - 869,956 869,956
Private Equity financial liabilities - - (11,024) (11,024)
Derived Investments 9,438 332,156 13,879 355,473
Debt - 332,156 9,495 341,651
Equities 9,438 - 4,384 13,822
Total 9,438 332,156 872,811 1,214,405
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 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
IFRS13 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
Movements in level 3 investments are summarised in the table below:
Six months ended 30 June 2023 Year ended 31 December 2022
Private Equity Investments €'000 Derived Investments €'000 Total Private Equity Investments €'000 Derived Investments €'000 Total
€'000 €'000
Opening fair value 870,958 14,810 885,768 1,012,855 18,478 1,031,333
Additions 6,898 - 6,898 194,380 - 194,380
Disposals and repayments (35,009) - (35,009) (228,316) (7,098) (235,414)
Realised gains/(losses) on financial assets 30,161 - 30,161 12,595 (6,931) 5,664
Unrealised (losses)/gains on financial assets (8,139) (931) (9,070) (114,493) 10,361 (104,132)
Unrealised losses on financial liabilities (5,937) - (5,937) (6,063) - (6,063)
Transfers into level 3 - - - - - -
Closing fair value 858,932 13,879 872,811 870,958 14,810 885,768
Financial assets held at FVTPL 869,956 13,879 883,835 877,021 14,810 891,831
Financial liabilities held at FVTPL (11,024) - (11,024) (6,063) - (6,063)
The unrealised losses attributable to only assets and liabilities held at 30
June 2023 were €15.0m (31 December 2022: €110.2m).
The table below sets out information about significant unobservable inputs
used in measuring financial instruments categorised as level 3 in the fair
value hierarchy:
Description Valuation Significant Sensitivity to changes in significant unobservable inputs 30 June 31 December 2022
technique unobservable inputs 2023 Valuation
Valuation €'000
€'000
Private Equity financial assets NAV adjusted for carried interest NAV The Company does not apply further discount or liquidity premiums to the 869,956 877,021
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
Private Equity financial liabilities risk, credit risk, currency risk and interest rate risk.
A movement of 10% in the value of Private Equity Investments would move the (11,024) (6,063)
NAV at the period end by 6.6% (31 December 2022: 6.7%).
Debt The Company holds a convertible preferred instrument, the value of which is Probability of On a look-through basis the Company held 1 debt position (31 December 2022: 1) 9,495 9,660
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 conversion
A movement of 10% in the conversion percentage would result in a movement of
0.0% on NAV at period end (31 December 2022: 0.0%).
Equities Comparable company earnings multiples and/or precedent transaction analysis Comparable company multiples The Company held 2 equity positions (31 December 2022: 2) which were valued 4,384 5,150
using comparable company multiples. The average multiple was 7.7x (31 December
2022: 8.5x).
A movement of 10% in the multiple applied would move the NAV at period end by
0.1% (31 December 2022: 0.1%).
14 Shareholders' capital
At 30 June 2023, the Company had 491,100,768 ordinary shares fully paid with
no par value in issue (31 December 2022: 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 2022.
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 six months six months
ended ended
30 June 2023 30 June 2022
Profit/(Loss) for the period attributable to equity shareholders: €'000 31,780 (52,067)
Weighted average number of shares in issue
Ordinary shares at end of the period 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) 1,428,595 -
Adjusted shares(2) 492,529,363 491,100,768
Earnings per share (cents)
Basic 6.47 (10.60)
Diluted 6.47 (10.60)
Adjusted 6.45 (10.60)
30 June 2023 31 December 2022
NAV €'000
NAV at end of period 1,301,763 1,299,376
NAV per share (€)
NAV per share 2.65 2.65
Adjusted NAV per share 2.64 2.65
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 period adjusted for the performance fee reserve and then divided by
the current number of ordinary shares in issue. At 30 June 2023, the Adjusted
NAV per share for both methodologies resulted in an Adjusted NAV per share of
€2.64 (31 December 2022: €2.65) respectively
At 30 June 2023, there were no items that would cause a dilutive effect on
earnings per share. The adjusted earnings per share has been calculated based
on the profit attributable to shareholders adjusted for the total accrued
performance fee at period end over the weighted average number of ordinary
shares. This has been calculated on a full liquidation basis inclusive of
performance fee attributable to realised investments. Performance shares to be
issued are calculated based on the trading price of shares and foreign
exchange rate at close of business on 30 June 2023.
