TIDMAPAX
RNS Number : 6766X
Apax Global Alpha Limited
14 August 2018
Apax Global Alpha Limited
Interim Report and Accounts 2018
Introduction
Who we are
Apax Global Alpha Limited ("AGA" or the "Company") is a
closed-ended investment company listed on the Main Market of the
London Stock Exchange with a Premium Listing. The Company is a
constituent of the FTSE All Share and Small Cap Indices. Ticker:
APAX
Why invest in AGA?
AGA offers investors exclusive exposure to both Apax Partners'
Private Equity funds and a portfolio of debt and equity holdings
derived from insight gained from their Private Equity investment
process. The investment objective is to provide capital
appreciation from the investment portfolio and regular
dividends.
Highlights 1H18
Total NAV Return1 Dividend per ordinary Adjusted NAV2
1H18/1H18 constant currency share at 30 June 2018
6.0% I 5.2% payable in respect of EUR 943.9m I GBP835.1m
1H18 (EUR/GBP)
4.82c I 4.33p
----------------------------- ----------------------- ----------------------------
Adjusted NAV per share Market capitalisation Percentage of funds invested
at 30 June 2018 at 30 June 2018 at 30 June 2018
EUR1.92 I GBP1.70 EUR 746.6m I 660.5m 104%
Chairman's statement
Stronger performance during the last six months driven by
substantial improvements in the Private Equity portfolio and
favourable currency movements.
Overview
During the last six months Apax Global Alpha benefited from the
strong performance of its Private Equity holdings. The underlying
portfolio companies demonstrated good progress in operational
metrics, and a maturing investment profile enabled more value to be
crystallised through profitable realisations. In contrast, Derived
Investments reported a small negative return during the period.
Performance
Total NAV Return during the first six months of 2018 was 6.0%,
equivalent to 5.2% on a constant currency basis. Private Equity
delivered a Total Return of 11.0%, whereas the Derived Investments
were negative at (0.6%) with Derived Debt up 0.6% and Derived
Equity down (2.3%), reflecting weakness in emerging markets.
Adjusted NAV per share increased 3.3% to EUR1.92 due in part to the
dividend payment made during the period. In sterling terms,
Adjusted NAV grew to GBP1.70.
The Private Equity portfolio saw a significant improvement in
performance, particularly in the second quarter. The strong
fundamentals of the underlying companies have now started to come
through in the reported numbers, as the return drag from
underperforming investments in 2016 and 2017 ceased.
A full analysis of the performance of the portfolio can be found
in the Investment Manager's report, as well as a commentary on the
current state of investment markets.
Portfolio summary
AGA was 104% invested on 30 June 2018. EUR39.9m was drawn from
the credit facility to bridge towards cash returns expected later
in the year from realisations including Azelis and GlobalLogic. The
portfolio's relative exposure remained unchanged, with 65% of the
invested portfolio in Private Equity and 35% in Derived
Investments. Whilst AGA strives to maintain a balance between
Private Equity and Derived Investments in the long term,
shareholders should continue to expect the share of investments in
Private Equity and Derived Investments to fluctuate.
Investment activity
The pace of new investments in the Private Equity portfolio
slowed, with the market continuing to be viewed as expensive. In
total, five new investments were made in Private Equity, one by
AIX, and four within the AMI and ADF. However exit activity was
robust. Three full exits were signed, one of which completed, all
from AVIII. The Gross IRR achieved on these realisations was 53.4%
(49.8% on a constant currency basis).
In Derived Debt, six of the seven investments made in 1H18 were
in US dollar loans. AGA exited five Derived Debt positions during
the period with a Gross IRR of 12.6% (12.1% on a constant currency
basis). Since the beginning of the year, eight new Derived Equity
investments were made, with an emphasis on European stocks. There
were six realisations with a Gross IRR of 7.7% (11.9% on a constant
currency basis) in the Derived Equity portfolio.
In total, EUR143.7m of capital was deployed over the six months
to 30 June 2018, EUR11.1m in Private Equity and EUR132.6m in
Derived Investments. Realisations totalled EUR124.1m, with EUR22.3m
from Private Equity and EUR101.8m from Derived Investments.
Market environment
Public market sentiment has been influenced by increased
protectionism and the tariff "tit-for-tat" of major economies.
Unsurprisingly this has manifested itself in jittery equity
markets, in particular in those economies and sectors most exposed
to exports. Volatility has also spilled over into bond markets
where credit spreads have widened. Private Equity valuations
however do not appear to have corrected yet and remain at high
levels.
If relative valuations remain the same, the Investment Adviser
expects transactions in the Apax sectors of Healthcare, Consumer
and Services to figure more prominently in 2H18 and 2019.
Lock-up release
The Company had its third anniversary since its IPO in June
2015. Consequently, a further 7.5% of AGA's ordinary shares were
released from lock-up. Previously a tender process was offered
through the Company's broker to facilitate the sale of these
shares. Due to negligible take-up in prior years, the Board decided
not to renew this arrangement in 2018.
Dividend
The Board remains committed to distributing 5% of AGA's NAV per
annum as a dividend to shareholders. The final dividend for the
fiscal year 2017 of 4.17 pence per share was paid to shareholders
on 4 April 2018. The Board has also approved the interim dividend
in respect of the fiscal year 2018 of 4.33 pence per share. Using
the closing exchange rate of 1.1122 on 9 August 2018, the dividend
represents 2.5% of AGA's euro NAV at 30 June 2018, equivalent to
4.82c euro cents. The total dividend of EUR23.7m will be paid on 14
September 2018 to members on the register on 24 August 2018. The
shares will be marked ex dividend on 23 August 2018.
Liquidity
AGA has exposure to six Apax Funds spanning vintages from 2005
to 2017 and has made total commitments of EUR816.2m to these funds,
of which EUR590.8m has already been funded. Total unfunded
commitments, taken together with recallable distributions received,
now amount to EUR279.3m. AGA has a cash balance of EUR16.9m, a
revolving credit facility with EUR100.1m remaining undrawn, and a
portfolio of Derived Investments with a fair market value of
EUR344.9m. As a result, AGA believes it has ample liquidity and
resources to fund future capital calls from the Apax Funds.
AGM voting results
A discontinuation resolution was put forward to the annual
general meeting for the first time this year (and similar
resolutions will be put forward every three years in the future).
The Directors were pleased that 99% of votes cast supported the
continuation of the Company in its current form. All other
resolutions also received a high level of support.
Board changes
Following Sarah Evans' retirement earlier this year, we are
pleased to welcome Mike Bane as a Director of AGA. Mr Bane joined
the Board and the Audit Committee on 3 July 2018. A qualified
accountant with more than 35 years of audit and advisory experience
in the investment management industry, he brings to the Board a
wealth of knowledge in relation to asset management and private
equity.
Outlook
In private equity, valuations remain high. Consequently the
Investment Adviser will continue to focus on monetisation of
existing investments. Credit markets may offer a better risk-reward
profile than they have in the past couple of years, in light of
higher rates and widening credit spreads. Investments in public
equity will need to take into account greater market volatility
arising from increased political and macroeconomic risks.
Tim Breedon CBE
Chairman
13 August 2018
"AGA's portfolio has strong fundamental characteristics that
puts it in good stead to realise more value in the future."
Investment Manager's report | Market overview
The first half of 2018 saw the return of public market
volatility. Private equity prices remain high, and finding the few
precious palatable risk-reward combinations in a sea of over-priced
transactions is key.
1H18 market review
After almost uninterrupted global asset price appreciation in
the past five years, the last six months saw the return of downside
volatility in public markets. Since the all-time high in the
S&P 500 on 26 January 2018, indices around the world have
fluctuated with some notable downward trends. Emerging markets in
particular have seen volatility lately: while indices have not
changed much between December 2017 and June 2018, intermediate
swings were in the double-digit percent in China, India and Brazil.
Western markets also saw major movements, for example the German
DAX declined by 9% peak-to-trough. The key driver behind the sudden
swings in sentiment is the fear of US trade wars with China and
Europe. Consequently, export exposed markets and export driven
sub-segments showed the largest declines.
Trade war concerns also influenced foreign exchange and credit
pricing. Most currencies depreciated against the US dollar.
Importantly for AGA, the euro seems to have reversed its prior
trend of strength. While its decline of 2.7% in 1H18 appears
moderate, the peak-to-trough decline of c.8% gives a better
perspective on the magnitude of recent changes.
Credit markets have also shifted direction. High yield bond
markets in the US saw increased volatility in spreads and yields
during the first six months of this year - after more than two
years of relatively steady declines. This shift was even more
pronounced in Europe with spreads widening significantly since the
beginning of the year. As Fig.1 shows, throughout most of 2018,
high yield spreads in Europe were narrower than in the US, but have
increased by almost 200bps since - a dramatic reversal which
supports AGA's Derived Debt positioning in the US versus
Europe.
Despite the re-emergence of volatility in public capital
markets, private equity transactions have continued at pace in H1.
As Fig.2 depicts in more detail, transaction volumes have increased
compared to 2017. In addition, Fig.3 shows that pricing has
remained elevated and in the case of Europe is at an all-time
high.
2018 to 2019 outlook
At face value, the global macroeconomic picture looks very
positive. Growth rates in most economies are up on previous years
and unemployment is approaching multi-decade lows in several
economies, including some of the largest. Consensus forecasts see
the trends continuing in the mid-term, marking this as one of the
largest post-war expansions. The forecasters' central scenario is
still for global growth to be above long-term trends with economies
testing capacity limits.
However, the return of protectionism has not only reintroduced
volatility in the capital markets but could also have significant
effects on the global growth outlook. In fact, some non-US metrics
may already be starting to show the impact of this shift in
expectations and sentiment. For example, the Eurozone manufacturing
index PMI fell to an 18-month low of 54.9 in June, down from 55.5
in May. While this is still expansionary, it shows that industrial
companies are feeling a change for the negative. The US ISM
Manufacturing Index came in at 60.2 in June after May's 58.7. This
was the second highest reading since 2004, reflecting the ongoing
robustness of the US economy fuelled by a huge fiscal impulse.
Nevertheless, trade disputes are likely to negatively affect the US
eventually and in addition there will be an enormous US fiscal
deficit to address at some point. The Chinese PMI is also not
showing any slowdown but this appears to be more due to the
mid-term momentum carrying over from 2017 rather than actual
industrial strength. China and Germany are arguably the two
countries with the most to lose if the tariff war escalates. In
addition to the tariff row, there are lingering conflicts and
political uncertainties, such as those concerning Iran, Korea and
Brexit.
Regarding Brexit, the UK finally seems to have set course for a
Norwegian-style future relationship with the EU. This in our view
is a good decision for its economy, which if executed would provide
a working model for continued trade flows and economic
collaboration. Yet we believe there are still significant risks to
the path taken. First, there is clearly resistance within parts of
the British political establishment which could scupper the
strategic direction. Second, the EU might not agree to the UK's
proposal as it could be viewed as "cherry picking". Third,
coordinating the UK's and the EU's positions and the need of
approval in 28 legislative systems, creates enormous process risk
in an already short timeline. A hard Brexit therefore still remains
a possibility and indeed a default position if there is no deal
agreed in time.
What does this mean for investments?
Making a call on the economic health for the next two years is
harder than six months ago, as the outcome appears dependent on
"man-made" factors rather than traditional economic drivers. That
said, political risks affect different sectors and different asset
classes with varying degrees of severity and picking the "right"
investment areas in the coming quarters could become a particularly
rewarding exercise.
To undertake this search for the best opportunities, it is
helpful to remember that AGA is active in three different asset
classes. Private Equity, Equities and Debt. The latter two are
combined under Derived Investments using AGA's terminology. In
Derived Debt, we would expect more attractive opportunities in the
coming years than there have been recently. As mentioned, spreads
have risen in H1 and US base rates have also increased, resulting
in yields expanding in the Western markets. Consequently, we
believe that risk-reward profiles in debt have improved and we
expect the share of debt to increase within AGA's Derived
Investments. Within the credit universe, we remain more positive on
US dollar debt, but note euro debt's recent improved attractiveness
as illustrated in Fig.1.
In Private Equity and Derived Equity, the Apax focus sectors of
Tech & Telco, Healthcare, Consumer and Services as well as the
Digital space have less exposure to the political risks than for
example automotive, industrials or commodities. Fig.4 compares
valuations of the Apax focus sectors to historical averages.
Healthcare and Consumer look relatively attractive and they are
also less cyclical than many other sectors. By value, most of AGA's
look-through Private Equity Investments in 1H18 were made in
Healthcare. If relative valuations remain the same, we would expect
Healthcare and Consumer as well as Services transactions to figure
more prominently in 2H18 and 2019. In addition, due to stock price
declines in some markets and the increased risks ahead, we believe
that so called "public-to-privates" or "PIPEs" could play a larger
role in the next 18 months. The art will be in finding the few
reasonably priced opportunities in a sea of highly-valued Private
Equity opportunities.
Investment Manager's report | Portfolio overview
1H18 market review
Apax Partners' unique portfolio mix of Private Equity and
Derived Investments positions AGA for sustainable long-term
returns.
NAV development and portfolio performance
At the end of June 2018, Adjusted NAV was EUR943.9m, up from
EUR912.4m at 31 December 2017 (Fig.1 and 2). A substantial part of
this movement was due to Private Equity unrealised gains from both
M&A and organic growth, representing a positive impact of
EUR54.8m. EUR7.4m of FX gains also increased Adjusted NAV on the
back of an appreciating dollar against the euro.
The second semi-annual dividend in relation to 2017 reduced
Adjusted NAV by EUR22.9m. It was paid to shareholders in April, in
line with AGA's objective to distribute 5% of NAV per annum. The
first dividend for 2018 is expected to be paid on 14 September
2018.
Private Equity, which had been lagging in 2016 and 2017, was the
driver of AGA's returns producing a contribution of 6.0% as the
portfolio companies continue to grow organically and through
acquisitions. Private Equity's Total Return on a constant currency
basis was 10.1%, and reported return was 11.0%.
Derived Investments produced a Total Return of (0.6%),
decreasing AGA's Total NAV Return by 0.1% (Fig.3).
Derived Debt was impacted in particular from a further write
down in FullBeauty to EUR4.1m at the end of June, as a result there
is limited further valuation downside going forward on this
investment.
Derived Equity's Indian positions were caught up in the sell-off
of Indian mid cap stocks which affected a small number of
investments.
Portfolio overview
Portfolio split by asset type
Dec 17 Jun 18
----------------- ------ ------
A Private Equity 65% 65%
----------------- ------ ------
B Derived Debt 20% 19%
----------------- ------ ------
C Derived Equity 15% 160%
----------------- ------ ------
Portfolio split by sector
Dec 17 Jun 18
--------------- ------ ------
A Tech & Telco 34% 31%
--------------- ------ ------
B Services 28% 31%
--------------- ------ ------
C Healthcare 22% 22%
--------------- ------ ------
D Consumer 15% 15%
--------------- ------ ------
E Digital 0% 1%
--------------- ------ ------
F Other 1% 0%
--------------- ------ ------
Portfolio split by geography
Dec 17 Jun 18
----------------- ------ ------
A North America 46% 49%
----------------- ------ ------
B Europe 31% 31%
----------------- ------ ------
C United Kingdom 6% 8%
----------------- ------ ------
D Israel 3% 3%
----------------- ------ ------
E India 7% 5%
----------------- ------ ------
F China 6% 3%
----------------- ------ ------
G Rest of World 1% 1%
----------------- ------ ------
In Private Equity, five new investments and one follow-on
investment were made. One of these new investments was funded by
AIX, which is the current global Apax buyout fund being invested.
The follow-on was in AVIII, AGA's largest Apax Fund exposure. Two
investments were made in mid-market buyouts in Israel through the
AMI Opportunities Fund ("AMI"). The Apax Digital Fund ("ADF"),
which closed in December 2017, made another two investments.
The Private Equity portfolio reported three full exits during
the period. In addition to the high private equity sponsor
interest, the Investment Adviser is also seeing strategic investors
become increasingly acquisitive which is encouraging for future
realisations. We also made 15 new investments in Derived
Investments and divested nine positions.
Since the annual results, the sector split has shifted slightly
from Tech & Telco to Services and the geographic exposure moved
towards the UK and North America.
