REG - Apax Global Alpha Ld - 2023 Interim Results Highlights
06/09/2023 07:00
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RNS Number : 4818L Apax Global Alpha Limited 06 September 2023
(LSE: APAX)
Apax Global Alpha Limited
Interim results for the period ended 30 June 2023
Apax Global Alpha (LON:APAX), the closed-ended investment company providing
access to the Apax Private Equity Funds, today announced its interim results
for the period ended 30 June 2023.
Key highlights
· AGA achieved a Total NAV Return(1) of 2.4% (3.6% constant currency) in the six
months ended 30 June 2023. Adjusted NAV(2) was largely unchanged at €1.3bn
(31 Dec 2022: €1.3bn) or €2.64/£2.27 per share.
· The main drivers of Total NAV Return were value creation across the Private
Equity portfolio as well as strong returns from the Debt portfolio.
· In Private Equity, continued momentum saw portfolio companies achieve average
LTM EBITDA growth of 14.1%(3) despite some slowdown in earnings growth in Q2
2023.
· AGA received €35m in distributions from the Apax Funds, primarily from three
full exits achieved at an average uplift of 24%(4). This brings total
distributions received from the Apax Funds in the last 5 years to €998m
compared to calls of €651m in the same period.
· AGA deployed €11.4m(5) across three new investments in the first six months
of 2023, including the first standalone investment in the Apax Global Impact
Fund to which AGA has committed $60m. The pipeline for new investments remains
healthy with Apax XI, the latest global buyout fund, signing its first two
investments in May and July.
· The Debt portfolio, which primarily consists of first and second lien loans to
complement the Private Equity portfolio, achieved a Total Return(1) of 5.3% in
the first six months of 2023. The portfolio had a yield to maturity of 13.3%
and, with 99% of investments being floating rate loans, the income yield was
11.4% at 30 June 2023.
· Dividend of 5.70p per share declared for the half year 2023, in line with
AGA's stated dividend policy of distributing 5% of NAV per annum.
Tim Breedon, Chairman of AGA, said:
"Against an uncertain market backdrop, AGA's performance remained resilient
driven primarily by value creation in the Private Equity portfolio and strong
returns from the Company's debt investments. Over the last five years AGA has
delivered a total annualised return of c.12% and returned nearly €300m in
dividends to shareholders. This is testament to the strength of AGA's
portfolio and the Apax Funds' 'all-weather' investment strategy."
Financial highlights
· AGA was 93% invested as at 30 June 2023. The Company's unfunded commitments to
the Apax Funds (together with recallable distributions) reduced by €20m in
the six months period to €985m at 30 June 2023 (31 Dec 22: €1.0bn).
· At 30 June 2023, AGA's invested portfolio was split 71% in Private Equity and
28% in Debt investments, with the remaining 1% invested across three Equity
positions.
· On 5 September 2023, AGA entered into a new multi-currency revolving credit
facility of €250m with SMBC Bank International plc and JPMorgan Chase, N.A.,
London Branch, replacing the facility with Credit Suisse AG, London Branch.
The new facility has an initial term of 2.5 years, and the margin will be
300-335bps (over SOFR or EURIBOR) p.a.
H1 2023 (EUR) H1 2023 (GBP) FY 2022 (EUR) FY 2022 (GBP)
Adjusted NAV(2) 1,299m 1,116m 1,299m 1,150m
Adjusted NAV(2) per share 2.64 2.27 2.65 2.34
NAV(2) per share 2.65 2.28 2.65 2.34
% of NAV H1 2023 H1 2023
constant currency
Total NAV Return(1) 2.4% 3.6%
Total Return(1) - Private Equity 66% 1.9% 3.2%
Total Return(1) - Debt Investments 26% 5.3% 6.9%
Total Return(1) - Derived Equity 1% 2.9% 3.8%
Cash & Others 7%
Portfolio highlights
· AGA offers access to a portfolio of hidden gems, mostly private companies that
shareholders can't buy elsewhere. These companies operate globally across the
core Apax sectors of Tech & Digital, Services, Healthcare, and
Internet/Consumer.
· At 30 June 2023, the invested portfolio consisted of 39% invested in Tech
& Digital, 28% in Services, 17% in Healthcare, and 16% in
Internet/Consumer.
· In Private Equity, earnings growth was a key driver of performance with
average LTM EBITDA growth to 30 June 2023 of 14.1%(3) across portfolio
companies. Valuation multiples reduced to 16.3x(3) compared to 17.2x at 31
December 2022, reflecting multiple compression from Paycor and Thoughtworks,
two publicly listed holdings that were IPO'd in 2021, as well as a change to
the comparables set of certain companies as a result of the impact of M&A.
· Leverage across the Apax Funds' portfolio reduced slightly to 4.4x(3) at 30
June 2023 (31 December 2022: 4.8%). The Funds' portfolio is well-positioned to
weather the current interest rate environment and 83%(6) of portfolio
companies have debt maturities extending beyond 2027 and about three quarters
of debt outstanding at a fixed rate.