16 Dividends
Dividends paid to shareholders SIX MONTHS ENDED 30 JUNE 2023 SIX MONTHS ended 30 JUNE 2022
€'000 £'000 €'000 £'000
Final dividend paid - 6.61 pence per share (31 December 2022: 6.36 pence per 32,462 28,582 37,418 31,234
share)
Total 32,462 28,582 37,418 31,234
Dividends proposed Six months ended 30 June 2023 Year ended 31 December 2022
€ £ € £
Interim dividend per share 6.63c 5.70p 6.61c 5.82p
On 1 March 2023, the Board approved the final dividend for 2022, 5.82 pence
per share (6.61 cents euro equivalent). This represents 2.5% of the Company's
euro NAV at 31 December 2022 and was paid on 3 April 2023.
On 5 September 2023, the Board approved an interim dividend for the six months
ended 30 June 2023, 5.70 pence per share (6.63 cents euro equivalent). This
represents 2.5% of the Company's euro NAV at 30 June 2023 and will be paid on
3 October 2023. The Board considered the Company's future liquidity position
and ability to pay dividends and deemed it appropriate to maintain payment of
the interim dividend.
17 SUBSEQUENT EVENTS
On 5 September 2023, the Board approved an interim dividend for the six months
ended 30 June 2023,5.70 pence per share (6.63 cents euro equivalent). This
represents 2.5% of the Company's euro NAV at 30 June 2023 and will be paid on
3 October 2023.
On 5 September 2023, the Company entered into a new multi-currency revolving
credit facility of €250m with SMBC Bank International plc and JPMorgan Chase
Bank, N.A., London Branch for general corporate purposes replacing the
facility held with Credit Suisse AG, London Branch. The new facility has an
initial term of 2.5 years, the interest rate charged will be SOFR or EURIBOR
plus a margin between 300-335bps and a non-utilisation fee of 115bps per
annum.
Shareholder information
contents Registrar
Administration 41 Link Asset Services
Investment policy 42 Mont Crevelt House
Quarterly returns since 1Q18 43 Bulwer Avenue
Portfolio allocations since 1Q18 45 St Sampson
Glossary 46 Guernsey GY2 4LH
Channel Islands
Administration Tel: +44 (0)871 664 0300
enquiries@linkgroup.co.uk
Directors (all Non-Executive) www.linkassetservices.com
Tim Breedon CBE (Chairman)
Susie Farnon (Chair of the Audit Committee) Independent Auditor
Chris Ambler KPMG Channel Islands Limited
Mike Bane Glategny Court
Stephanie Coxon St Peter Port
Guernsey GY1 1WR
Registered Office of the Company Channel Islands
PO Box 656
East Wing Association of Investment Companies - AIC
Trafalgar Court The AIC is the trade body for closed-ended investment companies. It helps its
member companies deliver better returns for their investors through lobbying,
Les Banques media engagement, technical advice, training, and events. www.theaic.co.uk
St Peter Port
Guernsey GY1 3PP Dividend timetable
Channel Islands Announcement: 6 September 2023
Ex-dividend date: 14 September 2023
Investment Manager Record date: 15 September 2023
Apax Guernsey Managers Limited Payment date: 3 October 2023
Third Floor, Royal Bank Place
1 Glategny Esplanade EARNINGS RELEASES
St Peter Port Q3 2022 earnings release is expected to be issued on or around 9 November
2023.
Guernsey GY1 2HJ
Channel Islands
Stock symbol
London Stock Exchange: APAX
Investment AdvisOr
Apax Partners LLP
Enquiries
33 Jermyn Street
Any enquiries relating to shareholdings on the share register (for example,
London SW1Y 6DN 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.