The overall portfolio mix between Private Equity and Derived
Investments remained stable. At the end of the reporting period,
AGA had exposure to 52 Private Equity portfolio companies and 37
Derived Investments. Ten investments in the Derived Investments
portfolio overlapped with the Apax Funds' portfolio companies,
either because AGA took a minority investment in the debt issued by
these portfolio companies, or has also invested in listed companies
in which the Apax Funds have a holding.
Fig.1: Adjusted NAV development (EURm)
Private Derived Investments Total
Equity
------------------------------ -------- -------------------- -------
Adjusted NAV at 31 December
2017 912.4
------------------------------- -------- -------------------- -------
Dividends paid (22.9)
------------------------------- -------- -------------------- -------
Expenses & other(1) (8.6)
------------------------------- -------- -------------------- -------
Total value gains(2) 60.2 27.8 78.0
------------------------------- -------- -------------------- -------
Total value losses(2) (0.4) (24.6) (25.0)
------------------------------- -------- -------------------- -------
Adjusted NAV at 30 June 2018 943.9
------------------------------- -------- -------------------- -------
1. Expenses and other consists of: expenses and accruals of
EUR4.8m; performance fee of EUR1.8m; and net FX losses of
EUR2.0m
2. Total value movement calculated by taking unrealised and
realised movements, FX and income earned during the period. Total
value gains show the positive contributors and total value losses
show the negative contributors
Fig.2: Adjusted NAV development (EURm)
Revolving
Private Derived credit
Equity Investments(1) Cash facility Other Total
------------------------------- ------- --------------- ------- --------- ------ ------
Adjusted NAV at 31 December
2017 586.1 307.2 19.0 - 0.1 912.4
------------------------------- ------- --------------- ------- --------- ------ ------
+ Investments 11.1 132.6 (131.2) - (12.5) -
* Divestments (22.3) (101.8) 122.0 - 2.1 -
+ Interest and dividend income - - 10.1 - (0.5) 9.6
+ Unrealised gains/(losses) 54.8 (17.8) - - - 37.0
+ Realised gains - 7.0 - - - 7.0
* FX gains/(losses)(2) 5.0 4.4 (1.6) (0.4) - 7.4
+/- Costs and other movements - - (2.6) - (2.2) (4.8)
* Dividends paid - - (22.9) - - (22.9)
+/- Performance fee reserve 3.4 10.2 (15.4) - - (1.8)
+/- Revolving credit facility
drawn/repaid - - 39.5 (39.5) - -
------------------------------- ------- --------------- ------- --------- ------ ------
Adjusted NAV at 30 June 2018 638.1 341.8 16.9 (39.9) 13.0 943.9
------------------------------- ------- --------------- ------- --------- ------ ------
1. Included in investments, divestments and realised gains are
movements related to the demerger of Strides Shasun. In April 2018,
Strides Shasun demerged and AGA received shares in a new listed
equity position Solara. AGA had a partial realisation of Strides
Shasun, whereby the proceeds received equaled the value of the new
investment Solara. No cash was exchanged as part of this
transaction
2. FX on cash includes the revaluation of cash balances and net
losses arising from the differences in exchange rates between
transaction dates and settlement dates, and unrealised net losses
arising from the translation into euro of assets and liabilities
(other than investments) which are not denominated in euro
Investment Manager's report | Private Equity
The Private Equity portfolio delivered a strong performance
during the first half of 2018 with a Total Return of 11.0% based on
robust growth of the portfolio companies.
Portfolio split by sector
Dec 17 Jun 18
--------------- ------ ------
A Tech & Telco 32% 32%
--------------- ------ ------
B Services 32% 31%
--------------- ------ ------
C Healthcare 20% 20%
--------------- ------ ------
D Consumer 15% 15%
--------------- ------ ------
E Digital 0% 1%
--------------- ------ ------
F Other 1% 1%
--------------- ------ ------
Portfolio split by geography
Dec 17 Jun 18
----------------- ------ ------
A North America 41% 42%
----------------- ------ ------
B Europe 40% 40%
----------------- ------ ------
C United Kingdom 5% 5%
----------------- ------ ------
D Israel 5% 5%
----------------- ------ ------
E India 5% 5%
----------------- ------ ------
F China 3% 3%
----------------- ------ ------
G Rest of World 1% 1%
----------------- ------ ------
Portfolio split by currency
Dec 17 Jun 18
-------- ------ ------
A USD 44% 46%
-------- ------ ------
B EUR 36% 38%
-------- ------ ------
C GBP 6% 5%
-------- ------ ------
D NOK 4% 3%
-------- ------ ------
E ILS 3% 3%
-------- ------ ------
F INR 3% 2%
-------- ------ ------
G HKD 2% 1%
-------- ------ ------
H Other 2% 2%
-------- ------ ------
Highlights
The Total Return for the Private Equity portfolio was 11.0% with
M&A and organic earnings growth being the main driver of value
creation. Performance was particularly strong in the second
quarter. On a constant currency basis, Total Return was 10.1%.
There were more exits than investments so far this year,
highlighting the focus on realising value in the portfolio.
NAV development
The Adjusted NAV of the Private Equity portfolio increased from
EUR586.1m to EUR638.1m in the half-year. The main factors behind
this increase were unrealised gains of EUR54.8m, together with
capital calls of EUR11.1m. FX positively contributed to Private
Equity Adjusted NAV by EUR5.0m (Fig.1).
Investment performance
The 2016 and 2017 annual report and accounts highlighted a small
number of difficult situations in the AVIII portfolio which dragged
down performance: Answers, Rue21, and FullBeauty. These three
situations have now been largely worked through from a valuation
perspective (combined NAV of these three Private Equity positions
at 30 June 2018: EUR3.1m). The operational performance of the
remainder of the portfolio is starting to show positively in the
results.
While the overall portfolio has performed strongly, a number of
portfolio companies stand out, notably Azelis, Idealista (both in
AVIII) and Acelity (in AEVII). The largest increase in valuation
related to Azelis which was AGA's largest Private Equity exposure
at the end of 2017. A binding offer was made for the company in
June 2018, driving a valuation uplift of 29% relative to the 31
December 2017 mark. While the transaction is expected to complete
in 2018, due to the duration of anti-trust approval, the June 2018
valuation already reflects the agreed sale price.
Acelity's uplift in valuation was due to EBITDA growth and
multiple expansion. The company has been investing in long-term
growth initiatives such as sales force staffing, marketing, medical
education and R&D which has led to a strong growth momentum
recently. In addition, Acelity completed the acquisition of
Crawford Healthcare in June 2018, a rapidly growing UK-based
advanced wound care company. This further strengthened Acelity's
position as the global leader in advanced wound healing.
The valuation of Idealista increased due to continued rapid
EBITDA growth as the business continued to cement its position as
the leading online real estate classified business in Spain. The
company is also growing its presence in Italy, and has recently
become the number two player in that market based on several
metrics.
Meanwhile, Ideal Protein, EVRY and Shriram City Union Finance
("SCUF") experienced the largest negative valuation movements.
Ideal Protein provides weight loss solutions and has seen a
softening in customer acquisition and retention. The company is
working on a number of initiatives to address this, including
improving its marketing and sales force.
SCUF and EVRY are both publicly listed, and their valuation
reflects share price declines.
Whilst the largest Private Equity valuation driver in 1H18 was
AVIII, we expect AIX to become an important contributor to returns
soon. This 2016 vintage fund is now 43% invested across 13
portfolio companies. Many investments have made remarkable progress
in the past year and the Fund has largely moved out of the
"J-curve" effect. It is now seeing not only an increase in
valuation but also IRR. The Investment Adviser believes the
portfolio has been constructed in a balanced manner, with c.70% of
capital invested at attractive absolute values, and the remainder
invested in high growth businesses at reasonable relative values.
If market multiples remain stable, further improvements in
valuations should follow in the periods ahead.
A note on valuation policies
The Apax Funds' valuations are updated on a quarterly basis.
This has consequences on how realisations and value movements are
reported.
1. In the Apax Funds, all gains in an investment up to the last
quarter before a sale are reported as "unrealised". Only in the
quarter, when a sale transaction is completed, will a "realised
gain" occur. In practice that means that an overwhelming part of
the value creation in a typical private equity hold period of four
to seven years will be reported as "unrealised".
2. Some exit processes draw on for one or more quarters after a
contract is signed (e.g. due to anti-trust approval processes in
many countries). This may actually translate into no "realised
gains" ever being reported for a private equity holding, despite a
profitable disposal. As an example, in the case of Azelis, the fair
market value of that investment at 30 June 2018 corresponds to the
agreed exit value, and the increase is denoted as "unrealised".
Investment activity
The pace of investment for AGA (and the Apax Funds) Private
Equity Investments in 1H18 has been slower than in the equivalent
prior year period. On a look-through basis AGA committed EUR25.3m
to signed and closed Apax Funds' investments in 1H18, compared to
EUR39.7m in 1H17.
AGA also invested EUR11.1m in the Apax Funds' carried interest
in the period, increasing its carried interest exposure to AEVII,
and creating a new stake in AEVI.
Five new investments were made during the six months by the Apax
Funds, as the overall portfolio structure continued to diversify.
The majority of new investments are in sub-sectors the Investment
Adviser knows well.
AIX acquired Healthium MedTech, a medical devices player in
India and a global leader in suturing needles. The investment
leverages Apax's significant experience in medical devices (current
investments include Acelity, Vyaire Medical and Syneron
Candela).
ADF made two additional investments: a minority growth
investment in Wizeline, a high-growth outsourced product
development and digital transformation consulting company; and a
growth buyout investment in Solita, a leading Finnish digital
transformation company. Both are IT Services transactions, a
sub-sector in which Apax has a great deal of experience, having
invested in and built a large number of leading businesses in this
industry.
AMI made two further investments: Global-e, a leading provider
of cross-border e-commerce solutions; and Ramet Trom, an Israeli
producer and supplier of prefabricated elements used in
construction.
AVIII purchased the remaining 50% stake in Vyaire Medical which
reflected the Investment Adviser's confidence in the business.
Vyaire continues to perform strongly and has recently undertaken a
number of acquisitions as it executes on its plan to become a
global leader in respiratory care.
As the Apax Funds operate credit facilities to bridge capital
calls from investors on a short term basis, AGA expects capital
calls of EUR22.7m, or c.2.4% of Adjusted NAV from these drawings in
the coming months. Usually AIX, AVIII and ADF bridge individual
capital calls for up to twelve months after each drawdown. AMI
drawings of the bridge facility are generally repaid once a
year.
While the high-priced environment has resulted in a slower
investment pace, the converse is true for exits with EUR112.1m of
expected proceeds from exits signed or closed in 1H18 for AGA
compared to EUR48.2m in 1H17. There were three strong full exits
during the first six months of the year. First, Genex was sold
generating a 2.8x Gross MOIC for the Apax Funds and EUR5.5m in cash
proceeds for AGA. Under the Apax Funds' ownership, the company had
completed eight add-on acquisitions which significantly expanded
its portfolio of solutions and resulted in an EBITDA increase
outperforming the broader market.
Second, after the period end, the sale of GlobalLogic completed
in August 2018 generating a 5.9x Gross MOIC for AVIII and
c.EUR65.6m in total cash proceeds for AGA, including those from a
partial exit of the position achieved in January 2017. Investment
in sales and marketing, alongside strategic M&A, saw the
business meaningfully deepen and expand its portfolio of software
development capabilities. This resulted in an acceleration in the
business with both revenue and EBITDA more than doubling in the
Apax Funds' holding period.
Third, in June 2018 the sale of Azelis was announced with the
completion scheduled for October 2018. On completion, the
investment is expected to deliver a c.3.6x Gross MOIC to AVIII and
approximately EUR72.3m in cash proceeds for AGA. Through M&A
(nine acquisitions) alongside organic growth from product
innovation and new mandate wins, the company saw revenues more than
double and EBITDA triple under the Apax Funds' ownership, and the
business transformed into a truly global speciality chemicals
distributor.
During the period, a number of portfolio companies were
refinanced (e.g. Boats Group and Exact) where there was an
opportunity to optimise capital structures, lower the cost of debt,
and/or fund dividends.
Fig.1: Private Equity Adjusted NAV development (EURm)
EURm
------------------------------- -------
Adjusted NAV 31 Dec 2017 586.1
------------------------------- -------
Secondary purchases(1) 11.1
------------------------------- -------
Distributions (22.3)
------------------------------- -------
Unrealised gains 54.8
------------------------------- -------
Performance fee adjustment(2) 3.4
------------------------------- -------
FX 5.0
------------------------------- -------
Adjusted NAV 30 June 2018(3) 638.1
------------------------------- -------
1. Secondary purchases of EUR11.1m relate to the purchase of two
carried interest holdings (add-on of EUR7.7m in AEVII and EUR3.4m
into a new carried interest holding in AEVI)
2. Performance fee adjustment accounting for the movement in the
performance fee reserve at 30 June 2018
3. Includes AGA's exposure to carried interest holdings in AEVII
and AEVI which were respectively valued at EUR31.9m and EUR4.3m at
30 June 2018
Fig.2: Private Equity performance (%)
%
----------------------------------------------------------- -------
Movement in underlying portfolio companies' earnings 12.1%
----------------------------------------------------------- -------
Movement in net debt(1) (4.5%)
----------------------------------------------------------- -------
Movement in comparable companies valuation multiple(2) 4.3%
----------------------------------------------------------- -------
One off and Other(3) (0.7%)
----------------------------------------------------------- -------
Management fees paid and carried interest accrued by Apax
Funds (2.7%)
----------------------------------------------------------- -------
Movement in AEVII and AEVI carried interest fair value 1.0%
----------------------------------------------------------- -------
Movement in performance fee reserve(4) 0.6%
----------------------------------------------------------- -------
FX 0.9%
----------------------------------------------------------- -------
1H18 Total Return 11.0%
----------------------------------------------------------- -------
1. Represents movement in all instruments senior to equity
2. Movement in the valuation multiples captures movement in the
comparable companies valuation multiples. In accordance with
International Private Equity and Venture Capital Valuation ("IPEV")
guidelines, the Apax Funds use a multiples based approach where an
appropriate valuation multiple (based on both public and private
market valuation comparators) is applied to maintainable earnings,
which is often but not necessarily represented by EBITDA to
calculate Enterprise Value
3. Mainly dilutions from the management incentive plan as a
result of growth in the portfolio's value
4. Performance fee adjustment accounting for the movement in the
performance fee reserve at 30 June 2018
Operational metrics
The Private Equity portfolio continued its good operational
momentum from both organic growth and M&A. Last Twelve Months
("LTM") revenue and EBITDA growth was 13.6% and 17.5% respectively.
Excluding M&A, growth was 9.1% and 11.7%.
The weighted average valuation multiple of the portfolio
increased from 13.8x to 14.8x LTM EBITDA, largely reflecting
improving public market multiples within the sectors that the Apax
Funds invest in, as well as uplifts particularly from the full
exits of Azelis and GlobaLogic.
The weighted average leverage of the portfolio companies
increased from 4.3x to 4.5x LTM EBITDA, mainly driven by debt
funded M&A.
Market outlook
Public market volatility continues as resilient economic and
earnings data contrast with ongoing geopolitical concerns. Despite
this volatility in public markets, private equity transactions have
continued at high volumes and prices.
The Investment Adviser believes discipline is vital when
investing against this market backdrop. Apax's wide geographic
reach and deep sector expertise identify attractive relative value
on a country or sub-sector basis. The investment strategy remains
focused on "quirky" opportunities which are off the beaten path
(thereby reducing competition), and where Apax can generate a clear
angle in the sourcing process or value creation opportunities,
which are different from those the market is seeing.
We believe that the existing portfolio is in good shape and
developing strongly which could lead to further good performance in
the second half of 2018.
