abrdn Pvt Equity - Half-year Report
28/06/2023 07:00
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RNS Number : 1001E abrdn Private Equity Opp Trst plc 28 June 2023
abrdn Private Equity Opportunities Trust plc
Legal Entity Identifier (LEI): 2138004MK7VPTZ99EV13
HALF YEARLY REPORT FOR THE SIX MONTHS ENDED 31 MARCH 2023
FINANCIAL HIGHLIGHTS
As at As at As at
31 March 30 September 31 March
2023 2022 2022
Net Asset Value Total Return(*+) 3.0% 14.1% 6.8%
Share Price Total Return(*+) 2.3% -15.1% 5.8%
FTSE All - Share Index Total Return 12.3% -4.0% 4.7%
Net Assets £1,181.4m £1,158.1m £1,095.3m
Share Price 412.0p 410.0p 520.0p
Expense Ratio(*+) 1.05% 1.06% 1.06%
(*) Considered to be an Alternative Performance Measure.
(+) A Key Performance Indicator by which the performance of the Manager is
measured by the Board.
HIGHLIGHTS TO 31 MARCH 2023
· Performance - NAV total return ("NAV TR") for the six months to
31 March 2023 was 3.0%. The valuation of the underlying portfolio increased by
5.4% during the period (excluding FX).
· Investment Activity - Five new primary commitments were made
during the period, two direct co-investments, two follow-on investments into
two existing direct co-investments and one secondary investment during the
period, totalling £140.8 million (31 March 2022: £239.7 million).
· Co-investments - Direct co-investment has continued to grow as a
proportion of the portfolio and has now reached a portfolio of 25* underlying
companies and 22% of portfolio NAV (30 September 2022: 22 underlying companies
and 19% of portfolio NAV).
· Cashflows - The portfolio generated distributions of £83.6
million (31 March 2022: £120.6 million) and had total drawdowns of £104.4
million in the six months to 31 March 2023 (31 March 2022: £145.5 million).
· Outstanding Commitments - Outstanding commitments at the year-end
amounted to £699.7 million (31 March 2022: £627.1 million). The
over-commitment ratio of 37.6% at year-end (31 March 2022: 38.9%) was at the
lower end of the Company's target range (30-75%).
· Balance Sheet & Liquidity - The revolving credit facility was
increased to £300.0m in size (from £200.0m) and extended in duration by a
year (to December 2025). APEO had cash and cash equivalents of £19.9 million
(31 March 2022: £26.6 million) and had £207.2 million undrawn on its
revolving credit facility (31 March 2022: £175.6 million undrawn).
* Following the incompletion of Project Concorde as previously reported in the
Company's Annual Report to 30 September 2022, AV Invest B3, which was an
initial acquisition as part of the wider project has now been reclassified as
a co-investment as opposed to a secondary investment within the Company's
portfolio from the start of the current period.
abrdn Private Equity Opportunities Trust plc (the "Company" or "APEO") is an
investment trust with a premium listing on the London Stock Exchange
APEO provides investors with exposure to leading private equity funds and
private companies, mainly in Europe.
Its investments are across primary funds, secondaries and co-investments, and
are driven by its Manager's deep, longstanding relationships with a group of
core private equity firms. Its investment objective is to achieve attractive
long-term total returns
for investors and its policy is to maintain a broadly diversified portfolio by
country, industry sector, maturity and number of underlying investments.
APEO has appointed abrdn Capital Partners LLP, a wholly owned subsidiary of
abrdn plc, as its alternative investment fund manager ("AIFM") and Manager
(the "Investment Manager" or the "Manager").
CHAIR'S STATEMENT
Introduction
I am delighted to present APEO's Half-Yearly Report for the six months to 31
March 2023. The past six months have continued to be a challenging period in
the global economy and financial markets, carrying on where we left off in the
previous financial year. The war in Ukraine continues with no sign of
resolution and the pace of interest rate rises, in order to tackle the high
levels of inflation in the global economy, has been unprecedented. We have
seen the unintended consequences of these rate rises, most notably impacting
US regional banks, creating a situation of even greater uncertainty.
Whilst I expect this challenging period still has some way to run yet, I gain
a great deal of confidence in APEO's NAV performance during the six months to
31 March 2023, in the face of this volatile backdrop. In addition, APEO's
balance sheet was further strengthened through the increase of its revolving
credit facility during the period. I continue to believe that APEO's focused
and consistent strategy, tested over 22 years, and the quality and diversified
nature of the existing portfolio will continue to position APEO well, in
weathering short term challenges and in delivering longer term value growth.
Manager Update
Shareholders may be aware of media articles in recent months claiming that
abrdn is looking at strategic options with respect to its Private Equity
division. While abrdn has made no comment in response to such articles,
shareholders should be assured that your Board has always maintained, and will
continue to remain, in close discussion with senior management of abrdn and
its Private Equity team to ensure the ongoing consistency of its approach and
the allocation of appropriate resources in fulfilling its role as Manager of
APEO for the benefit of APEO's shareholders. In the event of a potential
change in ownership of the Manager, shareholders can be further assured that
the Board would take all necessary steps to work with abrdn and the Manager to
fully protect the ongoing interests of shareholders with the aid of suitable
professional advice and appropriate due diligence.
This oversight of the Manager is a key part of the Board's responsibilities
and is carried out through regular and direct contact between the Board and
the various areas of the abrdn Private Equity team that contribute to the
management of APEO. The Manager has managed the Company since inception and
has delivered strong, consistent performance through multiple market cycles.
Investment Performance & Discount
The results for the six months to 31 March 2023 show resilient NAV
performance, with a NAV per share total return of 3.0% and net assets at
£1,181.4 million. This performance is testament to APEO's core investment
strategy, which has remained focused on partnering with a relatively small
cohort of high-quality private equity firms, predominately in the European
mid-market.
APEO's underlying portfolio of private companies is made up of businesses that
are often amongst the market leaders in resilient sub-sectors and are
profitable and cash generative. On the whole, these businesses have continued
to grow in spite of the more difficult market conditions.
For example, the top 50 portfolio companies by value in APEO, which equate to
41.1% of portfolio NAV, experienced average earning growth over the last
twelve-month ("LTM") of 29.7% at 31 March 2023.
Despite this NAV growth and portfolio performance, public market sentiment has
remained lukewarm with respect to private equity investment trusts, including
APEO, meaning that the wide share price discounts to NAV that we saw in the
second half of 2022 have persisted into 2023. APEO's share price total return
was 2.3% during the period but the share price discount to NAV at 31 March
2023 remained wide at 46.4%, with the discount ranging between 50.3% and 32.5%
during the last six months. The share price total return underperformed the
total return of 12.3% from the FTSE All-Share Index, its comparator index and
we remain disappointed in the current rating of APEO.
However, it is also worth noting that APEO's share price total return has
outperformed the FTSE All-Share Index over three, five and ten years, and
since the Company's inception in 2001.
Much of the current sentiment around private equity centres on the underlying
valuations, and NAV, and whether the valuations can be trusted in the current
environment. In terms of APEO specifically, I would highlight the active role
that the Manager, Board and Audit Committee play in terms of the governance of
the valuation process. The vast majority of APEO's underlying portfolio
companies are profitable, cash generative businesses that are subject to
bottom-up revaluations every quarter. I am confident in the level of scrutiny
that APEO's portfolio valuations receive.
I am conscious that some shareholders will be asking about share buybacks in
the face of our wide discount to NAV. I would highlight that the Board does
not have a stated discount control policy, but the Board, the Manager and our
Corporate Broker monitor the discount on a regular basis to ensure that APEO
is not an outlier when compared to other investment companies with a similar
investment approach and shareholder structure.
The Board has bought back its own shares in the past and sought shareholder
approval to do so again at the recent AGM in March 2023, as we keep this
matter under active and careful consideration. In the interim, the Board
remains happy with the current valuation of the overall portfolio.
Suffice to say there is always a balance to consider in terms of buying-back
shares on an accretive discount versus preserving cash liquidity for
investment purposes. The Board is also cognisant of APEO's relatively
concentrated shareholder register and, when considering buybacks, we are
mindful of liquidity in APEO's shares, which we believe is a key long-term
focus of our shareholders.
Commitments, Investments & Distributions
APEO employs a consistent, long-term approach to deployment and therefore the
six months ended 31 March 2023 remained an active period for new investment,
with the Company making new commitments totalling £140.8 million.
Specifically, APEO made five new primary commitments (£121.3 million), two
new direct co-investments (£9.3 million), two follow-on investments in
existing co-investments (£5.6 million) and one secondary investment (£4.6
million). Of particular note is the fact that direct co-investment has
continued to grow as a proportion of the portfolio and has now reached a
portfolio of 25 separate underlying companies and 22% of portfolio NAV (30
September 2022: 22 separate underlying companies and 19% of portfolio NAV).
APEO overcommits to private equity funds, in order to ensure the most
efficient use of its resources and optimise returns, and has done so since its
inception in 2001. Outstanding commitments at the year-end amounted to £699.7
million (31 March 2022: £627.1 million). The value of outstanding commitments
in excess of liquid resources as a percentage of portfolio value (referred to
as the "over-commitment ratio") was 37.6% at 31 March 2023 (31 March 2022:
38.9%). This is broadly in line with the figure twelve months prior and is at
the lower end of our long-term target range of 30%-75%.
APEO received £83.6 million of distributions from investments during the
period (31 March 2022: £120.6 million), in spite of the wider slowdown in
private equity M&A activity. The realised return from the distributions
equated to 2.6 times cost (31 March 2022: 2.2 times), which I would consider
as strong performance given the market backdrop during the period. The total
drawdowns during the period of £104.4 million (31 March 2022: £145.5
million) were higher than amounts received as distributions. However, it is
worth noting that £20.6 million of this relates to new co-investment and
secondaries (31 March 2022: £60.2 million), which is deployment directly
under the Manager's control and discretion.
Liquidity & Bank Facility
APEO's balance sheet remains in a strong position, having extended its
revolving credit facility during the period, from £200.0 million to £300.0
million and extended the maturity by a year to December 2025. The increase,
provided by RBS International, Société Générale and State Street Bank
International, provides APEO with additional capacity for new investment
activity. APEO had £207.2 million remaining undrawn on its £300.0 million
revolving credit facility at 31 March 2023 (31 March 2022: £175.6 million
undrawn) and held cash and cash equivalents of £19.9 million (31 March 2022:
£26.6 million).