United Kingdom The Registrars offer an online facility at www.signalshares.com which enables
shareholders to manage their shareholding electronically.
www.apax.com
Investor Relations
Administrator, Company Secretary and Depositary
Enquiries relating to AGA's strategy and results or if you would like to
Aztec Financial Services (Guernsey) Limited arrange a meeting, please contact:
PO Box 656 Katarina Sallerfors
East Wing Investor Relations - AGA
Trafalgar Court Apax Partners LLP
Les Banques 33 Jermyn Street
St Peter Port London SW1Y 6DN
Guernsey GY1 3PP United Kingdom
Channel Islands Tel: +44 (0)20 7872 6300
Tel: +44 (0)1481 749 700 investor.relations@apaxglobalalpha.com
AGA-admin@aztecgroup.co.uk
www.aztecgroup.co.uk
Corporate Broker
Jefferies International Limited
100 Bishopsgate
London EC2N 4JL
United Kingdom
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 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 Apax'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; (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.
Quarterly returns since 1Q18
Total Return(1) (euro) Return attribution
Private Derived Derived Private Derived Derived Performance Other(2) Total NAV Return
Equity Debt Equity Equity Debt Equity fee
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%)
1Q23 1.8% 2.8% 4.3% 1.2% 0.9% 0.1% (0.1%) (0.2%) 1.9%
2Q23 0.1% 2.6% (2.2%) 0.1% 0.9% 0.0% (0.2%) (0.2%) 0.6%
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%)
1H23 1.9% 5.3% 2.9% 1.2% 1.6% 0.1% (0.2%) (0.3%) 2.4%
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, including FX
movements on cash held
Total Return(1) (Constant currency) Return attribution
Private Derived Derived Equity Private Derived Derived Equity Performance Other(2) FX(3) Total NAV Return
Equity Debt Equity Debt fee
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% (0.0%) (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%)
1Q23 2.6% 3.9% 4.9% 1.8% 1.2% 0.1% (0.1%) (0.2%) (0.9%) 1.9%
2Q23 0.4% 3.1% (2.5%) 0.3% 1.0% 0.0% (0.2%) (0.1%) (0.4%) 0.6%
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%)
1H23 3.2% 6.9% 3.8% 2.0% 2.1% 0.1% (0.2%) (0.4%) (1.2%) 2.4%
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.
3. Includes the impact of FX movements on investments and FX on cash
held during each respective period
Portfolio allocation since 1Q18
Portfolio Allocation(1) Portfolio NAV (EURo) NAV (EURO)
Private Derived Derived Equity Net cash Private Equity Derived Derived Equity Net cash Total Total Adjusted
Equity Debt and NCAs Debt and NCAs NAV NAV
1Q18 65% 15% 17% 3% 572.5 136.2 152.6 22.1 883.3 883.3
2Q18 67% 19% 17% (4%) 638.8 184.3 160.6 (35.8) 947.8 943.9
3Q18 68% 17% 17% (2%) 638.9 158.1 159.0 (16.3) 939.7 937.3
4Q18 64% 19% 15% 2% 591.5 178.3 142.3 18.7 930.8 930.8
1Q19 68% 18% 11% 3% 669.5 178.9 112 28.1 988.5 988.2
2Q19 56% 22% 12% 9% 582.9 232.1 123.3 96.2 1,034.5 1,031.9
3Q19 61% 24% 11% 4% 648.1 257.4 116.0 38.9 1,060.4 1,055.8
4Q19 70% 23% 8% (1%) 766.3 252.5 89.7 (9.5) 1,099.0 1,092.1
1Q20 69% 23% 5% 3% 643.0 221.4 44.3 27.4 936.1 936.1
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% 918.4 327.0 30.8 145.7 1,421.8 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
1Q23 69% 27% 2% 2% 887.7 343.6 24.4 37.3 1,293.0 1,291.4
2Q23 66% 26% 1% 7% 858.9 341.7 13.8 87.4 1,301.8 1,298.7
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
H1 2023 68% 27% 2% 5% 873.3 342.7 19.1 62.4 1,297.5 1,295.1
1. For annual periods the average weighting over four quarters used
and for interim two quarters are used
Glossary
ADF means the limited partnerships that constitute the Apax Digital Private
Equity fund.
ADF II 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.
AGI means the limited partnerships that constitute the Apax Global Impact
Private Equity fund.
AGML or Investment Manager means Apax Guernsey Managers Limited.
AIX means the limited partnerships that constitute the Apax IX Private Equity
fund.
AMI means the limited partnerships that constitute the AMI Opportunities Fund
focused on investing in Israel.