Apax IX ("AIX") Apax VIII ("AVIII") Apax Europe VII ("AEVII")
AGA NAV: EUR144.6m AGA NAV: EUR409.7m AGA NAV(1) : EUR62.5m
------------------- --------------- ------------------- ---------- ------------------ ---------
% of AGA Private % of AGA Private % of AGA Private
Equity: 22% Equity: 65% Equity: 8%
------------------- --------------- ------------------- ---------- ------------------ ---------
Vintage: 2016 Vintage: 2012 Vintage: 2007
------------------- --------------- ------------------- ---------- ------------------ ---------
EUR159.5m,
Commitment amount: EUR154.5m,$175m Commitment amount: $218.3m Commitment amount: EUR86.5m
------------------- --------------- ------------------- ---------- ------------------ ---------
Fund size: $9.5bn Fund size: $7.5bn Fund size: EUR11.2bn
------------------- --------------- ------------------- ---------- ------------------ ---------
AMI Opportunities Fund
Apax Europe VI ("AEVI") ("AMI") Apax Digital Fund ("ADF")
AGA NAV(2) : EUR6.2m AGA NAV: EUR16.8m AGA NAV: (EUR1.0m)
------------------- --------------- ------------------- ---------- ------------------ ---------
% of AGA Private % of AGA Private % of AGA Private
Equity: 1% Equity: 3% Equity: 1%
------------------- --------------- ------------------- ---------- ------------------ ---------
Vintage: 2005 Vintage: 2015 Vintage: 2017
------------------- --------------- ------------------- ---------- ------------------ ---------
Commitment amount: EUR10.6m Commitment amount: EUR25.6m Commitment amount: EUR42.8m
------------------- --------------- ------------------- ---------- ------------------ ---------
Fund size: EUR4.3bn Fund size: $0.5bn Fund size: $1.1bn
------------------- --------------- ------------------- ---------- ------------------ ---------
1. Includes AGA's exposure to AEVII as a limited partner, valued
at EUR30.6m and through its carried interest holdings, valued at
EUR31.9m. The carried interest holdings were acquired through a
EUR10.5m investment in 2015 and EUR7.7m investment in April
2018
2. Includes AGA's exposure to AEVI as a limited partner, valued
at EUR1.9m and through its carried interest holdings, valued at
EUR4.3m. The carried interest holdings were acquired through a
EUR3.4m investment in April 2018
Acquisitions
Closed(1) Cost(2)
--------------- ------------------------------------------------------------------ --------
High growth product innovation and digital transformation-focused
IT services provider
Wizeline (ADF, North America, Digital) EUR1.4m
--------------- ------------------------------------------------------------------ --------
A follow-on investment: Respiratory devices and consumables
manufacturer
Vyaire Medical (AVIII, North America, Healthcare) EUR11.5m
--------------- ------------------------------------------------------------------ --------
Provider of solutions to online retailers who want to
sell outside their home market
Global-e (AMI, Israel, Tech & Telco) EUR0.5m
--------------- ------------------------------------------------------------------ --------
Producer and supplier of prefabricated elements for
the infrastructure and construction sectors in Israel
Ramet Trom (AMI, Israel, Services) EUR1.5m
--------------- ------------------------------------------------------------------ --------
Finland's largest digital transformation services company,
with particular expertise in data and analytics
Solita (ADF, Europe, Digital) EUR3.3m
--------------- ------------------------------------------------------------------ --------
Healthium An independent medical devices player in India
MedTech (AIX, India, Healthcare) EUR7.1m
--------------- ------------------------------------------------------------------ --------
AEVII Add-on position to the carry stake EUR7.7m
--------------- ------------------------------------------------------------------ --------
AEVI New carry position EUR3.4m
--------------- ------------------------------------------------------------------ --------
1. Wizeline closed in March 2018, Vyaire Medical closed in April
2018, Global-e closed in April 2018, Ramet Trom closed in May 2018,
Solita closed in June 2018 and Healthium MedTech closed in June
2018
2. Cost is AGA's indirect exposure to the underlying portfolio
companies held by the Apax Funds. Costs may change following final
close of the deal
Gross IRR on full exits(3) /MOIC(3)
53.4%/4.2x
Divestments
Initial
year of Gross Gross
Full exits(4) purchase MOIC(5) IRR(5)
--------------- ------------------------------------------ -------------- ---------- -------- -------
Provider of cost containment services
to the workers' compensation, disability
and auto industries
(AEVII & AVIII, North America, Fully
Genex Healthcare) exited 2014 2.8x 32%
--------------- ------------------------------------------ -------------- ---------- -------- -------
An outsourced product development
services firm Signed
GlobalLogic (AVIII, North America, Tech & Telco) full exit 2013 5.9x 57%
--------------- ------------------------------------------ -------------- ---------- -------- -------
Global distributor of specialty
chemicals and related services Signed
Azelis (AVIII, Europe, Services) full exit 2015 3.6x 56%
--------------- ------------------------------------------ -------------- ---------- -------- -------
Partial exits, Initial Cash proceeds
IPOs and year of to the Apax
others purchase Funds
--------------- ------------------------------------------ -------------- ---------- -----------------
Chinese asset management company
Huarong (AEVII & AVIII, China, Services) Recapitalised 2014 EUR70.1m
--------------- ------------------------------------------ -------------- ---------- -----------------
Consumer internet group in Israel
Zap Group (AMI, Israel, Tech & Telco) Dividend 2015 EUR6.3m
--------------- ------------------------------------------ -------------- ---------- -----------------
Global medical technology company
Acelity (AEVII, North America, Healthcare) Dividend 2011 EUR37.7m
--------------- ------------------------------------------ -------------- ---------- -----------------
Digital marketplace and solutions
for recreational marine industry
Boats Group (AIX, North America, Services) Recapitalised 2016 EUR36.2m
--------------- ------------------------------------------ -------------- ---------- -----------------
The largest general discount retail
chain store in Israel
Max (AMI, Israel, Consumer) Dividend 2017 EUR2.7m
--------------- ------------------------------------------ -------------- ---------- -----------------
The largest investment house in
Israel
Psagot (AEVII, Israel, Services) Recapitalised 2010 EUR67.2m
--------------- ------------------------------------------ -------------- ---------- -----------------
Nordic IT services provider
EVRY (AVIII, Europe, Tech & Telco) Dividend 2015 EUR21.3m
--------------- ------------------------------------------ -------------- ---------- -----------------
3. Gross IRR and MOIC on full exits calculated based on the
aggregate cash flows across all funds of the three deals realised
(inclusive of GlobalLogic which closed in August 2018 and Azelis
expected to close in 4Q18). Gross IRR represents concurrent Gross
IRR.
4. Genex full exit closed in March 2018, GlobalLogic full exit
signed in May 2018 and closed in August 2018 and Azelis full exit
signed in June 2018
5. Performance as at 30 June 2018, including unrealised value
and total realised proceeds. Gross MOICs and Gross IRRs represent
return to the fund which invested the most across all the Apax
Funds into the deal. AVIII and AIX performances represent the euro
tranche returns
Top 30 Private Equity Investments
AGA's indirect exposure at 30 June 2018
Valuation % of
Fund Geography Sector EURm NAV
------------------------ -------------- -------------- ------------- --------- ----
Azelis AVIII Europe Services 72.3 8%
------------------------ -------------- -------------- ------------- --------- ----
Assured Partners AVIII North America Services 57.0 6%
------------------------ -------------- -------------- ------------- --------- ----
Exact AVIII Europe Tech & Telco 39.3 4%
------------------------ -------------- -------------- ------------- --------- ----
Idealista AVIII Europe Consumer 34.8 4%
------------------------ -------------- -------------- ------------- --------- ----
GlobalLogic AVIII North America Tech & Telco 34.3 4%
------------------------ -------------- -------------- ------------- --------- ----
Engineering AVIII Europe Tech & Telco 33.4 4%
------------------------ -------------- -------------- ------------- --------- ----
Vyaire Medical* AVIII North America Healthcare 32.9 3%
------------------------ -------------- -------------- ------------- --------- ----
Unilabs AEVI & AIX Europe Healthcare 32.0 3%
------------------------ -------------- -------------- ------------- --------- ----
Acelity AEVII North America Healthcare 25.5 3%
------------------------ -------------- -------------- ------------- --------- ----
ThoughtWorks AIX North America Tech & Telco 23.4 2%
------------------------ -------------- -------------- ------------- --------- ----
NuPharm AVIII Europe Healthcare 23.3 2%
------------------------ -------------- -------------- ------------- --------- ----
EVRY* AVIII Europe Tech & Telco 22.8 2%
------------------------ -------------- -------------- ------------- --------- ----
Wehkamp AVIII Europe Consumer 20.5 2%
------------------------ -------------- -------------- ------------- --------- ----
Cole Haan AVIII North America Consumer 19.9 2%
------------------------ -------------- -------------- ------------- --------- ----
Duck Creek Technologies AVIII North America Tech & Telco 18.6 2%
------------------------ -------------- -------------- ------------- --------- ----
MATCHESFASHION.COM AIX UK Consumer 17.4 2%
------------------------ -------------- -------------- ------------- --------- ----
Quality Distribution* AVIII North America Services 17.3 2%
------------------------ -------------- -------------- ------------- --------- ----
Safetykleen* AIX UK Services 14.4 2%
------------------------ -------------- -------------- ------------- --------- ----
Shriram City Union AVIII India Services 13.8 1%
------------------------ -------------- -------------- ------------- --------- ----
Syneron Candela AIX North America Healthcare 12.0 1%
------------------------ -------------- -------------- ------------- --------- ----
ECi* AIX North America Tech & Telco 11.7 1%
------------------------ -------------- -------------- ------------- --------- ----
One Call AEVII & AVIII North America Healthcare 10.2 1%
------------------------ -------------- -------------- ------------- --------- ----
Zensar Technologies AVIII India Tech & Telco 9.4 1%
------------------------ -------------- -------------- ------------- --------- ----
Tivit AEVI & AEVII Rest of world Tech & Telco 9.4 1%
------------------------ -------------- -------------- ------------- --------- ----
Tosca AIX North America Services 8.7 1%
------------------------ -------------- -------------- ------------- --------- ----
Guotai Junan Securities AIX China Services 8.3 1%
------------------------ -------------- -------------- ------------- --------- ----
Boats Group* AIX North America Services 7.1 1%
------------------------ -------------- -------------- ------------- --------- ----
Psagot AEVII Israel Services 7.0 1%
------------------------ -------------- -------------- ------------- --------- ----
Healthium MedTech AIX India Healthcare 6.9 1%
------------------------ -------------- -------------- ------------- --------- ----
Attenti AIX Rest of world Tech & Telco 6.2 1%
------------------------ -------------- -------------- ------------- --------- ----
Other 62.2 6%
----------------------------------------------------------------------- --------- ----
Total gross investments 712.0 75%
----------------------------------------------------------------------- --------- ----
Carried interest (50.0) (5%)
-------------------------------------------------------- ------------- --------- ----
Capital call facilities and other (23.2) (3%)
-------------------------------------------------------- ------------- --------- ----
Total Private Equity 638.8 67%
----------------------------------------------------------------------- --------- ----
* Denotes overlap with the Derived Investments portfolio
www.apaxglobalalpha.com/investment-portfolio/top-holdings/private-equity
Investment Manager's report | Derived Investments
The performance of the Derived Investments portfolio weakened
during the period as the Derived Equity portfolio experienced
pressure from its emerging market exposure.
Portfolio split by sector
Dec 17 Jun 18
--------------- ------ ------
A Tech & Telco 36% 30%
--------------- ------ ------
B Services 21% 30%
--------------- ------ ------
C Healthcare 26% 22%
--------------- ------ ------
D Consumer 16% 17%
--------------- ------ ------
E Other 1% 1%
--------------- ------ ------
Portfolio split by geography
Dec 17 Jun 18
----------------- ------ ------
A North America 56% 60%
----------------- ------ ------
B Europe 14% 14%
----------------- ------ ------
C United Kingdom 8% 12%
----------------- ------ ------
D India 11% 7%
----------------- ------ ------
E China 11% 7%
----------------- ------ ------
Portfolio split by currency
Dec 17 Jun 18
------ ------ ------
A USD 60% 61%
------ ------ ------
B EUR 13% 9%
------ ------ ------
C GBP 8% 16%
------ ------ ------
D INR 11% 9%
------ ------ ------
E HKD 7% 4%
------ ------ ------
F NOK 1% 1%
------ ------ ------
Highlights
Total Return for Derived Investments was (0.6%) in 1H18, and
(1.9%) on a constant currency basis. The Derived Debt portfolio
produced a positive Total Return of 0.6% ((1.9%) on a constant
currency basis). The returns from the Derived Equity portfolio were
subdued with a Total Return of (2.3%), ((2.2%) on a constant
currency basis), primarily due to pressure from our investments in
emerging market stocks.
NAV development
The Adjusted NAV of the Derived Investments portfolio increased
from EUR307.2m to EUR341.8m in the period. Growth came from new
positions being added to the portfolio and a positive contribution
of EUR4.4m from FX. AGA invested EUR132.6m and divested EUR101.8m
in Derived Investments, generating net realised gains of EUR7.0m.
Unrealised losses were (EUR17.8m) (Fig.1) and were the main reason
for the weaker NAV and Total Return.
Investment performance
The Derived Investments portfolio generated a Total Return of
(0.6%). FX had a positive effect of 1.3% as the US dollar
appreciated against the euro (Fig.2); 61% of Derived Investments
are denominated in US dollars, resulting in a (1.9%) Total Return
on a constant currency basis. Derived Debt contributed 0.3% to the
performance of Derived Investments, compared with Derived Equities
with (0.9%).
The Derived Debt portfolio was particularly impacted by a
further write down in the FullBeauty second lien investment
(further details below). This one position represented 85% of total
Derived Debt unrealised losses during the first six months. The
remaining Debt positions held by AGA however are performing
well.
Within Derived Equity, AGA's exposure to China and India caused
a drag on performance. In particular, Indian mid-cap stocks were
caught in a sell-off as evidenced by the MSCI India Mid Cap index
declining by 10.9% in the first six months of the year.
The top three performers in the Derived Investments portfolio
(Fig.3) were Greencore, Dignity and Sophos, three UK listed
equities.
Greencore is currently the seventh largest Derived Investment
with a NAV of EUR15.4m. The company produces convenience food for
retailers and global brands in the UK and the US. AGA purchased
this stock earlier this year as its price was over-penalised
following a profit warning.
Dignity is the leading UK funeral services provider. AGA
acquired a position in Dignity in 2018 as it was trading at a
significant discount to its long-term valuation multiples, and not
reflecting its market position and growth rates. This valuation gap
closed sooner than expected, and AGA sold the position after a
short hold, generating 1.4x Gross MOIC and 522% Gross IRR.
The share price of Sophos (an IT security and data protection
company) has experienced some volatility during the first six
months but improved considerably compared to the prior year
end.
The positions with the greatest mark-downs were Strides Shasun
(listed equity), FullBeauty (second lien loan) and OVS (listed
equity).
Strides Shasun announced weak results. The business
significantly lagged management guidance, largely on account of
under-performance of its US business.
FullBeauty's debt valuation has decreased as operational trends
continue to be weak and its NAV at June 2018 marked at EUR4.1m.
There is therefore limited further valuation downside as a result
of total write-downs already made with respect to this
investment.
AGA's investment in OVS stock was driven by a read across from
other structurally sound retailers experiencing weather- related
weak trading during the winter months which later improved. Recent
political events in Italy and the insolvency of an OVS affiliate in
Switzerland impacted OVS's share price negatively in 1H18.
Investment activity
Derived Debt
The first half of 2018 saw a similar investment focus as 2017.
In Derived Debt, the preference for US second lien notes continued
as shown by the six of the seven debt investments made. Increased
US base rates have resulted in improved bond yields in the US, and
in Europe spreads have started to widen. In our view, this has
generally improved risk-reward profiles for credit investments.
Of the seven new debt investments, two were in Apax Funds
portfolio companies: Boats Group and Vyaire Medical. The overlap
between AGA's Derived Debt portfolio with Private Equity exposures
of Apax Funds was reduced to seven out of a total of 19 Derived
Debt holdings at the end of the period. This represents a 36.8%
overlap.
An example of the Investment Adviser's ability and insight to
source a new Derived Debt opportunity was the investment in
PowerSchool. PowerSchool is a software company catering to the US
education industry. Initially, Apax performed due diligence on
PowerSchool as a potential Private Equity opportunity, but did not
proceed due to an unfavourable valuation bid-ask spread. Following
the acquisition of PowerSchool by a consortium of Onex and Vista,
AGA invested EUR12.8m in the second lien loan as we had a strong
conviction towards the company's business fundamentals.
AGA exited five Derived Debt positions, generating EUR55.4m of
proceeds in 1H18. The Gross IRR achieved on fully and partially
exited positions was 12.6%, realising EUR1.6m (inclusive of income)
of gains. As many of these debt investments were US dollar
denominated, the constant currency Gross IRR achieved was 12.1%(1)
.
Derived Equity
During the first half of this year, a total of eight new Derived
Equity investments were completed, with an emphasis on Europe. The
overlap of the Derived Equity portfolio with the AGA Private Equity
exposures at 30 June 2018 was 16.7% with three positions out of a
total of 18 investments overlapping.
