REG - Patria Pvt Eq Trust. - Annual Financial Report
30/01/2025 07:00
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RNS Number : 1912V Patria Private Equity Trust PLC 30 January 2025
Patria Private Equity Trust plc
Legal Entity Identifier (LEI): 2138004MK7VPTZ99EV13
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2024
Patria Private Equity Trust plc ('PPET') is an investment trust with a premium
listing on the London Stock Exchange.
PPET partners with 15 carefully selected private equity managers, investing
both in their funds and directly alongside them into private companies. This
provides PPET's investors with a diversified underlying portfolio of more than
600 private companies, mainly headquartered in Europe. This approach has
resulted in consistent, long-term net asset value ('NAV') growth, with an
annualized NAV total return of 14.8% over the last decade.
Patria Capital Partners LLP, a wholly owned subsidiary of Patria Investments
Limited, is PPET's alternative investment fund manager ('AIFM', the
'Investment Manager' or the 'Manager').
KEY PERFORMANCE INDICATORS
As at As at
30 September 30 September
2024 2024
Share Price Total Return* 24.9% 11.7%
Net Asset Value Total Return* 2.4% 5.4%
Gearing* 11.8% 8.6%
Over-commitment Ratio* 28.5% 35.2%
* Considered to be an alternative performance measure.
OTHER FINANCIAL HIGHLIGHTS
As at As at As at
30 September 30 September 30 September
2024 2023 2022
NAV per share* 780.1p 777.7p 753.2p
Portfolio Return (in Local Currency) 8.8% 9.4% 10.5%
Total Dividend Per Share 16.8p 16.0p 14.4p
Share Price Discount to NAV* 31.4% 43.2% 45.6%
Net Assets £1,192.1m £1,195.6m £1,158.1m
Ongoing Charges Ratio (OCR) * 1.06% 1.06% 1.06%
* Considered to be an alternative performance measure
HIGHLIGHTS TO 30 SEPTEMBER 2024
· NAV Performance - NAV Total Return for the 12 months to 30 September 2024 was
2.4%.
· Portfolio Return in Local Currency - The underlying portfolio returned 8.8%
during the year in local currency.
· Cash flows - Realisations of £292.3 million and drawdowns of £163.7 million
during the year.
· New Investments - PPET made 17 investments totalling £195.8 million during
the year.
· Secondary Sale - PPET agreed to sell a portfolio of 14 fund positions at a 5%
discount to 31 March 2024 valuations (transaction reference date) during the
year.
· Direct Investments - The direct investment portfolio consists of 32 underlying
companies and equates to 25.7% of NAV.
· Outstanding Commitments - Outstanding commitments at the year-end amounted to
£652.7 million and the overcommitment ratio was 28.5% at year-end.
· Balance Sheet and Liquidity - At the year-end, PPET had £317.8 million of
short-term resources (cash, undrawn credit facility and deferred consideration
from secondary sales).
· Summary of the Year - The acquisition of PPET's Manager by Patria has brought
renewed energy and certainty to PPET's investment management team but
importantly will not result in any change in PPET's investment strategy.
TEN YEAR FINANCIAL RECORD
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Per share data
NAV (diluted) (p) 281.6 346.4 389.6 430.2 461.9 501.0 673.8 753.2 777.7 780.1
Share price (p) 214.0 267.3 341.5 345.5 352.0 320.0 498.0 410.0 442.0 535.0
Discount to diluted NAV per Share (%)(*) (24.0) (22.8) (12.3) (19.7) (23.8) (36.1) (26.1) (45.6) (43.2) (31.4)
Dividend per Share (p) 5.25 5.4 12.0 12.4 12.8 13.2 13.6 14.4 16.0
16.8
Ongoing charges ratio*(1,3) 0.98 0.99 1.14(2) 1.10 1.09 1.10 1.10 1.06 1.06 1.06
Returns data
NAV Total Return(*)(%) 11.9 24.8 14.9 13.3 11.7
10.5 37.9 14.1 5.4 2.4
Share Price Total Return(*)(%) 27.9 31.9 5.8 (4.6)
(4.0) 5.7 60.6 (15.1) 11.7 24.9
Portfolio data
Net Assets (£m) 438.7 532.6 599.0 661.4 710.1 770.3 1,036.0 1,158.1 1,195.6 1,192.1
Top 10 Managers as a % of net assets(3) 65.2 65.0 58.9 63.6 67.8
67.9 62.9 65.1 64.3 62.7
Top 10 investments as a % net assets 48.6 45.9 47.7 48.4 53.9 48.3
40.3 35.6 29.9 25.1
Source: The Manager & Refinitiv
1 For further information on the calculation of the ongoing charges ratio of
the Company, please refer to the alternative performance measures.
2The incentive fee arrangement ended on 30 September 2016. Following the end
of the incentive fee period, a single management fee of 0.95% per annum of the
NAV of the Company replaced the previous management and incentive fees.
3 The ongoing charges ratio was labelled as expense ratio in the Annual Report
to 30 September 2023.
* Considered to be an alternative performance measure.
CHAIR'S STATEMENT
"A year of positive transaction for PPET".
Introduction
I am pleased to report that PPET continues to perform despite the broader
challenges. The Share Price and NAV Total Return for the year to 30 September
2024 delivered 24.9% and 2.4% respectively.
The last 12 months have been a year of transition since our Manager had a
change in ownership and, as a result, the Board rebranded the Company to
Patria Private Equity Trust plc. At the same time, we appointed a new
corporate broker, launched a share buyback programme and conducted a
successful secondary sale of a non-core portfolio of fund investments.
From a wider investment trust perspective, there have been positive
developments around cost disclosures, which has the potential to benefit
private equity investment trusts like PPET.
Private equity investment activity is showing more positive momentum after a
tough 2023 and that should benefit the Company as we look ahead to 2025.
New Name
As I explained in the Interim Report, the Board spent a great deal of time
during the first half of the year undertaking due diligence on the Manager's
change of ownership, from abrdn plc ('abrdn') to Patria Investments
('Patria'). The Board announced our consent to the Manager change of control
at the AGM in March 2024 and the sale of the Manager completed at the end of
April 2024. The Company changed its name from abrdn Private Equity
Opportunities Trust plc to Patria Private Equity Trust plc on 29 April 2024.
The Board and I are pleased with how the Manager has settled into Patria
during the second half of the year and we are encouraged by the engagement
from Patria's senior leadership. Patria has so far delivered on their promises
and I would particularly highlight that they have invested behind the
Manager's team, with 15 new hires since the deal with abrdn was announced in
October 2023. They also committed additional money to help promote PPET
through marketing initiatives, following its name change. The Manager's senior
team has been stable for a number of years, with no departures following the
Patria move, and PPET's investment strategy remains unchanged.
There has been no change to PPET's service providers as a result of the change
of the Manager. However, unrelated to the Manager's change of ownership, the
Board initiated a change of broker during the year and appointed Investec Bank
plc as sole corporate broker with effect from 5 July 2024.
Investment strategy
The Board and the Manager are aligned on our vision for PPET's investment
strategy and the change of ownership hasn't materially impacted upon this.
PPET remains focused on the mid-market buyout segment of private equity
(private companies between €100 million and €1 billion enterprise value at
entry) and principally in Europe.
Whilst the broad focus on the private equity mid-market remains unchanged, we
want to further increase our exposure to the lower end of the mid-market:
companies between €100 million and €500 million enterprise value at entry.
Our belief is that the lower mid-market is the most attractive part of the
private equity market from a risk-adjusted viewpoint, given companies in this
segment are typically established, profitable and cash generative but with
clear avenues and strong potential for further growth. We believe this part of
the market has the potential to outperform other segments of private equity,
particularly in an environment where interest rates will be higher for longer.
PPET will continue to make fund investments, both on a primary and secondary
basis, but direct investments into private companies will continue to increase
as a proportion of the portfolio. Directs bring the key advantage of reducing
the underlying costs of PPET (compared to funds), given most of PPET's direct
portfolio doesn't attract fees or carried interest at an underlying level.
Therefore, we believe building a diversified portfolio of direct investments
will bring the potential for higher returns on a net basis and, so far, PPET's
portfolio of 32 direct investments is performing in line with that
expectation.
I would note that PPET has not deployed as much in fund secondaries as we
would have liked in recent years and that fund secondaries equate to 9.0% of
PPET's portfolio value at 30 September 2024. To help PPET deploy more in this
area, the Board agreed to PPET making a commitment to Patria Secondary
Opportunities Fund V ('SOF V'), a vehicle run by an affiliate of the Manager.
As part of this fund commitment, I would note that the investment will be
excluded from NAV when considering the calculation of the Manager's fee and
that PPET obtained attractive underlying terms as a cornerstone investor.
Lastly, given Patria is headquartered in Brazil and has been making private
markets investments in Latin America for over three decades, we are often
asked whether this means PPET will start investing in that geographic region.
I can confirm there are no plans for that and the Company's geographic focus
will remain largely on Europe.
Performance
I am pleased with the share price total return performance of 24.9% this year
(30 September 2023: 11.7%) and, whilst the NAV Total Return of 2.4% (30
September 2023: 5.4%) is lower than PPET's longer-term average, much of this
is due to foreign exchange ('FX') headwinds since the portfolio return in
local currency was 8.8% (30 September 2023: 9.4%).
The underlying health of PPET's portfolio is sound, as the Manager has
outlined in the Investment Manager's Review. However, I would call out the top
100 companies, which equate to around 63.9% of portfolio value, growing
revenue by 12.4% and EBITDA by 18.1% on average in the year to 30 September
2024. I would also highlight that increased market activity in the private
equity sector appears to be feeding through to an increased level of exits and
cash distributions to PPET. Exits in PPET's portfolio during the 12 months
resulted in an average uplift of 26%, when compared to the unrealised
valuation two quarters prior to exit.
PPET's balance sheet remains strong with £28.4 million of cash and £159.4
million remaining undrawn on PPET's revolving credit facility ('RCF') at 30
September 2024. This will be supplemented by approximately £157.2 million
of deferred proceeds from PPET's secondary sale of a portfolio of 14 fund
investments, which completed on 30 September 2024.
Furthermore, subsequent to the year-end, the Board announced an extension of
PPET's RCF which takes effect on 3 February 2025. The RCF has been extended
by three years and the amount available increased from £300.0 million to
£400.0 million with Banco Santander, SA and State Street Bank & Trust
Company joining the syndicate of banks as new lenders alongside current
providers The Royal Bank of Scotland International Limited (London Branch),
Société Générale, London Branch and State Street Bank International
GMBH. NatWest Markets plc continues to act as facility agent and will now
also act as security agent to the syndicate of banks.
In summary, I am pleased with performance during the year, within a
challenging market context. The Manager has provided more detailed information
on performance and the portfolio in the Investment Manager's Review.
Share price discount to NAV
PPET's share price discount to NAV at 30 September 2024 was 31.4% (30
September 2023: 43.2%) and compares to 35.1% of the weighted average of PPET's
close peer group. Whilst the Board is pleased with the narrowing of the
discount during the year, we continue to believe PPET's discount is too wide
and remain focused on initiatives to help narrow it even further.
The Board announced a share buyback programme in January 2024. During the year
to 30 September 2024, PPET had bought back 940,128 of its Ordinary Shares into
treasury, equating to an aggregate investment of £4.9 million. The programme,
which is being funded by a portion of the proceeds from the partial sale of
PPET's direct investment in Action, was instigated by the Board to take
advantage of PPET's share price discount and provide a compelling investment
for PPET shareholders. The buyback programme has also had the added impact of
contributing to the short-term demand for PPET shares and consequently helping
to drive share price performance during the period, adding 1.6 pence per share
to our NAV. Since 30 September 2024, the Company has bought back a further
1,240,000 shares.
Going forward, the Board will continue to monitor the programme closely and
the evolution of PPET's share price. We are certainly not content with the
current rating, despite it currently being narrower than similar private
equity investment trusts, and will continue to assess ways to generate
buy-side demand for PPET's shares and create value for existing shareholders.
Cost disclosure developments
The Board welcomes the FCA forbearance and an updated Key Information Document
has been published by the Manager to reflect a more accurate assessment of
costs to shareholders associated with an investment in PPET. As reported in
the Half Yearly Report, the Board believes that PPET was penalised by the
previous cost disclosure regulations. Including costs embedded in our
underlying investee funds in the overall PPET costs is misleading to
investors. We are pleased that the FCA forbearance was granted and await the
final rules from the UK Government. The Board was also pleased that, following
engagement with Fidelity, PPET can now be traded on Fidelity's platforms.
Dividend policy
PPET has grown its annual dividend for ten consecutive years and since 2016
has paid shareholders an enhanced dividend on a quarterly basis, which is
effectively an ongoing return of capital to shareholders at NAV. The Board
intends to continue this policy going forward, with the aim of maintaining the
value of the dividend in real terms.
For the year to 30 September 2024, PPET has paid four interim dividends of 4.2
pence per share. The fourth interim dividend was paid on 24 January 2025 to
shareholders on the register on 13 December 2024 resulting in a total dividend
for the year of 16.8 pence per share. This represents an increase of 5.0% on
the 16.0 pence per share paid for the year to 30 September 2023.
New Investments and Proposed Amendments to PPET's Investment Objective and
Policy
PPET continues to be active in deploying into new investment opportunities
through the cycle, having made six new fund investments, two fund secondaries
and nine direct investments during the year. Our Manager is focused on making
investments in the midmarket buyout space and partnering with private equity
managers that are truly market-leading and differentiated, usually via
specific sector expertise and proven ability to add value in their portfolio
companies.
In particular, I am encouraged by the growth in the direct investment
portfolio, which now stands at 32 companies, equates to around 26% of PPET's
portfolio value, and is performing strongly. As a reminder, direct investments
were brought into PPET's investment objective and policy in 2019. We aim to
continue PPET's growth in direct investments and with this in mind are
therefore seeking shareholder approval at the AGM to amend the Company's
investment objective and policy to, amongst other things:
· change the expected portfolio allocation to co-investments from a maximum of
25% of the Company's assets to an expected range for direct investments
(meaning co-investments and single asset secondaries) of 20-35% of the total
value of investments (and linked with this, specify that the portfolio
allocation to fund investments is expected to be around 65-80% of the total
value of investments);
· clarify that no single fund investment or direct investment may exceed 15% of
the Company's total value of investment at the time of investment;
· reduce the Company's over-commitment ratio (being the ratio by which the
Company can make commitments in excess of its uninvested capital) from a range
of 30-75% over the long-term to 30-65% over the long-term; and
· make it clear that the principal focus of the Company's investment strategy is
the European mid-market.
The full text of the proposed investment objective and policy for the Company
is set out below. A version showing the changes versus the current investment
objective and policy is shown in the Annual Report.
Secondary sale
In September 2024, PPET agreed the sale of a portfolio of 14 underlying fund
investments which resulted in deferred proceeds of approximately £157.2m and
achieved a pricing of 95% on 31 March 2024 valuations, being the transaction
reference date. The Manager's Review outlines the transaction in more detail;
however, I would highlight that this was a portfolio of funds that were either
older in nature or positioned outside of PPET's core mid-market focus and will
crystallise a strong return for the Company. The proceeds provide additional
firepower for PPET to deploy into core areas such as midmarket- focused funds
and direct investments, at a potentially attractive point in the investment
cycle, as well as reduce drawings on the Company's revolving credit facility
and provide capital for other corporate initiatives such as share buybacks.
I believe this transaction further underlines the quality and attractiveness
of PPET's broader portfolio, achieving a price equivalent to a 5% discount to
NAV for essentially a non-core portfolio. The Board is particularly pleased to
have achieved this outcome given PPET's share price discount to NAV and this
further highlights the disconnect between the current discounts seen in listed
private equity trusts compared to the private equity secondary market.
Board engagement
It has been a very busy year for the Board. abrdn announced its intention to
sell our Manager to Patria in October 2023 and so the financial year began
with extensive due diligence. The Board is collaborative and, I believe,
strikes the right balance between supporting and challenging our management
team.
We are constantly evaluating whether the Board remains fit for purpose and
engaged the services of Lintstock to support us in our Board effectiveness
review during the financial year. The review concluded that the Board is
active and effective, and areas for improvement that were identified are in
the process of being addressed.
From a succession planning perspective, the Board was delighted to announce
the appointment of Duncan Budge to the Board with effect from 1 February 2025.
Duncan has extensive experience of investment trusts and private assets, and
will bring a new perspective to the Board. Duncan will be seeking election to
the Board at the AGM. I have served on the Board since 2014, as Chair since
2022 and, at the request of the Board, will seek shareholder approval to serve
a further one year on the Board to hand over my Board Chair responsibilities
seamlessly. I will step down from the Board at the AGM in March 2026.
Invitation to AGM
The Board enjoys interaction with shareholders and were delighted to see a
good turnout at our AGM in March 2024. This year's AGM will be held on 25
March 2025 at 12:30pm at 12 Hay Hill, Mayfair, London, W1J 8NR and, like last
year, will include a presentation by the Investment Manager followed by lunch.
The Board encourages shareholders to attend and those who are not able to
attend to submit proxy votes on the resolutions proposed in advance.
Outlook
The past couple of years have been tough for the investment trust sector,
including private equity trusts like PPET. At the same time, there has been a
lot of attention on the semi-liquid space in private equity, which aims to
open the asset class to more investors.
I continue to believe that investment trusts are the best way for smaller
investors to access private equity, due to features like daily liquidity, the
evergreen nature of the portfolios and long-term track records, and I feel
optimistic about PPET going forward. The Board continues to monitor PPET's
share price and will continue to opportunistically buy back the Company's
shares. We are committed to our dividend policy and continue to return capital
to investors via four interim dividends each year. There are other ongoing
market developments which potentially offer tailwinds to PPET's underlying
portfolio and the evolution of its share price.
Firstly, private equity investment activity is picking up, with a number of
high-profile deals announced in 2024, and I expect this trend to continue into
2025. Increased activity will drive portfolio company exits and cash
distributions and should in theory act as a tailwind to NAV growth, since
exits are typically realised at an uplift to prior valuation.
The latter point has the potential to provide more confidence to investors, in
relation to private equity valuations. I remain hopeful that will help drive
further buy-side demand for private equity trusts like PPET. Furthermore, any
additional cuts in interest rates by central banks have the potential to
catalyse both PE market activity and investor interest in PE investment trust
shares.
On cost disclosures, I welcome the forbearance by the FCA and we look forward
to understanding what the new regulatory regime will look like. However, I am
optimistic that a long-term solution will be found that fairly represents the
investment trust sector, proving investors of all types with a
straightforward, accurate and comparable representation of costs. Private
equity trusts like PPET stand to be one of the main beneficiaries of this
change.
Lastly, you can expect our Manager to be focused on the same successful
investment strategy, namely mid-market funds and direct investments, with
continued growth in the latter. Shareholders can also be assured that the
Board will continue to monitor developments closely and be alert to
opportunities to create further value for PPET shareholders.
Alan Devine
Chair of the Board
29 January 2025
INVESTMENT MANAGER'S REVIEW
Summary of the Year
The acquisition by Patria has brought renewed energy and certainty to PPET's
investment management team, but importantly has not resulted in a change in
PPET's investment strategy.
Performance
PPET's portfolio returned 8.8% in constant currency over the course of the
year (2023: 9.4%) and the Manager is pleased with this performance in a
challenging market. However, the strengthening of Pound Sterling relative to
the US Dollar and the Euro means that currency FX continues to act as a
headwind to PPET's NAV performance, resulting in a NAV TR of 2.4% (2023: 5.4%)
in the 12 months to 30 September 2024.
Putting the year's performance into context, the portfolio return has been at
a similar level over the last three years, with FX being a tailwind to NAV TR
in 2022 but a headwind in both 2023 and 2024. The performance in 2021 is an
outlier, as it is by some distance the record year of performance across
PPET's 23-year history.
Realised gains during the year were derived from full or partial sales of
underlying portfolio companies, which were at an average valuation uplift of
25.6% compared to the unrealised value two quarters prior (2023: 18.5%). The
headline realised return from the Investment Manager's Review continued
portfolio exits equated to 2.1 times cost (2023: 2.5 times cost), which we
consider a strong performance in what remained a challenging backdrop for
private equity managers to conduct successful exit processes.
Aside from realisations, the key driver of the performance in 2024 has been
the earnings growth of portfolio companies. The vast majority of PPET's
underlying portfolio of private companies are growing, profitable and,
importantly, cash generative. Many of these businesses are niche market
leaders providing mission critical services operating in less cyclical sectors
such as Technology, Healthcare, Consumer Staples and certain areas of Business
Services.