AMI II means the limited partnerships that constitute the AMI II Opportunities
Fund focused on investing in Israel.
Apax Buyout Funds for AGA means investments in the following Private Equity
Funds: AXI, AX, AIX, AVIII, AEVII and AEVI.
Apax Global Alpha or Company or AGA means Apax Global Alpha Limited.
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.
Derived Debt Investments comprise debt investments held within the Derived
Investments portfolio.
Derived Equity Investments comprise equity investments held within the Derived
Investments portfolio.
Derived Investments comprise investments other than Private Equity
Investments, including primary investments in public and private debt, with
limited investments in equity, primarily in listed companies. In each case,
these are typically identified by Apax Partners as part of its private equity
activities.
Direct Deal costs means costs directly attributable to the due diligence and
execution of deals completed by the Company (such as broker fees and deal
research costs). For avoidance of doubt, it excludes taxes payables and
general fund and administration costs.
EBITDA Earnings before interest, tax, depreciation and amortisation.
ECB European Central Bank.
EHS means Environment, Health and Safety.
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.
ESG Environmental, Social and Governance.
EV Enterprise value.
FVTPL means fair value through profit or loss.
FX means foreign exchange.
GDP Gross Domestic Product.
Gross Asset Value or GAV means the Net Asset Value of the Company plus all
liabilities of the Company (current and non-current).
GHG means greenhouse gases.
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, excluding 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 taking the share price at the reporting
period date multiplied by the number of shares in issue. The euro equivalent
is translated using the exchange rate at the reporting period date.
MOIC Multiple of invested capital.
Net Asset Value or NAV means the value of the assets of the Company less its
liabilities as calculated in accordance with the Company's valuation policy.
NAV has no adjustments related to the IPO proceeds or performance fee
reserves.
NCAs means net current assets.
NTM Next twelve months.
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.
OCI Other comprehensive income.
P/E Price-to-earnings.
Performance fee reserve is the estimated performance fee reserve accrued in
line with the Investment Management Agreement agreed with AGA.
Portfolio Total Return means the sub-portfolio performance in a given period,
is calculated by taking total gains or losses and dividing them by the sum of
GAV at the beginning of the period and the time-weighted net invested capital.
The time-weighted net invested capital is the sum of investments made during
the period less realised proceeds received during the period, both weighted by
the number of days the capital was at work in the portfolio. Portfolio Total
Return is gross of performance fees but net of management fees and relevant
Direct Deal costs.
Private Equity Investments or Private Equity means primary commitments to,
secondary purchases of commitments in, and investments in, existing and future
Apax Funds.
RCF means revolving credit facility.
Reporting period means the period from 1 January 2023 to 30 June 2023.
Total NAV Return for a year/period means the return on the movement in the
Adjusted NAV per share at the end of the period together with all the
dividends paid during the period, to the Adjusted NAV per share at the
beginning of the period/year. Adjusted NAV per share used in the calculation
is rounded to five decimal points.
Total Return under the Total Return calculation, sub-portfolio performance in
a given period can be evaluated by taking total net gains in the period and
dividing them by the sum of the Adjusted NAV at the beginning of the period as
well as the investments made during the period. However, in situations where
realised proceeds are reinvested within the same period, performance under
this calculation is, via the denominator, impacted by the reinvestment.
Therefore, since 2017 the Investment Manager evaluates the sub-portfolio
performance using this amended methodology. The revised methodology takes
total gains or losses and divides them by the sum of Adjusted NAV at the
beginning of the period and the time-weighted net invested capital. The
time-weighted net invested capital is the sum of investments made during the
period less realised proceeds received during the period, both weighted by the
number of days the capital was at work in the portfolio. This provides a more
reflective view of actual performance.
Total Shareholder Return or TSR for the period means the net share price
change together with all dividends paid during the period.
Unaffected Valuation is determined as the fair value in the last quarter
before exit, when valuation is not affected by the exit process (i.e. because
an exit was signed, or an exit was sufficiently close to being signed that the
Apax Funds incorporated the expected exit multiple into the quarter end
valuation).