AGA made six full exits from the Derived Equity portfolio. Four
of these investments were purchased in the twelve months prior to
the sale. The short holding periods reflect investment objectives
having been achieved much earlier than originally anticipated. The
Gross IRR on all exited positions was 7.7% with three positions
returning negative or single-digit returns. Nonetheless, these
exits realised EUR6.8m of gains, and the constant currency Gross
IRR was 11.9%(1) .
1. Constant currency Gross IRR calculated based on the aggregate
cash flows of each position sold, converted to euro using the FX
rate at the first date of purchase for each respective position.
The Gross IRR is then calculated on their aggregate cash flows
Fig.1: Derived Investments Adjusted NAV development (EURm)
EURm
------------------------------- --------
Adjusted NAV 31 Dec 2017 307.2
------------------------------- --------
Investments 132.6
------------------------------- --------
Divestments (101.8)
------------------------------- --------
Realised gains 7.0
------------------------------- --------
Unrealised losses (17.8)
------------------------------- --------
Performance fee adjustment(1) 10.2
------------------------------- --------
FX 4.4
------------------------------- --------
Adjusted NAV 30 June 2018(3) 341.8
------------------------------- --------
1. Performance fee adjustment accounting for the movement in the
performance fee reserve at 30 June 2018
Fig.2: Derived Investments performance (%)
%
------------------------------- -------
Income 3.0%
------------------------------- -------
Realised gains 2.2%
------------------------------- -------
Unrealised gains (5.5%)
------------------------------- -------
Performance fee adjustment(1) (1.6%)
------------------------------- -------
FX 1.3%
------------------------------- -------
1H18 Total Return (0.6%)
------------------------------- -------
1. Performance fee adjustment accounting for the movement in the
performance fee reserve at 30 June 2018
Operational metrics
Derived Debt
Operational performance in the Derived Debt portfolio measured
by LTM EBITDA growth, improved from 6.2% to 15.4%, mainly due to
the addition of a number of new positions (Boats Group, PowerSchool
and Vyaire) with higher EBITDA growth.
The average yield of debt to maturity increased to 12.3% due to
an increase in LIBOR rates which affected the floating rate debt
AGA holds. 58% of Derived Debt positions were yielding 10% to
maturity or higher.
Derived Equity
Average LTM earnings growth in the Derived Equity portfolio has
increased from 12.0% to 16.1% due to a change in the portfolio mix
compared to December 2017 with more faster growing positions added.
There were eight additions and six positions sold in the
period.
The average price-to-earnings multiple for the Derived Equity
portfolio decreased to 23.5x. This was driven by the addition of
faster growing positions whose share prices remained stable or
decreased in some cases.
Market outlook
With the recent expansion of yields in Western markets, the
risk-reward profile of credit opportunities seems more viable and
we expect to see more debt investments in the Derived Investments
portfolio going forward. Within the debt universe, we remain more
positive on US dollar credit, but note euro investments have become
more attractive in light of increasing spreads.
We expect new investment opportunities to arise in Derived
Equity due to increasing volatility in public markets. We will
however remain vigilant in relation to valuation risks, in
particular from protectionist policies, tariff discussions, and
regional/political conflicts.
Investment Manager's report | Derived Investments
Debt
Acquisitions
Acquisitions(1) Cost(1)
---------------- ----------------------------------------------------------- --------
Online marketplace and provider of software solutions
for the recreational marine industry
Boats Group (North America, Services, second lien) EUR6.7m
---------------- ----------------------------------------------------------- --------
Global provider of environmental, health, safety, risk,
social consulting services and sustainability related
services
ERM (UK, Services, second lien) EUR1.7m
---------------- ----------------------------------------------------------- --------
Provider of cost containment services to the workers'
compensation, disability and auto industries
Genex (North America, Healthcare, second lien) EUR6.0m
---------------- ----------------------------------------------------------- --------
Container leasing and logistic company
Goodpack (North America, Services, second lien) EUR3.4m
---------------- ----------------------------------------------------------- --------
Provider of subscription-based legal insurance plans
and identity theft protection plans to individuals
LegalShield (North America, Services, second lien) EUR8.0m
---------------- ----------------------------------------------------------- --------
Market leader in US K-12 education software
PowerSchool (North America, Tech & Telco, second lien) EUR12.8m
---------------- ----------------------------------------------------------- --------
Global leader in the respiratory diagnostics, ventilation,
and anaesthesia delivery and patient monitoring market
segments
Vyaire Medical (North America, Healthcare, first lien) EUR15.5m
---------------- ----------------------------------------------------------- --------
1. Represents the cost acquired during 2018
Gross IRR(2) /MOIC(2)
12.6%/1.2x
Divestments
Initial
year Gross Gross
Full exits of purchase MOIC(3) IRR(3)
----------- ------------------------------------------- ------------- -------- -------
Provider of cost containment services to
the workers' compensation, disability and
auto industries
Genex (North America, Healthcare, second lien) 2014 1.4x 13%
----------- ------------------------------------------- ------------- -------- -------
Provider of financial services software
Misys (Europe, Tech & Telco, second lien) 2017 1.0x (6%)
----------- ------------------------------------------- ------------- -------- -------
German based speciality pharmaceutical
company
Riemser (Europe, Healthcare, first lien) 2017 1.1x 25%
----------- ------------------------------------------- ------------- -------- -------
2. Gross IRR and MOIC calculated based on the aggregate euro
cash flows since inception for deals realised during the period
(inclusive of two partial exits)
3. Calculated since the initial purchase date of the
investment
Equity
Acquisitions
Acquisitions(1) Cost(2)
------------------ ------------------------------------------------------- --------
House financing company
Can Fin Homes (India, Services) EUR8.2m
------------------ ------------------------------------------------------- --------
Provider of health and human services to patients with
intellectual disabilities
Civitas Solutions (North America, Healthcare) EUR12.1m
------------------ ------------------------------------------------------- --------
UK funeral services provider
Dignity (UK, Services) EUR8.1m
------------------ ------------------------------------------------------- --------
International producer of convenience foods
Greencore (Europe, Consumer) EUR11.4m
------------------ ------------------------------------------------------- --------
UK retirement specialist
Just Group (UK, Services) EUR8.6m
------------------ ------------------------------------------------------- --------
Facilities management company
Mitie (UK, Services) EUR8.5m
------------------ ------------------------------------------------------- --------
Italian family apparel retailer
OVS (Europe, Consumer) EUR12.5m
------------------ ------------------------------------------------------- --------
Repco Home House financing company
Finance(3) (India, Services) EUR7.9m
------------------ ------------------------------------------------------- --------
1. In April 2018, AGA's investment in Strides Shasun demerged
and the Company received shares in a new investment Solara, that
subsequently listed on the National Stock Exchange of India in June
2018. This resulted in a partial realisation of Strides Shasun and
new investment in Solara. This investment in Solara was valued at
EUR0.6m at 30 June 2018 and has been excluded from the above
2. Represents the cost acquired during 2018
3. Add-on position
Gross IRR(4) /MOIC(4)
7.7%/1.1x
Divestments
Initial
year Gross Gross
Full exits of purchase MOIC(5) IRR(5)
--------------------- ----------------------------------------------- ------------- -------- -------
Product design and development, engineering
software and cloud computing software company
Altair (North America, Tech & Telco) 2017 1.9x 1883%
--------------------- ----------------------------------------------- ------------- -------- -------
Italian factoring business
Banca Farmafactoring (Europe, Services) 2017 0.9x (12%)
--------------------- ----------------------------------------------- ------------- -------- -------
A Chinese merchant bank and asset management
China Cinda company
Asset Management (China, Services) 2015 0.8x (9%)
--------------------- ----------------------------------------------- ------------- -------- -------
UK funeral services provider
Dignity (UK, Services) 2018 1.4x 522%
--------------------- ----------------------------------------------- ------------- -------- -------
Technology services provider
Take (India, Tech & Telco) 2016 1.1x 4%
--------------------- ----------------------------------------------- ------------- -------- -------
Open source SaaS provider of data management
solutions
Talend (North America, Tech & Telco) 2017 1.2x 36%
--------------------- ----------------------------------------------- ------------- -------- -------
4. Gross IRR and MOIC calculated based on the aggregate euro
cash flows since inception for deals realised during the period
(inclusive of one partial exit)
5. Calculated since the initial purchase date of the
investment
Investment Manager's report | Derived Investments
Top 30 Derived Investments
at 30 June 2018
Valuation % of
Instrument Geography Sector EURm NAV
---------------------------- -------------- -------------- ------------- --------- ----
Syncsort 2L term loan North America Tech & Telco 21.2 2%
---------------------------- -------------- -------------- ------------- --------- ----
KRKA Listed equity Europe Healthcare 20.3 2%
---------------------------- -------------- -------------- ------------- --------- ----
Sophos* Listed equity UK Tech & Telco 17.1 2%
---------------------------- -------------- -------------- ------------- --------- ----
Quality Distribution* 2L term loan North America Services 17.0 2%
---------------------------- -------------- -------------- ------------- --------- ----
Aptos* 1L term loan North America Tech & Telco 16.8 2%
---------------------------- -------------- -------------- ------------- --------- ----
Vyaire Medical* 2L term loan North America Healthcare 16.6 2%
---------------------------- -------------- -------------- ------------- --------- ----
Greencore Listed equity Europe Consumer 15.4 2%
---------------------------- -------------- -------------- ------------- --------- ----
Civitas Solutions Listed equity North America Healthcare 14.0 1%
---------------------------- -------------- -------------- ------------- --------- ----
ECi* 2L term loan North America Tech & Telco 12.9 1%
---------------------------- -------------- -------------- ------------- --------- ----
PowerSchool 2L term loan North America Tech & Telco 12.7 1%
---------------------------- -------------- -------------- ------------- --------- ----
Sinopharm Listed equity China Healthcare 12.2 1%
---------------------------- -------------- -------------- ------------- --------- ----
Vipshop Listed equity China Consumer 11.9 1%
---------------------------- -------------- -------------- ------------- --------- ----
Rentpath 2L term loan North America Tech & Telco 10.8 1%
---------------------------- -------------- -------------- ------------- --------- ----
Safetykleen* 2L term loan UK Services 9.8 1%
---------------------------- -------------- -------------- ------------- --------- ----
DCB Listed equity India Services 9.6 1%
---------------------------- -------------- -------------- ------------- --------- ----
OVS Listed equity Europe Consumer 9.3 1%
---------------------------- -------------- -------------- ------------- --------- ----
Repco Home Finance Listed equity India Services 9.2 1%
---------------------------- -------------- -------------- ------------- --------- ----
Vertafore 2L term loan North America Tech & Telco 8.7 1%
---------------------------- -------------- -------------- ------------- --------- ----
LegalShield 2L term loan North America Services 8.7 1%
---------------------------- -------------- -------------- ------------- --------- ----
PDC Brands 2L term loan North America Consumer 8.7 1%
---------------------------- -------------- -------------- ------------- --------- ----
LegalZoom 2L term loan North America Services 8.7 1%
---------------------------- -------------- -------------- ------------- --------- ----
Advantage Sales & Marketing 2L term loan North America Consumer 7.9 1%
---------------------------- -------------- -------------- ------------- --------- ----
Just Group Listed equity UK Services 7.7 1%
---------------------------- -------------- -------------- ------------- --------- ----
Boats Group* 2L term loan North America Services 6.8 1%
---------------------------- -------------- -------------- ------------- --------- ----
Mitie Group Listed equity UK Services 6.8 1%
---------------------------- -------------- -------------- ------------- --------- ----
Can Fin Homes Listed equity India Services 6.5 1%
---------------------------- -------------- -------------- ------------- --------- ----
Strides Shasun Listed equity India Healthcare 6.5 1%
---------------------------- -------------- -------------- ------------- --------- ----
Genex* 2L term loan North America Healthcare 6.5 1%
---------------------------- -------------- -------------- ------------- --------- ----
Equity and
Answers warrants North America Services 6.3 1%
---------------------------- -------------- -------------- ------------- --------- ----
FullBeauty* 2L term loan North America Consumer 4.1 0%
---------------------------- -------------- -------------- ------------- --------- ----
Other investments 14.2 1%
--------------------------------------------------------------------------- --------- ----
Total Derived Investments 344.9 37%
--------------------------------------------------------------------------- --------- ----
* Denotes overlap with the Private Equity portfolio
www.apaxglobalalpha.com/investment-portfolio/top-holdings/derived-investments
Statement of Directors' responsibilities
Statement of principal risks and uncertainties
As an investment company with an investment portfolio comprising
financial assets, the principal risks associated with the Company's
business largely relate to financial risks, strategic and business
risks, and operating risks.
A detailed analysis of the Company's principal risks and
uncertainties are set out on pages 40 to 43 of the annual report
and accounts 2017 and have not changed materially since the date of
the report. The Company has not identified any new risks that will
impact the remaining six months of the financial year.
Statement of Directors' responsibilities in respect of the
Interim Report and Accounts
The Directors confirm that to the best of their knowledge:
-- the condensed interim financial statements have been prepared
in accordance with IAS 34 interim financial reporting as required
by DTR4.2.4R;
-- the Chairman's Statement and Investment Manager's report
(together constituting the Interim Management Report), together
with the statement of principal risks and uncertainties above,
include a fair review of the information required by DTR4.2.7R,
being an indication of important events that have occurred during
the period and their impact on these interim financial statements;
and a description of the principal risks and uncertainties for the
remaining six months of the year; and
-- the condensed interim financial statements provide a fair
review of the information required by DTR4.2.8R, being related
party transactions that have taken place in the first six months of
the current financial year and that have materially affected the
financial position or performance of the Company during that
period, and any changes in the related party transactions described
in the last annual report and accounts that could materially affect
the financial position or performance of the Company during that
period. Please refer to note 9 of the condensed interim financial
statements.
Signed on behalf of the Board of Directors
Tim Breedon CBE
Chairman
13 August 2018
Signed on behalf of the Audit Committee
Susie Farnon
Chairman of the Audit Committee
13 August 2018
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in Guernsey governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Independent review report
to Apax Global Alpha Limited
Conclusion
We have been engaged by Apax Global Alpha Limited (the
"Company") to review the condensed set of financial statements in
the half-yearly financial report for the six months ended 30 June
2018 which comprises the condensed statement of financial position,
the condensed statement of profit or loss and other comprehensive
income, the condensed statement of changes in equity, the condensed
statement of cash flows and the related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2018 is not prepared, in all material respects, in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU and
the Disclosure Guidance and Transparency Rules ("the DTR") of the
UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the
Company are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company for our
review work, for this report, or for the conclusions we have
reached.
Lee Clark
for and on behalf of
KPMG Channel Islands Limited
Chartered Accountants, Guernsey
13 August 2018
Condensed statement of financial position
At 30 June 2018 (Unaudited)
30 June 31 December
2018 2017
Notes EUR'000 EUR'000
------------------------------------------------------ ----- --------- -----------
Assets
Non-current assets
Investments held at fair value through profit or loss
("FVTPL") 8 983,670 910,669
------------------------------------------------------ ----- --------- -----------
Total non-current assets 983,670 910,669
------------------------------------------------------ ----- --------- -----------
Current assets
Cash and cash equivalents 16,916 18,989
Other receivables 1,742 1,987
------------------------------------------------------ ----- --------- -----------
Total current assets 18,658 20,976
------------------------------------------------------ ----- --------- -----------
Total assets 1,002,328 931,645
------------------------------------------------------ ----- --------- -----------
Liabilities
Current liabilities
Revolving credit facility 11 39,947 -
Investment payables 12,829 -
Accrued expenses 1,731 1,729
------------------------------------------------------ ----- --------- -----------
Total current liabilities 54,507 1,729
------------------------------------------------------ ----- --------- -----------
Total liabilities 54,507 1,729
------------------------------------------------------ ----- --------- -----------
Capital and reserves
Shareholders' capital 14 873,804 873,804
Share-based payment performance fee reserve 10 3,933 17,495
Retained earnings 70,084 38,617
------------------------------------------------------ ----- --------- -----------
Total equity 947,821 929,916
------------------------------------------------------ ----- --------- -----------
Total shareholders' equity and liabilities 1,002,328 931,645
------------------------------------------------------ ----- --------- -----------
On behalf of the Board of Directors
----------------------------------- --------------------------------
Tim Breedon Susie Farnon
Chairman Chairman of the Audit Committee
13 August 2018 13 August 2018
30 June 30 June 31 December 31 December
2018 2018 2017 2017
EUR GBP equivalent(1) EUR GBP equivalent(1)
------------------------------- ------- ------------------ ----------- ------------------
Net Asset Value ("NAV") ('000) 947,821 838,566 929,916 825,849
Adjusted NAV ('000)(2) 943,888 835,087 912,421 810,312
NAV per share 1.93 1.71 1.89 1.68
Adjusted NAV per share(2) 1.92 1.70 1.86 1.65
------------------------------- ------- ------------------ ----------- ------------------
1. The sterling equivalent has been calculated based on the
GBP/EUR exchange rate at 30 June 2018 and 31 December 2017
respectively.