Pence per share
NAV as at 1 October 2023 777.7
Net realised gains and income from portfolio +56.9
Net unrealised gains at constant FX on portfolio +14.9
Net unrealised FX losses on portfolio (43.6)
Dividends paid (16.4)
Management fee, administrative and finance costs (14.1)
Accretion arising from share buy-back scheme +1.6
Net income from other assets +3.1
NAV as at 30 September 2024 780.1
Top companies % of portfolio Median valuation multiple Median leverage multiple Average LTM* revenue growth Average LTM* EBITDA growth
10 17.6% 17.4x 3.5x 13.5% 23.3%
20 36.1% 14.2x 3.8x 12.5% 20.0%
50 46.1% 13.5x 3.9x 11.3% 18.2%
100 63.9% 13.5x 3.9x 12.4% 18.1%
* LTM = Last 12 months
Nav total return and portfolio return in local currency 2020 2021 2022 2023 2024
NAV TR 11.7% 37.9% 14.1% 5.4% 2.4%
Portfolio return - constant currency 12.2% 47.4% 10.5% 9.4% 8.8%
2020 2021 2022 2023 2024
Average exit uplift* 22% 41% 20% 18% 26%
* Compared to the valuation two quarters prior to exit
Drawdowns
Amount
Nordic Capital Evolution Fund £10.8 million
PAI VIII £9.4 million
IK IX Luxco 15 S.a.r.l. (co-investment) £7.8 million
Latour Co-Invest EDG (co-investment) £7.7 million
Hg Saturn 3 £6.4 million
IK Partnership II £6.3 million
MED BIO FPCI (secondary purchase) £6.1 million
Nordic XI £6.0 million
Altor V £5.7 million
Altor Fund VI £4.9 million
Other £92.6 million
During the financial-year, £163.7 million was drawn down (2023: £193.2
million), primarily for investment into existing and new underlying portfolio
companies. Of this, £118.5 million related to primary fund drawdowns (2023:
£154.2 million), with the remainder related to direct investments and fund
secondaries, which are fully under the control of the Manager and in line with
plan. Direct investment and fund secondaries are covered in detail later in
the review.
Fund drawdowns have fallen materially compared to the prior year due to the
lower level of private equity merger and acquisition ('M&A') activity.
Drawdowns during the period were mainly used to fund new investments, with
notably large drawdowns relating to the following underlying portfolio
companies:
· Visma (Hg Saturn 3) - provider of cloud-based, mission-critical
business and accounting software;
· Equipe (Nordic Capital Evolution Fund I) - provider of outpatient
healthcare services in the Netherlands;
· Alphia (PAI VII) - leading manufacturer of pet food and treats
for brands and retailers in North America;
· A-Safe (IK Partnership Fund II) - manufacturer and distributor of
industrial polymer safety barrier systems; and
· BRP Systems (Nordic Capital Evolution Fund I) - Provider of
software as a Service ('SaaS') enterprise resource planning ('ERP') platform
for the fitness industry.
Private equity funds usually have credit facilities to finance new investments
initially before drawing the capital from investors. We estimate that PPET had
around £111.2 million held on these credit facilities at 30 September 2024
(2023: £79.5 million). This is a good proxy for upcoming drawdowns as we
expect that these facilities will be drawn over the next 12 months.
Realisations
Total realisations (distributions and secondary sales) were £292.3 million
during the year (2023: £202.9 million).
Distributions
Amount
IK VIII £16.6 million
CVC VII £14.0 million
Advent International Global Equity VIII £7.8 million
Cinven VI £7.6 million
Permira V £6.5 million
Altor V £6.2 million
Exponent III £6.1 million
Investindustrial Growth £6.0 million
Nordic VII CV£5.5 million £5.5 million
MSouth Equity Partners IV £5.0 million
Other £67.4 million
Secondary sales (various investments) £143.7 million
During the financial-year, PPET received £148.6 million of distributions from
funds (2023: £149.9 million). The largest distributions during the period
related to the full exits of the following underlying portfolio companies,
with the relevant funds stated in brackets:
· Eres (IK Fund VIII) - French provider of financial technology services to the
employee profit-sharing and retirement scheme markets;
· Multiversity (CVC Fund VII) - provider of online higher education services
based in Italy;
· Barentz (Sixth Cinven Fund) - provider of ingredients for the nutrition,
pharmaceuticals and personal care end markets;
· Consilium (Nordic Capital IX) - producer of safety and safety-related
technologies for the marine, oil and gas, transport and construction markets;
and
· Ontic (CVC Fund VII) - provider OEM-licensed parts and repair services for
mature aerospace platforms.
Due to its diversified and high-quality nature, PPET's portfolio consistently
generates realisations through the cycle, with annual realisations equating to
at least 15% of opening portfolio value. The trend over the last five years is
outlined in the Annual Report.
Secondary Sales
In September 2024, PPET completed the sale of 14 fund investments,
representing 13% of the Company's portfolio at 31 August 2024. These fund
investments were sold for a price equivalent to 95% of valuation at 31 March
2024, totalling £180.0m. The transaction results from a competitive sales
process run by an established secondary intermediary with a number of
high-quality secondary players participating.
The disposal realises a combined overall return of 1.9x multiple on invested
capital and 16% internal rate of return ('IRR') for the 14 fund investments.
Deferred consideration from the secondary sale of £157.2m will be received in
three contractual payments with the first payment received in December 2024
(£58.3 million), the second in January 2025 (£5.1 million), and the final
payment due in September 2025.
Outstanding Commitments
Outstanding commitments at the year-end amounted to £652.7 million, in line
with prior year (30 September 2023: £652.0 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
28.5% at 30 September 2024 (30 September 2023: 35.2%). This is broadly in line
with the figure 12 months prior and is at the low end of our long-term target
range of 30%-75%. We estimate that £83.5 million of the reported outstanding
commitments are unlikely to be drawn down (30 September 2023: £94.3 million),
due to the nature of private equity investing, with private equity funds not
always being fully drawn.
Million
Outstanding commitments at 1 October 2023 652.0
Fund investment drawdowns (121.4)
Direct investment and secondary funding (42.3)
New commitments +195.8
Foreign exchange impact (31.7)
Secondary sales (10.6)
Other +10.9
Outstanding commitments at 30 September 2024 652.7
PPET's over-commitment ratio has been broadly consistent over the last five
years.
Balance Sheet and Liquidity
The balance sheet remains in a strong position with cash and cash equivalents
at 30 September 2024 of £28.4 million (30 September 2023: £9.4 million),
current receivables from secondary sales of £130.0 million (30 September
2023: £30.0 million), and £159.4 million remaining undrawn of its £300.0
million revolving credit facility (30 September 2023: £197.7 million),
totalling £317.8 million of short-term resources (30 September 2023: £237.2
million).
Investment Activity
PPET committed to 17 investments totalling £195.8 million during the year
(2023: £174.8 million), with £112.9 million in primary funds, £27.8 million
in fund secondaries and £55.2 million in direct investments.
Primary Funds
During the financial-year, £112.9 million was committed to six new primary
funds (2023: £147.5 million into seven new primary funds). As a reminder,
PPET's primary fund strategy is to partner with private equity firms,
principally in Europe, that have genuine sector expertise and operational
value creation capabilities with a core mid-market buyout orientation, ie
focusing on businesses with an enterprise value between €100 million and
€1 billion at entry.
Investment £m Description
IK Fund X 26.1 Focused primarily on mid-market businesses in Northern Continental Europe
across business services, consumer/food, healthcare and industrials.
Bowmark Fund VII 25.0 Focused on lower mid-market businesses in the UK across software and services
sectors.
Triton Fund 6 16.7 Mid-market buyout fund focused on investing in companies in the industrial
technology, business services and healthcare sectors in North-Western Europe.
Investindustrial Fund VIII 16.6 Mid-market buyout fund focused on niches within the industrials, consumer and
healthcare services sectors, primarily in Southern Europe.
Arbor Fund VI 15.6 US mid-market buy-out fund focused on investments in the food and beverage
sector.
Altor Climate Transition Fund I 12.8 Focused on investments across Northern Europe that will help to decarbonise
industries with a traditionally heavy carbon footprint.
Fund Secondaries
PPET committed £27.8 million into two new fund secondaries during the year
(2023: £4.6 million into one new fund secondary investment).
Investment £m Description
Patria Secondary Opportunities Fund V 18.9 A fund that targets secondary transactions in the private equity lower-mid and
mid-markets across Europe and North America.
Clean Biologics 8.8 Two contract testing development and manufacturing ('CDTMO') businesses,
alongside PPET's core manager Archimed.
Direct Investments
During the year, PPET committed £55.2 million into direct investments (2023:
£22.6 million). PPET committed £45.5 million to six new direct investments
(2023: £17.0 million) and £9.7 million was invested into three follow-on
investments in existing direct investments (2023: £5.6 million).
At 30 September 2024, there were 32 (2023: 26) direct investments in PPET's
portfolio, equating to 25.7% of NAV (2023: 19.4%). The direct investment
portfolio is slowly maturing, with an average investment age of 2.9 years at
30 September 2024 (2023: 2.2 years), and we are delighted with its performance
so far. We believe that there are a number of candidates for exit over the
next 12-24 months, which will return material cash back to PPET.
New Investments £m Description
European Digital Group 8.9 Business services provider focused on digital transformation. Investment
alongside Latour Capital and Montefiore Investment.
Systra 8.9 Global consulting and transportation engineering company. Investment alongside
Latour Capital
Nutripure 8.3 Direct-to-consumer French sports nutrition and health and wellness food
supplements brand. Investment alongside PAI Partners.
Goodlife 7.7 Manufacturer of frozen snacks in Europe, with a diversified business mix
across retail, out-of-home and industry. Investment alongside IK Partners.
Procemsa 7.3 Italian-headquartered vitamins and food supplements contact development and
manufacturing organisation ('CDMO'). Investment alongside Investindustrial.
Channelle Pharma 4.3 Manufacturer of generic animal and human health products headquartered in
Ireland. Investment alongside Exponent.
Follow-on investments £m Description
Visma 4.7 Provider of cloud-based, mission-critical business software. Investment
alongside Hg.
Undisclosed company 4.2 European-headquartered technology business in the healthcare sector, the
details of which are undisclosed due to confidentiality restrictions.
Undisclosed company 0.8 US-headquartered consumer business, the details of which remain undisclosed
due to confidentiality restrictions.
Investment activity since 2020
2020 2021 2022 2023 2024
Primary investments £99.5m £175.7m £257.2m £147.5m £112.9m
Secondary investments £12.5m £54.5m £17.1m £4.6m £27.8m
Direct investments £28.0m £76.9m £66.1m £22.6m £55.2m
Portfolio Construction
The underlying portfolio consists of over 600 private companies, largely
within the European mid-market. At 30 September 2024, 16 (2023 :12) companies
equated to more than 1% of portfolio NAV based on underlying portfolio company
exposure, with the largest single exposure being PPET's investment in Action,
equating to 2.4% (2023: 2.1%).
Geographic Exposure(1)
The portfolio is well diversified, which means that there isn't a reliance on
one private equity manager, company, geographic region, sector or vintage to
drive performance.
At 30 September 2024, 76% of underlying private companies were headquartered
in Europe (2023: 75%). PPET's underlying portfolio remains largely oriented to
North-Western Europe, with only 9% (2023: 10%) of underlying portfolio company
exposure in Southern and Eastern Europe. PPET is well diversified by region
across North-Western Europe, with the Nordics being the largest exposure at
16% (2023: 14%).
North America equates to 23% (2023: 24%) of the total, 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 PPET partners with for specific sector exposure
(eg Great Hill Partners in technology, American Industrial Partners in
industrials, Windrose in healthcare, and Seidler and Arbor in consumer).
1 Based on the latest available information from underlying managers. Figures
represent percentage of total value of underlying portfolio company exposure.
Geographic exposure is defined as the geographic region where underlying
portfolio companies are headquartered.
% Exposure as at
Geography 30 September 2024
Nordic 16
United Kingdom 14
France 13
Germany 12
Benelux 8
Spain 4
Italy 3
Other Europe 6
North America 23
Other ex-Europe 1
Sector Exposure(1)
At 30 September 2024, technology and healthcare represented a combined 44% of
the underlying portfolio company exposure (30 September 2023: 41%). When
combined with consumer staples, these more stable, less cyclical sectors
equate to over half of PPET's underlying portfolio at 56% (30 September 2023:
51%). It is worth noting that PPET generally invests in technology businesses
that are profitable and business-to-business-focused, and therefore has
relatively low exposure to higher growth, unprofitable technology businesses
where the consumer is the customer.
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, business services and industrial sub-sectors related to the 'green
transition'. These 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
(outdoor accommodation), CFC Underwriting (cybersecurity insurance MGA),
Trioplast (sustainable manufacturer of polyethylene film) and Planet (provider
of payments solutions for hospitality and retail).
% Exposure as at
Sector 30 September 2024
Information technology 23
Healthcare 21
Industrials 18
Consumer discretionary 12
Consumer staples 11
Financials 8
Materials 4
Utilities 1
Energy 1
Communication services 1
1 Based on the latest available information from underlying managers. Figures
represent percentage of total value of underlying portfolio company exposure.
Maturity Analysis(1,2)
The Manager does not try to time the market with respect to PPET, instead
aiming for consistent exposure across recent vintage years. Therefore, there
is an 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 four years). With 52%
being in vintages of four years or more (30 September 2023: 49%), this should
underpin exit activity and distributions in the coming months and years.
Holding period 30 September 2024
1 year 10%
2 years 22%
3 years 26%
4 years 19%
5 years 10%
>5 years 23%
1 Based on the latest available information from underlying managers. Figures
represent % of total value of underlying portfolio company exposure.
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
The acquisition by Patria has brought renewed energy and certainty to the
Manager's team, but importantly has not resulted in a change in PPET's
investment strategy. Therefore, the Manager's focus going forward remains on
the European mid-market. We will continue to partner with a small group of
leading private equity managers that we believe are differentiated, specialist
and can bring significant value to the businesses they invest in.
In line with our current strategic plan, we will continue to look to increase
the proportion of direct investments in the PPET portfolio, alongside our core
managers, which will reduce the underlying costs borne by PPET and therefore
provide the potential for greater performance. We expect direct investments to
equate to around 30% of the portfolio by value over the short-to-medium term,
consisting of a steady-state portfolio of 35-40 private companies.
The private equity secondary market continues to grow and mature, and remains
highly relevant to PPET's approach, both from a buy-side and sell-side
perspective. PPET was a net seller in the secondary market in 2024, as we took
advantage of attractive secondary market pricing to sell a portfolio of funds.
Following this proactive sale, we feel that the remaining PPET portfolio is
well-positioned in terms of its mid-market orientation and maturity, and there
is less need for further secondary sales in the immediate future. Therefore,
PPET is more likely to be a net buyer in the secondary market in the coming
years.
More generally, private equity market sentiment has improved in 2024 compared
to 2023, and we have seen some notable large exits in PPET's portfolio and
several more portfolio companies rumoured to be at advanced stages of sales
processes. Furthermore, we have seen European PE-backed initial public
offerings ('IPOs') return in the form of Douglas, Renk and Galderma, in
addition to the listing of CVC, a leading private equity firm, in Amsterdam.
We expect this gradual uptick in private equity activity to continue into
2025.
The PPET portfolio continues to perform resiliently and remains
well-positioned for a pick-up in activity levels. Any uptick in private equity
activity should result in an increase in distributions to PPET and be a
tailwind to NAV growth, given private equity backed companies tend to trade at
an uplift to their last bottom-up valuation. Furthermore, following the
secondary sales in 2024 and the upsizing of PPET's debt facility to £400.0
million, we feel that PPET is in a strong balance sheet position and has ample
firepower to take advantage of the exciting investment opportunities that lie
ahead. As such, we are excited about the potential for PPET as we look forward
to 2025.
Alan Gauld,
Lead Investment Manager and Senior Investment Director
for Patria Capital Partners LLP
29 January 2025
TEN LARGEST INVESTMENTS
at 30 September 2024
1 Nordic Capital Invests in medium to large-sized buyout deals in Northern Europe, through five
dedicated sector teams, with the ability to invest in healthcare on a global
basis
3.0% of NAV
(30 September 2023: 3.2%)
Fund Size: €4.3bn Nordic Capital Fund IX 30/09/24 30/09/23
Strategy: Mid to large buyouts
Enterprise Value of investments: €200m-€800m
Geography: Northern Europe (Global in Healthcare)
Website: www.nordiccapital.com
Value (£'000) 35,275 37,762
Cost (£'000) 23,786 23,403
Commitment (€'000) 30,000 30,000
Amount Funded 100.0% 100.0%
Income (£'000)* - -
2 Altor 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.
2.9% of NAV
(30 September 2023: 2.9%)
Fund Size: €2.1bn Altor Fund IV 30/09/24 30/09/23
Strategy: Mid-market buyouts
Enterprise Value of investments: €50m-€500m
Geography: Northern Europe
Website: www.altor.com
Value (£'000) 34,368 34,954
Cost (£'000) 30,347 29,206
Commitment (€'000) 55,000 55,000
Amount Funded 81.2% 76.0%
Income (£'000)* 308 -
3 Structured Solutions IV A diversified secondary transaction comprising large capbbuyout funds in
Europe and the US.
2.8% of NAV
(30 September 2023: 3.1%)
Fund Size: $125m Structured Solutions IV 30/09/24 30/09/23
Strategy: Various
Enterprise Value of investments: $500m-$5bn Primary Holdings
Geography: Europe and North America
Value (£'000) 32,786 36,687
Cost (£'000) 29,749 31,066
Commitment ($'000) 62,500 62,500
Amount Funded 72.6% 72.0%
Income (£'000) - 886
4 CVC Capital Partners Undertakes medium and large sized buyout transactions across a range of
industries and geographies.
2.7% of NAV
(30 September 2023: 3.8%)
Fund Size: €16.4bn CVC Capital Partners VII 30/09/24 30/09/23
Strategy: Mid to large buyouts
Enterprise Value of investments: $500m-$5bn
Geography: Europe and North America
Website: www.cvc.com
Value (£'000) 32,623 44,945
Cost (£'000) 22,417 24,898
Commitment (€'000) 35,000 35,000
Amount Funded 100.0% 97.2%
Income (£'000)* 34 1,945
5 PAI Partners Targets upper mid-market businesses in Western Europe, with a particular focus
on continental Europe. Typically invests in market leaders across healthcare,
business services, food & consumer goods and industrials sector
2.5% of NAV
(30 September 2023: 2.9%)
Fund Size: €5.1bn PAI Europe VII 30/09/24 30/09/23
Strategy: Upper Mid-market buyouts
Enterprise Value of investments: €300m - €1.2bn
Geography: Western Europe
Website: www.paipartners.com
Value (£'000) 29,466 29,681
Cost (£'000) 22,724 22,789
Commitment (€'000) 30,000 30,000
Amount Funded 87.7% 86.5%
Income (£'000)* - -
6 Action Since its establishment in 1993, Benelux-based Action has grown into the
leading non-food discount retailer in the region with more than 2,750 stores
and over 74,500 employees.
2.4% of NAV
(30 September 2023: 2.2%)
Fund Size: €2.5bn 3i 2020 Co-investment 1 30/09/24 30/09/23
Sector: Consumer staples SCSp
Location: Netherlands
Year of Investment: 2020
Private Equity Manager: 3i Group plc
Investment: Co-investment
Company Website: www.action.nl
Value (£'000) 28,874 26,160
Cost (£'000) 6,374 6,380
Commitment (€'000) 7,939 7,939
Amount Funded 100.0% 100.0%
Income (£'000)* 2,211 -
7 Altor Focuses on investing in and developing medium-sized companies often with a
Nordic origin and sustainability angle, that offer potential for value
creation through revenue growth, margin expansion, improved capital management
and strategic re-positioning
2.4% of NAV
(30 September 2023: 2.2%)
Fund Size: €2.6bn Altor Fund V 30/09/24 30/09/23
Strategy: Mid-market buyouts
EV of investments: €150m-€1bn
Geography: Northern Europe
Website: www.altor.com
Value (£'000) 28,157 26,706
Cost (£'000) 26,836 23,069
Commitment (€'000) 43,000 43,000
Amount Funded 68.7% 53.4%
Income (£'000) 28 238
8 Triton Targets mid-market companies that are operating below their full potential in
the industrials, business services and healthcare sectors in Northern and
Western Europe.
2.2% of NAV
(30 September 2023: 2.2%)
Fund Size: €5.3bn Triton Fund V 30/09/24 30/09/23
Strategy: Mid-market buyouts
EV of investments: €150m-€750m
Geography: Northern and Western Europe
Website: www.triton-partners.com
Value (£'000) 26,636 26,375
Cost (£'000) 16,766 15,632
Commitment (€'000) 30,000 30,000
Amount Funded 94.1% 86.2%
Income (£'000) 23 -
9 Exponent Invests in medium- to large-sized buyout deals in Northern Europe, through
five dedicated sector teams, with the ability to invest in healthcare on a
global basis.
2.1% of NAV
(30 September 2023: 2.5%)
Fund Size: £1.0bn Exponent Private Equity Partners III, LP. 30/09/24 30/09/23
Strategy: Mid-market buyouts
EV of investments: £75m-£350m
Geography: UK
Website: www.exponentpe.com
Value (£'000) 25,549 30,273
Cost (£'000) 19,065 21,232
Commitment (£'000) 28,000 28,000
Amount Funded 100.0% 100.0%
Income (£'000) 678 1,566
Capiton Invests in small cap and lower mid-market companies in the DACH region with a
primary focus in the healthcare & life science and high-tech industrials
sectors.