· AGA's Debt portfolio continued to perform strongly and delivered a Total
Return(1) of 5.3% in H1 2023. This portfolio has achieved a 46.8% cumulative
constant currency Total Return over the past five years, outperforming the
S&P/LSTA leveraged loan index(7) which delivered 22.4% for the same
five-year period.
· The Derived Debt portfolio absorbs cash not invested in Private Equity,
enhances the robustness of AGA's balance sheet, provides a steady flow of
income to support dividends, and additional returns.
· 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. This
portfolio delivered a Total Return(1) of 2.9% in H1 2023.
For further information regarding the announcement of AGA's Interim 2023
Results, including the Company's results presentation and details for today's
analyst and investor webcast at 9.30am (UK time), please visit
www.apaxglobalalpha.com
(http://www.apaxglobalalpha.com/shareholder-information/results-and-publications)
.
Contact details
Katarina Sallerfors, Investor Relations - AGA
Telephone: +44 207 666 6526
Email: Katarina.sallerfors@apax.com
APPENDIX
Movements in NAV
Adjusted NAV movements (€m) Private Equity Derived Investments Cash Treasury Shares Facility drawn Other(8) H1 2023
Total
Adjusted NAV at 31.12.22 871.0 364.2 68.0 - - (3.8) 1,299.4
+ Investments 6.9 5.9 (16.8) - - 4.0 -
- Distributions/ divestments (35.0) (19.1) 54.4 - - (0.3) -
+ Interest and dividend income - - 14.8 - - 4.1 18.9
+/- Gains/(losses) 26.5 10.1 - - - - 36.6
+/- FX gains/(losses)(9) (10.5) (5.6) 0.3 - - - (15.8)
+/- Costs and other movements - - (1.8) - - (3.0) (4.8)
- Dividends paid - - (32.5) - - - (32.5)
+/- Performance fee reserve(10) - (3.1) - - - - (3.1)
+/- Shares purchased - - - - - - -
+/- Revolving credit facility - - - - - - -
drawn/repaid
Adjusted NAV at 30.06.23 858.9 352.4 86.4 - - 1.0 1,298.7
Private Equity - operational metrics
Private Equity - operational metrics 30 June 23 31 December 22
Portfolio year-over-year LTM revenue growth(3) 16.0% 21.5%
Portfolio year-over-year LTM EBITDA growth(3) 14.1% 18.5%
Enterprise Value / EBITDA valuation multiple(3) 16.3x 17.2x
Net debt / EBITDA multiple(3) 4.4x 4.8x
Derived Investments - operational metrics
Derived Investments - operational metrics 30 June 23 31 December 22
Debt average yield to maturity 13.3% 12.1%
Debt average years to maturity 4.6 5.1
Debt average income yield 11.4% 9.9%
Other Invested Portfolio highlights
Invested Portfolio analysis(11) €m €m % %
- AEVI 2.2 0%
- AEVII 23.5 2%
- AVIII 62.8 6%
- AIX 309.5 25%
- AX 394.0 32%
- AXI (8.2) 0%
- AMI 26.1 2%
- AMI II (1.1) 0%
- ADF 51.4 4%
- ADF II 0.5 0%
- AGI (1.8) 0%
Private Equity 858.9 71%
- Derived Debt 341.7 28%
- Derived Equity 13.8 1%
Derived Investments 355.5 29%
Total 1,214.7 100%
Footnotes
1 "Total NAV Return" means the movement in the Adjusted NAV per share over the
quarter plus any dividends paid. "Total Return" reflects the sub-portfolio
performance on a stand-alone basis. It excludes items at the overall AGA level
such as cash, management fees, and costs
2 Adjusted NAV reflects Total NAV of €1,301.8m less performance fee reserve of
€3.1m
3 Gross Asset Value weighted average of the respective metric across the
portfolio. LTM Revenue growth and LTM EBITDA growth rates exclude companies
where EBITDA is not meaningful such as financial services or high growth
business with fluctuations in EBITDA. Net debt/EBITDA multiple and EV/EBITDA
valuation multiple excluded companies where EBITDA is not meaningful such as
financial services or high growth business valued on a revenue basis.
4 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 Aggregate Gross IRR and Gross MOIC calculated based on the expected
aggregate cash flows in euro across all funds for the deals signed and/or
IPO'd in the period. Gross IRR represents concurrent Gross IRR.
5 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
6 Weighted by AGA invested cost in AVIII, AIX and AX at 30 June 2023. Excludes
financial services companies where Net Debt/EBITDA is not relevant. Excludes
maturity dates in relation to portfolio companies with public equity. Excludes
AMI, AMI II, ADF, ADF II and AGI.