2. Adjusted NAV is the NAV net of the share-based payment
performance fee reserve. Adjusted NAV per share is calculated by
dividing the Adjusted NAV by the total number of shares.
The accompanying notes form an integral part of these condensed
interim financial statements.
Condensed statement of profit or loss and other comprehensive
income
Six months ended 30 June 2018 (Unaudited)
Six months Six months
ended ended
30 June 30 June
2018 2017
Notes EUR'000 EUR'000
-------------------------------------------------------- ----- ---------- ----------
Income
Investment income 9,652 15,288
Net changes in investments at FVTPL 8 53,493 (7,820)
Realised foreign currency (losses)/gains (2,043) 1,435
-------------------------------------------------------- ----- ---------- ----------
Net unrealised foreign currency losses(1) (246) (3,301)
-------------------------------------------------------- ----- ---------- ----------
Total income 60,856 5,602
Operating and other expenses
Performance fee 10 (1,810) (7,578)
Management fee 9 (2,228) (2,687)
Administration and other operating expenses 6 (1,573) (1,355)
-------------------------------------------------------- ----- ---------- ----------
Total operating expenses (5,611) (11,620)
-------------------------------------------------------- ----- ---------- ----------
Total income less operating expenses 55,245 (6,018)
-------------------------------------------------------- ----- ---------- ----------
Finance costs 11 (708) (675)
-------------------------------------------------------- ----- ---------- ----------
Profit/(loss) before tax 54,537 (6,693)
-------------------------------------------------------- ----- ---------- ----------
Tax charge 7 (142) (138)
-------------------------------------------------------- ----- ---------- ----------
Profit/(loss) after tax for the period 54,395 (6,831)
-------------------------------------------------------- ----- ---------- ----------
Other comprehensive income - -
-------------------------------------------------------- ----- ---------- ----------
Total comprehensive income attributable to shareholders 54,395 (6,831)
-------------------------------------------------------- ----- ---------- ----------
Earnings per share (cents) 15
Basic and diluted 11.08 (1.39)
Adjusted(2) 11.02 (1.37)
-------------------------------------------------------- ----- ---------- ----------
The accompanying notes form an integral part of these condensed
interim financial statements.
1. Net unrealised foreign exchange gain on cash and cash
equivalents of EUR0.1m offset by revaluation loss of EUR0.4m on the
revolving credit facility drawn at 30 June 2018.
2. The Adjusted earnings per share has been calculated based on
the profit attributable to ordinary shareholders adjusted for the
total accrued performance fee at 30 June 2018 and 30 June 2017
respectively as per note 15 and the weighted average number of
ordinary shares.
Condensed statement of changes in equity
Six months ended 30 June 2018 (Unaudited)
Share-based
Shareholders' Retained payment performance
For the six months ended 30 June capital earnings fee reserve Total
2018 Notes EUR'000 EUR'000 EUR'000 EUR'000
---------------------------------------- ----- ------------- --------- -------------------- ---------
Balance at 1 January 2018 873,804 38,617 17,495 929,916
Total comprehensive income attributable
to shareholders - 54,395 - 54,395
Share-based payment performance
fee reserve movement 10 - - (13,562) (13,562)
Dividend paid 16 - (22,928) - (22,928)
---------------------------------------- ----- ------------- --------- -------------------- ---------
Balance at 30 June 2018 873,804 70,084 3,933 947,821
---------------------------------------- ----- ------------- --------- -------------------- ---------
Share-based
Shareholders' Retained payment performance
For the six months ended 30 June capital earnings fee reserve Total
2017 and 31 December 2017 Notes EUR'000 EUR'000 EUR'000 EUR'000
---------------------------------------- ----- ------------- --------- -------------------- ---------
Balance at 1 January 2017 873,804 64,914 11,291 950,009
Total comprehensive income attributable
to shareholders - (6,831) - (6,831)
Share-based payment performance
fee reserve movement 10 - - 1,013 1,013
Dividend paid 16 - (23,769) - (23,769)
---------------------------------------- ----- ------------- --------- -------------------- ---------
Balance at 30 June 2017 873,804 34,314 12,304 920,422
---------------------------------------- ----- ------------- --------- -------------------- ---------
Total comprehensive income attributable
to shareholders - 27,336 - 27,336
Share-based payment performance
fee reserve movement - - 5,191 5,191
Dividend paid - (23,033) - (23,033)
---------------------------------------- ----- ------------- --------- -------------------- ---------
Balance at 31 December 2017 873,804 38,617 17,495 929,916
---------------------------------------- ----- ------------- --------- -------------------- ---------
The accompanying notes form an integral part of these condensed
interim financial statements.
Condensed statement of cash flows
Six months ended 30 June 2018 (Unaudited)
Six months Six months
ended ended
30 June 30 June
2018 2017
Notes EUR'000 EUR'000
------------------------------------------------------ ----- ---------- ----------
Cash flows from operating activities
Interest received 9,963 16,130
Interest paid (12) (19)
Dividend received 246 295
Performance fee paid 10 (15,372) (6,565)
Operating expenses paid (3,020) (4,396)
Tax paid 7 (128) (138)
Purchase of Private Equity Investments(1) (11,126) -
Capital calls paid to Private Equity Investments - (14,218)
Capital distributions from Private Equity Investments 22,057 50,129
Purchase of Derived Investments(2) (120,143) (107,518)
Sale of Derived Investments(2) 99,939 208,959
------------------------------------------------------ ----- ---------- ----------
Net cash used in operating activities (17,596) 142,659
------------------------------------------------------ ----- ---------- ----------
Cash flows from financing activities
Finance costs paid (740) (671)
Dividend paid(3) 16 (23,425) (23,425)
Revolving credit facility drawn 43,614 -
Revolving credit facility repaid (4,012) -
------------------------------------------------------ ----- ---------- ----------
Net cash from financing activities 15,437 (24,096)
------------------------------------------------------ ----- ---------- ----------
Cash and cash equivalents at the beginning of the
period 18,989 33,862
Net (decrease)/increase in cash and cash equivalents (2,159) 118,563
Effect of foreign currency fluctuations on cash
and cash equivalents 86 (3,301)
------------------------------------------------------ ----- ---------- ----------
Cash and cash equivalents at the end of the period 16,916 149,124
------------------------------------------------------ ----- ---------- ----------
1. These cash flows relate to the purchase of two carried
interest positions in Apax Europe VI (EUR3.4m) and Apax Europe VII
(EUR7.7m) in the secondary market.
2. On 9 April 2018, the Company's equity investment in Strides
Shasun limited demerged and the Company received shares in a new
company Solara, that subsequently listed on the National Stock
Exchange of India ("NSE") on 27 June 2018. This resulted in a
partial realisation of Strides Shasun limited (EUR1.2m) and a new
investment of EUR1.2m in Solara. As no cash was exchanged, this has
been excluded from the cash flows from investing activities. In the
prior period, the Company's first and second lien debt positions in
Answers were restructured and the Company received equity of
EUR6.9m, warrants of EUR0.2m and new second lien debt of EUR1.9m.
As no cash was exchanged, these have been excluded from the
comparative.
3. Dividend paid represents the cash amount paid to shareholders
adjusted for foreign exchange movements. The difference between the
amount included in the condensed interim statement of profit or
loss and the cash flow statement represents the foreign exchange
difference between the liability being booked and the final amount
paid.
The accompanying notes form an integral part of these condensed
interim financial statements.
Notes to the condensed interim financial statements
For the six months ended 30 June 2018
1 Reporting entity
Apax Global Alpha Limited (the "Company" or "AGA") is a limited
liability Guernsey company that was incorporated on 2 March 2015.
The address of the Company's registered office is PO Box 656, East
Wing, Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1
3PP. The Company invests in Private Equity funds, listed and
unlisted securities including debt instruments.
The Company's main corporate objectives are to provide
shareholders with capital appreciation from its investment
portfolio and regular dividends. The Company's operating activities
are managed by its Board of Directors and its investment activities
are managed by Apax Guernsey Managers Limited (the "Investment
Manager") under a discretionary investment management agreement.
The Investment Manager obtains investment advice from Apax Partners
LLP (the "Investment Adviser").
2 Basis of preparation
Statement of compliance
These condensed interim financial statements have been prepared
in accordance with IAS 34 "Interim Financial Reporting" as adopted
by the European Union and should be read in conjunction with the
Annual Report and Accounts 2017 which were prepared in accordance
with International Financial Reporting Standards, as adopted by the
European Union ("IFRS"). They do not include all the information
required for a complete set of IFRS financial statements. However,
the explanatory notes are included to explain events and
transactions that are significant to an understanding of changes in
the Company's financial position and performance since the last
annual financial statements.
Going concern
The Directors consider that it is appropriate to adopt the going
concern basis of accounting in preparing these condensed interim
financial statements. In reaching this assessment, the Directors
have considered a wide range of information relating to the present
and future conditions, including the condensed statement of
financial position, future projections, cash flows and the
longer-term strategy of the Company. On review of the condensed
statement of financial positon, it was noted that current
liabilities were greater than net current assets at 30 June 2018,
as the Company had drawn on its revolving credit facility (see note
11 for further details). The Company's future cash flow projections
show that this is a temporary position and that the facility will
be repaid in full in the short term.
Additionally, it was noted that the Company's facility is due to
expire on 4 February 2019 but the Company has the option to extend
for further twelve months (subject to final lender approval). The
Directors considered the unlikely scenario of non-renewal of this
facility and determined that it remains appropriate to adopt a
going concern basis. Without the facility, the Company has
sufficient liquidity within its Derived Investments portfolio to
cover all outstanding liabilities inclusive of outstanding Private
Equity commitments due within the next twelve months (see note 12
for further details on liquidity).
3 Accounting policies
There are no new standards or changes to standards since the
Annual Report and Accounts 2017 which significantly impact these
condensed interim financial statements. The accounting policies
applied by the Company in these condensed interim financial
statements are consistent with those set out on pages 73 to 77 of
the Annual Report and Accounts 2017.
4 Critical accounting estimates and judgements
The significant judgements made by management in applying the
Company's accounting policies and the key sources of estimation and
uncertainty remain the same as those applied in the year ended 31
December 2017. In preparing these interim condensed financial
statements, the Company makes judgements, estimates and assumptions
that affect the reported amounts of assets, liabilities, income and
expenses. Estimates and judgements are continually evaluated and
are based on the experience of the Board of Directors and the
Investment Manager and their expectations of future events. As
these judgements involve estimates of the likelihood of future
events, actual results could differ from those estimates which
could affect the future reported amounts of assets and liabilities.
Revisions to estimates are recognised prospectively.
(i) Judgements
The judgement that has the most significant effect on the
amounts recognised in the Company's condensed interim financial
statements relates to investment assets. These have been determined
to be investments held at fair value through profit or loss and
have been accounted for accordingly.
(ii) Estimates
The estimate that has the most significant effect on the amounts
recognised in the Company's financial statements relates to
investments held at FVTPL. The fair value of investments traded in
an active market at FVTPL is determined by reference to their
bid-market pricing at the reporting date otherwise the fair value
is determined by using appropriate valuation techniques and
methodologies.
The Investment Manager is responsible for the preparation of the
Company's valuations and meets quarterly to approve and discuss the
key valuation assumptions. The meetings are open to the Board of
Directors, the Investment Adviser and the external auditors to
enable them to challenge the valuation assumptions and the proposed
valuation estimates. On a quarterly basis, the Board of Directors
review and approve the final NAV calculation before it is announced
to the market.
The Investment Manager also makes estimates and assumptions
concerning the future and the resulting accounting estimates, will
by definition, seldom equal the related actual results. The
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities are
outlined in note 13.
5 Segmental analysis
The segmental analysis of the Company's results and financial
position is set out below. There have been no changes to the
reportable segments since those presented in the Annual Report and
Accounts 2017.
Reportable segments
Condensed statement of profit or loss Private Equity Central
and other comprehensive income Investments Derived Investments functions(1) Total
for the six months ended 30 June 2018 EUR'000 EUR'000 EUR'000 EUR'000
-------------------------------------------- -------------- ------------------- ------------- --------
Investment income - 9,653 (1) 9,652
Net change in investments at FVTPL 59,833 (6,340) - 53,493
Realised foreign exchange losses - (1,669) (374) (2,043)
Net unrealised foreign currency losses - - (246) (246)
-------------------------------------------- -------------- ------------------- ------------- --------
Total income 59,833 1,644 (621) 60,856
-------------------------------------------- -------------- ------------------- ------------- --------
Performance fees(2) (1,217) (593) - (1,810)
Management fees (293) (1,935) - (2,228)
Administration and other operating expenses - - (1,573) (1,573)
-------------------------------------------- -------------- ------------------- ------------- --------
Total operating expenses (1,510) (2,528) (1,573) (5,611)
-------------------------------------------- -------------- ------------------- ------------- --------
Total income less operating expenses 58,323 (884) (2,194) 55,245
-------------------------------------------- -------------- ------------------- ------------- --------
Finance costs - - (708) (708)
-------------------------------------------- -------------- ------------------- ------------- --------
Profit/(loss) before tax 58,323 (844) (2,902) 54,537
-------------------------------------------- -------------- ------------------- ------------- --------
Tax charge - (142) - (142)
-------------------------------------------- -------------- ------------------- ------------- --------
Total comprehensive income attributable
to shareholders 58,323 (1,026) (2,902) 54,395
-------------------------------------------- -------------- ------------------- ------------- --------
Private Equity Cash and
Condensed statement of financial position Investments Derived Investments other NCAs(3) Total
at 30 June 2018 EUR'000 EUR'000 EUR'000 EUR'000
------------------------------------------ -------------- ------------------- -------------- ----------
Total assets 638,812 344,858 18,658 1,002,328
Total liabilities - (12,829) (41,678) (54,507)
------------------------------------------ -------------- ------------------- -------------- ----------
NAV 638,812 332,029 (23,020) 947,821
------------------------------------------ -------------- ------------------- -------------- ----------
Condensed statement of profit or loss Private Equity Central
and other comprehensive income Investments Derived Investments functions(1) Total
for the six months ended 30 June 2017 EUR'000 EUR'000 EUR'000 EUR'000
-------------------------------------------- -------------- ------------------- ------------- ---------
Investment income - 15,175 113 15,288
Net change in investments at FVTPL (6,318) (1,502) - (7,820)
Realised foreign exchange gains 1,108 327 - 1,435
Net unrealised foreign currency losses - - (3,301) (3,301)
-------------------------------------------- -------------- ------------------- ------------- ---------
Total income (5,210) 14,000 (3,188) 5,602
-------------------------------------------- -------------- ------------------- ------------- ---------
Performance fees 104 (7,682) - (7,578)
Management fees (344) (2,343) - (2,687)
Administration and other operating expenses - - (1,355) (1,355)
-------------------------------------------- -------------- ------------------- ------------- ---------
Total operating expenses (240) (10,025) (1,355) (11,620)
-------------------------------------------- -------------- ------------------- ------------- ---------
Total income less operating expenses (5,450) 3,975 (4,543) (6,018)
-------------------------------------------- -------------- ------------------- ------------- ---------
Finance costs - - (675) (675)
-------------------------------------------- -------------- ------------------- ------------- ---------
Profit/(loss) before tax (5,450) 3,975 (5,218) (6,693)
-------------------------------------------- -------------- ------------------- ------------- ---------
Tax charge - (138) - (138)
-------------------------------------------- -------------- ------------------- ------------- ---------
Total comprehensive income attributable
to shareholders (5,450) 3,837 (5,218) (6,831)
-------------------------------------------- -------------- ------------------- ------------- ---------
Private Equity Cash and
Condensed statement of financial position Investments Derived Investments other NCA's(3) Total
at 31 December 2017 EUR'000 EUR'000 EUR'000 EUR'000
------------------------------------------ -------------- ------------------- --------------- --------
Total assets 457,647 314,788 150,736 923,171
Total liabilities - (1,023) (1,726) (2,749)
------------------------------------------ -------------- ------------------- --------------- --------
NAV 457,647 313,765 149,010 920,422
------------------------------------------ -------------- ------------------- --------------- --------
1. Central functions represents interest income earned on cash
balances held and other general administration costs and financial
costs.