Dividends
APEO pays a quarterly dividend, and the Board is committed to maintaining the
value of the dividend. APEO has already paid one quarterly dividend of 4.0
pence per share so far this year and the Board has announced a second
quarterly dividend of 4.0 pence per share. This will be paid on 28 July 2023
to shareholders on the register on 23 June 2023. The Board expects that, in
the absence of any adverse market event, the third and fourth interim
dividends will also be 4.0 pence per Ordinary Share, payable in October 2023
and January 2024 respectively, which would make a total dividend payment for
the year ending 30 September 2023 of 16.0 pence per ordinary share.
Outlook
Whilst APEO continues to perform resiliently through this more challenging
period in the wider market, both the Board and the Manager are taking nothing
for granted. Private equity has not been immune to the changing market
conditions, and we are currently seeing fewer buyout transactions taking
place, both from buy-side and sell-side perspectives. This slowdown in
activity will have a short-term impact on APEO and I expect the second half of
the year to show a reduction in the number of portfolio exits and the overall
quantum of distributions in particular.
At an underlying portfolio level, I do expect a combination of higher
inflation, higher interest rates and an economic slowdown to have a downward
impact upon earnings growth in the portfolio. This will have a knock-on impact
on NAV growth, especially when combined with the aforementioned lower exit
activity, given private equity managers tend to sell portfolio companies at an
uplift to valuation.
That said, I continue to view private equity as a long-term asset class where
new investment decisions are often made with a five-year time horizon in mind.
Whilst the second half of 2023 appears relatively uncertain, I believe that
the private equity ownership model, which typically involves majority control
of businesses, allows underlying companies to adapt more quickly to changing
market circumstances. Periods of uncertainty also tend to offer up new and
different opportunities for investment, which private equity firms have proved
adept at sourcing and completing.
APEO has invested for over 22 years, emerging in the aftermath of the dot-com
bubble, through the global financial crisis and the global pandemic. Our
strategy has been proven to work through the cycle. I believe that the quality
and diversification of the existing portfolio, combined with careful ongoing
management of new commitments and the balance sheet, will help to position the
Company well during these challenging market conditions and will allow APEO to
continue to generate attractive long-term returns to shareholders in the
coming years.
Finally, I would add that the Board will continue to be highly engaged in
terms of APEO's activity, whether that be the share price discount to NAV, the
underlying valuations, or its regular, close dialogue with the Manager. The
Board closely monitors the matters that impact APEO's performance and
shareholders can rest assured that will continue to be the case moving
forward.
Alan Devine
Chair
27 June 2023
INTERIM MANAGEMENT REPORT AND DIRECTORS' RESPONSIBILITY STATEMENT
PRINCIPAL RISKS & UNCERTAINITIES
The Board has an ongoing process for identifying, evaluating and managing the
principal risks, emerging risks and uncertainties of the Company. The
principal risks faced by the Company relate to the Company's investment
activities and are set out in the Strategic Report contained within the Annual
Report for the year ended 30 September 2022 (the "2022 Annual Report"). They
comprise the following risk categories:
• Market risk
• Liquidity risk
• Over-commitment risk
• Credit risk
• Investment selection
• Operational risk
The Board continues to closely monitor the political and economic
uncertainties which could affect the global economy and financial markets,
particularly the heightened interest rate risk in the UK and the knock on
impact on the recent collapses of the likes of Silicon Valley Bank, Credit
Suisse and First Republic Bank. The Board also monitors the impact of the
ongoing war in Ukraine and potential supply chain issues.
The Company has made enquiries of its Manager and third party service
providers in relation to continued compliance with sanctions measures enacted
by the UK in response to Russia's invasion of Ukraine.
These factors are addressed in the risk categories set out above and further
details on how they are managed and mitigated are provided in the 2022 Annual
Report. The Board will continue to assess these risks on an ongoing basis.
In all other respects, the Company's principal risks, emerging risks and
uncertainties have not changed materially since the date of the 2022 Annual
Report.
GOING CONCERN
In accordance with the Financial Reporting Council's Guidance on Risk
Management, Internal Control and Related Financial and Business Reporting, the
Directors have undertaken a rigorous review of the Company's ability to
continue as a going concern as a basis for preparing the financial statements.
The Board has taken into account; the £300.0 million committed, syndicated
revolving credit facility which matures in December 2025; the future cash flow
projections, including the impact of stress testing on the portfolio, the
ongoing expenses forecasts for the financial year, and the Company's net
resources available for investment. The Directors are also mindful of the
principal and emerging risks and uncertainties, as disclosed.
Having reviewed these matters, the Directors believe that the Company has
adequate financial resources to continue its operational existence for the
foreseeable future and for at least 12 months from the date of this
Half-Yearly Report. Accordingly, they continue to adopt the going concern
basis in preparing the Half-Yearly Report.
RELATED PARTY TRANSACTIONS
There have been no material changes in the related party transactions reported
in the 2022 Annual Report. Details of the Company's parent undertaking and
related party transactions are set out in note 13 to the Financial Statements.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors are responsible for preparing the Half-Yearly Report, in
accordance with applicable laws and regulations. The Directors confirm that,
to the best of their knowledge:
• The condensed set of financial statements has been prepared in
accordance with Financial Reporting Standard 104 (Interim Financial Reporting)
and gives a true and fair view of the assets, liabilities, financial position
and profit or loss of the Company;
• The Interim Management Report, together with the Chair's Statement
and Investment Manager's Report, includes a fair review of the information
required by DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the year; and
• The financial statements include a fair review of the information
required by DTR 4.28R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months of
the 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 that could do so.
The Half-Yearly Financial Report was approved by the Board and the above
Directors' Responsibility Statement was signed on its behalf by the Chair.
For abrdn Private Equity Opportunities Trust plc
Alan Devine
Chair
27 June 2023
INVESTMENT STRATEGY
APEO's investment objective is to achieve long-term total returns through
holding a diversified portfolio of private equity funds and direct investments
into private companies alongside private equity managers ("co-investments"), a
majority of which will have a European focus.
INVESTMENT POLICY
The Company: (i) commits to private equity funds on a primary basis; (ii)
acquires private equity fund interests in the secondary market; and (iii)
makes direct investments into private companies via co-investments. Its policy
is to maintain a broadly diversified portfolio by country, industry sector,
maturity and number of underlying investments.
The objective is for the portfolio to comprise around 50 "active" private
equity fund investments; this excludes funds that have recently been raised,
but have not yet started investing, and funds that are close to or being wound
up. The Company may also invest up to 25% of its assets in co-investments.
The Company may also hold direct private equity investments or quoted
securities as a result of distributions in specie from its portfolio of fund
investments. The Company's policy is normally to dispose of such assets where
they are held on an unrestricted basis.
To maximise the proportion of invested assets, the Company follows an
over-commitment strategy by making commitments which exceed its uninvested
capital. In making such commitments, the Manager, together with the Board,
will take into account the uninvested capital, the value and timing of
expected and projected cashflows to and from the portfolio and, from time to
time, may use borrowings to meet drawdowns. The Board has agreed that the
over-commitment ratio should sit within the range of 30% to 75% over the
long-term.
The Company's maximum borrowing capacity, defined in its articles of
association, is an amount equal to the aggregate of the amount paid up on the
issued share capital of the Company and the amount standing to the credit of
the reserves of the Company. However, it is expected that borrowings would not
normally exceed 30% of the Company's net assets at the time of drawdown.
The Company's non-sterling currency exposure is principally to the euro and US
dollar. The Company does not seek to hedge this exposure into sterling,
although any borrowings in euros and other currencies in which the Company is
invested would have such a hedging effect.
Cash held pending investment is invested in short-dated government bonds,
money-market instruments, bank deposits or other similar investments. Cash
held pending investment may also be invested in other listed investment
companies or trusts. The Company will not invest more than 15% of its total
assets in such listed equities.
The investment limits described above are all measured at the time of
investment.
PORTFOLIO CONSTRUCTION AND APPROACH
Investments made by APEO are typically with or alongside private equity firms
with whom the Manager has an established relationship of more than 10 years.
As at 31 March 2023, APEO directly held 80 separate fund investments (30
September 2022: 75) comprising primary and secondary fund interests, as well
as 25 separate co-investments (30 September 2022: 22).
Through its portfolio of investments, the Company has indirect exposure to a
diverse range of underlying portfolio companies, as well as additional
underlying fund of fund and co-investment interests. At 31 March 2023, APEO's
underlying portfolio included exposure to 685 separate underlying portfolio
companies (30 September 2022: 655), 44 underlying fund investments (30
September 2022: 41) and 9 underlying co-investments (30 September 2022: 9).
APEO predominantly invests in European mid-market companies. Around 77% (30
September 2022: 76%) of the total value of underlying portfolio company
exposure(1) is invested in European domiciled operating companies and the
Board expects this to remain the case over the longer term, with a weighting
towards North Western Europe. This has been APEO's geographic focus since its
inception in 2001 and where it has a strong, long-term track record. However,
APEO also selectively seeks exposure to North American mid-market companies,
as a means to access emerging growth or investment trends that cannot be fully
captured by investing in Europe alone.
APEO has a well-balanced portfolio in terms of non-cyclical and cyclical
exposure. Currently the largest single sector exposure represents 20% of the
total value of underlying portfolio company exposure1 (30 September 2022: 20%)
and it is expected that no single sector will be more than 30% of the
portfolio over the longer term. Over time, the Manager anticipates a
continuation of the recent shift toward sectors that are experiencing
long-term growth (such as Technology and Healthcare) at the expense of more
cyclical sectors, such as Industrial and Consumer Discretionary.
Environmental, Social and Governance ("ESG") is a strategic priority for the
Board and the Manager. APEO aims to be an active, long-term responsible
investor and ESG is a fundamental component of APEO's investment process.
Further detail on the Manager's approach to ESG can be found in the Annual
Report to 30 September 2022.
1 Excludes underlying fund and co-investments indirectly held through the
Company portfolio.
INTRODUCTION TO THE MANAGER - HOW WE INVEST
In order to achieve the investment objective, maintain a balanced portfolio
and take advantage of opportunities as they arise, APEO invests in three types
of private equity investment:
1. Primary Investment
APEO commits to investing in a new private equity fund. The committed capital
will generally be drawn over a three to five year period as investments in
underlying private companies are made. Proceeds are then returned to APEO when
the underlying companies are sold, typically over a four to five year holding
period.