10
2.1% of NAV
(30 September 2023: 1.4%)
Fund Size: €504m Capiton VI 30/09/24 30/09/23
Strategy: Mid to large buyouts
EV of investments: €25m-€100m
Geography: DACH
Website: www.capiton.de
Value (£'000) 25,267 16,280
Cost (£'000) 10,252 9,979
Commitment (€'000) 20,000 20,000
Amount Funded 62.0% 58.0%
Income (£'000)* - -
* Performance information has been prepared by PPET and has not been approved
by the General Partners of the funds or any of their Associates. Income
figures are for the year ended 30 September 2024 and 30 September 2023
respectively. The Company's position in Action is held through 3i 2020
Co-investment 1 SCSp, a special purpose vehicle managed by 3i as co-investment
lead.
Ten Largest Underlying Private Companies
Largest Ten Underlying Private Companies at 30 September 2024(1,2)
The below represents the ten largest underlying private companies which are
indirectly held through the Company's fund investments and/or direct
investments.
1 2.4% of NAV (2023: 2.2%) Action Sector: Consumer Staples Since its establishment in 1993, Benelux-based Action has grown into the
leading non-food discount retailer in the region with more than 2,750 stores
Location: Netherlands and over 74,500 employees.
Year of Investment: 2020
Private Equity Manager: 3i Group plc
Investment: 3i 2020 Co-investment 1 SCSp
Company Website: www.action.nl
2 2.1% of NAV (2023: 0.9%) Wundex Sector: Healthcare Wundex is a leading home care provider for patients with chronic wounds. The
company's qualified wound managers provide home care services that enable
Location: Germany faster and more effective wound treatment and significantly reduce the
workload of general care providers and physicians, backed by an integrated
Year of Investment: 2021 digital platform.
Private Equity Manager: Capiton AG
Investment: Capiton VI Wundex Co-Investment/Capiton VI In addition to treatment services, the company also offers a complete range of
60,000 home care products and decubitus systems. With its three business
Company Website: units: home care services, home care products and decubitus systems, Wundex
has built a fully integrated unique home care offering.
www.wundex.com (http://www.wundex.com)
3 2.0% of NAV (2023: 1.8%) European Camping Group Sector: Consumer Discretionary European Camping Group is a leading outdoor accommodation operator in Europe.
At acquisition, ECG operated a fleet of 21,000 high-quality holiday lets
Location: France across over 300 European sites. It operates under a number of strong brands,
including Eurocamp and Homair.
Year of Investment: 2021
Private Equity Manager: PAI Partners
Investment: ECG Co-invest SLP/PAI Europe VII/PAI Europe VIII/ECG 2 Co-invest
SLP
Company Website:
www.europeancampinggroup.com
4 1.9% of NAV (2023: 0.9%) Visma Sector: Information Technology Visma is the leading provider of mission-critical business software to small
& medium-sized companies and the public sector outside of North America.
Location: Norway Headquartered in Oslo, the company provides approximately 1.9 million paying
customers with SaaS solutions covering: accounting, resource planning,
Year of Investment: 2020 payroll, procurement and transaction processing. It is the largest provider of
cloud/SaaS to these sectors outside of North America, with ~€2.5 billion in
Private Equity Manager: HgCapital Annual Recurring Revenue and customers in ~30 countries.
Investment: Hg Vardos Co-invest L.P/Hg Saturn 2/Hg Saturn 3/Hg
Vega Co-Invest L.P.
Company Website:
www.visma.com (http://www.visma.com)
5 1.7% of NAV (2023: 1.6%) Access Sector: Information Technology Founded in 1991, the Access Group ('Access') is a leading UK mid-market
Enterprise Resource Planning business, providing financial management systems
Location: UK and human capital management software, as well as industry specific software
solutions. Access' software helps over 75,000 customers across commercial and
Year of Investment: 2018 not-for-profit organisations to work efficiently, with expertise across
numerous industries.
Private Equity Manager: HgCapital
Investment: Hg Saturn 3/HgCapital 8
Company Website: www.theaccessgroup.com
6 1.6% of NAV (2023: 0.6%) GRITEC Sector: Industrials GRITEC (formerly: Betonbau Group) was established in 1963. Today, GRITEC is
the largest German player in the attractive niche market of turnkey technical
Location: Germany stations such as transformer stations for power grids, charging infrastructure
for e-mobility and point of presence stations for telecommunication networks.
Year of Investment: 2022
Private Equity Manager: Capiton AG
Investments: Capiton VI
Website: www.gritec.com
7 1.5% of NAV (2023: 1.4%) Uvesco Sector: Consumer Staples Uvesco is a leading food retailer in the North of Spain with a growing
presence in Madrid. The company follows a differentiated model based on
Location: Spain proximity stores and a high-quality offering, including a significant fresh
product component that is locally sourced and sold through its network of over
Year of Investment: 2022 270 stores across six regions.
Private Equity Manager: PAI Partners
Investments: Uvesco Co-Invest SCSp/PAI Mid-Market I
Company Website: www.uvesco.es
8 1.5% of NAV (2023: 1.3%) Froneri Sector: Consumer Discretionary Froneri is a global ice cream manufacturer, and the largest pure-play
ice-cream manufacturer globally, benefitting from market-leading positioning
Location: United Kingdom in both branded and private label ice cream. It was formed as a joint venture
between R&R Ice cream plc and Nestle in 2016.
Year of Investment: 2019
Private Equity Manager: PAI Partners
Investments: PAI Strategic Partnerships SCSp/PAI Europe VII
Company Website: www.froneri.com
9 1.5% of NAV (2023: 1.4%) Namsa Sector: Healthcare NAMSA is the global industry leading Contract Research Organisation (CRO) for
preclinical and clinical medical device companies, and a global market leader
Location: United States in preclinical and biocompatability testing.
Year of Investment: 2020
Private Fund Manager: ArchiMed SaS
Investment: MPI-COI-NAMSA SLP
Company Website: www.namsa.com
10 1.4% of NAV (2023: 1.2%) CFC Sector: Financials CFC underwriting is a technology-led insurance platform, and is a global
leader and category innovator in the cyber market.
Location: United Kingdom
Year of Investment: 2022
Private Equity Manager: Vitruvian Partners
Investments: CFC Continuation Fund/Vitruvian IV
Company Website: www.cfc.com
INVESTMENT PORTFOLIO
at 30 September 2024
Vintage Investment Number of investments Outstanding commitments Cost Valuation Net multiple(2) % of NAV
£'000
£'000
£'000(1)
2018 Nordic Capital Fund IX 12 10,502 23,786 35,275 1.7x 3.0
2014 Altor Fund IV 16 8,618 30,347 34,368 1.7x 2.9
2021 Structured Solutions IV Primary Holdings 53 12,770 29,749 32,786 1.3x 2.8
2017 CVC Capital Partners VII 28 1,622 22,417 32,623 1.9x 2.7
2019 PAI Europe VII 19 4,822 22,724 29,466 1.5x 2.5
2020 3i 2020 Co-investment 1 SCSp(3) 1 - 6,374 28,874 5.1x 2.4
2019 Altor Fund V 36 8,035 26,836 28,157 1.3x 2.4
2019 Triton Fund V 20 8,427 16,766 26,636 1.5x 2.2
2015 Exponent Private Equity Partners III, LP. 8 3,059 19,065 25,549 1.9x 2.1
2020 Capiton VI 10 6,354 10,252 25,267 2.4x 2.1
2017 HgCapital 8 8 2,442 6,086 24,843 2.8x 2.1
2021 IK Partnership II 6 581 21,083 24,595 1.2x 2.1
2020 IK IX 15 672 20,769 24,327 1.2x 2.0
2020 Nordic Capital X 16 3,693 17,752 23,692 1.3x 2.0
2020 Investindustrial VII 13 7,195 14,908 23,444 1.5x 2.0
2019 American Industrial Partners VII 16 3,096 15,335 23,010 1.6x 1.9
2020 Vitruvian IV 27 2,036 19,179 22,750 1.2x 1.9
2014 CVC VI 19 1,522 13,813 21,968 2.2x 1.8
2021 Capiton VI Wundex Co-Investment(3) 1 3,068 2,914 20,945 4.4x 1.8
2016 IK Fund VIII 12 2,038 11,355 18,876 1.9x 1.6
2019 MSouth Equity Partners IV 13 1,185 13,845 18,869 1.5x 1.6
2021 Nordic Capital Evolution Fund 10 10,039 15,459 18,113 1.2x 1.5
2020 MPI-COI-NAMSA SLP(3) 1 1,807 5,573 17,490 2.7x 1.5
2022 Hg Saturn 3 6 11,968 15,111 16,095 1.1x 1.4
2021 Excellere Partners Fund IV 4 14,079 12,956 15,884 1.2x 1.3
2021 Arbor Co-Investment LP3 1 - 8,374 15,723 1.9x 1.3
2013 TowerBrook Investors IV 22 9,840 12,102 15,299 2.2x 1.3
2019 Bridgepoint Europe VI 17 516 10,511 15,203 1.3x 1.3
2021 Advent Technology II-A 13 11,155 13,245 15,154 1.1x 1.3
2020 Triton Smaller Mid-Cap Fund II 9 9,876 11,209 15,151 1.3x 1.3
2022 Uvesco Co-invest(3) 1 2,122 6,293 14,846 2.1x 1.2
2021 ECG Co-invest SLP(3) 1 3 6,920 14,447 2.1x 1.2
2022 Advent International Global Private Equity X 18 13,062 12,398 14,357 1.2x 1.2
2019 PAI Strategic Partnerships SCSp 2 71 6,705 14,283 2.1x 1.2
2020 Hg Genesis 9 12 3,184 9,590 14,125 1.4x 1.2
2020 Hg Saturn 2 7 3,247 8,524 12,994 1.4x 1.1
2020 PAI Mid-Market I 10 9,872 11,280 12,842 1.1x 1.1
2020 Seidler Equity Partners VII L.P. 7 842 13,230 12,799 1.0x 1.1
2021 MI NGE S.L.P.(3) 1 803 8,153 12,136 1.5x 1.0
2014 PAI Europe VI 11 1,383 4,539 12,119 1.9x 1.0
2013 Nordic Capital VIII 16 2,682 20,167 12,091 1.5x 1.0
2021 Hg Isaac Co-Invest LP(3) 1 38 7,571 11,140 1.5x 0.9
2021 MPI-COI-PROLLENIUM SLP(3) 1 1,348 7,159 10,294 1.4x 0.9
2021 Eurazeo Payment Luxembourg Fund SCSp(3) 1 1,046 5,350 10,093 1.3x 0.8
2023 One Peak Co-invest III LP(3) 1 - 9,434 9,876 1.0x 0.8
2023 Maguar Continuation Fund I GmbH & Co. KG(3) 1 906 6,767 9,865 1.5x 0.8
2022 PAI Europe VIII 8 15,204 9,955 9,706 1.0x 0.8
2021 CDL Coinvestment SPV(3) 1 - 5,294 9,673 1.8x 0.8
2021 WindRose Health Investors Fund VI 9 7,333 8,493 9,400 1.1x 0.8
2019 Vitruvian I CF LP 6 7,581 7,060 9,181 1.3x 0.8
2021 IK Co-invest Questel3 1 - 8,658 9,117 1.1x 0.8
2021 VIP SIV I LP(3) 1 3,330 5,670 9,045 1.6x 0.8
2020 Hg Vardos Co-invest L.P.(3) 1 - 4,244 8,933 2.0x 0.7
2020 Vitruvian III 29 917 5,108 8,901 2.2x 0.7
2023 IK IX Luxco 15 S.a.r.l.(3) 1 - 7,773 8,588 1.1x 0.7
2022 Nordic Capital Fund XI 11 16,574 8,593 8,285 1.0x 0.7
2019 Great Hill Partners VII 16 296 7,617 7,909 1.6x 0.7
2018 Investindustrial Growth 3 5,669 11,041 7,700 2.2x 0.6
2021 Latour Co-invest Funecap*(,3) 1 - 4,287 7,431 1.6x 0.6
2021 Permira Growth Opportunities II 15 17,408 10,199 7,303 0.8x 0.6
2017 Onex Partners IV LP 7 535 9,127 7,292 1.3x 0.6
2022 ArchiMed - Med Platform 2 5 16,940 8,111 7,177 0.9x 0.6
2024 Latour Co-Invest EDG*(,3) 1 1,237 7,705 7,163 0.9x 0.6
2020 Hg Mercury (3) 10 4,312 4,592 6,973 1.5x 0.6
2023 Procemsa Build-Up SCSp(3) 1 2,559 4,662 6,783 1.5x 0.6
2022 Altor Fund VI 9 19,806 5,291 6,628 1.3x 0.6
2019 Alphaone International S.à.r.l.(3) 1 1,650 3,522 6,403 1.8x 0.5
2023 Capiton Quantum GmbH & Co 2 702 3,857 6,246 1.6x 0.5
2016 Astorg VI 5 956 205 6,126 1.7x 0.5
2022 Hg Genesis 10 4 19,969 5,184 6,015 1.2x 0.5
2021 Bengal Co-Invest SCSp(3) 1 2,294 6,198 5,927 1.0x 0.5
2021 MPI-COI-SUAN SLP(3) 1 36 6,402 5,904 0.9x 0.5
2021 bd-capital Partners Chase(3) 1 - 4,291 5,838 1.4x 0.5
2024 MED BIO FPCI 2 2,758 6,065 5,832 1.0x 0.5
2014 Permira V 10 701 7,078 5,645 3.1x 0.5
2024 Hg Vega Co-Invest L.P.(3) 1 - 4,801 5,589 1.2x 0.5
2022 Leviathan Holdings, L.P.(3) 1 4 4,863 4,971 1.0x 0.4
2024 Exponent Herriot Co-Investment Partners, LP(3) 1 809 3,444 4,907 1.4x 0.4
2021 Nordic Capital WH1 Beta, L.P.(3) 1 71 3,622 4,858 1.2x 0.4
2021 GPMS Omega Holdco Limited(3) 1 17 4,259 4,291 1.0x 0.4
2022 Investindustrial Growth III 3 20,910 4,231 3,860 0.9x 0.3
2021 Great Hill Equity Partners VIII 7 10,637 4,587 3,833 0.8x 0.3
2023 Seidler Equity Partners VIII, L.P. 3 10,470 4,647 3,791 0.8x 0.3
2023 Latour Co-invest Funecap II*,(3) 1 - 2,952 3,112 1.1x 0.3
2021 ArchiMed III 6 8,892 3,756 3,005 0.8x 0.3
2023 Hg Mercury 4 1 21,640 3,386 2,963 0.9x 0.2
2022 AV Invest B3*,(3) 1 205 4,887 2,908 0.6x 0.2
2022 One Peak Growth III 8 9,088 3,535 2,903 0.8x 0.2
2023 Latour Capital IV 2 21,142 3,953 2,742 0.7x 0.2
2015 Capiton V 8 157 7,324 2,696 0.8x 0.2
2021 Hg Riley Co-Invest LP(3) 1 - 6,836 2,565 0.4x 0.2
2023 ECG 2 Co-Invest S.L.P.(3) 1 499 2,132 2,564 1.2x 0.2
2012 IK Fund VII 6 1,663 5,871 2,387 2.0x 0.2
2001 CVC III* 1 388 4,110 1,793 2.7x 0.2
2022 American Industrial Partners V 6 30 1,327 1,352 1.4x 0.1
2023 Montefiore Investment VI 2 15,143 1,528 1,182 0.8x 0.1
2008 CVC V* 2 415 4,310 941 2.4x 0.1
2023 Vitruvian V 5 23,141 1,876 883 0.5x 0.1
2019 Gilde Buy-Out Fund IV 1 - 2,262 538 1.2x 0.0
2006 3i Eurofund V 0 - 9,282 171 2.7x 0.0
2024 Bowmark Capital Partners VII, L.P. 0 25,000 - 132 n/a 0.0
2024 Altor ACT I (No. 1) AB 4 12,204 306 110 0.4x 0.0
2023 Montefiore Expansion I 1 7,946 383 106 0.0x 0.0
2007 Industri Kapital 2007 Fund* 0 1,444 5,545 90 1.4x 0.0
2015 Nordic Capital VII 2 1,474 6,765 - 1.4x 0.0
2023 IK X Fund 0 24,962 - - n/a 0.0
2024 Arbor Investments VI, L.P.(4) 0 14,910 - - n/a 0.0
2024 Investindustrial VIII(4) 0 16,641 - - n/a 0.0
2024 Latour Co-Invest Systra(3,4) 0 8,820 - - n/a 0.0
2024 Nutripure Co-Invest SCSp(3,4) 0 8,321 - - n/a 0.0
2024 Patria SOF V SCSp(4) 0 18,638 - - n/a 0.0
2024 Triton Fund 6 SCSp(4) 0 16,641 - - n/a 0.0
Total investments(5) 652,709 917,037 1,177,106 98.6 652,709
Non-portfolio assets less liabilities 14,998 1.4
Total shareholders' funds 1,192,104 100.0
1All funds are valued by the manager of the relevant fund or direct investment
as at 30 September 2024, with the exception of those funds suffixed with an *
which were valued as at 30 June 2024 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. Direct investment position.
4. New commitment for which an underlying company has yet to be acquired.
5. The 763 underlying investments represent holdings in 616 separate
underlying private companies, 44 underlying fund investments and 9 underlying
direct investments.
TOP 30 UNDERLYING PRIVATE COMPANY INVESTMENTS
at 30 September 2024
Entity Description Fund/Co-investment Year of Investment(1) % of NAV(2)
Action Non-food discount retailer 3i 2020 Co-investment 1 SCSp 2020 2.4%
Wundex Home care provider Capiton VI Wundex Co-Investment / Capiton VI 2021 2.1%
ECG European leader in outdoor accommodation market ECG Co-invest SLP / PAI Europe VII / PAI Europe VIII / ECG 2 Co-invest SLP 2021 2.0%
Visma Accounting software and services Hg Vardos Co-invest L.P / Hg Saturn 2 / Hg Saturn 3 / Hg Vega Co-Invest L.P. 2020 1.9%
Access Group Software Solutions HgCapital 8 / Hg Saturn 3 2018 1.7%
Gritec Specialist for technical buildings Capiton VI 2022 1.6%
Uvesco Leading Spanish regional grocer Uvesco Co-invest / PAI Mid-Market I 2022 1.5%
Froneri Leading independent global ice cream manufacturer PAI Strategic Partnerships SCSp / PAI Europe VII 2019 1.5%
NAMSA Contract research organisation for medical devices sector MPI-COI-NAMSA SLP 2020 1.5%
CFC Underwriting Global leader in the cyber insurance market CFC Continuation Fund / Vitruvian IV 2022 1.4%
ACT Leading global provider of market-based carbon footprint reduction solutions Arbor Co-Investment LP / Bridgepoint Europe VI 2021 1.3%
CDL Providing support to the medical profession through advanced diagnostics CDL Coinvestment SPV / Excellere Partners Fund IV 2021 1.3%
Trioworld Manufacturer of polyethylene film Altor Fund IV 2018 1.3%
Funecap Operator of funeral infrastructure and services Latour Co-invest Funecap / Latour Co-invest Funecap II / Latour IV 2021 1.2%
Insightsoftware Financial reporting and performance management software provider Hg Isaac Co-Invest LP / Hg Saturn 2 2021 1.1%
Mademoiselle Desserts Premium sweet bakery manufacturer Alphaone International S.à.r.l. / IK Fund VIII 2018 1.1%
Questel IP management software provider IK Co-invest Questel / IK IX 2020 1.0%
Groupe NGE Multi specialist and independent French public works provider MI NGE S.L.P. 2021 1.0%
Planet Leading provider of integrated payment solutions for hospitality and retail Eurazeo Payment Luxembourg Fund SCSp 2021 0.9%
Undisclosed(3) Medical aesthetics product manufacturer MPI-COI-PROLLENIUM SLP 2021 0.9%
GoodLife Manufacturer of frozen snacks IK IX Luxco 15 S.a.r.l. / IK IX 2023 0.8%
HRworks HR software provider Maguar Continuation Fund I GmbH & Co. KG 2023 0.8%
EDG Digital transformation and digital marketing services provider Latour Co-Invest EDG / Latour Capital IV 2024 0.8%
Docplanner Leading global online healthcare platform One Peak Co-invest III LP 2023 0.8%
Norican Metallic parts formation and preparation industry Altor Fund IV 2015 0.7%
Litera Provider of end to end document lifecycle solutions to the legal and life HgCapital 8 / Hg Genesis 9 2019 0.7%
sciences industries
R1 RCM Healthcare revenue services TowerBrook Investors IV 2016 0.7%
La Doria Manufacturer of private label food products Investindustrial VII 2022 0.7%
Tropicana Global manufacturer of branded juice products Bengal Co-Invest SCSp / PAI Europe VII 2022 0.7%
Esperi Care Private social and health care Triton Smaller Mid-Cap Fund II 2022 0.6%
Total 36.1%
1 Year of investment is disclosed as the first year of investment by a
portfolio investment.
2 All percentage of NAV figures are based on gross valuations, before any
carry provision.
3 Due to disclosure restrictions associated with our holding in the associated
fund or co-investment, we are unable to name the underlying private company.
STRATEGIC REPORT
INVESTMENT STRATEGY
Current Investment Objective
The Company'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.