2. Represents the movement in each respective portfolio's
overall performance fee reserve (realised and unrealised). At 30
June 2018, the maximum performance fee payable on the unrealised
portfolio would be EUR0.7m. In the Strategic Report, we have
allocated the full EUR0.7m to Private Equity as the IMA requires
that the Private Equity and Derived Investment reserves are
calculated seperately and then netted, therefore the maximum
payable on this reserve was allocated to Private Equity.
3. NCAs refers to net current assets of the Company.
6 Administration and other operating expenses
Six months Six months
ended ended
30 June 30 June
2018 2017
EUR'000 EUR'000
-------------------------------------------------- ---------- ----------
Directors' fees 129 155
Administration and other fees 246 280
Deal transaction, custody and research costs 817 532
General expenses 338 341
Auditors' remuneration
Other assurance services-interim review 46 46
Tax services (3) 1
-------------------------------------------------- ---------- ----------
Total administration and other operating expenses 1,573 1,355
-------------------------------------------------- ---------- ----------
Increase of EUR0.2m in deal transaction, custody and research
costs was mainly due to additional broker fees being incurred
compared to the prior year. The Company has no employees and there
were no pension or staff cost liabilities incurred during the
period.
7 Taxation
The Company is exempt from taxation in Guernsey under the
provisions of the Income Tax (Exempt Bodies) (Guernsey) Ordinance,
1989 and is charged an annual exemption fee of GBP1,200.
The Company, at times, may be required to pay tax in other
jurisdictions as a result of specific trades in its investment
portfolio. During the period ended 30 June 2018, the Company had a
net tax expense of EUR0.1m (30 June 2017: EUR0.1m) mainly related
to the sale of listed equities in India and tax incurred on debt
interest income in the United Kingdom. No deferred income taxes
were recorded as there are no timing differences.
8 Investments
(a) Unconsolidated subsidiaries
As at 30 June 2018, the Company does not have any subsidiaries.
The Company liquidated the last two remaining subsidiaries; RDS
Guernsey PCV GP Co Ltd and Twin Guernsey PCV GP Co Ltd, in the
prior year on 16 March 2017. Both entities were special purpose
vehicles incorporated in Guernsey.
(b) Investments held at FVTPL
30 June 31 December
2018 2017
EUR'000 EUR'000
--------------------------- --------- -----------
Opening fair value 910,669 911,554
Calls - 154,422
Distributions (22,333) (78,497)
Purchases(1) 143,707 278,543
Sales (101,866) (376,223)
Net change in fair value 53,493 20,870
--------------------------- --------- -----------
Closing fair value 983,670 910,669
--------------------------- --------- -----------
Private Equity Investments 638,812 590,185
Derived Investments 344,858 320,484
--------------------------- --------- -----------
Debt 184,253 188,429
Equities 160,605 132,055
--------------------------- --------- -----------
Closing fair value 983,670 910,669
--------------------------- --------- -----------
1. Included in purchases is EUR11.1m related to Private Equity
as two carried interest holdings were purchased on the secondary
market during the period.
(c) Net changes in investments at FVTPL
Six months Six months
ended ended
30 June 30 June
2018 2017
EUR'000 EUR'000
------------------------------------------------------ ---------- ----------
Private Equity Investments
Gross unrealised gains 60,861 33,977
Gross unrealised losses (1,028) (40,295)
------------------------------------------------------ ---------- ----------
Total net unrealised gains/(losses) on Private Equity
Investments 59,833 (6,318)
------------------------------------------------------ ---------- ----------
Derived Investments
Gross unrealised gains 20,306 28,199
Gross unrealised losses (27,624) (47,269)
------------------------------------------------------ ---------- ----------
Net unrealised losses on Derived Investments (7,318) (19,070)
------------------------------------------------------ ---------- ----------
Gross realised gains 9,203 29,285
Gross realised losses (8,225) (11,717)
------------------------------------------------------ ---------- ----------
Net realised gains on Derived Investments 978 17,568
------------------------------------------------------ ---------- ----------
Total net losses on Derived Investments (6,340) (1,502)
------------------------------------------------------ ---------- ----------
Total net gains/(losses) in investments at FVTPL 53,493 (7,820)
------------------------------------------------------ ---------- ----------
(d) Involvement with unconsolidated structured entities
The Company's investments in Private Equity funds are considered
to be unconsolidated structured entities. Their nature and purpose
is to invest capital on behalf of their limited partners. The funds
pursue sector focused strategies, investing in four key sectors;
Tech & Telco, Services, Healthcare and Consumer. The Company
commits to a fixed amount of capital, which may be drawn (and
returned) over the life of the fund. The Company pays capital calls
when due and receives distributions from the funds, once an asset
has been sold. Note 12 summarises current outstanding commitments
to the six underlying Private Equity Investments held. The fair
value of these was EUR638.8m at 30 June 2018 (30 June 2017:
EUR457.6m), whereas total value of the Private Equity funds was
EUR14.5bn (30 June 2017: EUR13.3bn). During the period, the Company
did not provide financial support and has no intention of providing
financial or other support to these funds.
9 Related party transactions
The Investment Manager was appointed by the Board of Directors
under a discretionary Investment Management Agreement ("IMA") dated
22 May 2015 and the amended IMA dated 22 August 2016, which sets
out the basis for the allocation and payment of the management
fee.
The management fee is calculated in arrears at a rate of 1.25%
per annum on the fair value of Derived Investments and non-fee
paying Private Equity Investments which do not already pay a
management fee and/or an advisory fee to the Investment Manager or
Investment Adviser. During the six months ended 30 June 2018,
EUR2.2m (30 June 2017: EUR2.7m) of management fees were earned by
the Investment Manager. The Investment Manager is also entitled to
a performance fee on realised gains when they reach or exceed a
benchmark performance, as explained in note 10.
The IMA has an initial term of six years and automatically
continues for a further three additional years unless prior to the
fifth anniversary of the start of the initial term or prior to the
second anniversary of the start of any additional year thereafter
either the Investment Manager or the Company (by a special
resolution) serves a written notice electing to terminate the IMA
at the expiry of the initial term of the commencement of the next
additional year. The Company is required to pay the Investment
Manager during the notice period all fees and expenses accrued and
payable at the date of termination.
The Investment Adviser has been engaged by the Investment
Manager to provide advice on the investment strategy of the
Company. An Investment Advisory Agreement ("IAA"), dated 22 May
2015 and the amendment dated 22 August 2016, exists between the two
parties. Though not legally related to the Company, the Investment
Adviser has been determined to be a related party. The Company paid
no fees and had no transactions with the Investment Adviser during
the period (30 June 2017: EURNil).
The Company has an Administration Agreement with Aztec Financial
Services (Guernsey) Limited ("Aztec") dated 22 May 2015. Under the
terms of the agreement, Aztec has delegated certain accounting and
bookkeeping services related to the Company to Apax Partners Fund
Services Limited ("APFS"), a related party of the Investment
Adviser, under a sub-administration agreement dated 22 May 2015. A
fee of EUR0.2m (30 June 2017: EUR0.3m) was paid by the Company in
respect of administration fees and expenses, of which EUR0.1m (30
June 2017: EUR0.1m) was paid to APFS.
At 30 June 2018, Tim Breedon held 70,000 shares (0.01%) ,Susie
Farnon held 20,000 shares (0.004%) and Chris Ambler held 6,553
shares (0.001%). On 3 January 2018, Sarah Evans retired from the
Board of Directors and the Audit Committee. On 3 July 2018, Mike
Bane was appointed as a new Director. Please see note 17 for
further details.
10 Performance fee
Six months
ended Year ended
30 June 31 December
2018 2017
EUR'000 EUR'000
------------------------------------------------------ ---------- ------------
Opening performance fee reserve 17,495 11,291
Performance fee charge to statement of profit or loss 1,810 12,770
Performance fee paid (15,372) (6,566)
------------------------------------------------------ ---------- ------------
Closing performance fee reserve 3,933 17,495
A performance fee is payable on an annual basis once realised
gains on the Derived Investments and non-fee paying Private Equity
Investments exceed the prescribed benchmark of 8% internal rate of
return. Performance fees are only payable to the extent they do not
dilute the returns below the 8% benchmark. They are calculated at
20% on total realised gains. Where there are overall net realised
losses in a period these are carried forward and netted against
future performance fees that may become payable.
The performance fee is payable to the Investment Manager by way
of ordinary shares of the Company, unless as permitted by the IMA
there are restrictions that prevent the Company purchasing shares,
in which case the performance fee may be paid in cash. The
mechanics of the payment of the performance fee are explained in
the prospectus. In accordance with IFRS 2 "Share-based Payment",
performance fee expenses are recognised in the statement of profit
or loss and allocated to a share-based payment performance fee
reserve in equity.
In the six months ended 30 June 2018 a performance fee of
EUR15.4m (31 December 2017: EUR6.6m) was paid in cash to the
Investment Manager in relation to performance on investments
realised during the year ended 31 December 2017 because regulatory
constraints prevented payment in shares. The intention of the
Company remains that future awards should be payable in shares. The
Company and the Investment Manager have been working to clear and
resolve these limitations and expect to pay the fee in shares from
31 December 2018 onwards.
At 30 June 2018, management's best estimate of the expected
performance fee was calculated on the eligible portfolio on a
liquidation basis. Of this, EUR3.2m (30 June 2017: EUR7.7m) is
related to realised gains earned during the period. The effect of
the performance fee on NAV per share is disclosed in note 15.
11 Revolving credit facility and finance costs
The Company entered into a multi-currency revolving credit
facility agreement on 22 May 2015 (the "Loan Agreement") with
Lloyds Bank plc for general corporate purposes. The Company may
borrow under the Loan Agreement; including letters of credit
subject to a maximum borrowing limit set at EUR140.0m. The facility
is due to expire on 4 February 2019, however the Company has an
option to extend for a further twelve months (subject to final
lender approval).
The interest rate charged is LIBOR or EURIBOR plus a margin of
210 bps. During the period EUR0.1m (30 June 2017 EUR12.9k) interest
was paid on seven drawdowns made on the facility. In addition, a
charge of EUR0.6m (30 June 2017: EUR0.7m) was included in the
condensed interim statement of profit or loss related to a
non-utilisation fee on the undrawn facility. Under the Loan
Agreement, the Company is required to provide collateral for each
utilisation. Collateral can be provided in the form of underlying
investments. The loan to value ratio must not exceed 1:5 of the
portfolio's NAV.
12 Financial risk management
The Company maintains positions in a variety of financial
instruments in accordance with its Investment Management strategy.
The Company's underlying investment portfolio comprises Private
Equity Investments and Derived Investments. The Company's exposure
to the portfolio is summarised in the table below:
30 June 31 December
2018 2017
--------------------------- ------- -----------
Private Equity Investments 65% 65%
Derived Investments 35% 35%
--------------------------- ------- -----------
Debt 19% 20%
Equities 16% 15%
--------------------------- ------- -----------
Total 100% 100%
--------------------------- ------- -----------
The Company's activities expose it to a variety of financial
risks: liquidity risk, credit risk and market risk including price
risk, foreign currency risk and interest rate risk. As at 30 June
2018, there were no material changes in the Company's exposure to
credit risk and market risk since 31 December 2017.
Liquidity risk
The table below summarises the maturity profile of the Company's
financial liabilities at 30 June 2018 based on contractual
undiscounted repayment obligations. The contractual maturities of
most financial liabilities are less than three months with the
exception of the revolving credit facility and commitments to
Private Equity Investments, where their expected cash flow dates
are summarised in the tables below.
At 30 June 2018, the Company had undrawn commitments of
EUR225.4m and EUR53.9m of recallable distributions (31 December
2017: EUR216.0m undrawn commitments and EUR50.0m recallable
distributions) of which EUR34.6m (31 December 2017: EUR78.7m) is
expected to be drawn within twelve months. In line with the
investment strategy of the Company, the Derived Investment
portfolio is expected to be invested in equities, predominantly
listed equity and debt. These asset classes provide additional
liquidity management options as many of them are readily
realisable.
The Company also has access to a short-term revolving credit
facility (see note 11) upon which it can draw up to EUR140.0m. The
Company may utilise this facility in the short term to bridge
Private Equity calls and ensure that it can realise the Derived
Investments at the best price available. At 30 June 2018, the
Company had drawn EUR39.9m (31 December 2017: EURNil) to fund a
number of Derived Investments. The Investment Manager expects to
repay the facility fully within the next three months as it awaits
a known upcoming Private Equity distribution from Apax VIII and
proceeds from a number of Derived Investments positions realised
post period end.
The Company does not manage liquidity risk on the basis of
contractual maturity. Instead the Company manages liquidity risk
based on expected cash flows.
30 June 2018
Up to 3 months 3-12 months 1-5 years Total
EUR'000 EUR'000 EUR'000 EUR'000
------------------------------------------ -------------- ----------- --------- --------
Investment payables 12,829 - - 12,829
Accrued expenses 1,731 - - 1,731
Revolving credit facility 39,947 39,947
Private Equity Investments outstanding
commitments and recallable distributions 770 34,610 243,945 279,325
------------------------------------------ -------------- ----------- --------- --------
Total 55,277 34,610 243,945 333,832
------------------------------------------ -------------- ----------- --------- --------
31 December 2017
Up to 3 months 3-12 months 1-5 years Total
EUR'000 EUR'000 EUR'000 EUR'000
------------------------------------------ -------------- ----------- --------- --------
Accrued expenses 1,729 - - 1,729
Private Equity Investments outstanding
commitments and recallable distributions - 78,714 187,517 266,231
------------------------------------------ -------------- ----------- --------- --------
Total 1,729 78,714 187,517 267,960
------------------------------------------ -------------- ----------- --------- --------
The Company's outstanding commitments and recallable
distributions to Private Equity Investments are summarised
below:
30 June 31 December
2018 2017
EUR'000 EUR'000
------------------ -------- -----------
Apax Europe VI 225 225
Apax Europe VII 648 1,030
Apax VIII 49,605 48,892
AMI Opportunities 13,796 12,887
Apax IX 172,258 161,548
Apax Digital 42,793 41,649
------------------ -------- -----------
Total 279,325 266,231
------------------ -------- -----------
13 Fair value estimation
(a) Investments measured at fair value
The Company classifies for disclosure purposes 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 levels:
Quoted prices (unadjusted) in active markets for identical
assets or liabilities (level 1).
Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from prices) (level 2).
Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level
3).
The level in the fair value hierarchy within which the fair
value measurement is categorised in its entirety is determined on
the basis of the lowest level input that is significant to the fair
value measurement in its entirety. If a fair value measurement uses
observable inputs that require significant adjustment based on
unobservable inputs, that measurement is a level 3 measurement.
Assessing the significance of a particular input to the fair value
measurement in its entirety requires judgement, considering factors
specific to the asset or liability.
The determination of what constitutes "observable" requires
significant judgement by the Company. The Company considers
observable data to be market data that is readily available,
regularly distributed or updated, reliable and verifiable, not
proprietary, and provided by independent sources that are actively
involved in the relevant market. The Company also determines if
there is a transfer between the each respective level at the end of
each reporting period based on the valuation information
available.
The following table analyses within the fair value hierarchy the
Company's financial assets (by class) measured at fair value at 30
June 2018:
Level 1 Level 2 Level 3 Total
Assets EUR'000 EUR'000 EUR'000 EUR'000
--------------------------- -------- -------- -------- --------
Private Equity Investments - - 638,812 638,812
Derived Investments 150,981 - 193,877 344,858
--------------------------- -------- -------- -------- --------
Debt - - 184,253 184,253
Equities 150,981 - 9,624 160,605
--------------------------- -------- -------- -------- --------
Total 150,981 - 832,689 983,670
--------------------------- -------- -------- -------- --------
The following table analyses within the fair value hierarchy the
Company's financial assets (by class) measured at fair value at 31
December 2017:
Level 1 Level 2 Level 3 Total
Assets EUR'000 EUR'000 EUR'000 EUR'000
--------------------------- -------- -------- -------- --------
Private Equity Investments - - 590,185 590,185
Derived Investments 121,339 - 199,145 320,484
--------------------------- -------- -------- -------- --------
Debt - - 188,428 188,428
Equities 121,339 - 10,717 132,056
--------------------------- -------- -------- -------- --------
Total 121,339 - 789,330 910,669
--------------------------- -------- -------- -------- --------
Investments whose values are based on quoted market prices in
active markets are classified as level 1 investments. There were no
transfers to or from level 1 during the period.