Primary investment has been the core focus of APEO's Investment Objective
since its inception in 2001. Primary investments can provide APEO with:
• consistent exposure to leading private equity managers;
• underlying portfolio diversification;
• a steady, predictable cashflow profile; and
• help drive APEO's dealflow in secondaries and co-investments.
2. Secondary Investment
APEO acquires a single fund interest or a portfolio of fund interests from
another investor, with the prior approval of the private equity managers of
the target funds. APEO pays the seller a cash amount for the interests and
takes on any outstanding commitments to the target funds.
Typically this would occur at a point where the target funds have already
invested the majority of its capital. The price paid in this type of
transaction will reflect the age profile of the funds, the quality of the
managers and the quality of the underlying portfolios. Secondaries allow the
Manager to gain exposure to funds of new or existing managers a later stage in
a fund's life.
Therefore they typically have a shorter investment duration than a primary
investment. Secondaries are opportunistic in nature and their availability is
dependent on multiple market and deal-specific factors.
3. Co-investment
APEO makes direct investments into private companies alongside other private
equity managers. APEO's strategy is to invest alongside private equity
managers with which abrdn Private Equity has made a primary investment.
Co-investment was introduced to the Investment Objective in 2019. The Manager
is seeking to build a diversified portfolio of around 30 co-investments in
order to mitigate concentration risk.
INVESTMENT MANAGER'S REVIEW
Performance
APEO continues to be positioned well by its 22-year-old core strategy of
partnering with a small group of top performing private equity firms, which
typically focus on profitable, cash generative underlying portfolio companies
in the private equity mid-market (enterprise values between £100.0m and
£1.0bn). Furthermore, APEO's portfolio is well diversified across a range of
sectors, with Technology (typically profitable B2B software) and Healthcare
the top two sector exposures at 20% and 19% respectively. This has helped the
portfolio deliver resilient NAV performance during the first six months of the
financial year, in spite of continued headwinds in the broader financial
markets and the global economy.
The NAV TR for the six months ended 31 March 2023 was 3.0% versus 12.3% for
the FTSE All-Share Index. The valuation of the portfolio at 31 March 2023
increased 5.4% over the period on a constant currency basis, with a decrease
of 1.8% attributable to FX, principally due to the appreciation of pound
sterling compared to US dollar and the Euro. The increase in value of the
portfolio on a per share basis was 15.2p. This was principally made up of
unrealised and realised gains and income of 42.0p, partially offset by FX,
dividends and costs associated with management fee, administrative and
financing of 26.8p.
Performance
The unrealised gains in the period are attributable to the strong performance
of the underlying portfolio, which continues to perform well operationally.
Looking at the top 50 underlying portfolio companies, which are the main value
drivers and equate to 41.1% portfolio NAV, the average revenue and EBITDA
growth was 23.6% and 29.7% respectively in the twelve months to 31 March 2023.
That has helped drive the resilient valuation performance in the portfolio, in
spite of declining listed comparable multiples. Focusing on the same cohort,
the median valuation multiple was 14.5x EBITDA at 31 March 2023, compared with
16.1x EBITDA a year prior. We are especially pleased about progress in APEO's
co-investment portfolio, which has seen a valuation uplift of 13.0% during the
six months to 31 March 2023.
Realised gains were derived from full or partial sales of underlying portfolio
companies during the six-month period, which were at an average uplift of
15.1% to the unrealised value two quarters prior (31 March 2022: 20.2%). The
headline realised return from the portfolio exits equated to 2.6 times cost
(31 March 2022: 2.2 times cost), which we consider a strong performance in
what was a challenging backdrop to conduct successful exit processes
Pence per share
NAV as at 1 October 2022 753.2
Net realised gains and income from portfolio 33.2
Net unrealised gains at constant FX on portfolio(1) 8.8
Net unrealised FX losses on portfolio -13.8
Dividends paid -7.2
Management fee, administration and finance costs -5.7
Net loss for other assets -0.1
NAV as at 30 September 2021 768.4
(1) Includes the reversal of previously recognised unrealised gains that have
realised during the financial year and are therefore included in Net realised
gains and income from portfolio.
Drawdowns
Amount - £million
Seidler Equity Partners VII 7.2
PGO2 6.7
IK Partnership II 5.6
Altor V 5.5
One Peak Co-invest III LP (Co-investment) 5.3
PAI Mid-Market I 4.7
Leviathan Holdings, L.P. (Co-investment) 4.1
MSouth Equity Partners IV 4.0
Nordic Capital X 3.9
Capiton Quantum 3.9
Other - £53.5m 53.5
£104.4 million was drawn down during the period, primarily for investment
into existing and new underlying portfolio companies. £83.8 million of this
figure related to primary fund drawdowns, with the remainder related to
co-investment and secondary deployment, which is fully under the control of
the Manager and as planned. Co-investment and secondary activity are covered
in detail later in the review.
Primary fund drawdowns during the year were mainly used to fund new underlying
investments into portfolio companies, with notably large drawdowns relating to
the following new underlying portfolio companies:
• Cold Jet Technologies (Seidler Equity Partners VII) - dry ice
technologies utilising recycled CO2;
• Unither (IK Partnership II) - pharmaceutical CDMO serving the
ophthalmology and respiratory end-markets;
• The ACES (Excellere Partners Fund IV) - Arizona-based school
operator focused on special needs education;
• Medix Staffing Solutions (MSouth Equity Partners IV) - leading US
provider of healthcare staffing services;
• Ascot Lloyd (Nordic Capital X) - leading UK independent financial
advisor platform.
We estimate that APEO had around £92.9 million held on underlying fund credit
facilities at 31 March 2023 (31 March 2022: £91.9 million), and we expect
that this will be largely drawn over the next 6 months.
Distribution
Amount - £million
HgCapital 8 15.2
InvestIndustrial Growth 10.8
Nordic VII CV I 8.7
IK VIII 7.7
IK VII 5.3
Other 35.9
£83.6 million of distributions were received from funds during the year (31
March 2022: £120.6 million). As expected, this was a decrease on the record
distribution levels seen in recent years, given the lower levels of private
equity M&A activity during the period. Exit activity was driven by market
appetite for high quality private companies in resilient sectors, often which
have the potential to expand inorganically through add-on acquisitions. Both
trade and financial buyers remained active during the period, albeit at lower
levels than in 2021 and the first half of 2022. However, the demand for
Initial Public Offerings ("IPOs") declined materially in the period, to the
extent that APEO saw no new IPOs from its portfolio during the period.
The largest distributions during the period related to the following
underlying portfolio companies, with the relevant funds stated in brackets:
• Access (HgCapital 8) - a provider of business management software
to mid-market organisations;
• Benvic (Investindustrial Growth) - a developer and producer of
highly customised, innovative thermoplastic solutions;
• The Binding Site (Nordic VII) - a global leader in specialty
diagnostics;
• Linxis (IK VIII) - global manufacturer of industrial equipment for
the food, pharma and cosmetic industries;
• Exxelia (IK VII) - designer and manufacturer of electronic
components and rotary joint assemblies for aerospace and defence industries.
Outstanding Commitments
As at Outstanding Commitments Outstanding commitments in excess of undrawn loan facility and case resources
as a % of portfolio NAV (£million)
30 September 2019 47.4% 450.3
30 September 2020 30.9% 471.4
30 September 2021 32.5% 557.1
30 September 2022 42.8% 678.9
31 March 2023 37.6% 699.7
Shortly after the period end, APEO undertook a partial realisation of its
holding in Action, the European non-food discount retailer, for portfolio
management reasons. This was achieved through a number of transactions with
existing investors in the 3i 2020 Co-investment Programme. These transactions
generated €26.0 million of cash proceeds at a value equivalent to 100% of 31
December 2022 valuation. As a reminder, APEO has been an investor in Action
since 2011, initially through 3i Eurofund V and then as a co-investor
alongside 3i, Action's lead investor. Following this partial realisation,
Action remains the largest underlying portfolio company in APEO's portfolio.
APEO made new commitments totalling £140.8 million during the period (31
March 2022: £239.7 million), with five new primary commitments, two new
direct co-investments, two follow-on investments in existing co-investments
and one secondary investment.
Outstanding commitments at the year-end amounted to £699.7 million (31 March
2022: £627.1 million). The value of outstanding commitments in excess of
liquid resources as a percentage of portfolio value (referred to as the
"over-commitment ratio") was 37.6% at 31 March 2023 (31 March 2022: 38.9%).
This is broadly in line with the figure twelve months prior and is at the
lower end of our long-term target range of 30%-75%. We estimate that
£72.0million of the reported outstanding commitments are unlikely to be drawn
down (31 March 2022: £69.9 million), due to the nature of private equity
investing, with private equity funds not always being fully drawn
Balance Sheet and Liquidity
The balance sheet remains in a strong position with cash and cash equivalents
at 31 March 2023 of £19.9 million (31 March 2022: £26.6 million). APEO also
extended its revolving credit facility during the period, from £200.0 million
to £300.0 million and extended the maturity by a year to December 2025. This
additional capacity, provided by RBS International, State Street Bank
International and Société Générale, provides APEO with both additional
flexibility and new investment capacity for the months and years ahead. APEO
had £207.2 million remaining undrawn on its £300.0 million revolving credit
facility at 31 March 2023 (31 March 2022: £175.6 million undrawn).
Investment Activity
Primary Funds
£121.3 million was committed to five new primary funds during the first six
months of the year (31 March 2022: £168.6 million into eight new primary
funds). As a reminder, APEO's primary fund strategy is to partner with private
equity firms, principally in Europe, that have genuine sector expertise and
operational value creation capabilities and have a core mid-market buyout
orientation, i.e. focusing on businesses with an enterprise value between
€100.0m and €1.0bn. The firms that APEO has partnered with during the
period fulfil this criteria and are relationships that the Manager established
over many years, often decades.
Investment £m Description
Vitruvian Investment 26.4 Growth-focused fund principally targeting European businesses which operate
principally in the Technology, Healthcare, Financial Services and
Partnership V Sustainability sectors
Altor Fund VI 25.9 Mid-market buyout fund with a strong sustainability focus, which targets
businesses across the Nordic and DACH regions.