Current 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 and
single-asset secondaries. 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 direct investments
into private companies, via co-investments alongside private equity managers.
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 cash flows to and from the portfolio and, from time to
time, may use borrowings to meet drawdowns. The Board has agreed that the
overcommitment 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.
STAKEHOLDER ENGAGEMENT AND RESPONSIBLE MANAGEMENT
Directors' Duties and Stakeholder Engagement
The PPET Directors' overarching duty is to act in a way that they consider, in
good faith, to promote the success of PPET for the benefits of its members as
a whole in accordance with s172 of the Companies Act 2006.
During discussions and deliberations, the Directors must take into account the
long-term consequences of their decisions, the interests of PPET's various
stakeholders and the impact PPET has on the community and the environment,
with a view to maintaining a reputation for high standards of business conduct
and fair treatment between the members of the Company.
Stakeholders Board engagement
Shareholders and Prospective Investors The Board is committed to maintaining open channels of communication and
engaging with shareholders and prospective investors. The Board seeks feedback
from shareholders and prospective investors to gain an understanding of their
views, both formally and informally.
The owners and future owners of PPET. Shareholder support and engagement is
critical to the Company and delivery of its long-term strategy.
Formal communication methods include:
AGM: The AGM provides an opportunity for the Directors to engage with
shareholders and answer their questions in the formal AGM environment, and
also informally over refreshments afterwards. At the AGM, there is typically a
presentation on the Company's performance and the future outlook as well as an
opportunity to ask questions of the Manager and Board.
Whilst the Board has historically alternated the location of the AGM between
Edinburgh and London, the Board was encouraged with the number of shareholders
in attendance and the levels of engagement at the AGM in 2024 in London and,
as such, has resolved to hold the AGM in London on 25 March 2025. The Board
will consider an AGM in Edinburgh in future.
The Board encourages shareholders to attend the AGM and for those unable to
attend, to lodge their votes by proxy on all of the resolutions put forward.
Publications: PPET publishes a full Annual Report in January each year that
contains a Strategic Report, governance section, Financial Statements and
additional information. The report is available online and in paper format.
PPET also produces a Half-Yearly Report each year. The purpose of these
reports is to provide shareholders with a clear understanding of PPET's
activities, portfolio, financial position and performance.
The Manager also publishes a monthly factsheet and a monthly Estimated NAV,
available at patriaprivateequitytrust.com.
The Board welcomes feedback from shareholders and prospective investors on its
publications to ensure the reports and updates are transparent and
understandable.
Shareholder meetings: As PPET is an investment trust and does not have any
Executive Directors, shareholder meetings are often held with the Manager
rather than members of the Board. Shareholders are able to meet with Patria
throughout the year and both the Manager and PPET's Broker reports back to the
Board on every shareholder meeting. This allows the Directors to hear feedback
from underlying shareholders.
The Chair, the Senior Independent Director and other members of the Board are
available to meet with shareholders to understand their views directly at any
time during the year.
Following the appointment of Investec as Broker, and the Manager's purchase by
Patria, a significant number of meetings had been held with shareholders
throughout the year.
Investor relations and marketing: PPET's website patriaprivateequitytrust.com
contains a range of information from the Manager including videos, portfolio
case studies, podcasts and presentations. Furthermore, details of financial
results, the investment process and Manager, together with PPET announcements
and contact details, can also be found on the website.
Feedback: The Board encourages shareholder feedback and invites shareholders
to write to the Board at its registered office. The Board has also set up an
email account to encourage shareholders to write directly to the Board.
Shareholders are invited to email any feedback or questions to the Board at
PPET.Board@patria.com. Either the Manager or Board via the Company Secretary
will reply to any questions received.
Our Manager Maintaining a close and constructive relationship with the Manager is crucial
for the Board in supporting the delivery of the Company's investment
The Manager's performance is critical for PPET to successfully deliver its objective. The Board is in regular contact with the Manager and adopts a
investment objective and achieve long-term returns for shareholders. supportive, yet challenging, approach to the relationship to ensure the best
outcome for shareholders.
Regular meetings: the Board meets with the Manager formally at least five
times per year and more regularly as necessary. The Board and its Committees
were particularly active during the financial year. The Board encourages the
Manager to speak candidly and freely on all issues affecting the Company.
Informal meetings: the Chair of the Board meets informally with the Manager
regularly to consider emerging issues for the Company. The Manager also
reports on changes within the investment trust industry, which may be of
interest to the Board.
Strategy meeting: each year, the Board and Manager hold a strategy meeting at
which the Company's investment objective and investment policy are discussed
in detail to determine whether they remain appropriate for future long-term
growth.
Service Providers As an investment trust, PPET has outsourced its operations to third-party
suppliers. In addition to the Manager, PPET appoints an Administrator, Company
Engaging with reputable and experienced providers allows PPET to maintain its Secretary, Registrar, Depositary and Broker.
premium listing on the London Stock Exchange.
The Board acknowledges that PPET's long-term success is dependent upon the
performance of its third-party service providers. The Board and Committees
receive regular reports from its key third-party service providers and seeks
views, advice and counsel from each of them outside of meetings as necessary.
The Board regularly reviews the performance of PPET's service providers and,
through the Management Engagement Committee, formally reviews their
performance and contractual arrangements to ensure that performance standards
are met and contractual terms remain appropriate and competitive. The Board
has the ability to change providers if they are not meeting the Board's
expectations. The Audit Committee considers the internal controls of key
service providers to ensure that they are appropriate and fit for purpose,
especially when hosting PPET's data.
Debt Providers The Board regularly reviews the adequacy of the Company's loan facility with
reference to its costs and the size of the facility relative to the size of
Availability of funding is important to allow PPET to take advantage of the Company's net assets.
investment opportunities as they arise.
The Manager acts as the main point of contact for PPET's lenders. On behalf of
the Board, the Manager maintains an open and transparent relationship with the
Company's lenders, providing regular business updates and compliance with loan
covenants. The Board is responsible for the Company's gearing strategy and
regularly monitors cash flows and the reliance upon the facility agreement.
As reported in the Chair's Statement, PPET increased its revolving credit
facility, with effect from 3 February 2025. The revolving credit facility,
which matures
in February 2028, increased from £300.0 million to £400.0 million. The Board
was pleased with the continued support from RBSI, Société Générale and
State
Street, and was delighted to welcome Banco Santander to the syndicate.
Private Equity Managers and Portfolio Companies The Board has delegated day-to day-management of the portfolio to the Manager.
However, the Board provides strategic oversight of the Manager's compliance
PPET has identified a core group of private equity managers through which its with PPET's investment policy and its engagement with the underlying investees
portfolio has been built. in the Company's portfolio.
On behalf of the Board and its stakeholders, the Manager invests alongside a
carefully selected range of private equity managers, built from years of
established relationships and proprietary research. The Manager assesses all
investment opportunities and participates on the advisory boards of some
investments.
The Manager reports to the Board regularly on its dialogue with the Company's
underlying and potential investments. From time to time, the Board will invite
core private equity managers to present to the Board.
Environment and Society The Board believes that integrating ESG best practice into PPET's strategy and
investment processes will help support the Company's investment objective by
The Board and Manager generating stronger, more sustainable returns for shareholders over the longer
term.
are fully committed to
managing the business
The Board monitors the Manager's commitment to ESG factors closely and
and its investment encourages it to stay close to the latest market developments. The Board takes
comfort from the Manager's policy to invest with private equity managers who
strategy responsibly. have advanced ESG approaches or have a strong cultural commitment to improve
their ESG credentials. The Manager's assessment is based on investment due
diligence and ongoing ESG engagement through initiatives like the Manager's
annual ESG survey.
ESG has been embedded into the Manager's investment process since 2015 and
every new investment made by PPET in recent years has been subject to specific
ESG due diligence.
Sale of PPET's Investment Manager to Patria - s172 spotlight
During the financial year, the Board spent a significant amount of time
discussing the impact of the sale of abrdn plc's European-headquartered
private equity business, which included PPET's Manager, to Patria ('the
Transaction').
The Board undertook an extensive due diligence exercise on the Transaction and
the impact on the Company's shareholders and service providers, and the
Manager's employees servicing PPET. The Board held fortnightly due diligence
meetings with the Manager, supported by the Company's legal advisers, to
ensure that each of the operational and regulatory services previously
provided by the abrdn infrastructure would be
seamlessly transferred to Patria.
During deliberations, the Board considered the long-term impact of the
Transaction on the Company and its various
stakeholders.
· Shareholders - The Board received assurances that the Transaction would be
cost-neutral for the Company. There were no additional costs borne by PPET's
shareholders as a result of the Transaction. The Board also engaged with the
Company's largest shareholders to understand their attitudes towards the
Transaction.
· Manager - The Board received assurances from Patria that there would be no
change to the personnel managing PPET. The team managing PPET, as well as
employees providing support to PPET across Company Secretariat, Fund
Operations and Marketing, transitioned smoothly from abrdn to Patria.
· Service providers - There was no negative impact on the Company's other
service providers during the Transaction. The Board received assurances that
each of the Company's other service providers did not object to the
Transaction. Where the Manager was a party to any of the service providers,
third-party contracts, these were successfully novated to Patria.
· Debt providers - Each of the Company's debt providers were engaged during
negotiations and provided confirmation that they did not have any objections
to the Transaction.
· Private equity managers and portfolio companies - There was no negative impact
on the Company's private equity managers and portfolio companies.
Communications to the Company's underlying portfolio entities were managed by
the Manager on behalf of the Board - there was no changes to the portfolio as
a result of the Transaction.
· Environment and society - The Board acknowledged that Patria Investments
Limited, as the new owner of the Manager, was committed to maintaining its
local presence in Edinburgh, creating certainty for the Manager's employees
and investing in the local community. Patria has identified office premises
within Edinburgh City Centre and is bolstering operations within Edinburgh.
Other Important Decisions Taken by the Board During the Financial Year
· Introduction of share buyback programme: During the financial year, the Board
was aware that, like many of its peers, PPET's share price had diverged
materially from its NAV, resulting in the Company's shares trading at material
discount, in excess of its long-term average, for a period in excess of 18
months. The Board agreed that the share price presented an exceptional
investment opportunity for the Company and agreed with the Manager that it was
a compelling use of the Company's capital. The Board also agreed that a share
buyback would provide immediate NAV accretion to PPET's shareholders. The
Board believes that the action highlighted, in the clearest terms, the
disconnect between PPET's share price and the valuation of the underlying
portfolio.
· Dividend: PPET's dividend has increased in value every year for the last ten
years and since 2016, the Company has paid shareholders an enhanced dividend
on a quarterly basis, with the aim of maintaining the value of the dividend in
real terms. Whilst the Board intends to continue this policy going forward,
the level of dividend is discussed and debated each year. The Board has
committed to pay four interim dividends of 4.2 pence per share taking the
total dividend for the financial year to 30 September 2024 of 16.8 pence per
share, a 5% increase on the total dividend of 16.0 pence per share during the
financial year to 30 September 2023. The Board considers that the dividend
policy is effectively an ongoing return of capital to shareholders at NAV. The
dividend approach is also a differentiator for the Company and the Board
considers that it may be attractive to prospective shareholders.
Board Diversity
The Board's statement on diversity is set out in the Statement of Corporate
Governance. At 30 September 2024, there were three male and two female
Directors on the Board.
Modern Slavery Act
As the Company does not offer goods and services to customers and has no
turnover, the Board considers that PPET is not within the scope of the Modern
Slavery Act 2015. PPET is therefore not required to make a slavery and human
trafficking statement. However, notwithstanding that, the Board considers
PPET's supply chains, dealing predominantly with professional advisers and
service providers in the financial services industry in the United Kingdom, to
be low risk in relation to this matter.
Streamlined Energy and Carbon Reporting ("SECR") Statement: Greenhouse Gas
Emissions and Energy Consumption Disclosure
PPET's activities are outsourced to third parties. It has no employees,
premises or operations either as a producer or provider of goods and services.
Therefore, it is not required to disclose energy and carbon information as
there are zero emissions associated or attributed to the Company and no
underlying global energy consumption.
Viability Statement
The Board has decided that five years is an appropriate period over which to
consider PPET's viability. The Board considers this to be an appropriate
period for an investment trust company with a portfolio of private equity
investments and the financial position of the Company.
In determining this time period, the Directors considered the nature of PPET's
commitments and its associated cash flows. The Manager presents the Board with
a comprehensive review of PPET's detailed cash-flow model on a regular basis,
including projections for up to five years ahead. This analysis takes account
of the most-up to-date information provided by the underlying private equity
managers, together with the Manager's current expectations in terms of market
activity and performance.
The Directors have also carried out an assessment of the principal risks and
discussed in Note 18 to the Financial Statements that are facing PPET over the
period of the review. These include those that would threaten its business
model, future performance, solvency or liquidity such as over-commitment,
liquidity and market risks. When considering the risks, the Board reviewed the
impact of stress testing on the portfolio, including multiple downside
scenarios which modelled a reduction in forecast distributions from 50% to
100% in an extreme downside case and the impact this would have on liquidity
and deployment. Under an extreme downside scenario which involved: i) a 100%
reduction in forecast distributions over a 12-month period; ii) all underlying
fund debt facilities being drawn simultaneously; and iii) a 25% reduction in
portfolio valuations spread over a period of 12 months, a significant
adjustment to planned new investment deployment would be required to maintain
sufficient liquid resources over the financial year to 30 September 2025 and
over the period through to December 2025. From December 2025 onwards, the
implied resumption of forecast distribution activity then provides sufficient
liquidity in this extreme downside scenario.
By having a portfolio of predominantly fund investments, diversified by
manager, vintage year, sector and geography and by monitoring PPET's cash
flows together with the Manager, the Directors believe PPET is able to
withstand economic cycles. The Directors are also aware of PPET's indirect
exposure to ongoing risks through underlying funds.
These risks are continually assessed via the Manager's ongoing portfolio
monitoring of both the underlying private equity managers and portfolio
companies. The Manager regularly communicates with the underlying private
equity managers and participates on a number of fund advisory boards.
Based on the results of this analysis and the ongoing ability to adjust the
portfolio, the Directors have a reasonable expectation that PPET will be able
to continue in operation and meet its liabilities as they fall due over the
five- year period following the date of this report.
Future Strategy
Although the Board has recommended amendments to the Company's investment
objective and policy, the Board intends to maintain the policies set out in
the Strategic Report for the year ending 30 September 2025 as it believes that
these are in the best interests of shareholders.
Long-Term Investment
The Manager's investment process seeks to outperform its comparator index over
the longer term. The Board has in place the necessary procedures and processes
to continue to promote PPET's long-term success. The Board will continue to
monitor, evaluate and seek to improve these processes as PPET continues to
grow over time, to ensure that the investment proposition is delivered to
shareholders and other stakeholders in line with their expectations.
On behalf of the Board
Alan Devine
Chair
29 January 2025
PRINCIPAL RISKS AND UNCERTAINTIES
The Board is responsible for PPET's risk management and internal control
systems.
Through the Audit Committee, the Board carries out regular and robust reviews
of the risk environment in which PPET operates. During discussions, the Board
also considers and identifies emerging risks which could impact PPET in the
future, such as material changes in the geopolitical or macroeconomic
environment. These could impact PPET or its underlying investments, attitudes
towards listed equities and the listed private equity investment trust sector
or developments in climate change from an investor attitude or regulatory
expectation.
There are a number of risks which, if realised, could have a material adverse
effect on PPET and its financial condition, performance and prospects, which
the Board considers to be principal risks. The Board considers its risk
appetite in relation to each principal risk and monitors the potential impact
and risk mitigation on an ongoing basis. Where a risk is approaching or is
outside the tolerance level, the Board and Manager will take action to manage
the risk. Currently, the Board considers the risks to be managed within
acceptable levels.
The principal risks faced by PPET relate to the Company's investment
activities and these are set out in the following table.
Risk Tolerance Mitigation / Update Direction of Travel
Valuation Risk PPET is at risk of the economic cycle impacting listed financial markets and Medium Public markets have been relatively stable during 2024, which has impacted the Unchanged
hence potentially affecting the valuation of underlying investments and timing valuation of the PPET portfolio. Investments in PPET's portfolio are all
of exits. subject to private equity guidelines such as IPEV Guidelines with respect of
valuations. Furthermore, they are predominantly in line with either IFRS or US
GAAP accounting standards.
The Manager has a formal governance process around valuations. Quarterly
valuations are subject to review and challenge by the Manager's Valuation
Committee and the outputs from those meetings are reported to the Audit
Committee. The Company's Auditors attend the year end Valuation Committee and
did not identify any material judgements to the Manager's valuations of PPET's
underlying valuations.
Private equity investment activity has steadily increased over the course of
2024. On 30 September 2024, PPET undertook a secondary sale of 14 underlying
fund investments which achieved pricing of 95% on 31 March 2024 valuations.
The Manager currently expects private equity investment activity to continue
its recovery in 2025 but has contingency plans in case the exit environment
worsens again and, subsequent to the financial year, PPET increased the size
of its revolving credit facility to £400.0 million.
Currency A material proportion of PPET's investments and cash balances are held in Medium The Manager monitors PPET's exposure to foreign currencies and reports to the Unchanged
currencies other than Sterling. PPET is therefore sensitive to movements in Board on a regular basis. Its non-Sterling currency exposure is primarily to
foreign exchange rates. the Euro and the US Dollar. PPET does not hedge foreign currency risk.
During the year ended 30 September 2024, Sterling appreciated by 4.3% relative
to the Euro (2023: appreciated 1.2%) and appreciated by 9.9% relative to the
US Dollar (2023: appreciated 9.3%). This movement in the Euro and the US
Dollar had a net negative impact on PPET's net assets during 2024.
Over-commitment PPET is unable to settle outstanding commitments to fund investments Medium PPET makes commitments to private equity funds, which are typically drawn over Unchanged
three to five years. Hence, PPET will tolerate a degree of over-commitment
risk in order to make the most efficient use of PPET's resources and deliver
long-term investment performance.
In order to mitigate this risk, the Board has instructed the Manager to
maintain appropriate levels of resources, whether through cash and cash
equivalents or the revolving credit facility, relative to the levels of
over-commitment.
The Manager also forecasts and assesses the maturity of the underlying
portfolio to determine likely levels of distributions in the near term.
The Manager also tracks PPET's over-commitment ratio, and takes action as
necessary, to ensure that it sits within the range, agreed with the Board, of
30% to 75% over the long term.
At 30 September 2024, PPET had £652.7 million (2023: £651.9 million) of
outstanding commitments, with £83.5 million (2023: £94.3 million) expected
not to be drawn. The over-commitment ratio was 28.5% (2023: 35.2%).
Investment selection The Manager makes decisions to invest in funds and/or direct investments that Medium The Manager undertakes detailed due diligence prior to investing in, or Unchanged
are not accretive to PPET's NAV over the long term. divesting, any fund or direct investment. It has an experienced team which
monitors market activity closely. PPET's management team has long-established
relationships with the 15 core managers in the Company's portfolio, which have
been built up over many years. ESG factors are integrated into the investment
selection process and the Board and the Manager believes that will improve
investment decision-making and help to generate stronger, more sustainable
returns.
The Manager's senior investment team has remained stable over the last five
years, with no departures, and its Investment Committee composition has also
been consistent during this period.
Climate Climate change impacts PPET's portfolio, either from a physical or transition Medium PPET is committed to being an active, long-term responsible investor - Increased
point of view. sustainability and ESG is a fundamental component of its Manager's investment
process.
PPET's capital is invested with or alongside core private equity managers who
demonstrate strong adherence to ESG principles and processes or have a
cultural commitment to improve their ESG credentials. Focus
on climate change is part of that assessment.
The Board acknowledges that the private equity industry is still relatively
early in its response to climate change and the Manager is focused on engaging
with its portfolio of private equity managers to help promote further positive
change.
Liquidity PPET is unable to meet short-term financial Low PPET manages its liquid investments to ensure that sufficient cash is Decreased
available to meet contractual commitments and also seeks to have cash
demands. available to meet other short-term needs. Additional short-term flexibility is
achieved through the use of its revolving multi-currency loan facility.
PPET had cash and cash equivalents of £28.4 million (2023: £9.4 million) and
£159.4 million (2023: £197.7 million) available on its revolving credit
facility as at 30 September 2024.
Following period-end, PPET increased the size of its revolving credit facility
to £400.0 million and extended its maturity to February 2028.
During September 2024, PPET agreed to sell a portfolio of 14 fund investments
in a secondary transaction resulting in deferred consideration of £157.2m at
transaction close, receivable in three contractual payments with the first
payment received in December 2024, the second in January 2025 and the final
payment due in September 2025.
Credit The exposure to loss from failure of a counterparty to deliver securities or Low PPET places funds with authorised deposit takers from time to time and, Unchanged
cash for acquisitions or disposals of investments or to repay deposits. therefore, is potentially at risk from the failure of such an institution.
PPET's cash is held by BNP Paribas Securities Services SA, which is rated A+
by Standard and Poor's Global Ratings.
The credit quality of the counterparties is kept under regular review. Should
the credit quality or the financial position of these financial institutions
deteriorate significantly, the Manager would move cash balances to other
institutions.