7 Derived Debt constant currency returns and S&P LSTA leveraged loan index
rebased to 100 and compounded on a quarterly basis. Bloomberg source for
S&P LSTA leveraged loan index
8 Other reflects net current assets.
9 FX on cash includes the revaluation of cash balances and net gain or losses
arising from the differences in exchange rates between transaction dates and
settlement dates, and unrealised net gains or losses arising from the
translation into euro of assets and liabilities (other than investments) which
are not denominated in euro
10 Movement in the performance fee reserve reflects the performance fee reserve
accrued by the Company's at 30 June 23. This does not represent the underlying
Private Equity portfolio's carried interest.
11 Invested Portfolio excludes cash and cash equivalents, revolving credit
facility drawn and net current assets, including these the NAV was €1,301.8m
and Adjusted NAV was €1,298.7m reflecting adjustment of €3.1m for the
estimated performance fee reserve accrued.
Notes
1. Note that references in this announcement to Apax Global Alpha Limited have
been abbreviated to "AGA" or "the Company". References to Apax Partners LLP
have been abbreviated to "Apax" or "the Investment Adviser"
2. Please be advised that this announcement may contain inside information as
stipulated under the Market Abuse Regulations (EU) NO. 596/2014 ("MAR")
3. This announcement is not for release, publication or distribution, directly or
indirectly, in whole or in part, into or within the United States or to "US
persons" (as defined in Regulation S under the United States Securities Act of
1933, as amended (the "Securities Act")) or into or within Australia, Canada,
South Africa or Japan. Recipients of this announcement in jurisdictions
outside the UK should inform themselves about and observe any applicable legal
requirements in their jurisdictions. In particular, the distribution of the
announcement may be restricted by law in certain jurisdictions
4. The information presented herein is not an offer for sale within the United
States of any equity shares or other securities of Apax Global Alpha Limited
("AGA"). AGA has not been and will not be registered under the US Investment
Company Act of 1940, as amended (the "Investment Company Act"). In addition,
AGA's shares (the "Shares") have not been and will not be registered under the
Securities Act or any other applicable law of the United States. Consequently,
the Shares may not be offered or sold or otherwise transferred within the
United States, or to, or for the account or benefit of, US Persons, except
pursuant to an exemption from the registration requirements of the Securities
Act and under circumstances which will not require AGA to register under the
Investment Company Act. No public offering of the Shares is being made in the
United States
5. This announcement may include forward-looking statements. The words "expect",
"anticipate", "intends", "plan", "estimate", "aim", "forecast", "project" and
similar expressions (or their negative) identify certain of these
forward-looking statements. These forward-looking statements are statements
regarding AGA's intentions, beliefs or current expectations concerning, among
other things, AGA's results of operations, financial condition, liquidity,
prospects, growth and strategies. The forward-looking statements in this
presentation are based on numerous assumptions regarding AGA's present and
future business strategies and the environment in which AGA will operate in
the future. Forward-looking statements involve inherent known and unknown
risks, uncertainties and contingencies because they relate to events and
depend on circumstances that may or may not occur in the future and may cause
the actual results, performance or achievements of AGA to be materially
different from those expressed or implied by such forward looking statements.
Many of these risks and uncertainties relate to factors that are beyond AGA's
ability to control or estimate precisely, such as future market conditions,
currency fluctuations, the behaviour of other market participants, the actions
of regulators and other factors such as AGA's ability to continue to obtain
financing to meet its liquidity needs, changes in the political, social and
regulatory framework in which AGA operates or in economic or technological
trends or conditions. Past performance should not be taken as an indication or
guarantee of future results, and no representation or warranty, express or
implied, is made regarding future performance. AGA expressly disclaims any
obligation or undertaking to release any updates or revisions to these
forward-looking statements to reflect any change in AGA's expectations with
regard thereto or any change in events, conditions or circumstances on which
any statement is based after the date of this announcement, or to update or to
keep current any other information contained in this announcement.
Accordingly, undue reliance should not be placed on the forward-looking
statements, which speak only as of the date of this announcement.
About Apax Global Alpha Limited
AGA is a Guernsey registered closed-ended investment Company listed on the
London Stock Exchange. It is regulated by the Guernsey Financial Services
Commission.
AGA's objective is to provide shareholders with capital appreciation from its
investment portfolio and regular dividends. The Company is targeting an
annualised Total Return, across economic cycles, of 12-15% (net of fees and
expenses) including a dividend yield of 5% of Net Asset Value.
The investment policy of the Company is to make Private Equity investments in
Apax Funds, and Debt Investments, derived from the insights gained via Apax's
Private Equity activities.
Further information regarding the Company and its publications are available
on the Company's website at www.apaxglobalalpha.com.
About Apax Partners LLP
Apax Partners LLP ("Apax") is a leading global private equity advisory firm.
For over 50 years, Apax has worked to inspire growth and
ideas that transform businesses. The firm has raised and advised funds with
aggregate commitments of more than $65 billion. The Apax
Funds invest in companies across four global sectors of Tech, Services,
Healthcare, and Internet/Consumer. These funds provide long-term equity
financing to build and strengthen world-class companies. For further
information about Apax, please visit www.apax.com.
Apax is authorised and regulated by the Financial Conduct Authority in the UK.
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