Hg Genesis 10 26.1 Mid-market buyout fund targeting investments in software and services
businesses primarily in Northern Europe.
Hg Mercury 4 26.7 Lower mid-market buyout fund targeting investments in software and services
businesses primarily in Northern Europe.
Seidler Equity Partners VIII 16.2 North American lower mid-market fund targeting investments in branded consumer
products, business services and specialty manufacturing sectors.
Case study - primary funds- Altor
Altor is a leading mid-market private equity firm in the Nordic region, with
top tier networks across their target markets and a high quality, creative
investment team.
Investment: Altor Fund VI
Commitment year: 2022
Fund size: €3.0bn target
APEO's commitment: €30m
Geographic focus: Northern Europe but with a focus on the Nordic Region
Target company size: Mid-market focus
Sectors: Business Services, Consumer, Industrials, FIG and Technology
Investment strategy: Buyout / Growth
Overview
• Established in 2003 by Harald Mix to focus on private equity
activities in the mid-market segment of the Nordic region.
• From the start, Altor raised considerable interest among
investors and its performance since then has meant latter funds being highly
sought after. As abrdn had a relationship with Mix from his days at IK
Partners, we were invited to invest in Altor's first fund in 2003.
• Altor has a strong Swedish heritage and specialism but today
operates across Northern Europe. The firm has gradually opened offices in Oslo
(2005), Copenhagen (2007), Helsinki (2007) and Zurich (2018) to build up their
presence on the ground.
• It has a flexible ownership approach and a strong focus on
partnerships with founders and management teams, which mean it can take
majority and minority positions in its portfolio companies. It also has a
strong focus on the green transition, backing a number of
sustainability-focused businesses.
• Altor is an active owner of its portfolio companies and helps
management teams to drive operational change and growth. Its focus is to
double earnings during its ownership and generate 3x cost or more.
APEO's Exposure
• APEO has invested with the manager since 2014, committing to the
previous 2 funds: Altor IV & Altor V.
• The abrdn Private Equity team has known Altor for two decades and
been an investor in Altor since its first fund.
Co-investments
During the six-month period, APEO invested and committed £14.9 million into
two new co-investments and two follow-on investments in existing
co-investments (31 March 2022: £65.8 million into nine new co-investments and
one follow-on investment).
The level of deployment into new co-investments has decreased in the period to
31 March 2023 compared to prior year, when the private equity market was
particularly active, creating many co-investment deal leads. With the
reduction in private equity M&A during the first six months of the year,
APEO has seen lower co-investment deal flow activity than in the prior year
and the Manager has been especially selective in terms of asset quality and
entry pricing, given the tougher economic backdrop and uncertain pricing
environment.
As a reminder, co-investments were introduced to APEO's investment objective
in 2019 and bring a number of advantages, most notably greater control over
portfolio construction and lower associated costs (and therefore higher return
potential). Over the longer term the Manager expects co-investments to equate
to around 25% of the portfolio.
At 31 March 2023 there were 25 separate co-investments in APEO's portfolio,
equating to 22% of NAV. Whilst the co-investment portfolio remains relatively
immature, with an average investment age of 1.6 years at 31 March 2023, we are
delighted with its performance so far, with no material underperformers but
several co-investments ahead of their initial investment case.
Investment £m Description
Undisclosed 5.3 Investment, alongside One Peak Partners, into a European-headquartered
software company that allows patients and healthcare professionals to connect
more easily, making healthcare experiences more efficient and human.
Undisclosed 4.0 Investment into a US-headquartered consumer business alongside one of APEO's
core private equity managers, the details of which remain undisclosed due to
confidentiality restrictions.
Follow-on investment in Funecap 3.0 Additional commitment provided to Funecap alongside Latour Capital as part of
a shareholder reorganisation following a period of strong growth at the
business. The additional capital will also be used to support future growth
initiatives.
Follow-on investment in European Camping Group 2.6 Additional investment made into European Camping Group in order to fund the
strategic acquisition of Vacanceselect, a French headquartered peer in the
outdoor accommodation market which, similar to European Camping Group, has
campsites across Europe including France, Italy, Spain and Croatia.
Secondary Investments
APEO invested and committed £4.6 million into a new secondary investment
during the period (31 March 2022: £5.1 million into one new secondary
investment).
Investment £m Description
Capiton Quantum 4.6 Through APEO's existing commitment to Capiton V, APEO rolled its position of
€4.5 million in two underlying private companies into the Capiton Quantum
continuation fund, with an additional top-up commitment of €0.7 million also
provided for additional M&A opportunities.
Case Study - Co-investment- European Camping Group
European Camping Group (ECG) is a leading player in Europe's premium outdoor
accommodation market.
Lead Manager: PAI Partners
Investment year: 2021
Size at entry: Mid-market (<€1bn EV)
APEO's investment: €11m (includes €3m follow-on)
Geographic focus: France/Western Europe
Sector: Travel & Leisure
Company Overview
• ECG ("European Camping Group") is the fourth largest tour
operator in France and its growth has consistently outperformed the broader
outdoor accommodation market since 2012.
• ECG boasts a pan-European footprint of over 23,000 mobile
homes located across more than 300 camp sites in France, Italy, Spain and
Croatia.
• ECG also operates a portfolio of leading brands including
Eurocamp, Homair, Roan, Al Fresco and Palmiers Ocean. This multi-brand
approach is unique and enables ECG to attract a broad international customer
base by tailoring each brand to suit its end market.
• ECG recently completed the transformational acquisition of
Vacanceselect, the number 3 player in France's outdoor accommodation market
with a footprint of c.30k pitches and c.22k Mobile Homes (MH) across more than
260 camp sites. The acquisition positions the newly combined entity as the
clear leader in the French market, with ~11% share, and as the third largest
platform in Europe.
The Opportunity
• One of the market leaders in Europe's highly resilient outdoor
accommodation sector, with future growth underpinned by a number of tailwinds
including ongoing site densification and premiumisation of campsites as well
as various consumer trends (i.e. increasing appetite for staycations, rise in
multigenerational travel and growing desire to holiday "close to nature").
• Strongly positioned within a highly fragmented market - the
management team identified >200 acquisition targets on entry.
• Attractive entry pricing, at a significant discount to the
market valuation implied by comparable transactions.
• Several value creation initiatives started in recent years are
expected to bear fruit during the investment period. The most notable
initiatives include the implementation of yield management processes (i.e.
implementation of group-wide tools and systems aimed at optimising pricing
and/or occupancy rates), ongoing expansion of the group's geographic footprint
and a rebalancing of the group's site portfolio to include a larger proportion
of more profitable, directly managed sites.
• Opportunity to invest alongside a high-quality private equity
manager in PAI, who possess an unparalleled track record and clear expertise
within Europe's travel sector having previously generating strong returns on
their investments in Roompot and B&B Hotels.
Portfolio Construction
The underlying portfolio consists of over 650 underlying portfolio companies,
largely within the European mid-market and spread across different countries,
sectors and vintages. At 31 March 2023, only 11 companies equated to more than
1% of portfolio NAV based on underlying portfolio company exposure, with the
largest single exposure equating to 5.6% (Action).
Geographic Exposure(1 2)
We believe that the portfolio is well diversified, which positions APEO well
as we move into a more recessionary macroeconomic environment. At 31 March
2023, 77% of underlying portfolio companies were headquartered in Europe (30
September 2022: 76%). APEO's underlying portfolio remains largely positioned
to North Western Europe, with only 7% of underlying portfolio company exposure
in Italy and Spain (30 September 2022: 6%). APEO is well diversified by region
across North Western Europe, with the UK and the Nordics being the highest
exposures at 15% each (30 September 2022: UK 17%, the Nordics 14%).
North America equates to 22% of the total (30 September 2022: 23%), with
exposure to the region obtained through European private equity managers that
have expanded their operations into North America and US-headquartered lower
mid-market private equity managers that APEO partners with for specific sector
exposure (e.g. Great Hill Partners in Technology, American Industrial Partners
in Industrials, Windrose in Healthcare and Seidler in Consumer).
1 Based on the latest available information from underlying managers. Figures
represent % of total value of underlying portfolio company exposure. This
excludes any underlying fund and co-investments held through the Company
portfolio.
2 In addition to the above, 4% of underlying portfolio companies are based in
European countries not separately disclosed above, while 1% are based in
countries outside of Europe, excluding North America.
Sector Exposure(1)
At 31 March 2023, Technology and Healthcare represented a combined 39% of the
underlying portfolio company exposure (30 September 2022: 40%). When combined
with Consumer Staples, these more stable, less cyclical sectors equate to over
half of APEO's underlying portfolio at 52% (30 September 2022: 52%). It is
worth noting that APEO generally invests in Technology businesses that are
profitable and B2B-focused and therefore has relatively low exposure to higher
growth, unprofitable technology businesses that have been particularly out of
favour over the last twelve months following interest rate rises.
The other half of the portfolio is exposed to more cyclical sectors, notably
Industrials, Consumer Discretionary and Financials. That said, there are
sub-sectors within these areas that provide growth opportunities, such as
Fintech, ecommerce and B2B Services, where businesses often have a valuable
product or an essential service offering with a strong digital component. Some
examples within our top 20 underlying portfolio companies by value include
European Camping Group, CFC Underwriting (cyber security insurance MGA),
Trioplast (sustainable manufacturer of polyethylene film) and Planet (provider
of payments solutions for hospitality and retail).
% Exposure as at
Sector 31 March 2023
Technology 20
Healthcare 19
Industrials 19
Consumer discretionary 14
Consumer staples 13
Financials 8
Materials 4
Energy 1
Utilities 1
Communication services 1
1 Based on the latest available information from underlying managers. Figures
represent % of total value of underlying portfolio company exposure. This
excludes any underlying fund and co-investments held through the Company
portfolio.
Maturity Analysis(1, 2)
The Manager does not try to time the market with respect to APEO, instead
aiming for consistent exposure across recent vintage years. Therefore, there
is a fairly even split of portfolio companies at the underlying level that are
approaching maturity (held for more than four years) and companies typically
still in the value creation phase (held for less than 4 years). With 47% being
in vintages of four years or more (30 September 2022: 47%), this should
underpin exit activity and distributions once private equity market activity
returns to long-term, "normal" levels.
Holding Period %
1 year 13
2 years 25
3 years 15
4 years 13
5 years 13
>5 years 21
1 Based on the latest available information from underlying managers. Figures
represent % of total value of underlying portfolio company exposure. This
excludes any underlying fund and co-investments held through the Company
portfolio.