Operational The risk of loss or a missed opportunity resulting from a regulatory failure Low The Manager's business continuity plans, and approach to cybersecurity risk, Increased
or a failure relating to people, processes or systems. are reviewed on an ongoing basis alongside those of PPET's key service
providers.
The Board has received reports from its key service providers setting out
their existing business continuity framework. Having considered these
arrangements, the Board is confident that a good level of service will be
maintained in the event of an interruption to business operations or other
major events, and this was well-tested during the global pandemic in 2020/21.
This risk increased during the period, due to the Manager's change of
ownership (to Patria in 2024 and the potential risks associated with a change
of ownership), but there have been no impacts on the Company and its
operations.
The operational risk of the Manager's change of ownership was further
mitigated by the transfer of the Manager's investment and operational teams.
There has been no material change to the personnel servicing PPET from a
management, company secretarial, marketing and operational perspective
following the transfer to Patria.
PPET's financial risk management objectives and policies are contained in Note
18 to the Financial Statements.
EXTRACT OF DIRECTORS' REPORT / CORPORATE GOVERNANCE STATEMENT
The Directors present their report and the audited Financial Statements of the
Company for the year ended 30 September 2024.
The Directors consider that the Annual Report and Accounts, taken as a whole,
is fair, balanced and understandable, and provides the information necessary
for shareholders to assess the Company's position and performance, business
model and strategy.
Directors
Each of the Directors as at 30 September 2024, whose biographies are shown in
the Annual Report and on the Company's website, is considered to be
independent of PPET and the Manager. PPET is not aware of any potential
conflicts of interest between any duty owned to it by any of the Directors and
their respective private interests.
At 30 September 2024, there were three male and two female Directors on the
Board. Subsequent to the year-end, the Board announced the appointment of
Duncan Budge as an additional Non-executive Director with effect from 1
February 2025.
All of the Directors will retire and stand for election or re-election at the
Company's AGM on 25 March 2025.
Results and Dividends
The Financial Statements for the year ended 30 September 2024 are contained
below.
Interim dividends of 4.2 pence per share were paid in April, July and October
2024. In December 2024, the Board declared a fourth interim dividend of 4.2
pence per share paid in January 2025, taking the total dividend for the
financial year to 30 September 2024 to 16.8 pence per share. This is a 5%
increase on the 16.0 pence per share paid for the financial year to 30
September 2023.
Interim dividends of 4.2 pence per share were paid in April, July and October
2024. In December 2024, the Board declared a fourth interim dividend of 4.2
pence per share paid on 24 January 2025, taking the total dividend for the
financial year to 30 September 2024 to 16.8 pence per share. This is a 5%
increase on the 16.0 pence per share paid for the financial year to 30
September 2023.
Principal Activity and Status
PPET was incorporated in Scotland on 9 March 2001 as a public limited company
with company number SC216638. It is an investment company within the meaning
of section 833 of the Companies Act 2006 and carries on business as an
investment trust.
PPET has applied for and has been accepted as an investment trust under
sections 1158 and 1159 of the Corporation Tax Act 2010 and Part 2 Chapter 1 of
Statutory Instrument 2011/2999. This approval relates to accounting periods
commencing on or after 1 October 2012. The Directors believe that the Company
has conducted its affairs so as to be able to retain such approval.
The Company intends to manage its affairs so that its shares continue to be a
qualifying investment for inclusion in the stocks and shares component of an
individual savings account ('ISA').
Capital Structure and Voting Rights
The rights attached to the Company's shares are set out in the Company's
Articles of Association.
At the AGM on 27 March 2024, the Directors were given authority to allot
shares, disapply pre-emption rights and buy back shares. These authorities
will expire at the forthcoming AGM. Relying on this authority and in order to
take advantage of the investment opportunity offered by the discount to NAV on
the Company's share price, the Company bought back 940,128 Ordinary Shares
into treasury representing 0.6% of the Company's issued share capital.
As at 30 September 2024, the Company's issued share capital comprised of
153,746,294 Ordinary Shares of 0.2 pence each (2023: 153,746,294). Of those
shares, 152,806,166 Ordinary Shares were in issue and 940,128 were held in
treasury (2023: nil). At general meetings, each ordinary shareholder is
entitled to one vote on a show of hands and, on a poll, to one vote for every
Ordinary Share held.
There are no restrictions on the transfer of Ordinary Shares in the Company
issued by the Company other than certain restrictions, which may from time to
time be imposed by law. The Company is not aware of any agreements between
shareholders that may result in a transfer of securities and/or voting rights.
The Company's Manager
Patria Capital Partners LLP (formerly abrdn Capital Partners LLP), a wholly
owned subsidiary of Patria Investments Limited has been appointed as the
Company's AIFM and Manager.
The Manager charges a management fee, payable quarterly, at 0.95% per annum of
the Company's NAV at the end of the relative quarter. The Manager is not
entitled to a performance fee. No fee is payable on any investments in any
investment trust, collective investment scheme or any other company or fund
managed, operated or advised by the Manager or any other subsidiary of Patria
where there is an entitlement to a fee on that investment.
Further details of the fees payable to the Manager are shown in Notes 3 and 4
to the Financial Statements.
The management agreement is terminable on not less than 12 months' written
notice.
Other Service Providers and Advisers
The Board has appointed a number of other service providers and advisers to
support it in the delivery of its investment objective.
The Company entered into the contracts with each service provider after full
and proper consideration by the Board of the quality and cost of services. The
performance of each service provider and adviser is reviewed regularly, and
subject to formal annual review by the Management Engagement Committee.
Shareholders and Substantial Interests
The table that follows shows the interests of major shareholders based on the
best available information provided by analysis of the Company's share
register, also incorporating any disclosures provided to the Company in
accordance with Disclosure Guidance and Transparency Rule 5 in the period
under review and up to 31 December 2024.
Shareholder % of voting rights at 30 September 2024 % of voting rights at 31 December 2024
Phoenix Life Limited 53.91 54.26
Interactive Investor 4.58 4.54
Hargreaves Lansdown, stockbrokers 3.61 3.35
Oxfordshire County Council Pension Fund 3.40 3.45
Our Relationship with Phoenix
The Standard Life Assurance Company ('Standard Life') originally listed PPET
on the London Stock Exchange in 2001. At that time, PPET was known as Standard
Life European Private Equity Trust plc ('SLEPET').
At launch of the Company, Standard Life transferred 19 of its European private
equity funds interests, with a valuation of £80.7 million to PPET (then
called SLEPET). In return, Standard Life was allotted 50.5% of the Company's
share capital and voting rights. At that time, Standard Life and SLEPET
entered into a relationship agreement pursuant to which, it was agreed,
amongst other things, that Standard Life would be permitted to increase its
shareholding in the Company without making a general offer for the shares it
does not own in accordance with the Takeover Code.
Following various affiliate transfers and the sale of the Standard Life
business to Phoenix Group in 2018, Standard Life's holding in the Company was
transferred to Phoenix Life Limited. Phoenix Life Limited ('PLL') is the
Company's largest shareholder.
Pursuant to the relationship agreement, which remains in force, PLL has
irrevocably undertaken to the Company that, at any time when PLL and its
Associates (meaning any company which is a member of the PLL group) are
entitled to exercise or control 30% or more of the rights to vote at general
meetings of the Company, it will not (and will procure that none of its
Associates will) seek to nominate Directors to the Board of the Company who
are not independent of PLL and its Associates, 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
propose 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.
The Board and Manager have a positive relationship with Phoenix and regularly
communicate with Phoenix regarding PPET. Aside from PPET, Patria also manages
other private equity investments on Phoenix's behalf.
Role of the Board
The Board is responsible for the strategic oversight of the Company on behalf
of the shareholders. It is PPET's decision-making body and represents the
interests of PPET's shareholders. There are a number of matters reserved for
the Board's approval, which include overall strategy, investment objective and
policy, borrowings, buybacks, dividend policy and Board composition.
The Board meets at least five times per year and more often as business
dictates. In the event that any Directors are unable to attend Board and
Committee meetings, the relevant Directors will be contacted by the Chair and
Company Secretary before and/or after the meeting to ensure they were aware of
the issues being discussed and to obtain their input.
The Board meetings follow a formal agenda, which is approved by the Chair and
circulated by the Company Secretary in advance of the meeting to all the
Directors and other attendees.
A typical Board agenda includes:
· a review of investment performance and new investment activity;
· an update on the pipeline of investment activity and asset management
initiatives;.
· consideration of PPET's capital deployment, its debt facility, balance sheet
and liquidity; cash flow and capital management;
· review of conflicts of interest;
· update on marketing and shareholder relations;
· presentation from PPET's broker on capital market activity;
· review of peer group analysis; and
· regulatory, compliance, corporate governance and industry updates.
Board papers are typically circulated at least one week in advance of each
Board meeting via a secure online platform. Minutes are maintained of every
Board meeting and the Company Secretary is responsible for tracking actions
arising from discussions.
Directors
The Board holds at least five Board meetings per year, at least four Audit
Committee meetings per year, at least one Nomination Committee meeting and at
least one Management Engagement Committee meeting per year. Directors'
attendance at scheduled Board and Committee meetings is set out below.
Board Audit Management Nomination
meetings Committee Engagement Committee
meetings and Nomination meetings
Committee
meetings
Dugald Agble1 5 (5) 4 (4) 1 (1) 1 (1)
Alan Devine2 5 (5) 0 (0) 0 (0) 0 (0)
Diane Seymour-Williams 5 (5) 5 (5) 1 (1) 1 (1)
Yvonne Stillhart 5 (5) 5 (5) 1 (1) 1 (1)
Calum Thomson 5 (5) 5 (5) 1 (1) 1 (1)
2 The Board Chair is not a member of the Board Committees. He stepped down
as a member on 28 May 2023.
Given the matters to be considered by the Board and Committees during the
financial year, the Board and Committees met in excess of 30 times during the
financial year. In addition to the regular business, the Board and Committees
met to consider the Manager's change of control, the Company's share buyback
programme, activity in the Company's underlying portfolio, the Company's level
of dividend, Board succession planning and the appointment of the Company's
new corporate broker, amongst other items.
The Board, as a whole, seeks to ensure that it is appropriately balanced by
skills, experience, tenure, expertise and diversity. The Directors possess a
wide range of business and financial experience, which enable the Board to
provide clear and effective leadership and governance of the Company. Each
Director commits sufficient time to fulfil their duties.
The Board, led by the Nomination Committee, follows a formal process for the
appointment of Non-executive Directors. The appointment of new Directors is
always made on the basis of merits and the skills/experience identified by the
Board as being desirable to complement the existing skillset on the Board. The
Board recognises the benefits and is supportive of diversity in its
recruitment of new Board members. The Board will not display any bias for age,
gender, race, sexual orientation, religion, ethnic or national origins, or
disability.
A formal induction programme is established for each new Director, which
involves the provision of a full induction pack containing relevant
information about the Company. New Directors are invited to meet with members
of the Company's management team, finance team, marketing team and Company
Secretary, and other members of the PPET team. New Directors also have the
opportunity to meet with the Company's other service providers and, where
appropriate, shareholders.
The terms and conditions of the appointment of the Non-executive Directors are
set out in letters of appointment. The terms and conditions of appointment of
the Nonexecutive Directors will be available for inspection at the AGM, and at
the Company's registered office. No Director has a service contract with the
Company.
The Board believes that each Director has the requisite high level and range
of business, investment and financial experience, which enables the Board to
provide clear and effective leadership and proper governance of the Company.
Each Director remains independent and free from any relationship which could
materially interfere with the exercise of their judgement on issues of
strategy, performance, resources and standards of conduct.
The Board subscribes to the view that independence of an individual Director
is not necessarily compromised by length of tenure on the Board, and that
continuity and experience can add significantly to the Board's strength.
Following formal performance evaluations, the Board believes that each of the
Directors is independent in character and judgement, and that there are no
relationships or circumstances which are likely to affect their judgement.
All of the Directors will retire and, being eligible, will offer themselves
for election or re-election at the AGM in March 2025. The terms and conditions
of appointment of the Non-executive Directors will be available for inspection
at the AGM.
The Board therefore recommends the re-election of each of the Directors at the
AGM.
Board Evaluation
The Board has a formal process for the annual evaluation of the performance of
the Board as a whole, its Committees and the individual Directors. In 2024,
the Board instructed Lintstock Ltd to conduct an external review of its
performance. Lintstock is an advisory firm that specialises in Board reviews
and has no other connection with the Company or individual Directors.
Lintstock collaborated with PPET to tailor the line of enquiry to the specific
needs of the Company.
Board members then completed bespoke surveys assessing the performance of the
Board and Committees, Chair and Manager, alongside a self-assessment
questionnaire addressing their own individual performance. Lintstock analysed
the findings from the surveys and delivered focused reports, including a
number of recommendations to increase effectiveness. The findings were
presented to the Board, following which actions were agreed for implementation
and monitoring.
Lintstock found that the PPET Board engaged well with the Board review
process. The exercise had a particular focus on the impact of the Manager's
change of control, from abrdn to Patria, and the overall findings of the
Review were positive, with areas including the management of meetings and the
relationships between Board members recognised as particular strengths. The
Review also identified a few key priorities for 2025, including Board member
succession planning.
As part of the review, Lintstock provided an analysis of PPET relative to the
Lintstock Governance Index, which comprises around30 core Board performance
metrics from over100 Board reviews that Lintstock has recently facilitated,
specifically for UK investment companies. This helped the Directors to
understand how the PPET Board compares with other organisations, putting the
findings into context.
The review of the individual Directors concluded that each Director's
performance continues to be effective. Each Board Director demonstrates
commitment to their role and their individual performances contribute to the
long-term sustainable success of the Company.
Board Tenure
The Board does not consider that a Director's independence is necessarily
compromised by length of tenure on the Board. The Board's tenure policy seeks
to ensure that the Board remains well-balanced by skills and experience, and
time served on the Board.
Whilst the Board believes that the Directors should be refreshed regularly and
Directors should not generally serve beyond the AGM following the ninth
anniversary of their appointments, there may be circumstances in which is
appropriate for Directors to serve beyond this term such as to facilitate
effective succession planning or the development of a diverse Board. In such a
situation, the reason for the extension will be fully explained to
shareholders.
It is the Board's policy that each Director stands for election or re-election
at each AGM. The Board's recommendation for election or re-election at the AGM
is made on an individual basis following a rigorous review of each individual
Director and their contribution.
As set out in the Chair's Statement, the Board has asked that Alan Devine
remain on the Board for a further year and recommends his re-election to
shareholders. Alan Devine has been asked to remain on the Board beyond his
nine-year term to allow a smooth transition of chair responsibilities to his
successor. Assuming shareholders approve Alan Devine's re-election at the AGM
in March 2025, Alan Devine will step down from the Board at the AGM in March
2026.
Board Diversity
The Board recognises the importance of having a range of skilled, experienced
individuals with appropriate knowledge represented on the Board in order to
allow it to fulfil its obligations. The Board also recognises the benefits and
is supportive of the principle of diversity in its recruitment of new Board
members and has taken into account the Hampton-Alexander Review and the Parker
Review.
The Board will not display any bias for age, gender, race, sexual orientation,
religion, ethnic or national origins, or disability in considering the
appointment of its Directors. In view of its size, the Board will continue to
ensure that all appointments are made on the basis of merit against the
specification prepared for each appointment. The Board does not therefore
consider it appropriate to set measurable objectives in relation to its
diversity.
However, the Board will take account of the diversity targets set out in the
FCA's Listing Rules. The Board voluntarily discloses the following
information in relation to its diversity. As an externally managed investment
company, the Board employs no executive staff and therefore does not have a
CEO or a Chief Financial Officer, both of which are deemed senior Board
positions by the FCA. Other senior Board positions recognised by the FCA are
Chair of the Board and Senior Independent Director ('SID'). In addition, the
Board has resolved that the Company's year-end date be the most appropriate
date for disclosure purposes.
The following information has been provided by each Director. There have been
no changes since 30 September 2024.
Number of Board members Percentage of the Board Number of senior positions on the Board
Men 3 60 2
Women 2 40(1) 0
1 Meets the target that at least 40% of Directors are women as set out in UKLR
14.3.30R.
Number of Board members Percentage of the Board Number of senior positions on the Board
White British or other White (including minority-white groups) 4 80 2
Black/African/Caribbean/Black British 1 20(1) 0
1 Meets the target that at least one individual on the Board is from a
minority background as set out in UKLR 14.3.30R.
Role of the Chair
Alan Devine is the Chair of the Board. He was appointed to the Board on 28 May
2014 and assumed the role of Chair on 22 March 2022.
The Chair is responsible for providing effective leadership to the Board by
setting the tone of the Company, demonstrating objective judgement and
promoting a culture of openness and debate. The Chair facilitates the
effective contribution of and encourages active engagement by each Director.
In conjunction with the Company Secretary, the Chair ensures that Directors
receive accurate, timely and clear information to assist them with effective
decision-making. The Chair leads and acts upon the results of the formal and
rigorous annual Board and Committee evaluation process by recognising
strengths and addressing any weaknesses of the Board. He also ensures that the
Board engages with major shareholders and that all Directors understand
shareholder views.
Role of the Senior Independent Director
Calum Thomson is the SID. He was appointed to the Board on 30 November 2017
and assumed the role as SID on 22 March 2022.
The SID acts as a sounding board for the Chair and acts as an intermediary for
other Directors, when necessary. Working closely with the Chair of the
Nomination Committee, the SID leads the annual appraisal of the Chair's
performance. The SID is also available to shareholders to discuss any concerns
they may have.
Directors' and Officers' Liability Insurance
The Company maintains insurance in respect of Directors' and officers'
liabilities in relation to their acts on behalf of the Company. The Company's
Articles of Association provide that any Director or other officer of the
Company is to be indemnified out of the assets of the Company against any
liability incurred by him as a Director or other officer of the Company to the
extent permitted by law.
Management of Conflicts of Interest
The Board has a procedure in place to deal with a situation where a Director
has a conflict of interest. As part of this process, each Director discloses
other positions held and all other conflict situations that may need to be
authorised either in relation to the Director concerned or his or her
connected persons. The Board considers each Director's situation and decides
whether to approve any conflict or other external positions, taking into
consideration what is in the best interests of the Company and whether the
Director's ability to act in accordance with his or her wider duties is
affected.
Each Director is required to notify the Company Secretary of any potential, or
actual, conflict situations that will need authorising by the Board.
Authorisations given by the Board are reviewed at each Board meeting. No
Director has a service contract with the Company, although all Directors are
issued with letters of appointment. There were no contracts during, or at the
end of the year, in which any Director was interested.
The Company has a policy of conducting its business in an honest and ethical
manner. The Company takes a zero-tolerance approach to bribery and corruption,
and has procedures in place that are proportionate to the Company's
circumstances to prevent them. The Manager also adopts a Group-wide
zero-tolerance approach and has its own detailed policy and procedures in
place to prevent bribery and corruption. Copies of the Manager's antibribery
and corruption policies are available on its website.
In relation to the corporate offence of failing to prevent tax evasion, it is
the Company's policy to conduct all business in an honest and ethical manner.
The Company takes a zero-tolerance approach to facilitation of tax evasion
whether under UK law or under the law of any foreign country and is committed
to acting professionally, fairly and with integrity in all its business
dealings and relationships.
Financial Risk Management
The principal risks and uncertainties facing the Company are set out above.
The principal financial risks and the Company's policies for managing these
risks are set out in note 18 to the financial statements.
Corporate Governance Report
I am pleased to introduce this year's Corporate Governance Statement. In this
statement, the Company reports on its compliance with the 2019 AIC Code of
Corporate Governance ('the AIC Code') and sets out how the Board has operated
during the year. The AIC Code, published in 2019, is intended to provide a
framework of best practice in respect of the governance of investment
companies. Next year, the Company will report on its compliance with the new
2024 AIC Corporate Governance Code ('the New Code'), which applies to
accounting periods beginning on or after 1 January 2025. The Board has
reviewed the impact of the New Code and, where necessary, has commenced
preparations to be able to report on compliance.
Patria Private Equity Trust plc is committed to high standards of corporate
governance and the Board has considered and applied the principles and
provisions of the AIC Code. The AIC Code addresses the principles and
provisions set out in the UK Corporate Governance Code (the 'UK Code'), as
well as setting out additional provisions on issues that are of specific
relevance to Patria Private Equity Trust plc.
The Board considers that reporting against the principles and provisions of
the AIC Code, which has been endorsed by the Financial Reporting Council,
provides more relevant information to shareholders.
The AIC Code is available on the AIC website (theaic.co.uk). It includes an
explanation of how the AIC Code adapts the principles and provisions set out
in the UK Code to make them relevant for investment companies.
The Company has complied throughout the year with the principles and
provisions of the AIC Code. The Board attaches great importance to the matters
set out in the UK Code and strives to apply its principles in a manner that
would enable shareholders to evaluate how the principles have been applied.
However, it should be noted that where the principles and provisions are
related to the role of the Chief Executive, Executive Directors' remuneration
and the establishment of a Remuneration Committee, the Board considers these
principles and provisions not relevant as Patria Private Equity Trust is an
externally managed Company with an entirely Non-executive Board, and with no
employees or internal operations.