Level 3 investments include Private Equity and Derived
Investments in both debt and equity. As they trade infrequently,
observable prices are not available for these investments, and
accordingly valuation techniques are used to derive the fair
value.
The Company values its holding in Private Equity based on the
NAV statements it receives from the respective underlying fund. The
main input into the valuation models used to determine NAV of the
underlying level 3 investments within the private equity funds
comprises earnings multiples (based on the budgeted earnings or
historical earnings of the issuer and earnings multiples of
comparable listed companies). The Company also considers original
transaction price, recent transactions in the same or similar
instruments and completed third-party transactions in comparable
instruments and adjusts the model as deemed necessary. The Company
values debt based upon models that take into account factors
relevant to each investment and uses third-party market data and
broker quotes where available. The Company values unquoted equities
based on models that utilise comparable company multiples, budgeted
and historical earnings and recent transactions.
Movements in level 3 instruments are summarised below:
Six months ended 30 June
2018 Year ended 31 December 2017
----------------------------------------- ------------------------------------------
Private Private
Equity Derived Investments Total Equity Derived Investments Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
---------------------------- --------- ------------------- --------- --------- ------------------- ----------
Opening fair value 590,185 199,145 789,330 498,750 222,922 721,672
Additions 11,126 54,090 65,216 154,422 157,692 312,114
Disposals and repayments (18,155) (55,462) (73,617) (78,497) (182,436) (260,933)
Realised gains/(losses) - (711) (711) - (29,214) (29,214)
Unrealised gains/(losses) 55,656 (3,185) 52,471 15,510 26,904 42,414
Transfers in/(out) of level
3 - - - - 3,277 3,277
---------------------------- --------- ------------------- --------- --------- ------------------- ----------
Closing fair value 638,812 193,877 832,689 590,185 199,145 789,330
---------------------------- --------- ------------------- --------- --------- ------------------- ----------
The unrealised gains attributable to assets held at 30 June 2018
were EUR52.5m (31 December 2017: EUR6.8m).
(b) Significant unobservable inputs used in measuring fair
value
The table below sets out information about significant
unobservable inputs used in measuring financial instruments
categorised as level 3 in the fair value hierarchy:
30 June 31 December
Significant Sensitivity to changes in 2018 2017
unobservable significant Valuation Valuation
Description Valuation technique inputs unobservable inputs EUR'000 EUR'000
------------- --------------------------- --------------- -------------------------------- ---------- -----------
The Company does not
apply further discount
or liquidity premiums
to the valuations as
these are already captured
in the underlying valuation.
This NAV is subject to
changes in the valuations
of the underlying portfolio
companies. These can
be exposed to a number
of risks, including liquidity
risk, price risk, credit
risk, currency risk and
interest rate risk. A
movement of 10% in the
value of Private Equity
Investments would move
the NAV at the period
end by 6.4% (31 December
2017: 6.1%).
The Company's investment
in AEVII carried interest
is valued based on a
discounted cash flow
model. A movement of
10% in the discount rate
NAV adjusted for applied would move the
Private carried interest NAV at period end by
Equity and discounted cash NAV; Discount 0.2% (31 December 2017:
Investments flow model rate applied 0.1%). 638,812 590,185
------------- --------------------------- --------------- -------------------------------- ---------- -----------
The Company held 19 debt
positions
(31 December 2017: 15),
Illiquid debt positions of which 18 positions
are valued via debt (31 December 2017: 13)
valuation models. had a credit quality
These models consider, adjustment applied. The
where appropriate, average credit quality
broker quotes, credit adjustment applied was
computations, market 1.4% (31 December 2017:
yield movements, 0.1%). A movement of
risk premiums, the 10% in the risk premium
credit quality of would result in a movement
the borrower and of 0.03% on NAV at period
expected repayment Credit quality end (31 December 2017:
Debt dates adjustment 0.1%). 184,253 188,428
------------- --------------------------- --------------- -------------------------------- ---------- -----------
The Company held 4 equity
positions (31 December
2017: 4) of which 2 positions
were valued using comparable
company multiples. The
Where market prices average multiple was
are unavailable, 10.9x (31 December 2017:
the Company uses 9.6x). A movement of
comparable company 10% in the multiple applied
earnings multiples Comparable would move the NAV at
and precedent transaction company period end by 0.1% (31
Equities analysis multiples December 2017: 0.1%). 9,624 10,717
------------- --------------------------- --------------- -------------------------------- ---------- -----------
14 Shareholders' capital
At 30 June 2018, the Company had 491,100,768 ordinary shares
fully paid with no par value in issue (31 December 2017:
491,100,768 shares). All ordinary shares rank pari passu with each
other, including voting rights and there has been no change since
31 December 2017.
The Company has one share class; however a number of investors
are subject to lock-up arrangements for periods of five or ten
years, which restrict them from disposing of ordinary shares issued
at admission. For investors with five-year lock-up periods, 20% of
ordinary shares are released from lock-up each year from the first
anniversary of admission, 15 June 2016. At 30 June 2018, 60% of
these five-year lock-up shares have been released increasing total
free float shares to 60% of total shares issued. For investors with
ten-year lock-up periods, 20% of ordinary shares are released from
lock-up each year from the sixth anniversary of admission, 15 June
2021.
15 Earnings and NAV per share
Six months Six months
ended ended
30 June 30 June
Earnings 2018 2017
-------------------------------------------------------- ------------ ------------
Profit or loss for the period attributable to equity
shareholders: EUR'000 54,395 (6,831)
Weighted average number of shares in issue
Ordinary shares at end of period 491,100,768 491,100,768
Shares issued in respect of performance fee (see note
10) - -
-------------------------------------------------------- ------------ ------------
Total weighted and diluted ordinary shares 491,100,768 491,100,768
-------------------------------------------------------- ------------ ------------
Effect of performance fee adjustment on ordinary shares
Performance shares to be awarded based on a liquidation
basis(1) 2,586,699 7,099,718
-------------------------------------------------------- ------------ ------------
Adjusted shares(2) 493,687,467 498,200,486
-------------------------------------------------------- ------------ ------------
Earnings per share (cents)
Basic and diluted 11.08 (1.39)
Adjusted 11.02 (1.37)
-------------------------------------------------------- ------------ ------------
1. The number of performance shares is calculated inclusive of
deemed realised performance shares that would be issued utilising
the theoretical performance fee payable calculated on a liquidation
basis.
2. The calculation of Adjusted Shares above assumes that new
shares were issued by the Company to the Investment Manager in lieu
of the performance fee. As per the Prospectus, the Company may also
purchase shares from the market if the Company is trading at a
discount to its NAV per share. In such a case, the Adjusted NAV per
share would be calculated by taking the NAV at the year or period
end adjusted for the performance fee reserve and then divided by
the current number of ordinary shares in issue. At 30 June 2018,
the Adjusted NAV per share for both methodologies resulted in an
Adjusted NAV per share of EUR1.92 (30 June 2017: EUR1.85).
At 30 June 2018, there were no items that would cause a dilutive
effect on earnings per share. The adjusted earnings per share has
been calculated based on the profit attributable to shareholders
adjusted for the total accrued performance fee at period end over
the weighted average number of ordinary shares. This has been
calculated on a full liquidation basis inclusive of performance fee
attributable to realised investments. Performance shares to be
issued are calculated based on the trading price of shares and
foreign exchange rate at close of business on 30 June 2018.
The Company had a NAV per share of EUR1.93 at 30 June 2018 (31
December 2017: EUR1.89). This was calculated based on the NAV of
the portfolio divided by the weighted average number of ordinary
shares. The Adjusted NAV per share of EUR1.92 (31 December 2017:
EUR1.86) was adjusted to account for the accrued performance fee
shares as described earlier.
30 June 31 December
2018 2017
---------------------------------- ------- -----------
NAV EUR'000
NAV at the end of the period/year 947,821 929,916
NAV per share (EUR)
NAV per share 1.93 1.89
Adjusted NAV per share 1.92 1.86
---------------------------------- ------- -----------
16 Dividends
Six months ended Six months ended
30 June 2018 30 June 2017
------------------------------------------ ------------------ ------------------
Dividends paid to shareholders EUR'000 GBP'000 EUR'000 GBP'000
------------------------------------------ -------- -------- -------- --------
Final dividends paid-4.17 pence per share
(30 June 2017: 4.13 pence per share) 22,928 20,478 23,769 20,283
------------------------------------------ -------- -------- -------- --------
Total 22,928 20,478 23,769 20,283
------------------------------------------ -------- -------- -------- --------
Six months ended Six months ended
30 June 2018 30 June 2017
------------------ ------------------
Dividends proposed EUR GBP EUR GBP
------------------- -------- -------- -------- --------
Interim dividends 4.82c 4.33p 4.69c 4.24p
------------------- -------- -------- -------- --------
On 5 March 2018, the Board approved the final dividend for 2017,
4.17 pence per share (4.73 cents euro equivalent). This represents
2.5% of the Company's euro NAV at 31 December 2017 and was paid on
4 April 2018.
17 Subsequent events
On 3 July 2018, Mike Bane was appointed as a Non-Executive
Director and a member of the Audit Committee. Mr Bane, resident in
Guernsey, has more than 35 years of audit and advisory experience
in the investment management industry. He graduated with a BA in
Mathematics from the University of Oxford, and is a member of the
Institute of Chartered Accountants in England and Wales.
On 14 August 2018, the Board approved an interim dividend for
the six months ended 30 June 2018 of 4.33 pence per ordinary share
(4.82 cents euro equivalent). This represents 2.5% of the Company's
euro NAV at 30 June 2018 and has an expected payment date of 14
September 2018.
Shareholder information | Administration
Directors (all Non-Executive)
Tim Breedon CBE, (Chairman)
Susie Farnon (Chairman of the Audit Committee)
Chris Ambler
Mike Bane (appointed 2 July 2018)
Sarah Evans (resigned 3 January 2018)
Registered Office of the Company
PO Box 656
East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3PP
Channel Islands
Investment Manager
Apax Guernsey Managers Limited
Third Floor, Royal Bank Place
1 Glategny Esplanade
St Peter Port
Guernsey GY1 2HJ
Channel Islands
Investment Adviser
Apax Partners LLP
33 Jermyn Street
London SW1Y 6DN
United Kingdom
Administrator, Company Secretary and Depositary
Aztec Financial Services (Guernsey) Limited
PO Box 656
East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3PP
Channel Islands
Tel: +44 (0)1481 749 700
AGA-admin@aztecgroup.co.uk
Corporate Broker
Jefferies International Limited
Vintners Place
68 Upper Thames Street
London EC4V 3BJ
United Kingdom
Registrar
Link Asset Services
Mont Crevelt House
Bulwer Avenue
St Sampson
Guernsey GY2 4LH
Channel Islands
Tel: +44 (0)871 664 0300
enquiries@linkgroup.co.uk
Independent Auditor
KPMG Channel Islands Limited
Glategny Court
St Peter Port
Guernsey GY1 1WR
Channel Islands
Association of Investment Companies - AIC
The AIC is the trade body for closed-ended investment companies.
It helps its member companies deliver better returns for their
investors through lobbying, media engagement, technical advice,
training, and events.
Dividend timetable
Announcement: 14 August 2018
Ex-dividend date: 23 August 2018
Record date: 24 August 2018
Payment date: 14 September 2018
Earnings releases and annual results
Earnings releases are expected to be issued on or around 7
November 2018 and 8 May 2019. The annual results for the twelve
months to 31 December 2018 are expected to be issued 5 March
2019.
Stock symbol
London Stock Exchange: APAX
Enquiries
Any enquiries relating to shareholdings on the share register
(for example, transfers of shares, changes of name or address, lost
share certificates or dividend cheques) should be sent to the
Registrars at the address given above. The Registrars offer an
online facility at www.signalshares.com which enables shareholders
to manage their shareholding electronically.
Investor Relations
Enquiries relating to AGA's strategy or results may be directed
to:
Sarah Wojcik
IR Manager - AGA
Apax Partners LLP
33 Jermyn street
London SW1Y 6DN
United Kingdom
Tel: +44 (0)20 7872 6300
investor.relations@apaxglobalalpha.com
Shareholder information | Investment policy
The Company's investment policy is to make (i) Private Equity
Investments, which are primary and secondary commitments to, and
investments in, existing and future Apax Funds and (ii) Derived
Investments, which Apax will typically identify as a result of the
process that Apax Partners undertakes in its private equity
activities and which will comprise direct or indirect investments
other than Private Equity Investments, including primarily
investments in public and private debt, as well as limited
investments in equity, primarily in listed companies. Once fully
invested, the Company expects to be invested in approximately equal
proportion between Private Equity Investments and Derived
Investments, though the investment mix will fluctuate over time due
to market conditions and other factors, including calls for and
distributions from Private Equity Investments, the timing of making
and exiting Derived Investments and the Company's ability to invest
in future Apax Funds. The actual allocation may therefore fluctuate
according to market conditions, investment opportunities and their
relative attractiveness, the cash flow requirements of the Company,
its dividend policy and other factors.
Private Equity Investments
The Company expects that it will seek to invest in any new Apax
Funds that are raised in the future. Private Equity Investments may
be made into Apax Funds with any target sectors and geographic
focus and may be made directly or indirectly. The Company will not
invest in third-party managed funds.
Derived Investments
The Company will typically follow the Apax Group's core sector
and geographical focus in making Derived Investments, which may be
made globally. Derived Investments may include among others, (i)
direct and indirect investments in equity and debt instruments,
including equity in private and public companies, as well as in
private and public debt which may include sub-investment grade and
unrated debt instruments, (ii) co-investments with Apax Funds or
third-parties, (iii) investments in the same or different types of
equity or debt instruments in portfolio companies as the Apax Funds
and may potentially include (iv) acquisitions of Derived
Investments from Apax Funds or third-parties, (v) investments in
restructurings; and (vi) controlling stakes in companies.
Investment restrictions
The following specific investment restrictions apply to the
Company's investment policy:
-- no investment or commitment to invest shall be made in any
Apax Fund which would cause the total amounts invested by the
Company in, together with all amounts committed by the Company to,
such Apax Fund to exceed, at the time of investment or commitment,
25% of the Gross Asset Value; this restriction does not apply to
any investments in or commitments to invest made to any Apax Fund
that has investment restrictions restricting it from investing or
committing to invest more than 25% of its total commitments in any
one underlying portfolio company;
-- not more than 15% of the Gross Asset Value may be invested in
any one portfolio company of an Apax Fund on a look-through
basis;
-- not more than 15% of the Gross Asset Value may be invested in any one Derived Investment; and
-- in aggregate, not more than 20% of the Gross Asset Value is
intended to be invested in Derived Investments in equity securities
of publicly listed companies. However, such aggregate exposure will
always be subject to an absolute maximum of 25% of the Gross Asset
Value.
The aforementioned restrictions apply as at the date of the
relevant transaction or commitment to invest. Hence, the Company
would not be required to effect changes in its investments owing to
appreciations or depreciations in value, distributions or calls
from existing commitments to Apax Funds, redemptions or the receipt
of, or subscription for, any rights, bonuses or benefits in the
nature of capital or of any acquisition or merger or scheme of
arrangement for amalgamation, reconstruction, conversion or
exchange or any redemption, but regard shall be had to these
restrictions when considering changes or additions to the Company's
investments (other than where these investments are due to
commitments made by the Company earlier).
The Company may borrow in aggregate up to 25% of Gross Asset
Value at the time of borrowing to be used for financing or
refinancing (directly or indirectly) its general corporate purposes
(including without limitation, any general liquidity requirements
as permitted under its Articles of Incorporation), which may
include financing short-term investments and/or buybacks of
ordinary shares. The Company does not intend to introduce long-term
structural gearing.