2 The holding period is the length of time that an underlying portfolio
company has been held since its initial investment date by the Company.
Outlook
We are delighted by the resilient performance of APEO's underlying portfolio
during the first six months of the year and remain bullish on the long-term
prospects for both private equity as an asset class and APEO. However, we
still remain cautious as we look to the short-term. Higher inflation, interest
rate rises and the conflict in Ukraine have created a high degree of
uncertainty in both the global economy and financial markets, and we do not
expect these challenging conditions to abate during the remainder of 2023.
Specifically in relation to private equity, we are currently seeing dealflow
levels slow down as buyers and sellers attempt to reconcile differing price
expectations. Furthermore, debt financing is less available and more expensive
than in recent years, as banks retrench from the leverage buyout market and
private credit funds become the main source of debt funding for new
transactions. As less money is flowing back to investors, new private equity
fundraises are, on average, taking longer than seen in previous years and we
expect to see some managers fail to hit their fundraising targets.
Whilst distributions by underlying funds to APEO have held up during the first
six months of the year, this slowdown in the private equity market will
eventually impact upon APEO's cashflows. Going forward, exits and
distributions are expected to decline but less money is expected to be drawn
for new investments too. It will also have implications on the portfolio
valuation growth, as private equity investments typically sell at an uplift to
carrying value, which helps drive APEO's NAV growth in normal times. We expect
private equity dealflow to pick up again soon, given the record levels of "dry
powder" in private equity, but we expect that the remainder of the year will
continue to see a slower pace compared to recent years.
That said, it is worth reiterating that APEO has navigated multiple cycles
over a 22-year period and the strategy has remained broadly consistent since
its inception in 2001. We take comfort in the quality of the private equity
firms that APEO partners with, the broad diversification of the underlying
portfolio by sector, geography and maturity, and the Company's strong balance
sheet position, which has been further enhanced by the extension of its
revolving credit facility from £200.0m to £300.0m.
More generally, the governance model of private equity, through majority
control and active ownership, provides the opportunity for hands-on value
creation and for decisions to be taken more efficiently and effectively in
response to changing market circumstances. The private equity firms that APEO
partners with today are much more specialised within sectors and sub-sectors,
and have deeper value creation toolkits compared to, for example, before the
global financial crisis.
Furthermore, market volatility does provide a silver lining around attractive
new investment opportunities, and we believe that private equity particularly
thrives during these periods. We saw in the aftermath of the dotcom bubble and
the global financial crisis that private firms make many of their best
investments during periods of uncertainty, with more differentiated investment
opportunities becoming available, like long-held family-owned businesses,
corporate carve outs and public to private transactions, and entry pricing
tends to be more reasonable during these periods.
We believe that private equity is a long-term asset class, and we expect it to
continue to deliver outperformance on both absolute and relative bases. Whilst
we expect the remainder of 2023 to be more challenging in terms of financial
markets, the global economy and private equity dealflow, we take comfort in
the private equity governance model, the quality of APEO's current portfolio
and its set of core managers, and the opportunity to make attractive new
investments during this period of greater uncertainty.
Alan Gauld,
Lead Portfolio Manager
For abrdn Capital Partners LLP
27 June 2023
TEN LARGEST INVESTMENTS
at 31 March 2023
1 Action Since its establishment in 1993, Benelux-based Action has grown into the
leading non-food discount retailer in the region with more than 2,300 stores
and close to 80,000 employees
Fund Size: €2.5bn 3i 2020 Co-investment 1 SCSp(1) 31/03/23 30/09/22
Sector: Consumer staples
Location: Netherlands
Year of Investment: 2020
Private Equity Manager: 3i Group plc
Investment: Co-investments
Website: www.action.nl
Value (£'000) 73,484 59,695
Cost (£'000) 22,630 22,630
6.2% of NAV (30 September 2022: 5.1%) Commitment (€'000) 26,540 26,540
Amount Funded 100.0% 100.0%
Income (£'000)* - -
2 Advent International Invests in attractive niches within business & financial services,
healthcare, industrial, retail and technology sectors.
Fund Size: €13.0bn Advent International Global Private Equity VIII 31/03/23 30/09/22
Strategy: Mid to large buyouts Enterprise Value of Investments: $200m - $3bn
Geography: Global with a focus on Europe and North America
Website: www.adventinternational.com
Value (£'000) 52,688 52,171
Cost (£'000) 31,652 31,652
4.5% of NAV (30 September 2022; 4.5%) Commitment (€'000) 45,000 45,000
Amount Funded 100.0% 100.0%
Income (£'000)* - -
3 CVC Capital Partners Undertakes medium and large sized buyout transactions across a range of
industries and geographies.
Fund Size: €16.4bn CVC Capital Partners VII 31/03/23 30/09/22
Strategy: Mid to large buyouts Enterprise Value of Investments: €500m -
€5bn
Geography: Europe and North America
Website: www.cvc.com
Value (£'000) 45,567 44,399
Cost (£'000) 25,160 24,862
3.9% of NAV (30 September 2022: 3.8%) Commitment (€'000) 35,000 35,000
Amount Funded 91.5% 84.1%
Income (£'000)* 1,945 31
4 Altor Funds Focuses on investing in and developing medium-sized companies with a Nordic
origin that offer potential for value creation through revenue growth, margin
expansion, improved capital management and strategic re-positioning.
Fund Size: €2.1bn Altor Fund IV 31/03/23 30/09/22
Strategy: Mid-market buyouts Enterprise Value of Investments: €50m - €500m
Geography: Northern Europe
Website: www.altor.com
Value (£'000) 39,406 37,158
Cost (£'000) 28,416 27,886
3.3% of NAV (30 September 2022: 3.2%) Commitment (€'000) 55,000 55,000
Amount Funded 74.3% 73.2%
Income (£'000)* - 794
5 Nordic Capital Invests in medium to large-sized buyout deals in Northern Europe, through four
dedicated sector teams, with the ability to invest in healthcare on a global
basis.
Fund Size: €4.3bn Nordic Capital Fund IX 31/03/23 30/09/22
Strategy: Mid to large buyouts Enterprise Value of Investments:
€200m-€800m
Geography: Northern Europe (Global in Healthcare)
Website: www.nordiccapital.com
Value (£'000) 38,043 35,841
Cost (£'000) 23,585 22,355
3.2% of NAV (30 September 2022: 3.1%) Commitment (€'000) 30,000 30,000
Amount Funded 94.7% 89.0%
Income (£'000)* - -
6 Exponent Target businesses have strong market positions, evidence of historical
constraints and are capable of transformation. Companies often have a
significant international footprint
Fund Size: £1.0bn Exponent Private Equity Partners III, LP. 31/03/23 30/09/22
Strategy: Mid-market buyouts Enterprise Value of Investments: £75m-£350m
Geography: UK
Website: www.exponentpe.com
Value (£'000) 36,538 34,963
Cost (£'000) 23,299 22,479
3.1% of NAV (30 September 2022: 3.0%) Commitment (€'000) 28,000 28,000
Amount Funded 88.8% 87.5%
Income (£'000)* - 252
7 IK Partners Invests in growth strategies supporting business transformation. Unique
Northern Continental European footprint
Fund Size: $1.9bn IK Fund VIII 31/03/23 30/09/22
Strategy: Mid-market buyouts
Enterprise Value of Investments: $100m-$500m
Geography: Northern Europe
Website: www.ikinvest.com
Value (£'000) 35,237 38,225
Cost (£'000) 19,371 22,944
3.0% of NAV (30 September 2022: 3.3%) Commitment (£'000) 46,000 46,000
Amount Funded 94.7% 94.7%
Income (£'000)* 3,576 4
8 Undisclosed A diversified secondary transaction comprising large cap buyout funds in
Europe and the US
Fund Size: $125bn Structured Solutions IV Primary Holdings 31/03/23 30/09/22
Strategy: Various
Enterprise Value of Investments: $500m-$5bn
Geography: Europe and North America
Website: N/A
Value (£'000) 33,006 28,507
Cost (£'000) 28,935 28,093
2.8% of NAV (30 September 2022: 3.2%) Commitment (€'000) 62,500 62,500
Amount Funded 67.1% 62.9%
Income (£'000)* 886 -
9 Bridgepoint A leading mid -market focused private equity firm targeting buyout investments
in European companies with strong market positions and earnings growth
potential across six core sectors
Fund Size: €5.8bn Bridgepoint Europe VI 31/03/23 30/09/22
Strategy: Mid-market buyouts
Enterprise Value of Investments: €200m- €1bn
Geography: Europe
Website: www.bridgepoint.eu
Value (£'000) 30,332 28,650
Cost (£'000) 20,808 20,118
2.6% of NAV (30 September 2022: 2.5%) Commitment (€'000) 30,000 30,000
Amount Funded 83.2% 79.7%
Income (£'000)* 222 -
10 Cinven Targets companies that have the ability to deploy clearly identified sector
strategies to accelerate growth in Europe or globally.
Fund Size: €7.0bn Sixth Cinven Fund 31/03/23 30/09/22
Strategy: Mid to large buyouts
Enterprise Value of Investments: €250m -€6bn
Geography: Europe and North America
Website: www.cinven.com
Value (£'000) 30,002 28,151
Cost (£'000) 16,651 16,654
2.5% of NAV (30 September 2022: 2.4%) Commitment ($'000) 28,100 28,100
Amount Funded 92.3% 92.3%
Income (£'000)* - 622
Notes:
(1) APEO's position in Action is held through 3i 2020 Co-investment 1 SCSp, a
special purpose vehicle managed by 3i as co-investment lead.
* Performance information has been prepared by APEO and has not been approved
by the General Partners of the funds or any of their Associates. Income
figures are for the six months to 31 March 2023 and 31 March 2022
respectively.