The AIC Code is made up of 17 principles split into five sections covering:
· board leadership and purpose;
· division of responsibilities;
· composition, succession and evaluation;
· audit, risk and internal control; and
· remuneration.
Details of how the Company has applied the principles of the AIC Code are set
out in this report.
Board Committees
The Board has appointed a number of Committees, as set out below. Copies of
their terms of reference, which clearly define the responsibilities and duties
of each Committee, are available on the Company's website or upon request from
the Company.
The performance of the Committees and their terms of reference are reviewed by
the Board on an ongoing basis and formally at least annually.
Audit Committee
The Audit Committee is chaired by Calum Thomson, who is a Chartered
Accountant, and has recent and relevant financial experience. The Committee
comprises all Non-executive Directors, except Alan Devine who stepped down as
a member on 28 May 2023, the ninth anniversary of his appointment as a Board
Director. The Board is satisfied that the Committee as a whole has competence
relevant to the investment trust sector.
The Audit Committee's Report is contained in the Annual Report
Management Engagement Committee
The Management Engagement Committee is chaired by Yvonne Stillhart. The
Committee comprises all Non-executive Directors except Alan Devine who stepped
down as a member on 28 May 2023, the ninth anniversary of his appointment as a
Board Director.
The main responsibilities of the Committee include:
· monitoring and evaluating the performance of the Manager;
· reviewing at least annually the continued retention of the Manager;
· reviewing, at least annually, the terms of appointment of the Manager
including, but not limited to, the level and method of remuneration and the
notice period of the Manager; and
· reviewing the performance and remuneration of the other key service providers
to the Company.
The Committee met once formally in respect of the year ended 30 September 2024
to review the performance and the terms of appointment of the Manager.
However, the Management Engagement Committee was heavily involved in
supporting the Board undertake due diligence on the acquisition of the
Company's Manager by Patria.
Following the annual review of the Manager, the Committee recommended to the
Board that the continuing appointment of the Manager was in the best interests
of the shareholders and the Company as a whole.
In reaching this decision, the Committee considered the Company's long-term
performance record and concluded that it remained satisfied with the
capability of the Manager to deliver satisfactory investment performance, that
its processes are thorough and robust, and that it employs a well-resourced
team of skilled and experienced fund managers. In addition, the Committee is
satisfied that the Manager has the secretarial, administrative and promotional
skills required for the effective operation and administration of the Company.
Nomination Committee
The Nomination Committee is chaired by Diane Seymour-Williams. The Committee
comprises all Non-executive Directors except Alan Devine, who stepped down as
a member on 28 May 2023, the ninth anniversary of his appointment as a Board
Director.
The main responsibilities of the Committee include:
· regularly reviewing the structure, size and composition (including the skills,
knowledge, experience, diversity and gender) of the Board;
· undertaking succession planning, taking into account the challenges and
opportunities facing the Company and identifying candidates to fill vacancies;
· recruiting new Directors, undertaking open advertising or engaging external
advisers to facilitate the search, as appropriate, with a view to considering
candidates from a wide range of backgrounds, on merit, and with due regard for
the benefits of diversity on the Board, taking care to ensure that appointees
have enough time available to devote to the position;
· ensuring that new appointees receive a formal letter of appointment and
suitable induction and ongoing training;
· arranging for the annual Board and Committee performance evaluations and
ensuring that Directors are able to commit the time required to properly
discharge their duties;
· making recommendations to the Board as to the position of Chair, SID and Chair
of the Nomination, Audit and Management Engagement Committees;
· assessing, on an annual basis, the independence of each Director; and
· approving the re-election of any Director, subject to the UK Code, the AIC
Code, or the Articles of Association, at the AGM, having due regard to their
performance, ability to continue to contribute to the Board in the light of
the knowledge, skills and experience required and the need for progressive
refreshing of the Board.
During the year, the Committee discussed Board succession planning and
succession planning for Alan Devine. Conflicted members of the Nomination
Committee did not participate in any discussions around Chair succession
planning. Alan Devine did not participate in Board Chair succession planning
discussions either.
The Company appointed Nurole Limited to assist the Committee in Board
succession planning during the year. Nurole Limited also assisted the Board
with recruitment in 2021 but is independent of the Company and the Board of
Directors.
In association with Nurole Limited, the Committee drafted a role profile and
instigated a search for an additional Non-executive Director. The Committee
led the process for the search, interview and appointment of Duncan Budge as
an additional Non-executive Director with effect from 1 February 2025. The
Committee also considered future Board succession planning requirements over
the coming years.
Going Concern
The Company's business activities, together with the factors likely to affect
its future development, performance and financial position, are set out in the
Strategic Report and Investment Manager's Review.
The Financial Statements have been prepared on the going concern basis and on
the basis that approval as an investment trust company will continue to be
met. The Directors have made an assessment of the Company's ability to
continue as a going concern and are satisfied that the Company has adequate
resources to continue in operational existence for a period of at least 12
months from the date when these Financial Statements were approved.
In making the assessment, the Directors of the Company have considered the
likely impacts of geopolitical and economic uncertainties on the Company, the
investment portfolio and the Company's operations. These include, but are not
limited to, the potential further impact of internal conflicts and election
cycles, disruptions to global supply chains and increases in the cost of
living, persistent inflation, high interest rates and the impact of climate
change on PPET's portfolio.
At each Board meeting, the Directors review the Company's latest management
accounts and other financial information. Following a review of the Company's
latest management accounts and other financial information of the Company, the
Directors believe that the Company is able to meet the obligations of the
Company as they fall due. The Company's commitments to investments are
reviewed at each Board meeting, together with its financial resources,
including cash held and its borrowing capability. Cash flow scenarios are also
presented and discussed at each meeting as well as severe but plausible stress
testing and downside liquidity modelling scenarios with varying degrees of
decline in investment valuations, decreased investment distributions and
increased call rates.
In the event of a downside scenario, PPET can take steps to limit or mitigate
the impact on the balance sheet by drawing on its revolving credit facility
which has been extended from £300.0 million to £400.0 million with effect
from 3 February 2025, and pausing on new commitments. It could also look to
raise additional credit or capital, sell assets to increase liquidity and
reduce its over-commitment ratio.
After due consideration of the balance sheet, activities of the Company, its
assets, liabilities, commitments and financial resources, the Directors have
concluded that the Company has adequate resources to continue in operation for
at least 12 months from the approval of the Financial Statements for the year
ended 30 September 2025. For this reason, they consider it appropriate to
continue to adopt the going concern basis in preparing the Financial
Statements.
Accountability and Audit
The respective responsibilities of the Directors and the Independent Auditor
in connection with the Financial Statements are set out in the Annual Report.
The Directors confirm that, so far as they are each aware, there is no
relevant audit information of which the Company's Independent Auditor was
unaware, and that each Director has taken all the steps that they might
reasonably be expected to have taken as a Director to make themselves aware of
any relevant audit information and to establish that the Company's Independent
Auditor was aware of that information.
Independent Auditor
Shareholders approved the reappointment of BDO LLP as the Company's
Independent Auditor at the AGM on 27 March 2024 and resolutions to approve its
reappointment for the year to 30 September 2025 and to authorise the Directors
to determine its remuneration will be proposed at the AGM on 25 March 2025.
Additional Information
Where not provided elsewhere in the Directors' Report, the following provides
the additional information required to be disclosed by Part 15 of the
Companies Act 2006.
There are no restrictions on the transfer of Ordinary shares in the Company
issued by the Company other than certain restrictions which may from time to
time be imposed by law. The Company is not aware of any agreements between
shareholders that may result in a transfer of securities and/or voting rights.
The rules governing the appointment of Directors are set out in the Directors'
Remuneration Report in the Annual Report. The Company's Articles of
Association may only be amended by a special resolution passed at a general
meeting of shareholders.
AGM
The Notice of the AGM, which will be held on 25 March 2025 at 12:30pm at 12
Hay Hill, Mayfair, London W1J 8NR, and the related Notes, may be found in the
Annual Report.
Shareholders are encouraged to vote on the resolutions proposed in advance of
the AGM and submit questions to the Board and to the Manager by emailing
PPET.Board@patria.com.
At the AGM, resolutions including the following business will be proposed:
Dividend Policy
As a result of the timing of the payment of the Company's interim dividends,
the Company's shareholders are unable to approve a final dividend each year.
In line with good corporate governance, the Board therefore proposes to put
the Company's dividend policy to shareholders for approval at the AGM and on
an annual basis thereafter.
The Company's dividend policy is that interim dividends on the Ordinary Shares
are payable quarterly. Resolution 3 will seek shareholder approval for the
dividend policy.
Issue of Ordinary Shares
Resolution 12, which is an ordinary resolution, will, if passed, renew the
Directors' authority to allot new Ordinary shares up to an aggregate nominal
amount of £30,313, representing 10% of the issued share capital of the
Company (excluding treasury shares) as at 27 January 2025. As at 27 January
2025 (being the latest practicable date prior to the publication of this
Notice), the Company held 2,180,128 ordinary shares of 0.2p each in treasury,
representing 1.44% of the total ordinary shares in issue (excluding treasury
shares).
Resolution 13, which is a special resolution, will, if passed, renew the
Directors' existing authority to allot new Ordinary Shares or sell treasury
shares for cash without the new Ordinary Shares first being offered to
existing shareholders in proportion to their existing holdings. This will give
the Directors authority to allot Ordinary Shares or sell shares from treasury
on a non pre-emptive basis for cash up to an aggregate nominal amount of
£30,749 (representing 10% of the issued Ordinary Share capital of the Company
as at 27 January 2025).
New Ordinary Shares, issued under this authority, will only be issued at
prices representing a premium to the last published NAV per share.
The authorities being sought under resolutions 12 and 13 shall expire at the
conclusion of the Company's next AGM in 2026 or, if earlier, on the expiry of
15 months from the date of the passing of the resolutions, unless such
authorities are renewed, varied or extended prior to such time. The Directors
have no current intention to exercise these authorities and will only do so if
they believe it is advantageous and in the best interests of shareholders as a
whole.
Purchase of the Company's Ordinary Shares
Resolution 14, which is a special resolution, seeks to renew the Board's
authority to make market purchases of the Company's Ordinary Shares in
accordance with the provisions contained in the Companies Act 2006 and the
FCA's Listing Rules. Accordingly, the Company will seek authority to purchase
up to a maximum of 14.99% of the issued share capital (excluding treasury
shares) at the date of passing of the resolution at a minimum price of 0.2
pence per share (being the nominal value).
Under the Listing Rules, the maximum price that may be paid on the exercise of
this authority must not exceed the higher of:
· 105% of the average of the middle market quotations (as derived from the Daily
Official List of the London Stock Exchange) for the shares over the five
business days immediately preceding the date of purchase; and
· the higher of the last independent trade and the highest current independent
bid on the trading venue on which the purchase is carried out.
The Board only intends to use this authority to purchase the Company's
Ordinary Shares, if doing so would result in an increase in the NAV per
Ordinary Share and would be in the best interests of shareholders. Any
Ordinary Shares purchased shall either be cancelled or held in treasury. The
authority being sought shall expire at the conclusion of the AGM in 2026 or,
if earlier, on the expiry of 15 months from the date of the passing of the
resolution unless such authority is renewed prior to such time.
Notice of General Meetings
The Companies Act 2006 provides that the minimum notice period for general
meetings of listed companies is 21 days, but with an ability for companies to
reduce this period to 14 days (other than for AGMs) provided that two
conditions are met. The first condition is that the company offers a facility,
accessible to all shareholders, to appoint a proxy by means of a website. The
second condition is that there is an annual resolution of shareholders
approving the reduction of the minimum notice period from 21 days to 14 days.
In line with previous years, the Board is therefore proposing resolution 15 as
a special resolution to approve 14 days as the minimum period of notice for
all general meetings of the Company other than AGMs, renewing the authority
passed at last year's AGM. The approval would be effective until the end of
the Company's next AGM, when it is intended that the approval be renewed.
The Board would consider on a case-by-case basis whether the use of the
flexibility offered by the shorter notice period is merited, taking into
account the circumstances, including whether the business of the meeting is
time sensitive and it would therefore be to the advantage of the shareholders
to call the meeting on shorter notice.
Investment Objective & Policy
As noted in the Chair's Statement, the Board has recently undertaken a review
of the Company's investment objective and policy. In 2019, shareholders voted
to amend the investment objective and policy to allow the Manager to have
increased flexibility to make direct investments into private companies
alongside private equity managers.
As at 30 September 2024, around 26% of the Company's portfolio was invested in
direct investments. PPET has benefitted from lower fees and strong performance
of its direct investment book and the Manager has identified a number of
opportunities to grow this book further. Whilst the majority of the Company's
portfolio will continue to comprise fund investments, the Board recommends
that the investment policy is amended to provided flexibility to increase the
direct investment opportunity through providing in the investment policy that
the expected range of direct investments (meaning co-investments and single
asset secondaries) is 20-35% of the total value of investments (and, in light
of this change, also confirm that the expected portfolio allocation to fund
investments is to be around 65-80% of the total value of investments).
The Board is also taking the opportunity to propose some simplifications,
clarifications and other amendments to PPET's investment objective and policy.
These include, but are not limited to: (i) reducing the upper limit on the
overcommitment ratio (being the ratio by which the Company can make
commitments in excess of its uninvested capital) from 75% to 65% over the
long-term (so that the over-commitment ratio should sit within the range of
30%-65% over the long term as opposed to 30% to 75%); (ii) clarify that no
single fund investment or direct investment may exceed 15% of the Company's
total value of investment at the time of investment and; (iii) make clear that
the principal focus of the Company's investment strategy is the European
mid-market.
The Listing Rules of the FCA (the "UKLRs") require any proposed material
changes to the Company's published investment objective and policy to be
submitted to the FCA for prior approval. The Company obtained FCA approval on
20 January 2025. The UKLRs also require shareholder approval prior to any
material changes being made to the Company's published investment objective
and policy.
The amendments are therefore subject to the approval of shareholders at the
Annual General Meeting. Accordingly, subject to the approval of Resolution 16,
which will be proposed as an ordinary resolution, the Company's new investment
objective and policy will be as follows and a comparison of the new investment
objective policy against the existing objective and policy is shown in the
Annual Report.
New Investment Objective:
To achieve long-term total returns through investing in and managing a diverse
portfolio of private equity investments, principally focused on the European
mid-market.
New Investment Policy:
The Company seeks to achieve its investment objective by, principally:
(i) committing to private equity funds, both on a primary basis (at a fund's
inception) and a secondary basis (by acquiring fund positions from other
investors during a fund's life); and
(ii) making direct investments (via co-investments and single company
secondaries) into private companies alongside mid-market focused private
equity firms.
The Company expects that the value of fund investments will represent around
65-80% of the total value of investments and that the value of direct
investments will represent 20-35% of the total value of investments. No single
fund investment or direct investment may exceed 15% of the Company's total
value of investments at the time of investment.
Investments made by the Company are typically with or alongside private equity
firms with whom the Manager has an established relationship and has conducted
full due diligence on.
Whilst the significant majority of investments will have a European focus, the
Company's policy is to maintain a diversified portfolio by country, industry
sector, maturity and number of underlying investments.
The Company may also hold 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 as soon as practicable where they are held
on an unrestricted basis.
As an investor in private equity funds, the Company follows an over-commitment
strategy by making commitments which exceed its uninvested capital. This
allows the Company to maximise the proportion of invested assets, allowing
efficient use of the Company's resources.
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 cash flows 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 65% 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 may be 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.
Recommendation
The Board considers that the resolutions to be proposed at the AGM are in the
best interests of the Company and most likely to promote the success of the
Company for the benefit of its members as a whole. Accordingly, the Board
recommends that shareholders vote in favour of the resolutions as they intend
to do in respect of their own beneficial shareholdings, amounting to 71,861
Ordinary Shares, representing 0.05% of the issued share capital.
By order of the Board
GPMS Corporate Secretary Limited
Company Secretary
50 Lothian Road, Festival Square
Edinburgh EH3 9WJ
29 January 2025
Directors' Responsibility Statement
Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice, the requirements of the Companies Act 2006 and
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare the
financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law)
including FRS 102 'The Financial Reporting Standard applicable in the UK and
Republic of Ireland'. Under company law the Directors must not approve the
financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or loss for the
Company for that period.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and prudent;
· state whether they have been prepared in accordance with applicable UK
Accounting Standards, subject to any material departures disclosed and
explained in the financial statements;
· prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business; and
· prepare a Directors' Report, a Strategic Report and Directors' Remuneration
Report which comply with the requirements of the Companies Act 2006.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
Act 2006.
They are also responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection of fraud and
other irregularities. The Directors are responsible for ensuring that the
Annual Report and accounts, taken as a whole, are fair, balanced, and
understandable and provides the information necessary for shareholders to
assess the Company's position and performance, business model and strategy.
Website Publication
The Directors are responsible for ensuring the Annual Report and the financial
statements are made available on a website. Financial statements are published
on the Company's website in accordance with legislation in the United Kingdom
governing the preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and integrity of
the Company's website is the responsibility of the Directors. The Directors'
responsibility also extends to the ongoing integrity of the financial
statements contained therein.
Directors' Responsibilities Pursuant to DTR4
The Directors confirm to the best of their knowledge:
· the financial statements have been prepared in accordance with applicable
accounting standards and give a true and fair view of the assets, liabilities,
financial position and profit and loss of the Company; and
· the Annual Report includes a fair review of the development and performance of
the business and the financial position of the Company, together with a
description of the principal risks and uncertainties that the Company faces.
On behalf of the Board
Alan Devine
Chair
29 January 2025
Financial Statements
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2024
For the year ended 30 September 2024 For the year ended 30 September 2023
Notes Revenue Revenue Revenue Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Total capital gains on investments 9 - 38,353 38,353 - 70,562 70,562
Currency gains / (losses) 14 - 4,251 4,251 - (60) (60)
Income 2 6,903 - 6,903 9,645 - 9,645
Investment management fee 3 (571) (10,841) (11,412) (561) (10,652) (11,213)
Administrative expenses 4 (1,269) - (1,269) (1,234) - (1,234)
Profit before finance costs and taxation 5,063 31,763 36,826 7,850 59,850 67,700
Finance costs 5 (482) (8,481) (8,963) (332) (5,821) (6,153)
Profit before taxation 4,581 23,282 27,863 7,518 54,029 61,547
Taxation 6 (1,329) 14 (1,315) (1,462) 878 (584)
Profit after taxation 3,252 23,296 26,548 6,056 54,907 60,963
Earnings per share - basic and diluted 8 2.13p 15.25p 17.38p 3.94p 35,71p 39.65p
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.
The total dividend which has been recommended based on this Statement of
Comprehensive Income is 16.80p (2023:16.00p) per Ordinary share.
The accompanying notes form an integral part of these Financial Statements.
STATEMENT OF FINANCIAL POSITION
As at 30 September 2024
As at As at
30 September 2024 30 September 2023
Notes £'000 £'000 £'000 £'000
Non-current assets
Investments 9 1,177,106 1,261,995
Current assets 1,177,106 1,261,995
Receivables 10 130,147 30,117
Cash and cash equivalents 28,358 9,436
Total Current assets 158,505 39,553
Current liabilities
Payables 11 (3,704) (5,022)
Revolving credit facility 12 (139,803) (100,883)
Net current assets / (liabilities) 14,998 (66,352)
Total assets less current liabilities 1,192,104 1,195,643
Capital and reserves
Called-up share capital 13 307 307
Share premium account 14 86,485 86,485
Special reserve 14 51,503 51,503
Capital redemption reserve 14 94 94
Capital reserves 14 1,053,715 1,057,254
Revenue reserve 14 - -
Total shareholders' funds 1,192,104 1,195,643
Net asset value per equity share 15 780.1p 777.7p
The accompanying notes form an integral part of these financial statements.
The Financial Statements of Patria Private Equity Trust plc (formerly known as
abrdn Private Equity Opportunities Trust plc), registered number SC216638,
were approved and authorised for issue by the Board of Directors on 29 January
2025 and were signed on its behalf by Alan Devine, Chair.
Alan Devine
Chair
29 January 2025
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2024
Notes Called-up Share Capital Share premium account Special reserve Capital redemption reserve Capital reserves Revenue reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 October 2023 307 86,485 51,503 94 1,057,254 - 1,195,643
Profit after taxation - - - - 23,296 3,252 26,548
Dividends paid 7 - - - - (21,927) (3,252) (25,179)
Repurchase of shares into treasury - - - - (4,909) - (4,909)
Balance at 30 September 2024 13,14 307 86,485 51,503 94 1,053,715 - 1,192,104
For the year ended 30 September 2023
Notes Called-up Share Capital Share premium account Special reserve Capital redemption reserve Capital reserves Revenue 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 - - - - 54,907 6,056 60,963
Dividends paid 7 - - - - (17,316) (6,056) (23,372)
Balance at 30 September 2023 13,14 307 86,485 51,503 94 1,057,254 - 1,195,643
The accompanying notes form an integral part of these Financial Statements.
