REG - Princess Private Eq. Princess Priv E-PEYS - Princess 2023 annual results and webcast details

Princess Private Equity HoldingAnnouncement

25/03/2024 07:00

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RNS Number : 0494I  Princess Private Equity Holding Ltd  25 March 2024

(LSE: PEYS/PEY)

Princess Private Equity Holding Limited

 

Princess 2023 annual results and webcast details

Strengthening the Board

Capital allocation policy

Proposed change of name

 

2023 financial highlights

Princess Private Equity Holding Limited today publishes its annual results for
2023. The key financial highlights are:

 

·    Net asset value ("NAV") closed the year at EUR 14.16 per share.
Including the total dividend of EUR 0.73 per share, this represents a NAV
total return of 1.8%.

·    Share price total return was 32.6%. Discount to NAV was 26.7% at
year-end.

·    Value creation of 5.7% was the main driver of NAV growth with the
three largest contributors in the portfolio being PCI Pharma Services, Vishal
Mega Mart and DiversiTech.

·    5% of 2022 year-end NAV paid out in 2023 amounted to EUR 0.73 per
share, resulting in an annualized dividend yield of 7% based on the closing
share price of EUR 10.38.

·    The total capital invested by Princess amounted to EUR 12.1
million, predominantly in follow-on investments in portfolio companies. EUR
30.0 million was committed to Partners Group Direct Equity V Fund during the
year. Since the year-end a further EUR 20.0 million was committed to Partners
Group Direct Equity V Fund, resulting in a total commitment to the Fund of EUR
50.0 million.

·    Princess received distributions of EUR 46.7 million, of which EUR
35.4 million stemmed from direct investments.

·    Cash balance was EUR 9.7 million. EUR 19.0 million of the EUR 140.0
million revolving credit facility was drawn at 31 December 2023. The credit
facility expires in December 2026.

·    To align Princess with the broader listed private equity universe,
the Board agreed for the Company to discontinue the hedging of currency
exposures from 1 April 2023.

 

Princess 2023 results webcast details

Princess will hold a webcast today, Monday 25 March 2024, at 09:00 GMT /
10:00 CET.  Partners Group, the Investment Manager, will give an update on
the financial results and developments in the Princess portfolio based on
audited figures as of 31 December 2023.  To access the live webcast please
use this LINK
(https://event.eu.on24.com/wcc/r/8000061908/E806E3B197E6114CF1C6DB9C9FAC4C07)
or go directly to the Investor Relations section of the Company's website. The
presentation is available here: Princess 2023 Annual Results presentation
(https://www.princess-privateequity.net/en/investor-relations/web-cast-live-events/)
.

The full annual report is available here: Financial reports - Princess Private
Equity Holding Limited
(https://www.princess-privateequity.net/en/investor-relations/financial-reports/)
.

 

The three key highlights are:

 

Strengthening the Board

Peter McKellar was appointed as a Director and the Non-Executive Chair of the
Board with effect from 23 November 2023. He has extensive experience in the
asset management, investment company and private equity sectors. He is
currently a Non-Executive Director of 3i Group plc, the Deputy Chairman of
AssetCo plc, a Non-Executive Director of Investcorp Capital plc, and a Board
Member of Scottish Enterprise. He was formerly Global Head of Private Markets
at Abrdn plc, where he oversaw £55 billion of assets under management, before
which he led Standard Life Investments' private equity and infrastructure
business and was their Chief Investment Officer. During his time at Standard
Life Investments Peter led the listing in 2001 and was then lead manager of
Standard Life Private Equity Trust (now called Abrdn Private Equity
Opportunities) until 2015. Prior to that, he held a variety of finance posts
in industry and corporate finance positions. Peter holds an LLB (Hons) from
Edinburgh University and is a UK resident.

On 15 February 2024, Axel Holtrup was appointed as a Non-Executive Director.
He is a seasoned private equity investor with more than 25 years of investment
experience. He is also an early-stage technology investor and serves as a
member of the Supervisory Board of Deutsche Beteiligungs AG ("DBAG"), a German
listed private equity company. Previously he worked over the course of 20
years as a partner in private equity firms AEA Investors, Silver Lake Partners
and Investcorp. His responsibilities included sourcing, executing and managing
major private equity transactions across Europe. Axel started his career in
investment banking at Morgan Stanley in 1995. Axel holds a Bachelor (Hons)
degree in European Business Administration from Middlesex University in London
and a Diplom Betriebswirt from Reutlingen University in Germany. He is a
German national who resides in the UK.

Gerhard Roggemann is a German resident. He was appointed to the Board on 21
March 2024 and also serves as a board member for the Else-Kroener-Fresenius
Foundation, is Deputy Chair of the Supervisory Board for Bremer AG, and is an
independent business consultant, based in Hanover, Germany. Gerhard's
professional experience includes serving as a non-executive director and later
as Chair of the Supervisory Board of Deutsche Beteiligungs AG ("DBAG"), a
Frankfurt-listed private equity firm focused on German mid-market buyouts
(2009-2020). He has also been a non-executive director of a number of
prominent German and UK companies, including Deutsche Boerse AG, Fresenius SE
& Co KGaA, Friends Life Group Plc, F&C Asset Management Plc and
Resolution Ltd Guernsey. Gerhard previously worked in senior management
positions at JP Morgan & Co, Norddeutsche Landesbank and WestLB. In all
these functions his responsibilities centered around investment banking,
trading, and investment management.

 

Henning von der Forst notified the Board in October 2023 that, having served
as a Non-Executive Director since 2012, he intends not to seek re-election at
the next Annual General Meeting ("AGM").