INVESTMENT PORTFOLIO
at 31 March 2023
Vintage Investment Number of investments Outstanding commitments Cost Valuation Net multiple(2) % of NAV
£'000
£'000
£'000(1)
2020 3i 2020 Co-investment 1 SCSp(3) 1 - 22,630 73,484 3.4x 6.2
2016 Advent International Global Private Equity VIII 29 - 31,652 52,688 2.0x 4.5
2017 CVC Capital Partners VII 32 2,615 25,160 45,567 1.8x 3.9
2014 Altor Fund IV 16 12,420 28,416 39,406 1.9x 3.3
2018 Nordic Capital Fund IX 14 1,393 23,858 38,043 1.6x 3.2
2015 Exponent Private Equity Partners III, LP. 9 3,144 23,299 36,538 1.9x 3.1
2016 IK Fund VIII 11 2,152 19,371 35,237 1.9x 3.0
2021 Structured Solutions IV Primary Holdings* 53 16,646 28,935 33,006 1.2x 2.8
2019 Bridgepoint Europe VI 17 4,437 20,808 30,332 1.5x 2.6
2016 Sixth Cinven Fund 14 1,909 16,651 30,002 2.0x 2.5
2017 HgCapital 8 11 4,692 10,746 28,935 2.6x 2.4
2019 Advent International Global Private Equity IX 36 1,803 19,304 28,540 1.5x 2.4
2018 PAI Europe VII 18 5,382 21,024 28,158 1.4x 2.4
2014 CVC VI 22 2,405 14,099 28,062 2.2x 2.4
2013 TowerBrook Investors IV 10 11,123 16,062 27,894 2.3x 2.4
2019 Altor Fund V 19 14,259 23,301 27,612 1.3x 2.3
2019 Triton Fund V* 18 11,384 14,890 24,715 1.5x 2.1
2014 PAI Europe VI 12 1,797 13,911 22,671 2.0x 1.9
2020 Cinven 7 15 6,872 14,777 19,719 1.3x 1.7
2014 Permira V 10 740 9,832 18,567 3.4x 1.6
2019 American Industrial Partners VII 13 3,665 13,133 18,479 1.5x 1.6
2020 IK IX 12 5,346 16,215 18,415 1.1x 1.6
2020 Investindustrial VII 11 8,339 13,920 18,404 1.3x 1.6
2020 Nordic Capital X 16 7,385 14,292 18,301 1.3x 1.5
2015 Bridgepoint Europe V 9 2,554 13,159 18,214 2.1x 1.5
2021 Arbor Co-Investment LP3 1 - 8,374 17,632 2.1x 1.5
2020 Vitruvian IV 28 7,088 14,363 17,285 1.2x 1.5
2020 MPI-COI-NAMSA SLP3 1 1,921 5,562 16,966 2.6x 1.4
2019 MSouth Equity Partners IV 11 3,768 13,300 15,770 1.2x 1.3
2015 Equistone Partners Europe Fund V 12 2,192 16,476 15,169 1.6x 1.3
2013 Nordic Capital VIII 11 2,194 17,552 14,848 1.6x 1.3
2021 ECG Co-invest SLP*3 1 250 6,663 13,831 2.1x 1.2
2018 Investindustrial Growth 4 6,291 11,028 13,507 2.4x 1.1
2020 Capiton VI 10 7,983 9,335 13,415 1.4x 1.1
2022 Uvesco Co-invest*3 1 - 8,451 12,713 1.5x 1.1
2019 PAI Strategic Partnerships SCSp 2 205 6,579 11,764 1.8x 1.0
2020 Seidler Equity Partners VII L.P. 7 2,850 11,303 11,503 1.0x 1.0
2021 Excellere Partners Fund IV 3 17,733 10,589 11,396 1.1x 1.0
2021 MPI-COI-PROLLENIUM SLP3 1 1,450 7,133 11,273 1.6x 1.0
2020 PAI Mid-Market I 6 12,096 9,683 10,828 1.1x 0.9
2020 Hg Genesis 9 12 4,789 8,204 10,469 1.2x 0.9
2017 Onex Partners IV LP 8 1,032 10,259 10,383 1.4x 0.9
2019 Vitruvian I CF LP 5 8,168 7,828 10,056 1.3x 0.8
2021 IK Co-invest Questel 1 - 8,658 10,005 1.2x 0.8
2021 MI NGE S.L.P. 1 848 8,153 9,980 1.2x 0.8
2021 Hg Isaac Co-Invest LP3 1 41 7,571 9,923 1.3x 0.8
2021 Eurazeo Payment Luxembourg Fund SCSp3 1 1,104 7,798 9,801 1.3x 0.8
2021 Advent Technology II-A 11 16,942 8,630 9,786 1.1x 0.8
2021 Hg Riley Co-Invest LP3 1 - 6,836 9,636 1.4x 0.8
2020 Hg Saturn 2 7 4,976 7,056 9,486 1.3x 0.8
2019 Great Hill Partners VII 18 803 8,012 9,376 1.4x 0.8
2020 Vitruvian III 28 1,671 5,264 9,189 2.0x 0.8
2021 IK Partnership II 4 12,990 9,000 9,109 1.0x 0.8
2015 Astorg VI 5 4,038 205 8,948 1.7x 0.7
2021 CDL Coinvestment SPV3 1 - 5,294 7,837 1.5x 0.7
2021 MPI-COI-SUAN SLP3 1 45 6,395 6,987 1.1x 0.6
2020 Hg Vardos Co-invest L.P.3 1 - 4,244 6,951 1.7x 0.6
2021 Latour Co-invest Funecap*3 1 - 4,287 6,951 1.5x 0.6
2021 Bengal Co-Invest SCSp*3 1 2,488 6,198 6,914 1.1x 0.6
2020 Hg Mercury 3 10 6,119 4,645 6,396 1.3x 0.5
2021 Capiton VI Wundex Co-Investment*3 1 3,240 5,378 6,176 1.1x 0.5
2021 CFC Continuation Fund3 1 5,085 3,915 6,064 1.5x 0.5
2020 Triton Smaller Mid-Cap Fund II* 8 14,070 7,641 6,005 0.8x 0.5
2015 Nordic Capital VII 4 1,601 10,998 5,998 1.4x 0.5
2021 Permira Growth Opportunities II 9 19,716 9,037 5,781 0.6x 0.5
2019 Alphaone International S.à.r.l.*3 1 1,742 3,522 5,629 1.6x 0.5
2021 bd-capital Partners Chase3 1 - 4,279 5,361 1.3x 0.5
2021 WindRose Health Investors Fund VI 4 10,768 5,735 5,339 0.9x 0.5
2023 One Peak Co-invest III LP3 1 - 5,277 5,272 1.0x 0.4
2012 IK Fund VII 3 1,756 6,707 4,935 2.1x 0.4
2012 Equistone Partners Europe Fund IV 7 649 8,762 4,725 2.1x 0.4
2022 AV Invest B3*3 1 316 4,789 4,508 0.9x 0.4
2012 Advent International Global Private Equity VII 18 835 5,495 4,125 2.1x 0.3
2022 Leviathan Holdings, L.P.*3 1 - 4,119 4,044 1.0x 0.3
2023 Capiton Quantum GmbH & Co 2 741 3,857 3,869 1.0x 0.3
2015 Capiton V 9 370 7,038 3,856 0.9x 0.3
2021 Nordic Capital WH1 Beta, L.P.3 1 1,121 2,597 3,461 1.2x 0.3
2021 ASI Omega Holdco Limited*3 1 1,194 3,111 3,425 1.1x 0.3
2021 Nordic Capital Evolution Fund 5 23,076 3,234 3,369 1.0x 0.3
2022 ArchiMed - Med Platform 2 2 23,272 2,930 2,312 0.8x 0.2
2001 CVC III* 1 421 4,283 1,966 2.7x 0.2
2011 Montagu IV 4 675 4,771 1,922 1.8x 0.2
2013 Bridgepoint Europe IV 5 795 2,920 1,852 1.6x 0.2
2022 American Industrial Partners V 6 - 1,312 1,790 1.4x 0.2
2023 ECG 2 Co-Invest S.L.P.*3 1 911 1,753 1,733 1.0x 0.1
2022 Advent International Global Private Equity X 6 24,384 1,999 1,536 0.8x 0.1
2022 Investindustrial Growth III 1 25,461 881 794 0.9x 0.1
2021 ArchiMed III 4 11,881 1,266 786 0.6x 0.1
2008 CVC V* 1 438 4,329 786 2.4x 0.1
2022 Hg Saturn 3 2 28,022 300 630 2.1x 0.1
2019 Gilde Buy-Out Fund IV 1 - 2,262 519 1.2x 0.0
2006 3i Eurofund V 1 - 9,282 383 2.7x 0.0
2023 Latour Capital IV 0 25,649 715 312 0.4x 0.0
2022 Hg Genesis 10 2 26,115 246 210 0.9x 0.0
2007 Industri Kapital 2007 Fund 0 1,525 5,545 78 1.4x 0.0
2009 Capiton IV GmbH & Co. Beteiligungs KG* 5 149 241 30 1.1x 0.0
2022 Altor Fund VI 0 26,213 150 5 0.0x 0.0
2021 Great Hill Equity Partners VIII 4 15,342 844 - 0.0x 0.0
2022 One Peak Growth III 5 13,043 133 - 0.0x 0.0
2023 Hg Mercury 4 0 26,361 - - 0.0x 0.0
2023 Latour Co-invest Funecap II3 0 2,951 - - 0.0x 0.0
2022 Nordic Capital Fund XI 0 26,361 - - 0.0x 0.0
2022 PAI Europe VIII 0 26,361 - - 0.0x 0.0
2023 Seidler Equity Partners VIII, L.P. 0 16,175 - - 0.0x 0.0
2023 Vitruvian V 0 26,361 - - 0.0x 0.0
Total investments4 774 699,683 912,026 1,256,658 106.4
Non-portfolio assets less liabilities (75,248) (-6.4)
Total shareholders' funds 1,181,410 100.0
1 All funds are valued by the manager of the relevant fund or
co-investment as at 31 March 2023, with the exception of those funds suffixed
with an * which were valued as at 31 December 2022 or initial funding amount
paid.
2 The net multiple has been calculated by the Manager in sterling on
the basis of the total realised and unrealised return for the interest held in
each fund and co- investments. These figures have not been reviewed or
approved by the relevant fund or its manager.
3 Co-investment position. A number of these positions represent
follow-on investments in the same underlying company.