Shareholder information | Quarterly returns since 1Q15
Total Return(2) (euro) Return attribution
-------------------------- ---------------------------------------------------------------
Private Derived Derived Private Derived Derived Performance Total
Equity Debt Equity Equity Debt Equity fee Other(3) NAV Return
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
1Q15(1) 17.4% 9.5% 15.3% 5.9% 4.0% 2.8% (1.6%) 0.9% 11.8%
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
2Q15(1) 2.7% (0.5%) (3.6%) 9.2% (3.9%) (4.8%) 2.8% (3.7%) (0.5%)
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
3Q15 4.6% (2.1%) (7.7%) 1.4% (0.5%) (0.8%) 0.0% (0.4%) (0.4%)
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
4Q15 8.1% 3.9% 10.4% 3.3% 1.5% 1.1% (0.5%) 0.3% 5.6%
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
1Q16 (0.5%) (1.5%) (5.4%) (0.3%) (0.7%) (0.5%) 0.5% (0.8%) (1.8%)
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
2Q16 1.6% (0.4%) 5.8% 0.9% (0.1%) 0.4% (0.3%) 0.3% 1.2%
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
3Q16 (0.3%) 5.0% 11.1% (0.2%) 1.7% 1.1% (0.1%) (0.5%) 2.0%
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
4Q16 7.5% 5.9% (0.3%) 3.4% 2.0% (0.0%) (0.4%) 0.5% 5.5%
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
1Q17 1.6% 0.5% 4.7% 0.7% 0.2% 0.6% (0.3%) 0.2% 1.4%
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
2Q17 (2.7%) (7.7%) 11.4% (1.9%) (2.4%) 2.9% (0.6%) (0.2%) (2.1%)
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
3Q17 1.0% (1.4%) 0.2% 0.8% (0.3%) 0.2% (0.2%) (0.9%) (0.3%)
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
4Q17 3.4% 5.2% 3.4% 1.8% 1.0% 1.0% (0.4%) 0.2% 3.5%
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
1Q18 0.0% (1.7%) (0.2%) (0.3%) 0.0% (0.1%) 0.2% (0.4%) (0.7%)
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
2Q18 11.0% 2.5% (1.8%) 6.9% 0.7% (0.2%) (0.3%) (0.1%) 6.9%
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
2015 34.6% 10.5% 15.9% 10.9% 3.8% 2.0% (1.6%) (1.4%) 13.6%
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
2016 8.0% 8.0% 11.3% 3.8% 2.7% 0.9% (0.0%) (0.9%) 6.6%
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
2017 3.3% (2.0%) 24.2% 1.6% (0.7%) 4.3% (1.4%) (1.7%) 2.2%
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
2018 YTD 11.0% 0.6% (2.3%) 6.6% 0.7% (0.4%) (0.2%) (0.7%) 6.0%
-------- -------- ------- ------- ------- ------- ------- ----------- -------- -----------
Total Return(2) (Constant
currency) Return attribution
----------------------------- ---------------------------------------------------------------------
Private Derived Derived Private Derived Derived Performance Total
Equity Debt Equity Equity Debt Equity fee Other(3) FX(4) NAV Return
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
1Q15(1) 8.7% 0.6% 3.7% 3.6% 1.2% 1.3% (1.9%) (0.9%) 8.7% 11.8%
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
2Q15(1) 4.7% 2.6% (0.2%) (3.2%) (0.9%) 0.2% (0.6%) 0.2% 3.7% (0.5%)
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
3Q15 7.2% (1.8%) (5.0%) 2.3% (0.5%) (0.6%) 0.0% (0.4%) (1.2%) (0.4%)
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
4Q15 7.3% 0.8% 8.1% 3.3% 0.5% 1.0% (0.6%) (0.3%) 1.7% 5.6%
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
1Q16 1.8% 2.5% (0.8%) 0.7% 0.4% (0.2%) 0.8% (0.4%) (3.1%) (1.8%)
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
2Q16 (0.1%) (2.5%) 5.4% 0.3% (0.9%) 0.5% (0.4%) 0.0% 1.6% 1.2%
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
3Q16 0.1% 6.0% 11.5% (0.1%) 2.1% 1.2% (0.1%) (0.6%) (0.5%) 2.0%
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
4Q16 4.1% (0.0%) (4.5%) 2.0% 0.3% (0.5%) (0.4%) 0.1% 4.0% 5.5%
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
1Q17 2.0% 1.7% 4.5% 1.1% 0.7% 0.7% (0.3%) (0.2%) (0.6%) 1.4%
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
2Q17 1.5% (1.5%) 17.9% 0.7% (0.3%) 3.3% (0.5%) (0.6%) (4.8%) (2.1%)
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
3Q17 2.5% 1.7% 1.1% 1.3% 0.5% 0.5% (0.1%) (0.2%) (2.3%) (0.3%)
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
4Q17 4.5% 6.6% 3.9% 2.7% 1.4% 1.2% (0.4%) (0.2%) (1.1%) 3.5%
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
1Q18 1.3% 0.6% 2.4% 0.4% 0.4% 0.2% 0.3% (0.3%) (1.7%) (0.7%)
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
2Q18 8.9% (2.6%) (3.9%) 5.8% (0.2%) (0.6%) (0.3%) (0.5%) 2.7% 6.9%
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
2015 31.3% 1.8% 7.2% 9.9% 1.2% 1.1% (1.6%) (1.4%) 4.4% 13.6%
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
2016 5.9% 5.6% 12.0% 2.8% 2.0% 0.9% (0.0%) (0.9%) 1.8% 6.6%
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
2017 10.0% 9.8% 35.7% 4.9% 2.1% 5.5% (1.3%) (1.0%) (8.0%) 2.2%
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
2018 YTD 10.1% (1.9%) (2.2%) 6.0% 0.2% (0.3%) (0.2%) (0.5%) 0.8% 6.0%
-------- --------- -------- -------- ------- ------- ------- ----------- -------- ------ -----------
NOTE: All quarterly information included in the tables above is
unaudited
1. Includes returns of the PCV Group for the period between 31
December 2014 and 15 June 2015
2. Total Return for each respective sub-portfolio has been
calculated by taking total gains or losses and dividing them by the
sum of Adjusted NAV at the beginning of the period and the
time-weighted net invested capital. The time-weighted net invested
capital is the sum of investments made during the period less
realised proceeds received during the period, both weighted by the
number of days the capital was at work in the portfolio.
3. Includes management fees and other general costs. It also
includes FX on the euro returns table only
4. Includes the impact of FX movements on investments and FX on
cash held during each respective period
Shareholder information | Portfolio allocation since 1Q15
Portfolio Allocation(2) Portfolio NAV NAV
------------------------------------ ------------------------------------ ----------------
Total
Private Derived Derived Net cash Private Derived Derived Net cash Total Adjusted
Equity Debt Equity and NCAs Equity Debt Equity and NCAs NAV NAV
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
1Q15(1) 40% 36% 18% 7% 245.4 218.1 107.1 40.5 611.1 600.8
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
2Q15(1) 30% 27% 8% 35% 263.8 237.5 71.5 313.1 885.9 877.9
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
3Q15 39% 29% 10% 22% 344.0 256.9 89.1 192.5 882.4 874.7
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
4Q15 51% 37% 10% 2% 473.6 346.7 94.4 21.8 936.5 923.6
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
1Q16 50% 36% 9% 5% 444.5 320.1 82.1 40.3 887.1 883.6
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
2Q16 49% 35% 10% 6% 440.3 314.5 93.3 53.0 901.1 894.4
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
3Q16 47% 36% 10% 7% 421.0 319.2 90.4 66.6 897.2 889.6
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
4Q16 52% 30% 13% 4% 498.8 284.9 127.9 38.5 950.0 938.7
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
1Q17 52% 30% 16% 2% 489.5 282.4 147.5 16.6 935.9 928.0
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
2Q17 50% 21% 13% 16% 457.6 195.3 119.5 148.0 920.4 908.1
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
3Q17 58% 21% 19% 1% 522.8 189.1 170.8 12.7 895.5 881.9
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
4Q17 63% 20% 14% 2% 590.2 188.4 132.1 19.2 929.9 912.4
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
1Q18 65% 15% 17% 3% 572.5 136.2 152.6 22.1 883.3 883.3
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
2Q18 67% 19% 17% (4%) 638.8 184.3 160.6 (35.8) 947.8 943.9
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
2015 40% 32% 11% 17% 331.7 264.8 90.5 142.0 829.0 819.2
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
2016 50% 34% 11% 5% 451.1 309.7 98.4 49.6 908.9 901.6
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
2017 56% 23% 16% 5% 515.0 213.8 142.5 49.1 920.4 907.6
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
2018 YTD 66% 17% 17% (1%) 605.7 160.2 156.6 (6.9) 915.6 913.6
-------- ------- ------- ------- --------- ------- ------- ------- --------- ----- ---------
1. Includes returns of the PCV Group for the period between 31
December 2014 and 15 June 2015
2. For annual periods the average weighting over 4 quarters
used; for 2018 YTD the average of 1Q18 and 2Q18 used
Glossary
Adjusted NAV Calculated by adjusting the NAV at reporting periods,
by the estimated performance fee reserves.
-------------------------- -------------------------------------------------------------
Adjusted NAV per share Calculated by dividing the Adjusted NAV by the number
of shares in issue.
-------------------------- -------------------------------------------------------------
AEVI Means the limited partnerships that constitute the
Apax Europe VI Private Equity fund.
-------------------------- -------------------------------------------------------------
AEVII Means the limited partnerships that constitute the
Apax Europe VII Private Equity fund.
-------------------------- -------------------------------------------------------------
Apax Global Alpha or Means Apax Global Alpha Limited.
Company or AGA
-------------------------- -------------------------------------------------------------
AGML or Investment Manager Means Apax Guernsey Managers Limited.
-------------------------- -------------------------------------------------------------
AIX Means the limited partnerships that constitute the
Apax IX Private Equity fund.
-------------------------- -------------------------------------------------------------
AMI Means the limited partnerships that constitute the
AMI Opportunities Fund focused on investing in Israel.
-------------------------- -------------------------------------------------------------
ADF Means the limited partnerships that constitute the
Apax Digital Fund Private Equity fund.
-------------------------- -------------------------------------------------------------
Apax Group Means Apax Partners LLP and its affiliated entities,
including its sub-advisers, and their predecessors,
as the context may require.
-------------------------- -------------------------------------------------------------
Apax Partners or Apax Means Apax Partners LLP.
or Investment Adviser
-------------------------- -------------------------------------------------------------
Apax Private Equity Funds Means Private Equity funds managed, advised and/or
or Apax Funds operated by Apax Partners.
-------------------------- -------------------------------------------------------------
APG Means Apax Partners Guernsey Limited.
-------------------------- -------------------------------------------------------------
AVIII Means the limited partnerships that constitute the
Apax VIII Private Equity fund.
-------------------------- -------------------------------------------------------------
Brexit Refers to the upcoming exit of the UK from the EU
following the invocation of Article 50 of the Treaty
on the European Union on 29 March 2017.
-------------------------- -------------------------------------------------------------
Capital Markets Practice Consists of a dedicated team of specialists within
or CMP the Apax Partners Group having in-depth experience
of the leverage finance debt markets, including market
conditions, participants and opportunities. The CMP
was initially set up to support the investment advisory
teams within Apax Partners in structuring the debt
component of a private equity transaction. The CMP
has over the years expanded its mandate to working
alongside the investment advisory teams to advise
on debt Derived Investments.
-------------------------- -------------------------------------------------------------
Custody risk The risk of loss of securities held in custody occasioned
by the insolvency or negligence of the custodian.
-------------------------- -------------------------------------------------------------
Derived Investments Comprise investments other than Private Equity Investments,
including primarily investments in public and private
debt, with limited investments in equity, primarily
in listed companies, which in each case typically
are identified by Apax Partners as part of its private
equity activities.
-------------------------- -------------------------------------------------------------
Derived Debt Investments Comprise of debt investments held within the Derived
or Derived Debt Investments portfolio.
-------------------------- -------------------------------------------------------------
Derived Equity Investments Comprise of equity investments held within the Derived
or Derived Equity Investments portfolio.
-------------------------- -------------------------------------------------------------
EBITDA Earnings before interest, tax, depreciation and amortisation.
-------------------------- -------------------------------------------------------------
EV Enterprise value.
-------------------------- -------------------------------------------------------------
FVTPL Means fair value through profit or loss.
-------------------------- -------------------------------------------------------------
Gross Asset Value or GAV Means the Net Asset Value of the Company plus all
liabilities of the Company (current and non--current).
-------------------------- -------------------------------------------------------------
Gross IRR or Internal Means an aggregate, annual, compound, internal rate
Rate of Return of return calculated on the basis of cash receipts
and payments together with the valuation of unrealised
investments at the measurement date. Foreign currency
cash flows have been converted at the exchange rates
applicable at the date of receipt or payment. For
Private Equity Investments, IRR is net of all amounts
paid to the underlying Investment Manager and/or
general partner of the relevant fund, including costs,
fees and carried interests. For Derived Investments,
IRR does not reflect expenses to be borne by the
relevant investment vehicle or its investors including,
without limitation, performance fees, management
fees, taxes and organisational, partnership or transaction
expenses.
-------------------------- -------------------------------------------------------------
Invested Portfolio Means the part of AGA's portfolio which is invested
in Private Equity and Derived Investments, however
excluding any other investments such as legacy hedge
funds and cash.
-------------------------- -------------------------------------------------------------
IPO Initial public offering.
-------------------------- -------------------------------------------------------------
KPI Key performance indicator.
-------------------------- -------------------------------------------------------------
LSE London Stock Exchange.
-------------------------- -------------------------------------------------------------
LTM Last twelve months.
-------------------------- -------------------------------------------------------------
Market capitalisation Market capitalisation is calculated by taking the
share price at the reporting period date multiplied
by the number of shares in issue. The euro equivalent
is translated using the exchange rate at the reporting
period date.
-------------------------- -------------------------------------------------------------
MOIC Multiple of invested capital.
-------------------------- -------------------------------------------------------------
NBFC Non-bank financial company.
-------------------------- -------------------------------------------------------------
NTM Next twelve months.
-------------------------- -------------------------------------------------------------
Net Asset Value or NAV Means the value of the assets of the Company less
its liabilities as calculated in accordance with
the Company's valuation policy. NAV has no adjustments
related to the IPO proceeds or performance fee reserves.
-------------------------- -------------------------------------------------------------
Operational Excellence Professionals who support the Apax Funds' investment
Practice or OEP strategy by providing assistance to portfolio companies
in specific areas such as devising strategies, testing
sales effectiveness and cutting costs.
-------------------------- -------------------------------------------------------------
OCI Other comprehensive income.
-------------------------- -------------------------------------------------------------
PCV Means PCV Lux S.C.A.
-------------------------- -------------------------------------------------------------
PCV Group Means PCV Lux S.C.A and its subsidiaries. PCV Group
was established in August 2008. Irrespective of whether
the text refers to AGA or PCV Group, references to
trading or performance prior to the IPO on 15 June
2015 refer to trading as PCV Group.
-------------------------- -------------------------------------------------------------
Performance fee reserve The performance fee reserve is the estimated performance
fee reserve which commenced accruing on 1 January
2015 in line with the Investment Management Agreements
of the PCV Group and AGA.
-------------------------- -------------------------------------------------------------
P/E Price earnings.
-------------------------- -------------------------------------------------------------
Private Equity Investments Means primary commitments to, secondary purchases
or Private Equity of commitments in, and investments in, existing and
future Apax Funds.
-------------------------- -------------------------------------------------------------
Reporting period Means the period from 1 January 2018 to the current
financial reporting period ending on 30 June 2018.
-------------------------- -------------------------------------------------------------
SME Small and mid--sized enterprises.
-------------------------- -------------------------------------------------------------
Total NAV Return For a period means the return on the movement in
the Adjusted NAV per share at the end of the period
together with all the dividends paid during the period,
to the Adjusted NAV per share at the beginning of
the period/year. Adjusted NAV per share used in the
calculation is rounded to five decimal points.
-------------------------- -------------------------------------------------------------
Total Return or TR Total Return, the sub-portfolio performance in a
given period, is calculated by taking total gains
or losses and dividing them by the sum of Adjusted
NAV at the beginning of the period and the time weighted
net invested capital. The time weighted net invested
capital is the sum of investments made during the
period less realised proceeds received during the
period, both weighted by the number of days the capital
was at work in the portfolio.
-------------------------- -------------------------------------------------------------
Total Shareholder Return For the period means the net share price change together
or TSR with all dividends paid during the period
-------------------------- -------------------------------------------------------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FKNDQKBKBKFD
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