STATEMENT OF CASH FLOWS
For the year ended For the year ended
30 September 2024 30 September 2023
Notes £'000 £'000 £'000 £'000
Cashflows from operating activities
Profit before taxation 27,863 61,547
Adjusted for:
Finance costs 5 8,963 6,153
Gains on disposal of investments 9 (82,804) (112,726)
Revaluation of investments 9 44,129 41,864
Currency (gains) / losses 14 (4,251) 60
(Increase)/decrease in non-investment related debtors (108) 241
(Decrease) / increase in creditors (1,035) 880
Tax deducted from non-UK income 6 (1,315) (584)
Net cash outflow from operating activities (8,558) (2,565)
Investing activities
Purchase of investments 9 (157,648) (189,446)
Purchase of secondary investments 9 (6,065) (3,857)
Distributions of capital proceeds by investments 9 143,595 141,555
Receipt of proceeds from disposal of investments 9 43,725 22,955
Net cash inflow / (outflow) from investing activities 23,607 (28,793)
Financing activities
Revolving credit facility - amounts drawn 12 82,954 60,239
Revolving credit facility - amounts repaid 12 (39,810) (19,893)
Interest and commitment fees paid (8,266) (6,461)
Ordinary dividends paid 7 (25,179) (23,372)
Repurchase of shares into treasury (4,909) -
Net cash inflow from financing activities 4,790 10,513
Net increase / (decrease) in cash and cash equivalents 19,839 (20,845)
Cash and cash equivalents at the beginning of the year 9,436 30,341
Currency losses on cash and cash equivalents (917) (60)
Cash and cash equivalents at the end of the year 28,358 9,436
Cash and cash equivalents consist of:
Cash 28,358 9,436
Cash and cash equivalents 28,358 9,436
The accompanying notes form an integral part of these Financial Statements.
Included in profit before taxation is dividends received from investments of
£4,527,000 (2023: £3,532,000), interest received from investments of
£1,791,000 (2023: £5,519,000) and interest received from cash balances of
£586,000 (2023: £594,000).
Included in interest and commitment fees paid is interest paid of £6,989,000
(2023: £4,787,000) and commitment fees paid of £1,277,000 (2023;
£1,674,000).
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting Policies
(a) Basis of Accounting
The Financial Statements have been prepared in accordance with the Companies
Act 2006, Financial Reporting Standard 102 and with the Statement of
Recommended Practice 'Financial Statements of Investment Trust Companies and
Venture Capital Trusts, (the 'SORP'), updated in July 2022. They have also
been prepared on the assumption that approval as an investment trust will
continue to be granted. The Financial Statements have been prepared on a going
concern basis. The Directors believe that this is appropriate for the reasons
outlined in the Directors' Report. The principal accounting policies adopted
are set out below. These policies have been applied consistently throughout
the current and prior year.
Rounding is applied to the disclosures in these Financial Statements, where
considered relevant.
(b) Revenue, Expenses and Finance Costs
Dividends and income from unquoted investments are included when the right to
receipt is established, which is the notice value date. Dividends are
accounted for as revenue in the Statement of Comprehensive Income. Interest
receivable is dealt with on an accruals basis.
All expenses are accounted for on an accruals basis. Expenses are charged
through the revenue account of the Statement of Comprehensive Income except as
follows:
· transaction costs incurred on the purchase and disposal of investments are
recognised as a capital item in the Statement of Comprehensive Income; and
· the Company charges 95% of investment management fees and finance costs to
capital, in accordance with the Board's expected long-term split of returns
between capital gains and income from the Company's investment portfolio. Bank
interest expense has been charged wholly to revenue.
(c) Investments
Investments have been designated upon initial recognition as fair value
through profit or loss as detailed below. On the date of making a legal
commitment to invest in a fund or co-investment, such commitment is recorded
and disclosed. When funds are drawn in respect of these commitments, the
resulting investment is recognised in the Financial Statements. The investment
is removed when it is realised or when the investment is wound up. Gains and
losses arising from changes in fair value are included as a capital item in
the Statement of Comprehensive Income and are ultimately recognised in the
capital reserves.
Unquoted investments are stated at the Directors' estimate of fair value and
follow the recommendations of the European Private Equity & Venture
Capital Association ('EVCA') and the British Private Equity & Venture
Capital Association ('BVCA'). The estimate of fair value is normally the
latest valuation placed on an investment by its manager as at the 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'. Where formal valuations are not
completed as at the 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 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.
For listed investments, which were actively traded on recognised stock
exchanges, fair value is determined by reference to their quoted bid prices on
the relevant exchange as at the close of business on the last trading day of
the Company's financial year.
(d) Dividends payable
Dividends are recognised in the period in which they are paid.
(e) Capital and Reserves
Share premium - The share premium account represents the premium above nominal
value received by the Company on issuing shares net of issue costs.
Special reserve - Court approval was given on 27 September 2001 for 50% of the
initial premium arising on the issue of the Ordinary Share capital to be
cancelled and transferred to a special reserve. The reserve is a distributable
reserve and may be applied in any manner as a distribution, other than by way
of a dividend.
Capital redemption reserve - This reserve is used to record the amount
equivalent to the nominal value of any of the Company's own shares purchased
and cancelled in order to maintain the Company's capital.
Capital reserve - Gains/(Losses) on disposal - Represents gains or losses on
investments realised in the period that have been recognised in the Statement
of Comprehensive Income, in addition to the transfer of any previously
recognised unrealised gains or losses on investments within 'Capital reserve -
revaluation' upon disposal. This reserve also represents other accumulated
capital-related expenditure such as management fees and finance costs, as well
as other currency gains/losses from non-investment activity. Company shares
which are repurchased into treasury are also represented in this reserve.
Capital reserve - Revaluation - Represents increases and decreases in the fair
value of investments that have been recognised in the Statement of
Comprehensive Income during the period.
Revenue Reserve - The revenue reserve represents accumulated revenue profits
retained by the Company that have not currently been distributed to
shareholders as a dividend.
The revenue and capital reserves - Gains/(losses) on disposal represent the
amount of the Company's reserves distributable by way of dividend.
(f) Taxation
i) Current taxation - Provision for corporation tax is made at the current
rate on the excess of taxable income net of any allowable deductions. In line
with the recommendations of the SORP, the allocation method used to calculate
tax relief on expenses presented against capital in the Statement of
Comprehensive Income is the 'marginal basis'. Under this basis, if taxable
income is capable of being offset entirely by expenses presented in the
revenue column of the Statement of Comprehensive Income, then no tax relief is
transferred to the capital column. Withholding tax suffered on income from
overseas investments is taken to the revenue column of the Statement of
Comprehensive Income.
ii) Deferred taxation is recognised in respect of all timing differences that
have originated but not reversed at the Statement of Financial Position date,
where transactions or events that result in an obligation to pay more or a
right to pay less tax in future have occurred at the Statement of Financial
Position date, measured on an undiscounted basis and based on enacted tax
rates. This is subject to deferred tax assets only being recognised if it is
considered more likely than not that there will be suitable profits from which
the future reversal of the underlying timing differences can be deducted.
Timing differences are differences arising between the Company's taxable
profits and its results as stated in the Financial Statements which are
capable of reversal in one or more subsequent periods.
Due to the Company's status as an investment trust company, and the intention
to continue meeting the conditions required to obtain approval in the
foreseeable future, the Company has not provided deferred tax on any capital
gains and losses arising on the revaluation or disposal of investments.
(g) Foreign Currency Translation, Functional and Presentation Currency
Foreign currency translation - Transactions in foreign currencies are
converted to Sterling at the exchange rate ruling at the date of the
transaction. Overseas assets and liabilities are translated at the exchange
rate prevailing at the Company's Statement of Financial Position date. Gains
or losses on translation of investments held at the year-end are accounted for
in the Statement of Comprehensive Income through inclusion in total capital
gains/losses on investments and is transferred to capital reserves. Gains or
losses on the translation of overseas currency balances held at the year-end
are also accounted for through the Statement of Comprehensive Income and are
transferred to capital reserves.
Functional and presentation currency - For the purposes of the Financial
Statements, the results and financial position of the Company is expressed in
Sterling, which is the functional currency and the presentation currency of
the Company.
Rates of exchange to sterling at 30 September were:
2024 2023
Euro 1.2019 1.1528
US Dollar 1.3414 1.2206
Canadian Dollar 1.8121 1.6502
Transactions in overseas currency are translated at the exchange rate
prevailing on the date of transaction.
The Company's investments are made in a number of currencies. However, the
Board considers the Company's functional currency to be Sterling. In arriving
at this conclusion, the Board considers that the shares of the Company are
listed on the London Stock Exchange. The Company is regulated in the United
Kingdom, principally having its shareholder base in the United Kingdom, pays
dividends as well as expenses in Sterling.
(h) Cash and Cash Equivalents
Cash comprises bank balances and cash held by the Company. Cash equivalents
comprise money-market funds, which are used by the Company to provide
additional short-term liquidity. Cash equivalents are short-term, highly
liquid investments that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
(i) Debtors
Debtors are recognised initially at fair value. They are subsequently measured
at amortised cost using the effective interest method, less the appropriate
allowances for estimated irrecoverable amounts.
(j) Creditors
Creditors are recognised initially at fair value. They are subsequently stated
at amortised cost using the effective interest method.
(k) Revolving Credit Facility
Revolving credit facility drawdowns are recognised initially at cost, being
the fair value of the consideration received. They are subsequently stated at
amortised cost using the effective interest method.
(l) Segmental Reporting
The Directors are of the opinion that the Company is engaged in a single
segment of business activity, being investment business. Consequently, no
business segmental analysis is provided.
(m) Judgements and Key Sources of Estimation Uncertainty
The preparation of Financial Statements requires the Company to make estimates
and assumptions and exercise judgements in applying the accounting policies
that affect the reported amounts of assets and liabilities at the date of the
Financial Statements and the reported amounts of revenues and expenses arising
during the year. Estimates and judgements are continually evaluated and based
on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. The area
where estimates and assumptions have the most significant effect on the
amounts recognised in the Financial Statements is the determination of fair
value of unquoted investments, as disclosed in Note 1(c).
2. Income
Year to Year to
30 September 2024 30 September 2023
£'000 £'000
Dividends from investments 4,526 5,519
Interest from investments 1,791 3,532
Interest from cash balances 586 594
Total income 6,903 9,645
3. Investment Management Fees
Year to 30 September 2024 Year to 30 September 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fee 571 10,841 11,412 561 10,652 11,213
The Manager of the Company is Patria Capital Partners LLP (formerly abrdn
Capital Partners LLP). In order to comply with the Alternative Investment Fund
Managers Directive, the Company appointed Patria Capital Partners LLP as its
Alternative Investment Fund Manager from1 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. The management agreement between the Company and the Manager is
terminable by either party on 12 months' written notice.
Investment management fees due to the Manager as at 30 September 2024 amounted
to £2,627,000 (30 September 2023: £3,943,000).
4. Administrative Expenses
Year to Year to
30 September 2024 30 September 2023
£'000 £'000
Directors' fees 285 269
Employers' national insurance 33 31
Secretarial and administration fees 281 266
Marketing fees 255 323
Fees and subscriptions 116 99
Auditor's remuneration 93 84
Depositary fees 66 62
Professional and consultancy fees 34 55
Legal fees 6 7
Other expenses 100 38
Total 1,269 1,234
No non-audit services were provided by the Company auditor, BDO LLP, during
the year to 30 September 2024. The Auditor's remuneration is reported net of
VAT.
Irrecoverable VAT has been included under the relevant expense line.
The administration fee payable to IQ EQ Administration Services (UK) Ltd is
adjusted annually in line with the retail price index. The administration
agreement is terminable by the Company on three months' notice.
As of 29 April 2024, the secretarial fee is payable to GPMS. The secretarial
fee payable to GPMS Corporate Secretary Limited is adjusted annually in line
with the retail price index. Prior to this date, the secretarial fee was
payable to abrdn Holdings Limited. The secretarial agreement is terminable by
the Company on six months' notice.
The emoluments paid to the Directors during the year can be found in the
Directors' Remuneration Report in the Annual Report.
5. Finance Costs
Year to 30 September 2024 Year to 30 September 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Revolving credit facility interest expense 385 6,640 7,025 215 3,604 3,819
Revolving credit facility commitment fee 64 1,213 1,277 84 1,590 1,674
Revolving credit facility arrangement fee 33 628 661 33 627 660
Total 332 5,821 8,963 332 5,821 6,153
6. Taxation
Year to Year to
30 September 2024 30 September 2023
£'000 £'000
Overseas withholding tax 1,315 584
(a) Analysis of the tax charge throughout the year
Year to 30 September 2024 Year to 30 September 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Profit before taxation 4,581 23,282 27,863 7,518 54,029 61,547
(b) Factors affecting the total tax charge for the year
The tax assessed for the year is different from the standard rate of
corporation tax in the UK. The differences are explained below.
Year to 30 September 2024 Year to 30 September 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Profit multiplied by the effective rate of corporation tax in the UK - 25.0% 1,145 5,821 6,966 1,655 11,887 13,542
(2023: 22.0%)
Non-taxable capital gains on investments (1) - (9,588) (9,588) - (15,524) (15,524)
Non-taxable currency (gains)/losses - (1,063) (1,063) - 13 13
Non-taxable income (1,131) - (1,131) (777) - (777)
Overseas withholding tax 1,315 - 1,315 584 - 584
Surplus management expenses and loan relationship deficits not relieved - 4,816 4,816 - 2,746 2,746
Total tax charge/(credit) for the year 1,329 (14) 1,315 1,462 (878) 584
1 The Company carries on business as an investment trust company with respect
to sections 1158-1159 of the Corporation Tax Act 2010. As such any capital
gains are exempt from UK taxation.
(c) Factors that may affect future tax charges
At the year-end, there is a potential deferred tax asset of £16,052,787
(2023: £11,202,939) in relation to excess management expenses carried
forward. The deferred tax asset is unrecognised at the year-end in line with
the Company's stated accounting policy.
The Corporation Tax main rate for the years 1 April 2023 and 2024 was 25%. A
revision to Corporation Tax was introduced in the Finance Bill 2021, which
retained the main rate at 19% from 1 April 2022, followed by an increase to
25% from 1 April 2023. Deferred taxes at the Statement of Financial Position
date have been measured at these enacted rates and reflected in these
Financial Statements.
7. Dividend on Ordinary Shares
Year to Year to
30 September 2024 30 September 2023
£'000 £'000
Amount recognised as a distribution to equity holders in the year:
2023 third quarterly dividend of 4.00p (2022: 3.60p) per Ordinary Share paid 6,150 5,536
on 27 October 2023 (2022: paid on 28 October 2022)
2023 fourth quarterly dividend of 4.00p per Ordinary Share (2022: 3.60p) paid 6,150 5,536
on 26 January 2024 (2022: paid on 27 January 2023)
2024 first quarterly dividend of 4.20p (2023: 4.00p) per Ordinary Share paid 6,441 6,150
on 26 April 2024 (2023: paid on 21 April 2023)
2024 second quarterly dividend of 4.20p (2023: 4.00p) per Ordinary Share paid 6,438 6,150
on 26 July 2024 (2023: paid on 28 July 2023)
Total 25,179 23,372
Set out below are the total dividends paid and proposed in respect of the
financial year, which is the basis on which the requirements of sections
1158-1159 of the Corporation Tax Act 2010 are considered. Of the total profit
after taxation for the year of £26,548,000 (2023: £60,963,000), the total
revenue and capital profits which are available for distribution by way of a
dividend for the year is £65,791,000 (2023: £102,208,000).
Year to Year to
30 September 2024 30 September 2023
£'000 £'000
2024 first quarterly dividend of 4.20p (2023: 4.00p) per Ordinary Share paid 6,441 6,150
on 26 April 2024 (2023: paid on 21 April 2023)
2024 second quarterly dividend of 4.20p (2023: 4.00p) per Ordinary Share paid 6,438 6,150
on 26 July 2024 (2023: paid on 28 July 2023)
2024 third quarterly dividend of 4.20p (2023: 4.00p) per Ordinary Share paid 6,421 6,150
on 25 October 2024 (2023: paid on 27 October 2023)
2024 fourth quarterly dividend of 4.20p per Ordinary Share (2023: 4.00p) paid 6,381 6,150
on 24 January 2025 (2023: paid on 26 January 2024)
Total 25,681 24,600
8. Earnings Per Share - Basic and Diluted
Year to Year to
30 September 2024 30 September 2023
p £'000 p £'000
The net return per Ordinary Share is based on the following figures:
Revenue net return 2.13 3,252 3.94 6,056
Capital net return 15.25 23,296 35.71 54,907
Total net return 17.38 26,548 39.65 60,963
Weighted average number of Ordinary Share in issue excluding those held in 152,806,166 153,746,294
treasury:
There are no diluting elements to the earnings per share calculation in 2024
(2023: none).
9. Investments
Year to 30 September 2024 Year to 30 September 2023
Total Total
£'000 £'000
Fair value through profit or loss:
Opening market value 1,261,995 1,192,380
Opening investment holding gains (304,198) (346,062)
Opening book cost 957,797 846,318
Movements in the year:
Additions at cost 157,648 189,446
Secondary purchases 6,065 3,857
Distribution of capital proceeds (143,595) (141,555)
Secondary sales (143,682) (52,995)
834,233 845,071
Gains on disposal of underlying investments 82,804 112,726
Closing book cost 917,037 957,797
Closing investment holding gains 260,069 304,198
Closing market value 1,177,106 1,261,995
Year to 30 September 2024 Year to 30 September 2023
Total Total
£'000 £'000
Gains on investments held at fair value through profit or loss based on
historical costs.
82,804 112,726
Gains recognised as unrealised in previous years in respect of distributed
capital proceeds or disposal of investments.
(64,168) (46,367)
Gains on distribution of capital proceeds or disposal of investments based on
the carrying value at the previous year end date
18,636 66,359
Net movement in unrealised investment gains 20,390 4,503
Total capital gains on investments held at fair value through profit or loss 38,675 70,862
Transaction costs
During the year, expenses were incurred in acquiring or disposing of
investments. These have been expensed through capital and are included within
capital gains on investments of £38,353,000 (2023: £70,562,000) in the
Statement of Comprehensive Income. The total costs were as follows:
Year to 30 September 2024 Year to 30 September 2023
£'000 £'000
Transaction costs 322 300
10. Receivables
30 September 2024 30 September 2023
£'000 £'000
Amounts falling due within one year:
Investments receivable 129,996 30,040
Prepayments 104 39
Interest receivable 47 38
Total 130,147 30,117
Investments receivable as at 30 September 2024 relate to sales proceeds due to
the Company, receivable in three contractual payments with the first payment
received in December 2024, the second in January 2025 and the final payment
due in September 2025.
11. Payables
30 September 2024 30 September 2023
£'000 £'000
Amounts falling due within one year:
Management fee 2,627 3,943
Accruals 998 888
Secretarial and administration fee 79 191
Total 3,704 5,022
12. Revolving Credit Facility
30 September 2024 30 September 2023
£'000 £'000
Revolving credit facility 139,803 100,883
At 30 September 2024, the Company had a £300.0 million (30 September 2023:
£300.0 million) committed, multicurrency syndicated revolving credit
facility, of which £140.6 million (30 September 2023: £102.4 million) had
been drawn down. The facility is provided by The Royal Bank of Scotland
International Limited, Société Générale and State Street Bank
International GmbH. The facility expires in December 2025.
The interest rate on the facility is calculated as the defined reference rate
of the currency drawn plus 1.625% rising to 2.0% depending on the level of
utilisation, whilst the commitment fee rate payable on non-utilisation is
between 0.7% and 0.8% per annum based on the level of facility utilisation.
Inclusive of the revolving credit facility balance is £813,000 of unamortised
revolving credit facility fees, which partially offsets the total amount of
the facility balance drawn as at 30 September 2024 (2023: £1,475,000).
On 24 January 2025, the Company announced an expansion of the credit facility
which increased from £300.0 million to £400.0 million with Banco Santander,
S.A. and State Street Bank & Trust Company joining the syndicate of banks
as new lenders alongside current providers The Royal Bank of Scotland
International Limited (London Branch), Société Générale, London Branch and
State Street Bank International GMBH. NatWest Markets plc continues to act
as facility agent and will now also act as security agent to the syndicate of
banks.
The credit facility now matures on 3 February 2028 with options to extend for
up to a further two years.
The margin on the Loan Facility is 2.6%, and the commitment fee payable on
non-utilisation is between 0.8% and 0.9% per annum, depending on the level of
utilisation. An annual fee of 0.35% is also payable.
Analysis of changes in net debt
As at 30 September 2023 Cashflows Operational non-cash charges(1) As at 30 September 2024
£'000 £'000 £'000
Cash and cash equivalents 9,436 19,839 (917) 28,358
Revolving credit facility (100,883) (43,142) (4,221) 139,803
Net debt (91,447) (23,303) (5,138) 168,161
(1) Other non-cash charges relate to foreign currency movements as well as the
amortisation of capitalised arrangement fees which are included against the
revolving credit facility balance.