4 The 774 underlying investments represent holdings in 685 separate
companies, 44 fund investments and 9 co-investments.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 March 2023
For the six months ended 31 March 2023 For the six months ended 31 March 2022
Notes Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Total capital gains on investments - 37,688 37,688 - 71,998
Currency (losses)/gains - (396) (396) - 131
Income 4 6,357 - 6,357 4,750 - 4,750
Investment management fee 5 (278) (5,291) (5,569) (516) (4,646) (5,162)
Administrative expenses (568) - (568) (520) - (520)
Profit before finance costs and taxation 5,511 32,001 37,512 3,714 67,483 71,197
Finance costs (136) (2,411) (2,547) (153) (875) (1,028)
Profit before taxation 4,464 29,963 34,427 3,017 66,762 69,779
Earnings per share - basic and diluted 7 2.90p 19.49p 22.39p 1.96p 43.42p 45.38p
The Total columns of this statement represents the profit and loss account of
the Company.
There are no items of other comprehensive income, therefore this statement is
the single statement of comprehensive income of the Company.
All revenue and capital items in the above statement are derived from
continuing operations.
No operations were acquired or discontinued in the year.
CONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
As at 31 March 2023
As at As at
31 March 2023 30 September 2022
Notes £'000 £'000 £'000 £'000
Non-current assets
Investments 8 1,256,658 1,192,380
1,256,658 1,192,380
Current assets
Receivables 109 1,056
Cash and cash equivalents 19,899 30,341
20,008 31,397
Creditors: amounts falling due within one year
Payables (4,237) (3,713)
Revolving credit facility 10 (91,019) (62,012)
Net current liabilities (75,248) (34,328)
Total assets less current liabilities 1,181,410 1,158,052
Capital and reserves
Called-up share capital 307 307
Share premium account 86,485 86,485
Special reserve 51,503 51,503
Capital redemption reserve 94 94
Capital reserves 1,043,021 1,019,663
Revenue reserve - -
Total shareholders' funds 1,181,410 1,158,052
Net asset value per equity share 9 768.4p 753.2p
The Financial Statements of abrdn Private Equity Opportunities Trust plc,
registered number SC216638 were approved and authorised for issue by the Board
of Directors on 27 June 2022 and were signed on its behalf by Alan Devine,
Chair.
CONDENSED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 March 2023
Notes Called-up
Share Capital
share premium Special redemption Capital Revenue
capital account reserve reserve reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 October 2022 307 86,485 51,503 94 1,019,663 - 1,158,052
Profit after taxation - - - - 29,963 4,464 34,427
Dividends paid 6 - - - - (6,605) (4,464) (11,069)
Balance at 31 March 2023 307 86,485 51,503 94 1,043,021 - 1,181,410
For the six months ended 31 March 2022
Called-up
Share Capital
share premium Special redemption Capital Revenue
capital account reserve reserve reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 October 2021 307 86,485 51,503 94 897,578 - 1,035,967
Profit after taxation - - - - 66,762 3,017 69,779
Dividends paid 6 - - - - (7,437) (3,017) (10,454)
Balance at 31 March 2022 307 86,485 51,503 94 956,903 - 1,095,292
CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
For the six months For the six months
ended 31 March 2023 ended 31 March 2022
Notes £'000 £'000 £'000 £'000
Cashflows from operating activities
Profit before taxation 34,965 70,169
Adjusted for:
Finance costs 2,547 1,028
Gains on disposal of investments 8 (39,321) (63,774)
Revaluation of investments 1,430 (8,438)
Currency losses / (gains) 396 (131)
Increase in debtors (51) (308)
Increase in creditors 193 840
Tax deducted from non-UK income (538) (390)
Net cash outflow from operating activities (379) (1,801)
Investing activities
Purchase of investments 8 (100,594) (145,453)
Purchase of secondary investments 8 (3,857) -
Distributions of capital proceeds received by investments 8 78,064 116,178
Net distributions receivable from investments 249 (1,825)
Receipt of proceeds from disposal of unquoted investments - 15,714
Net cash outflow from investing activities (26,138) (15,386)
Financing activities
Revolving credit facility - amounts drawn 30,813 41,421
Revolving credit facility - amounts repaid - (17,020)
Interest paid and arrangement fees (3,273) (797)
Ordinary dividends paid 6 (11,069) (10,454)
Net cash inflow from financing activities 16,471 13,947
Net decrease in cash and cash equivalents (10,046) (3,240)
Cash and cash equivalents at the beginning of the period 30,341 29,714
Currency (losses)/gains on cash and cash equivalents (396) 131
Cash and cash equivalents at the end of the period 19,899 26,605
Cash and cash equivalents consist of:
Cash 19,899 26,605
Cash and cash equivalents 19,899 26,605
Included in profit before taxation is dividends received from investments of
£3,139,000 (2022: £2,753,000), interest received from investments of
£2,937,000 (2022: £1,997,000) and interest received from cash balances and
money market funds of £286,000 (2022: £Nil).
NOTES TO THE FINANCIAL STATEMENTS
1 Financial Information
The financial information for the year ended 30 September 2022 within the
report is considered non-statutory as defined in sections 434-436 of the
Companies Act 2006. The financial information for the six months ended 31
March 2023 and 31 March 2022 has not been audited. The financial information
for the year ended 30 September 2022 has been extracted from the published
accounts that have been delivered to the Registrar of Companies and on which
the report of the auditor was unqualified under section 498 of the Companies
Act 2006.
2. Basis of preparation and going concern
The condensed financial statements for the six months ended 31 March 2023 have
been prepared in accordance with Financial Reporting Standard 104 (Interim
Financial Reporting) and with the Statement of Recommended Practice for
"Financial Statements of Investment Trust Companies and Venture Capital
Trusts".
The condensed financial statements for the six months ended 31 March 2023 have
been prepared using the same accounting policies as the preceding annual
financial statements. This is available at www.abrdnpeot.co.uk or on request
from the Company Secretary.
The Board has made an assessment of the Company's ability to continue as a
going concern and are satisfied that the Company has the resources to continue
in business for a period of at least 12 months from the date of these
condensed financial statements. In preparing these condensed financial
statements, the Board has considered:
· the remaining undrawn balance of the £300.0 million committed,
syndicated revolving credit facility with a maturity date in December 2025;
· the level of cash balances. The Manager regularly monitors the
Company's cash position to ensure sufficient cash is held to meet liabilities
as they fall due;
· the future cash flow projections (including the level of expected
realisation proceeds, the expected future profile of investment commitments
and the terms of the revolving credit facility); and
· the Company's cash flows during the period.
Based on a review of the above, the Directors are satisfied that the Company
has, and will maintain, sufficient resources to continue to meet its
liabilities as they fall due for at least 12 months from the date of approval
of the condensed financial statements. Accordingly, the condensed financial
statements have been prepared on a going concern basis.
3. Exchange rates
Rates of exchange to sterling were:
As at 31 March 2023 As at 30 September 2022
Euro 1.1381 1.1395
US Dollar 1.2365 1.1163
Canadian Dollar 1.6734 1.5339
Six months ended Six months ended
31 March 2023 31 March 2022
4. Income £'000 £'000
Income from investments 3,139 2,753
Interest from investments 2,937 1,997
Interest from cash balances 281 -
Total income 6,357 4,750
Six months ended 31 March 2023 Six months ended 31 March 2022
Revenue Capital Total Revenue Capital Total
5 Investment management fees £'000 £'000 £'000 £'000 £'000 £'000
Investment management fee 278 5,291 5,569 516 4,646 5,162
The Manager of the Company is abrdn Capital Partners LLP. In order to comply
with the Alternative Investment Fund Managers Directive, the Company appointed
abrdn Capital Partners LLP as its Alternative Investment Fund Manager from 1
July 2014.
The investment management fee payable to the Manager is 0.95% per annum of the
NAV of the Company. The investment management fee is allocated 95% to the
realised capital reserve - gains/(losses) on disposal and 5% to the revenue
account. Prior to 01 October 2022, the investment management fee was allocated
90% to the realised capital reserve - gains/(losses) on disposal and 10% to
the revenue account. The management agreement between the Company and the
Manager is terminable by either party on twelve months written notice.
Investment management fees due to the Manager as at 31 March 2023 amounted to
£3,445,000 (30 September 2022:
£2,888,000).
6 Dividend on ordinary shares
For the financial period ending 31 March 2023, the first quarterly dividend of
4.0p per ordinary share was paid on
21 April 2023 (2022: dividend of 3.6p was paid on 22 April 2022). A proposed
dividend of 4.0p per share is due to be paid on 28 July 2023 (2022: dividend
of 3.6p was paid on 29 July 2022).
In respect of the year ended 30 September 2022, the third quarterly dividend
of 3.6p per ordinary share was paid on 28 October 2022 (2021: dividend of 3.4p
per ordinary share paid on 29 October 2021). The final dividend of 3.6p per
ordinary share was then paid on 27 January 2023 (2021: dividend of 3.4p per
ordinary share paid on 25 January 2022).
Six months ended Six months ended
31 March 2023 31 March 2022
7 Earnings per share - basic and diluted p £'000 p £'000
The net return per ordinary share is based on the following figures:
Revenue net return 2.90 4,464 1.96 3,017
Capital net return 19.49 29,963 43.42 66,762
Total net return 22.39 34,427 45.38 69,779
Weighted average number of ordinary shares in issue: 153,746,294 153,746,294
There are no diluting elements to the earnings per share calculation in the
six months ended 31 March 2023 (2022: none).
8 Investments Six months Year ended
ended 31 March 2023 30 September 2022 Unquoted Investments
Unquoted Investments
£'000 £'000
Fair value through profit or loss:
Opening market value 1,192,380 1,007,843
Opening investment holding gains (346,062) (304,629)
Opening book cost 846,318 703,214
Movements in the period/year:
Additions at cost 100,594 245,270
Secondary purchases 3,857 8,347
Distribution of capital proceeds (78,064) (201,806)
Secondary sales - (15,714)
872,705 739,311
Gains on disposal of underlying investments 39,321 107,007
Closing book cost 912,026 846,318
Closing investment holding gains 344,632 346,062
Closing market value 1,256,658 1,192,380
The total capital gain on investments of £37,688,000 (2022: £147,940,000)
per the Condensed Statement of Comprehensive Income for the six months ended
31 March 2023 also includes transaction costs of £203,000 (2022: £214,000).
9 Net asset value per equity share As at 31 March 2023 As at 31 March 2022
Basic and diluted:
Ordinary shareholders' funds £1,181,409,611 £1,158,052,447
Number of ordinary shares in issue 153,746,294 153,746,294
Net asset value per ordinary share 768.4p 753.2p
The net asset value per ordinary share and the ordinary shareholders' funds
are calculated in accordance with the Company's articles of association.