Value creation is based on full exits since January 2015 to 30 June 2023,
calculated combined in euro weighted by AGA's invested cost in AEVII, AVIII,
AIX and AX. Total value creation before the impact of FX, management dilution,
arrangement fees and other. The total cost associated with each investment and
realisations prior to 2015 are included in the calculation. The total cost
associated with each investment and realisations prior to 2015 are included in
the calculation. Excludes value creation for investments exited AEVI, AMI and
ADF deals.
The objective of the value creation analysis is to give, in Apax's opinion, a
fair reflection of how Apax has driven returns.
The methodology bridges the movement in the 100% equity value of the buy-out
investment during the respective funds' ownership period based on the primary
valuation metrics of EBITDA, the EV/EBITDA multiple and net debt, foreign
exchange impacts, and the Management Dilution / Other in the following way:
· Value created from EBITDA growth: (EBITDA at Exit - EBITDA at
Entry) / Multiple at Exit. In the instances where EBITDA does not represent
meaningful information in relation to the portfolio company the earnings
metric used for valuation purposes was used instead of EBITDA, for example
Profit After Tax
· Value created from change in net debt reduction: (Net Debt at Exit
- Net Debt at Entry)
· Value created from change in multiple expansion: (Multiple at Exit
- Multiple at Entry) x EBITDA at Entry
· Value created from foreign exchange (FX): (Exit Equity (USD) /
Entry Equity (USD)) - (Exit Equity (Transaction Currency)/Entry Equity
(Transaction Currency))
· Value created from other (including management dilution): Takes
into account management incentive plans thereby diluting the total return to
Apax. It also includes other deal-specific impacts such as arrangement fees
· The value created by each metric is typically expressed as a
multiple of entry equity value
At an investment level, there are a number of situations where the basic value
creation analysis may produce is leading results. As such, Apax has sought,
subject to data quality, to adjust the reported base data for such impacts,
including (but not limited to) the following circumstances:
· Significant bolt-on acquisitions: these make the investment appear
to have driven value creation through EBITDA growth and lost value through
increased leverage, where this is not strictly the case. In such cases, Apax
has added the acquired entity's EV, EBITDA and debt to the original
investment's entry data
· Significant disposals: these make the investment appear to have
driven value creation through deleveraging and reduced value through negative
EBITDA growth, where this is not strictly the case. In such cases, Apax has
added the disposed entity's EV, EBITDA, and debt to the original investment's
exit data
· Recapitalisations: taking on additional leverage to pay a dividend
to the funds and other co-investors makes it appear as though equity value has
been reduced through greater indebtedness. Apax has adjusted for this by
adding back the dividend to exit net debt
· Follow-on investments: these make it appear as though the
investment has deleveraged through good performance, whereas in reality the
funds have simply injected more capital. Apax has adjusted for this through
adding the follow-on investment to entry equity and enterprise value
· Partial exits: where a partial exit has taken place during the life
of a deal, the results achieved by the funds may differ from the return
inferred from the value creation analysis. For example, where the funds sold
part of their stake at a valuation mid-way through the investment that was
lower than the valuation at final exit, the MOIC calculated by the value
creation methodology would be higher than that achieved by the funds. Apax has
adjusted for this by creating theoretical exit positions reflecting a blend of
the investment's financial position and valuation at the time of exits, based
on the proportion of the stakes sold at different points of time
· Share placements: where a partial exit has taken place via a share
sell-down or IPO, the results achieved by the funds may differ from the return
inferred from the value creation analysis. For example, where the funds sold
shares at a price mid-way through the investment that was higher than the
price at exit, the MOIC calculated by the value creation methodology would be
lower than that achieved by the funds. Apax has adjusted for this in two
circumstances: (i) Primary offering: adding back total primary proceeds to
exit net debt; and (ii) Secondary offering: creating a theoretical exit
position reflecting a blend of the investment's financial position and
valuation at the time of offering and at exit, based on the proportion of
shares sold down at different points of time
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR NKPBKKBKBNCKRecent news on Apax Global Alpha
See all newsREG - Apax Global Alpha Ld - Apax IX agrees to sell Healthium
AnnouncementREG - Apax Global Alpha Ld - Quarterly Results to 31 March 2024
AnnouncementREG - Apax Global Alpha Ld - Result of AGM
AnnouncementREG - Apax Global Alpha Ld - Audit Committee Change
AnnouncementREG - Apax Global Alpha Ld - Apax Funds to acquire IANS
Announcement