13. Called-up Share Capital
30 September 2024 30 September 2023
£'000 £'000
Issued and fully paid:
Ordinary shares of 0.2p
Opening balance of 153,746,294 (2023: 153,746,294) Ordinary Shares 307 307
Closing balance of 152,806,166 (2023: 153,746,294) Ordinary Shares 307 307
The Company may buy back its own shares where it is judged to be beneficial to
shareholders, taking into account the discount between the Company's net
assets and the share price, and the supply and demand for the Company's shares
in the open market.
The Company repurchased 940,128 (2023: none) of its own Ordinary Shares during
the year ended 30 September 2024, which are held in treasury. Including shares
held in treasury, the Company has a total number of 153,746,294 shares in
issue.
14. Reserves
Capital reserves
Share Special Capital Gains/ Revaluation Revenue
premium reserve redemption (losses) on reserve
account reserve disposal
£'000 £'000 £'000 £'000 £'000 £'000
Opening balances at 1 October 2023 86,485 51,503 94 753,009 304,245 -
Gains on disposal of investments - - - 82,804 - -
Management fee charged to capital - - - (10,841) - -
Finance costs charged to capital - - - (8,481) - -
Transaction costs - - - (322) - -
Tax relief on management fee and finance costs above - - - 14 - -
Currency (losses) / gains - - - (635) 619 -
Revaluation of investments - - - - (41,864) -
Repurchase of shares into treasury (4,909)
Return after taxation - - - - - 3,252
Dividends during the year - - - (21,927) - (3,252)
Closing balances at 30 September 2024 86,485 51,503 94 788,712 265,003 -
The revenue and capital reserve - gains/(losses) on disposal represent the
amounts of the Company's reserve distributable by way of dividend.
15. Net Assets Per Equity Share
As at 30 September 2024 As at 30 September 2023
Basic and diluted:
Ordinary shareholders' funds £1,192,104,190 £1,195,643,000
Number of Ordinary Shares in issue 153,746,294 153,746,294
Number of Ordinary Shares in issue excluding those held in treasury
152,806,166 153,746,294
Net asset value per ordinary share 780.1p 777.7p
The net assets 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 assets per equity share calculation
in 2024 (2023: none).
16. Commitments and Contingent Liabilities
30 September 2024 30 September 2023
£'000 £'000
Outstanding calls on investments 652,709 651,991
This represents commitments made to fund and direct investments interests
remaining undrawn. The undrawn commitments will typically be paid by the
Company to the various interests upon request of its general partner under the
terms of the respective underlying agreement each investment.
17. Parent Undertaking, Related Party Transactions and Transactions with the
Manager
The ultimate parent undertaking of the Company is Phoenix Group Holdings. The
results for the year to 30 September 2024 are incorporated into the group
Financial Statements of Phoenix Group Holdings, which will be available to
download from the website: thephoenixgroup.com.
Phoenix Life Limited ('PLL'), which is 100% owned by Phoenix Group Holdings)
and the Company have entered into a relationship agreement which provides
that, for so long as PLL and its Associates exercise, or control the exercise,
of 30% or more of the voting rights of the Company, PLL 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 propose 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 year ended
30 September 2024, PLL received dividends from the Company totalling
£13,509,000 (2023: £12,521,000).
During the period ended 30 September 2024, the Manager charged management fees
totalling £11,411,000 (2023: £11,213,000) to the Company in the normal
course of business. The balance of management fees outstanding at 30 September
2024 was £2,627,000 (2023: £3,943,000).
abrdn Investment Management Limited, which shared had the same ultimate parent
as the Manager during the period ended 30 September 2024, received fees for
the provision of promotional activities of £34,000 (30 September 2023:
£108,000) during the period. The balance of promotional activities
outstanding at 30 September 2024 was £nil (2023: £89,000).
abrdn Holdings Limited, which had shared the same ultimate parent as the
Manager during the period ended 30 September 2024, received fees for the
provision of Company Secretarial services of £42,000 (30 September 2023:
£81,000) during the period. The balance of secretarial fees outstanding at 30
September 2024 was £21,000 (2023: £154,000).
Further to the public announcement on 23 October 2023, abrdn plc as the former
ultimate beneficial owner of the Manager completed the sale of its European
Private Equity business to Nasdaq-listed Patria Investments on 29 April 2024.
The announcement of and subsequent sale of the Manager of the Company has no
impact on the Financial Statements.
Following the sale transaction, abrdn Holdings Limited no longer provides
Company Secretarial services to the Company. These services, with effect from
29 April 2024, are provided by GPMS Corporate Secretary Limited, which shares
the same ultimate parent as the Manager. GPMS Corporate Secretary Limited
received fees for the provision of Company Secretarial services of £42,000
(2023: nil). The balance of secretarial fees outstanding at 30 September 2024
was £42,000 (2023: nil).
No other related party transactions were undertaken during the year ended 30
September 2024.
18. Risk Management, Financial Assets and Liabilities
Financial Assets and Liabilities
The Company's financial instruments comprise fund and other investments,
money-market funds, cash balances, debtors and creditors that arise from its
operations. The assets and liabilities are managed with the overall objective
of achieving long-term total returns for shareholders.
Summary of Financial Assets and Financial Liabilities by Category
The carrying amounts of the Company's financial assets and financial
liabilities, as recognised at the Statement of Financial Position date of the
reporting periods under review, are categorised as follows:
30 September 2024 30 September 2023
£'000 £'000
Financial assets
Financial assets measured at fair value through profit or loss:
Fixed asset investments - designated as such on initial recognition 1,177,106 1,261,995
Financial assets measured at amortised cost:
Investments receivable 129,996 30,040
Money-market funds, cash and short-term deposits 28,358 9,436
1,335,460 1,301,471
Non-financial assets
Other receivables 151 77
151 77
Financial Liabilities
Measured at amortised cost:
Current liabilities:
Payables 3,704 5,022
Revolving credit facility 139,803 100,883
143,507 105,905
Assets/Liabilities Measured at Amortised Cost
The carrying value of the current assets and liabilities is deemed to be fair
value due to the short-term nature of the instruments and/or the instruments
bearing interest at the market rates.
Risk Management
The Directors manage investment risk principally through setting an investment
policy and by contracting management of the Company's investments to an
investment manager under terms which incorporate appropriate duties and
restrictions, and by monitoring performance in relation to these. The
Company's investments are in private equity funds, typically unquoted limited
partnerships and co-investments. These are valued by their managers generally
in line with the EVCA and the BVCA guidelines, which provide for a fair value
basis of valuation. The funds may hold investments that have become quoted or
the co-investment may become quoted and these will be valued at the
appropriate listed price, subject to any discount for marketability
restrictions.
As explained in the Company's investment policy, risk is spread by investing
across a range of countries and industrial sectors, thereby reducing excessive
exposure to particular areas. The Manager's investment review and monitoring
process is used to identify and, where possible, reduce risk of loss of value
in the Company's investments.
The Company's investing activities expose it to various types of risk that are
associated with the financial instruments and markets in which it invests. The
most important types of financial risk to which the Company is exposed are
market risk, over-commitment risk, liquidity risk, credit risk and interest
rate risk.
The nature and extent of the financial instruments outstanding at the
Statement of Financial Position date and the risk management policies employed
by the Company are discussed below.
Market Risk
a) Price Risk
The Company is at risk of the economic cycle impacting the listed financial
markets and hence potentially affecting the pricing of new underlying
investments, the valuation of existing underlying investments and the price
and timing of exits. By having a diversified and rolling portfolio of
investments the Company is well-placed to take advantage of economic cycles.
100% of the Company's investments are held at fair value. The valuation
methodology employed by the managers of the unquoted investments may include
the application of EBITDA ratios derived from listed companies with similar
characteristics. Therefore, the value of the Company's portfolio is indirectly
affected by price movements on listed financial exchanges. A 10% increase in
the valuation of investments at 30 September 2024 would have increased the net
assets attributable to the Company's shareholders and the total return for the
year by £117,711,000 (2023: £126,995,000); a 10% change in the opposite
direction would have decreased the net assets attributable to the Company's
shareholders and the total return for the year by an equivalent amount. Due to
the private nature of the underlying companies in which the Company's
investments are invested, it is not possible for the Company to pinpoint the
effect to the Company's net assets of changes to the EBITDA ratios of listed
markets any more accurately.
b) Currency Risk
The Company makes fund and co-investment commitments in currencies other than
Sterling and, accordingly, a significant proportion of its investments and
cash balances are in currencies other than Sterling. In addition, the
Company's syndicated revolving credit facility is a multicurrency facility.
Therefore, the Company's NAV is sensitive to movements in foreign exchange
rates.
The Manager monitors the Company's exposure to foreign currencies and reports
to the Board on a regular basis. It is not the Company's policy to hedge
foreign currency risk. It is expected that the majority of the Company's
commitments and investments will be denominated in Euros. Accordingly, the
majority of the Company's indebtedness will usually be held in that currency.
No currency swaps or forwards were used during the year.
The table below sets out the Company's currency exposure.
30 September 2024 30 September 2023
Local Sterling Local Sterling
Currency Equivalent Currency Equivalent
'000 £'000 '000 £'000
Fixed asset investments:
Euro 1,033,478 859,906 1,105,059 958,569
Sterling 65,406 65,406 67,425 67,425
US Dollar 337,745 251,795 288,052 236,002
Cash and cash equivalents:
Euro 25,491 21,210 9,056 7,856
Sterling 1,915 1,915 569 569
US Dollar 7,018 5,232 1,232 1,009
Canadian Dollar 3 1 3 2
Investment receivable
Euro 156,236 129,996 34,631 30,040
Other receivables:
Euro 34 28 26 23
Sterling 105 105 42 42
US Dollar 23 17 16 13
Revolving credit facility:
Euro (168,022) (139,803) (116,300) (100,883)
Other creditors:
Euro (807) (672) (650) (565)
Sterling (2,993) (2,993) (4,423) (4,423)
US Dollar (53) (39) (43) (35)
Total 1,192,104 1,195,643
Outstanding commitments:
Euro 562,123 467,715 563,736 489,006
Sterling 33,830 33,830 10,084 10,084
US Dollar 202,764 151,164 186,623 152,901
Total 652,709 651,991
c) Currency Sensitivity
During the year ended 30 September 2024, Sterling appreciated by 4.3% relative
to the Euro (2023: appreciated 1.2%) and appreciated by 9.9% relative to the
US Dollar (2023: appreciated 9.3%).
To highlight the sensitivity to currency movements, if the value of Sterling
had weakened against both of the above currencies by 10% compared to the
exchange rates at 30 September 2023, the capital gain for the year would have
increased by £125,221,000 (2023: £125,617,000); a 10% change in the opposite
direction would have decreased the capital gain for the year by £102,454,000
(2023: £102,777,000).
The calculations above are based on the portfolio valuation and cash and
revolving credit facility balances as at the respective Statement of Financial
Position dates and are not necessarily representative of the year as a whole.
Based on similar assumptions, the amount of outstanding commitments would have
increased by £56,309,000 at the year-end (2023: £71,323,000) a 10% change in
the opposite direction would have decreased the amount of outstanding
commitments by £68,822,000 (2023: £58,355,000).
Liquidity Risk
The Company has significant investments in unquoted investments which are
relatively illiquid. As a result, the Company may not be able to liquidate its
investments quickly at an amount close to their fair value in order to meet
its liquidity requirements, including the need to meet outstanding undrawn
commitments. The Company manages its liquid investments to ensure sufficient
cash is available to meet contractual commitments and also seeks to have cash
available to meet other short-term financial needs. Short-term flexibility is
achieved, where necessary, through the use of the syndicated revolving credit
facility. Liquidity risk is monitored by the Manager on an ongoing basis and
by the Board on a regular basis. Payables, as disclosed in Note 11, all fall
due within one year and the revolving credit facility, as described in Note
12, has drawn £140,616,000 as at 30 September 2024 (2023: £102,358,000),
with an amount of £159,384,000 (2023: £197,642,000) still available to be
drawn.
Credit Risk
Credit risk is the exposure to loss from failure of a counterparty to deliver
securities or cash for acquisitions or disposals of investments or to repay
deposits. The Company places funds with authorised deposit takers from time to
time and, therefore, is potentially at risk from the failure of any such
institution. At the year-end, the Company's financial assets exposed to credit
risk amounted to the following:
30 September 2024 30 September 2023
£'000 £'000
Cash and cash equivalents 28,358 9,436
Investment receivable 129,996 30,040
158,354 39,476
The Company's cash is held by BNP Paribas Securities Services SA, which is
rated A+ by Standard and Poor's. Should the credit quality or the financial
position of the bank deteriorate significantly, the Manager would move the
cash balances to another institution.
As at 30 September 2024, £129,996,000 of the investment receivable per Note
10 relate to future proceeds, which are due from the secondary sale of fund
investments during the period. Under the terms of the transaction, the
proceeds of sale are to be received in three contractual payments, the first
two of which were received in December 2024 and January 2025 respectively,
with the final payment due in September 2025. The Manager considers the credit
risk associated with this balance to be in line with those arising from the
normal course of business. To date, the buyer has met the payment profile
outlined and agreed in the contractually binding sales and purchase agreement.
The Manager continues to monitor market developments, which may affect this
assessment.
Interest Rate Risk
The Company will be affected by interest rate changes as it holds some
interest-bearing financial assets and liabilities, which are shown in the
table below; however, the majority of its financial assets are investments in
private equity investments, which are non-interest bearing. Interest rate
movements may affect the level of income receivable on money-market funds and
cash deposits and interest payable on the Company's variable rate borrowings.
The possible effects on the cash flows that could arise as a result of changes
in interest rates are taken into account when making investment and borrowing
decisions. Derivative contracts are not used to hedge against any exposure to
interest rate risk.
Interest Risk Profile
The interest rate risk profile of the portfolio of financial assets and
liabilities at the Statement of Financial Position date was as follows:
30 September 2024 30 September 2023
Weighted average Weighted average
interest rate interest rate
% £'000 % £'000
Floating rate
Financial assets: cash and cash equivalents 3.05 28,358 2.72 9,436
Financial liabilities: Revolving credit facility 5.58 139,803 4.49 100,883
The weighted average interest rate on the bank balances is based on the
interest rate payable, weighted by the total value of the balances. The
weighted average period for which interest rates are fixed on the bank
balances is 31 days (2023: 31 days).
The weighted average interest rate on the revolving credit facility is based
on the interest rate paid on the individual loan balances, weighted by the
duration and value of each individual loan balance outstanding during the
financial year.
Interest Rate Sensitivity
An increase of 1% in interest rates would have decreased the net assets
attributable to the Company's shareholders by £1,258,000 (2023: £853,000). A
decrease of 1% would have increased the net assets attributable to the
Company's shareholders by £1,258,000 (2023: £853,000). The impact of
interest rates on revenue is not material. The calculations are based on the
interest paid and received during the year.
Capital Management Policies and Procedures
The Company's capital management objectives are:
· to ensure that the Company will be able to continue as a going concern; and
· to maximise the return to its equity shareholders through an appropriate
balance of equity capital and debt.
As at the year-end, the Company had net debt of £112.3 million (2023: £92.8
million). 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 Board monitors and reviews the broad structure of the Company's capital on
an ongoing basis. This review includes the nature and planned level of
gearing, which takes account of the Manager's views on the market and the
extent to which revenue in excess of that which is required to be distributed
should be retained.
The Company's objectives, policies and processes for managing capital are
unchanged from the preceding accounting period. Any year-end positions are
presented in the Statement of Financial Position.
The Company is subject to externally imposed capital requirements with respect
to the obligation and ability to pay dividends by section 1159 of the
Corporation Tax Act 2010 and by the Companies Act 2006, respectively.
19. Fair Value Hierarchy
FRS 102 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
Statement of Financial Position, are grouped into the following fair value
hierarchy at 30 September 2024:
Level 1 Level 2 Level 3 Total
Financial assets at fair value through profit or loss £'000 £'000 £'000 £'000
Unquoted investments - - 1,177,106 1,177,106
Net fair value - - 1,177,106 1,177,106
As at 30 September 2023
Level 1 Level 2 Level 3 Total
Financial assets at fair value through profit or loss £'000 £'000 £'000 £'000
Unquoted investments - - 1,261,995 1,261,995
Net fair value - - 1,261,995 1,261,995
Unquoted Investments
Unquoted investments are stated at the Directors' estimate of fair value and
follow the recommendations of the EVCA and the BVCA. The estimate of fair
value is normally the latest valuation placed on an investment by its manager
as at the 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
adjusted for marketability discounts where appropriate, or by reference to
recent transactions. Where formal valuations are not completed as at the
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 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.
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 Association of
Investment Companies ('AIC') SORP.
The APMs are considered by the Board and the Manager to be the most relevant
basis for shareholders in assessing the overall performance of the Company and
for comparing the performance of the Company to its peers, taking into account
industry practice. Definitions and reconciliations to IFRS measures are
provided in the main body of the report or in this Glossary of the Annual
Report, where appropriate.
In selecting these APMs, the Directors considered the key objectives and
expectations of typical investors in an investment trust such as PPET.
Annualised NAV Total Return
Annualised NAV total return is calculated as the return of the net asset value
('NAV') per share compounded on a quarterly basis, based on reported NAV per
share from inception to 30 September 2024. NAV total return is inclusive of
all dividends received since inception and assumes all dividends are
reinvested at the time they are received and generate the same return as NAV
per share during each reporting period.
Assuming dividends are not reinvested results in an annualised NAV total
return of 10.7 % since inception.
Discount
The amount by which the market price per share is lower than the net asset
value ('NAV') per share of an investment trust. The discount is normally
expressed as a percentage of the NAV per share.
As at As at
30 September 30 September
2024
2023
Share price (p) a 535.0 442.0
Net Asset Value per share (p) b 780.1 777.7
Discount (%) c = (b-a) / b 31.4 43.2
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 As at
30 September 30 September
2024
2023
Dividend per share (p) a 16.8 16.0
Share price (p) b 535.0 442.0
Dividend yield (%) c = a / b 3.1 3.6
Gearing
Gearing refers to the ratio of the Company's debt to its equity capital. The
Company may borrow money to invest in additional investments for its
portfolio.
NAV total return ('NAV TR')
NAV TR 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 per share (p) as at 30 September 2023 a 777.7
NAV per share (p) as at 30 September 2024 b 780.1
Price Movement c = (b/a) - 1 0.3%
Dividend Reinvestment(1) d 2.1%
NAV Total return e = c + d 2.4%
1 NAV TR assumes investing the dividend in the NAV of the Company on the date
on which that dividend goes ex-dividend.
Ongoing charges ratio ('OCR')
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 buyback
transactions, expressed as a percentage of the average NAV during the period.
The OCR previously included an allocation of the look-through expenses of the
Company's underlying investments, excluding performance-related fees. However,
in accordance with the AIC SORP, the Board agreed that it is not appropriate
for PPET to include in its own cost disclosures, on a 'look through' or any
other basis, all or part of any costs incurred by its underlying investments.
This is in line with the approach adopted by PPET's peers.
The ongoing charges ratio has been calculated in accordance with the
applicable guidance issued by the AIC.
Year ended Year ended
30 September 2024 30 September 2023
£'000 £'000
Investment management fee a 11,412 11,213
Administrative expenses b 1,269 1,234
Ongoing charges c = a + b 12,681 12,447
Average net assets d 1,200,147 1,175,937
Ongoing charges ratio e = c / d 1.06% 1.06%(1)
(1) In the Annual Report to 30 September 2023, this was reported as the Total
Expenses Ratio. The Ongoing Charges Ratio was reported as 2.84% and included
an element of lock-through costs.
Over-commitment ratio
Outstanding commitments less cash and cash equivalents and the value of
undrawn loan facilities divided by portfolio NAV.
As at As at
30 September 2024
30 September 2023
£000
£000
Undrawn Commitments a 652,708 651,991
Less undrawn loan facility b (159,384) (197,720)
Less cash and cash equivalents c (158,354) (9,436)
Net outstanding commitments d = a + b + c 334,970 444,835
Portfolio NAV e 1,177,106 1,261,995
Over-commitment ratio f = d / e 28.5% 35.2%
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 2023 a 442.0
Share price (p) as at 30 September 2024 b 535.0
Price Movement (%) c = (b / a) - 1 21.0%
Dividend Reinvestment (%)1 d 3.9%
Share price total return e = c + d 24.9%
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.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 September 2024 or 2023 but is
derived from those accounts. Statutory accounts for 2023 have been delivered
to the registrar of companies, and those for 2024 will be delivered in due
course. The auditor has reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006
The statutory accounts for the financial year ended 30 September 2024 have
been approved by the Board and audited but will not be filed with the
Registrar of Companies until after the Company's Annual General Meeting which
will be held on 25 March 2025 at 12:30pm at 12 Hay Hill, Mayfair, London, W1J
8NR.
The Annual Report will be posted to shareholders shortly and copies are
available from the Manager or from the Company's website
(www.patriaprivateequitytrust.com).
For Patria Private Equity Trust plc
GPMS Corporate Secretary Limited, Company Secretary
For further information, please contact:
For Patria Private Equity Trust plc
Alan Gauld, Fund Manager PPET.Board@patria.com
Investec Bank plc +44 (0)20 7597 4000
Lucy Lewis
Tom Skinner
Denis Flanagan
SEC Newgate (For Media)
Sally Walton +44 (0)20 3757 6872
ppet@secnewgate.co.uk
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