There are no diluting elements to the net asset value per equity share
calculation in the six months ended 31 March 2023 (2022: none).
10 Revolving credit facility As at 31 March 2023 As at 30 September 2022
£'000 £'000
Revolving credit facility 91,019 62,012
On 10 October 2022, the Company announced an expansion of the credit facility
which increased from £200.0 million to £300.0 million with The Royal Bank of
Scotland International Limited joining as a lender and Natwest Markets Plc
replacing Citibank Europe plc as Agent in the syndicate of banks providing the
revolving credit facility, alongside current providers Société Générale
and State Street Bank International GmbH.
The interest rate on the expanded facility is unchanged and is calculated as
the defined reference rate of the currency drawn plus 1.625% rising to 2.0%
depending on the level of utlisation, whilst the commitment fee rate payable
on non- utilisation is now between 0.7% and 0.8% per annum based on the level
of facility utilisation. The maturity date of the facility was extended by one
year to December 2025.
Inclusive of the revolving credit facility balance is £1,806,000 of
unamortised revolving credit facility fees which partially offsets the total
amount of the facility balance drawn as at 31 March 2023. With respect of the
comparative period to 30 September 2022, the unamortised revolving credit
facility fees of £748,000 were included as part of Receivables.
This amount is not considered material to require restatement of the prior
year financial statements, and does not impact the Net asset value of the
Company at either date.
11 Commitments and contingent liabilities As at 31 March 2023 As at 30 September 2022
£'000 £'000
Outstanding calls on investments 699,683 678,880
This represents commitments made to fund and co-investment interests remaining
undrawn.
12. Fair Value hierarchy
FRS 104 requires an entity to classify fair value measurements using a fair
value hierarchy that reflects the significance of the inputs used in making
the measurements. The fair value hierarchy has the following classifications:
• Level 1: The unadjusted quoted price in an active market for
identical assets or liabilities that the entity can access at the measurement
date.
• Level 2: Inputs other than quoted prices included within Level
1 that are observable (i.e., developed using market data) for the asset or
liability, either directly or indirectly.
• Level 3: Inputs are unobservable (i.e., for which market data
is unavailable) for the asset or liability.
The Company's financial assets and liabilities, measured at fair value in the
Condensed Statement of Financial Position, are grouped into the following fair
value hierarchy at 31 March 2023:
Financial assets at fair value through profit or loss Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Unquoted investments - - 1,256,658 1,256,658
Net fair value - - 1,256,658 1,256,658
As at 30 September 2022::
Financial assets at fair value through profit or loss Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Unquoted investments - - 1,192,380 1,192,380
Net fair value - - 1,192,380 1,192,380
Unquoted Investments
Unquoted investments are stated at the directors' estimate of fair value and
follow the recommendations of the EVCA and the BVCA (European Private Equity
& Venture Capital Association and British Private Equity & Venture
Capital Association). The estimate of fair value is normally the latest
valuation placed on an investment by its manager as at the Condensed Statement
of Financial Position date. The valuation policies used by the manager in
undertaking that valuation will generally be in line with the joint
publication from the EVCA and the BVCA, "International Private Equity and
Venture Capital Valuation guidelines". Fair value can be calculated by the
manager of the investment in a number of ways. In general, the managers with
whom the Company invests adopt a valuation approach which applies an
appropriate comparable listed company multiple to a private company's earnings
or by reference to recent transactions. Where formal valuations are not
completed as at the Condensed Statement of Financial Position date, the last
available valuation from the manager is adjusted for any subsequent cash flows
occurring between the valuation date and the Condensed Statement of Financial
Position date. The Company's Manager may further adjust such valuations to
reflect any changes in circumstances from the last manager's formal valuation
date to arrive at the estimate of fair value.
13. Parent undertaking and related party transactions
The ultimate parent undertaking of the Company is Phoenix Group Holdings. The
results of the Company are incorporated into the group financial statements of
Phoenix Group Holdings, which will be available to download from the website
www.thephoenixgroup.com.
Standard Life Assurance Limited ("SLAL", which is 100% owned by Phoenix Group
Holdings), and the Company have entered into a relationship agreement which
provides that, for so long as SLAL and its Associates exercise, or control the
exercise, of 30% or more of the voting rights of the Company, SLAL and its
Associates, will not seek to enter into any transaction or arrangement with
the Company which is not conducted at arm's length and on normal commercial
terms, take any action that would have the effect of preventing the Company
from carrying on an independent business as its main activity or from
complying with its obligations under the Listing Rules or purpose or procure
the proposal of any shareholder resolution which is intended or appears to be
intended to circumvent the proper application of the Listing Rules. During the
period ended 31 March 2023, SLAL received dividends from the Company totalling
£5,931,000 (31 March 2022: £5,855,000).
During the period ended 31 March 2023, the Manager charged management fees
totalling £5,569,000 (31 March 2022: £5,162,000) to the Company in the
normal course of business. The balance of management fees outstanding at 31
March 2023 was £3,445,000 (30 September 2022: £2,888,000).
abrdn Investment Management Limited, which shares the same ultimate parent as
the Manager, received fees for the provision of promotional activities of
£29,000 (31 March 2022: £60,000) during the period. The balance of
promotional fees outstanding at 31 March 2023 was £Nil (30 September 2022:
£325,000).
The Company Secretarial services for the Company are provided by abrdn
Holdings plc (former Aberdeen Asset Management PLC), which shares the same
ultimate parent as the Manager. During the period ended 31 March 2023, the
Company incurred secretarial fees of £36,000 (31 March 2022: £35,000). The
balance of secretarial fees outstanding at 31 March 2023 was £139,000 (30
September 2022: £104,000).
No other related party transactions were undertaken during the six months
ended 31 March 2023.
ALTERNATIVE PERFORMANCE MEASURES
Alternative Performance Measures
Alternative performance measures ("APMs") are numerical measures of the
Company's current, historical or future performance, financial position or
cash flows, other than financial measures defined or specified in the
applicable financial framework. The Company's applicable financial framework
includes FRS 102 and the AIC SORP.
In selecting these Alternative Performance Measures, the Directors considered
the key objectives and expectations of typical investors in an investment
trust such as APEO.
Discount
The amount by which the market price per share is lower than the net asset
value per share of an investment trust. The discount is normally expressed as
a percentage of the net asset value per share.
Six months ended 31 March 2023 Year ended
30 September
2022
Share price (p) a 412.0 410.0
Net Asset Value per share (p) b 768.4 753.2
Discount (%) c=(b-a)/b 46.4 453.6
Dividend yield
The total dividend per ordinary share in respect of the financial year divided
by the share price, expressed as a percentage, calculated at the year end date
of the Company:
As at 30 September 2022 As at 30 September 2021
Dividend per share (p) a 14.4 13.6
Share price (p) b 410.0 498.0
Dividend yield (%) c=(a/b) 3.5 2.7
NAV total return
NAV total return shows how the NAV has performed over a period of time in
percentage terms, taking into account both capital returns and dividends paid
to shareholders. This involves reinvesting the net dividend into the NAV at
the end of the quarter in which the shares go ex-dividend. Returns are
calculated to each quarter end in the year and then the total return for the
year is derived from the product of these individual returns.
NAV (p)
NAV per share (p) as at 30 September 2022 a 753.2
NAV per share (p) as at 31 March 2023 b 768.4
Price Movement c=(b/a)-1 2.0%
Dividend Reinvestment 1 d 1.0%
NAV Total return e=c+d 3.0%
1 NAV total return assumes investing the dividend in the NAV of the Company on the date on which that dividend goes ex-dividend.
Ongoing charges ratio/ expense ratio
The ongoing charges ratio is calculated as management fees and all other
recurring operating expenses that are payable by the Company, excluding the
costs of purchasing and selling investments, performance fees, finance costs,
taxation, non-recurring costs, and the costs of any share buy-back
transactions, expressed as a percentage of the average NAV during the period.
The ratio also includes an allocation of the look-through expenses of the
Company's underlying investments, excluding performance-related fees.
The ongoing charges ratio has been calculated in accordance with the
applicable guidance issued by the Association of Investment Companies ("AIC").
Six months ended Year ended
31 March 2023 30 September 2022
£'000 £'000
Investment management fee a 5,569 10,600
Administrative expenses b 568 1,054
Ongoing charges * c=a+b 12,274 11,654
Average net assets d 1,169,927 1,099,764
Expense ratio e=c/d 1.05% (1.06%)
Look-through expenses f 1.67% 1.67%
Ongoing charges ratio g=e+f 2.72% 2.73%
* The interim ongoing charges figure above is calculated using actual costs
and charges to 31 March 2023 annualised for the full financial year.
The look-through expenses represent an allocation of the management fees and
other expenses charged by the underlying investments held in the portfolio of
the Company. Performance related fees, such as carried interest, are excluded
from this figure. This is calculated over a five year historic average, and is
recalculated on an annual basis based on the previous calendar year.
Over-commitment ratio
Outstanding commitments less cash and cash equivalents and the value of
undrawn loan facilities divided by portfolio NAV.
Six months ended Year ended
30 September 2022
31 March 2023
£000s
£000s
Undrawn Commitments a 699,684 678,880
Less undrawn loan facility b (207,189) (137,988)
Less resources available for investment c (19,899) (30,341)
Net outstanding commitments d=a-b-c 472,595 510,551
Portfolio NAV e 1,256,659 1,192,380
Over-commitment ratio f=d/e 37.6% 42.8%
Share price total return
The theoretical return derived from reinvesting each dividend in additional shares in the Company on the day that the share price goes ex-dividend.
Date Share price (p)
Share price (p) as at 30 September 2022 a 410.0
Share price (p) as at 30 September 2023 b 412.0
Price Movement c=(b/a)-1 0.5%
Dividend Reinvestment 1 d 1.8%
NAV Total return e=c+d 2.3%
1 Share price total return assumes reinvesting the dividend in the share
price of the Company on the date on which that dividend goes ex-dividend.
For abrdn Private Equity Opportunities Trust plc
abrdn Holdings Limited, Company Secretary
For further information please contact:
Alan Gauld,
Lead Portfolio Manager, abrdn Capital Partners LLP
Tel: 0131 528 4424
William Hemmings
Client Director, Investment Trusts, abrdn
Tel: 020 7463 6223
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