 

Capital allocation policy

It is critical for the Board and the Investment Manager to have a clear and
robust capital allocation policy. This is not only with regard to addressing
the share price discount to NAV on an absolute and relative basis to peers,
but about the fundamental decision as to whether further investment in the
existing portfolio may offer better returns for shareholders than undertaking
new investment. This is particularly apposite when the share price discount is
high and any purchase of shares by the Company, and consequential reduction in
the share count, offers an immediate enhancement to NAV, as well as an ongoing
return from further investment in the existing portfolio. The listed private
equity sector has struggled historically with capital allocation. As we
hopefully move into an improving private equity environment, with increasing
realizations, greater liquidity, and rising NAVs, it is essential that the
right criteria exist for the allocation of capital and that such criteria are
transparent, so that existing and potential shareholders can have confidence
in the decisions being made.

 

Following Board approval, the Company's policy going forward is that:

"Once the share price is at a discount of more than or equal to 30% to the
last reported NAV, 75% of "Free Cash Flow" will be used to acquire issued
shares, either for cancellation or to be placed into treasury for potential
re-issue, until such time as the discount is less than 30%. Where the share
price is at a discount of more than or equal to 20% to the last reported NAV,
but less than 30%, 50% of Free Cash Flow will be used to acquire issued shares
until such time as the discount is less than 20%.

 

Free Cash Flow is defined as gross cash plus distributions and secondary sales
contracted to be received by the Company, less (for the next rolling 6 months)
a provision for:

 

1. payment of the current dividend objective of 5% of the previous year end
NAV;

2. fees, expenses and interest payable in managing and running the Company;

3. the repayment of any drawn debt facilities; and

4. a reserve of 3% of net assets, to cover anticipated cash drawn in respect
of existing fund commitments, follow-on funding for existing direct
investments, and new direct investments at an advanced stage where such sums
are committed.

 

The quantum of Free Cash Flow will be calculated at the beginning of each
quarter. The above policy is subject to the limits and terms of the
shareholder authority approved at each AGM to buy back up to 14.99% of the
Company's shares. The policy will be reviewed regularly, and at least
annually, by the Board and may be amended in light of Company and/or market
conditions. Importantly, the Board reserves the right to undertake share buy
backs at discounts of less than 20%."

 

The policy effectively creates a "cash sweep", where if the Company's shares
are trading at more than or equal to a 20% or 30% discount to the last
announced NAV, 50% or 75% respectively of Free Cash Flow will be used to
undertake share buy backs in the market. The percentage share price discounts
chosen should be seen in the context of the Company's average share price
discount over the last ten years and since listing of 18% and 24%
respectively.

 

Fundamentally, the policy respects the liquidity position and waterfall of the
Company. Meeting the Company's dividend objective of 5% of the previous
year-end NAV is at the heart of the Company's new capital allocation policy.
As such, the dividend, as well as ongoing fees, expenses, the repayment of
outstanding indebtedness, and a reserve to meet existing investment
commitments, will be provided for prior to excess Free Cash Flow being used
for share buy backs.

 

Proposed change of name

The Company's Investment Manager, Partners Group, is one of the largest
private equity and private markets investment managers in the world with
approximately USD 147 billion of assets under management. The Investment
Manager has an enviable investment track record of delivering superior returns
and has received numerous awards for its investment performance and industry
research. Against this background the Board believes it is important that the
relationship with the Investment Manager is more clearly recognized in the
Company's name and that the Company is identifiable as a Partners Group
managed vehicle. Equally, the Investment Manager recognizes that the Company
is of significant importance to it as a client and that it is a "shop window"
for its skills and thought leadership to the investor community. To that end,
a resolution will be proposed at the AGM in June 2024 to change the Company's
name to Partners Group Private Equity Limited.

Ends.

About Princess

Princess is an investment holding company founded in 1999 and domiciled in
Guernsey. It invests in private equity direct investments. Princess is managed
in its investment activities by Partners Group, a global private markets
investment management firm with USD 147 billion in investment programs under
management in private markets, of which USD 76 billion is in private equity.
Princess aims to provide shareholders with long-term capital growth and an
attractive dividend yield. Princess is traded on the Main Market of the London
Stock Exchange (ticker: PEY for the Euro Quote; PEYS for the Sterling Quote).

 

Contacts

Princess Private Equity Holding Limited:

princess@partnersgroup.com

www.princess-privateequity.net

 

 Investor relations contact:            Media relations contact:

 Sarah Page                             Jenny Blinch

 Phone: +44 20 7575 2695                Phone: +41 41 784 65 26

 E-mail: sarah.page@partnersgroup.com   E-mail: jenny.blinch@partnersgroup.com

 

Registered Number: 35241   LEI: 54930038LU8RDPFFVJ57

Notes:

1.     Note that references in this announcement to Princess Private
Equity Holding Limited have been abbreviated to "Princess" or "Company".
References to Partners Group AG have been abbreviated to "Partners Group " or
"Investment Manager".

2.     This document does not constitute an offer to sell or a
solicitation of an offer to buy or subscribe for any securities and neither is
it intended to be an investment advertisement or sales instrument of Princess
Private Equity Holdings. The distribution of this document may be restricted
by law in certain jurisdictions. Persons into whose possession this document
comes must inform themselves about and observe any such restrictions on the
distribution of this document. In particular, this document and the
information contained therein is not for distribution or publication, neither
directly nor indirectly, in or into the United States of America, Canada,
Australia or Japan.

3.     This document may have been prepared using financial information
contained in the books and records of the product described herein as of the
reporting date. This information is believed to be accurate but has not been
audited by any third party. This document may describe past performance, which
may not be indicative of future results. No liability is accepted for any
actions taken on the basis of the information provided in this document.
Neither the contents of Princess' website nor the contents of any website
accessible from hyperlinks on Princess' website (or any other website) is
incorporated into, or forms part of, this announcement.

 

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