Apax Global Alpha Limited (LON: APAX) has today announced unaudited interim results for the half-year ended 30 June 2019. Key highlights are as follows:
Key highlights
· 1H19 Total NAV Return1 was +13.4% (+12.9% constant currency)2. LTM3 Total NAV Return1 was +14.4% (+12.2% constant currency)2 reflecting primarily strong performance of the Private Equity portfolio
· First semi-annual dividend of 4.86 pence per share declared, equivalent to 2.5% of euro NAV at 30 June
Outstanding commitments and funding sources
· AGA was 91% invested with net cash after liabilities of €96.2m4
· Outstanding commitments to the Apax Funds (together with recallable distributions and new AX commitment) amounted to €636.8m (62% of NAV) with funding sources of €1,174.5m (114% of NAV). Funding sources comprise Private Equity Investments of €582.9m, Derived Investments of €355.4m, undrawn facility of €140.0m, cash of €116.3m and net current liabilities of €20.1m
Interim performance highlights
· The contributions to Total NAV Return1 of +13.4% were: Private Equity +12.8%, Derived Investments +0.9%, FX +0.5% and costs and other movements -0.8%
· Derived Debt and Derived Equity contributed +1.0% and -0.1% respectively to Total NAV Return1
· Total Return1 of Private Equity was +20.5% (+20.3% constant currency). Derived Debt delivered Total Return1 of +5.4% (+4.8% constant currency). Derived Equity had a Total Return1 of +0.9% (-0.7% constant currency)
· Aggregate Gross IRR5 and Gross MOIC5 on Private Equity four full exits was 24.0% and 2.8x
· Gross IRR6 and Gross MOIC6 on two Derived Debt exits was 13.4% and 1.2x and on four Derived Equity exits was 35.0% and 1.3x
| Adjusted NAV7 movements | Private Equity€m | Derived Investments€m | Cash €m | Facility drawn€m | Other €m | 1H19 Total€m | LTM3Total€m | |
| Adjusted NAV at 31.12.18 | 591.5 | 320.6 | 17.3 | – | 1.4 | 930.8 | 943.9 | |
| + Investments | 19.5 | 82.3 | (76.5) | – | (25.3) | – | – | |
| – Divestments | (148.5) | (50.4) | 196.0 | – | 2.9 | – | – | |
| + Interest and dividend income | – | – | 7.7 | – | 0.7 | 8.4 | 18.0 | |
| +/- Unrealised gains/(losses) | 119.2 | (2.6) | – | – | – | 116.6 | 120.3 | |
| +/- Realised gains/(losses) | – | 2.4 | – | – | – | 2.4 | (15.7) | |
| +/- FX gains8 | 1.2 | 3.1 | 0.1 | – | – | 4.4 | 20.2 | |
| +/- Costs and other movements | – | – | (4.6) | – | 0.2 | (4.4) | (8.7) | |
| – Dividends paid | – | – | (23.7) | – | – | (23.7) | (47.4) | |
| +/- Performance fee reserve | (2.6) | – | – | – | – | (2.6) | 1.3 | |
| +/- Revolving credit facility drawn/repaid | – | – | – | – | – | – | – | |
| Adjusted NAV at 30.06.19 | 580.3 | 355.4 | 116.3 | – | (20.1) | 1,031.9 | 1,031.9 | |
Private Equity portfolio highlights
· Private Equity portfolio delivered a strong performance with a Total Return1 of +20.5% (+20.3% constant currency)
· Unrealised gains were €119.2m and favourable FX movements were €1.2m
· On a look-through basis, AGA invested or committed c.€87.9m in seven new investments
· Calls of €19.5m were paid to AIX (€13.3m), ADF (€6.0m) and AMI (€0.2m)
· Distributions totalled €148.5m; €5.3m from AIX in relation to ThoughtWorks and Manappuram Finance, €142.5m from AVIII in relation to AssuredPartners and Exact Software, €0.7m from AMI in relation to Ten Petroleum and Max
· Aggregate Gross IRR5 and Gross MOIC5 on full exits was 24.0% and 2.8x
· FX exposure of c.52% in US dollar denominated investments
· Tech & Telco was the most heavily weighted sector, accounting for 34% of the Private Equity portfolio
· Private Equity portfolio is diversifying across fund vintages
| Private Equity – operational metrics | 30 June 2019 | 31 December 2018 |
| Portfolio year-over-year LTM revenue growth9 | 12.2% | 13.9% |
| Portfolio year-over-year LTM EBITDA growth9 | 12.6% | 17.7% |
| Enterprise Value / EBITDA valuation multiple9 | 15.3x | 13.9x |
| Net debt / EBITDA multiple9 | 3.9x | 4.0x |
| Number of new investments in the half year10 | 7 | 3 |
| Number of exits in the half year11 | 4 | 2 |
Derived Investments portfolio highlights
· A combination of Derived Debt Total Return1 of +5.4% (+4.8% constant currency) and Derived Equity Total Return1 of +0.9% (-0.7% constant currency) led to an overall Total Return1 of +3.7% for Derived Investments (+2.6% constant currency)
· Realised gains were €2.4m and unrealised losses of €2.6m stood against income of €8.4m and positive FX movements of €3.1m
· New investments of €82.3m12 were weighted towards debt, as six new debt positions were added to the Derived Debt portfolio compared to two equity investments in the period
· AGA exited two debt investments and four equity investments with proceeds of €50.4m13
· Gross IRR6 on Derived Debt exits was 13.4% and Gross MOIC6 was 1.2x. Gross IRR6 on Derived Equity exits was 35.0% and Gross MOIC6 was 1.3x
· FX exposure of c.57% in US dollar denominated investments
· Tech & Telco was the most heavily weighted sector, accounting for 41% of the Derived Investments portfolio
· Portfolio split between Derived Debt and Derived Equity was 65% and 35% respectively
| Derived Investments – operational metrics | 30 June 2019 | 31 December 2018 | |
| Debt year-over-year LTM EBITDA growth14 | 17.3% | 7.9% | |
| Debt average income yield to maturity14 | 9.9% | 10.8% | |
| Debt average years to maturity | 6.2 | 6.2 | |
| Debt average income yield15 | 9.5% | 10.8% | |
| Equity year-over-year LTM earnings growth16 | 14.9% | 19.2% | |
| Equity price-to-earnings ratio16 | 20.8x | 18.5x | |
| Number of investments in the half year12 | 7 | 6 | |
| Number of full exits in the half year13 | 6 | 10 |
Other Invested Portfolio highlights
· Exposures remained weighted towards Private Equity at 62% and Derived Investments of 38%
· FX exposure c.57% in US dollar denominated investments
| Invested Portfolio analysis17 | €m | €m | % | % |
| Private Equity | 582.9 | 62% | ||
| – AMI | 22.4 | 2% | ||
| – AEVI | 5.8 | 1% | ||
| – AEVII | 73.3 | 8% | ||
| – AVIII | 255.5 | 27% | ||
| – AIX | 214.5 | 23% | ||
| – ADF | 11.4 | 1% | ||
| Derived Investments | 355.4 | 38% | ||
| – Derived Debt | 232.1 | 25% | ||
| – Derived Equity | 123.3 | 13% | ||
| Total | 938.3 | 938.3 | 100% | 100% |
| Sector mix | €m | Invested Portfolio17% | PrivateEquity% | Derived Investments% |
| Tech & Telco | 36% | 34% | 41% | |
| Services | 26% | 21% | 37% | |
| Healthcare | 24% | 24% | 22% | |
| Consumer | 12% | 18% | 0% | |
| Digital | 1% | 2% | 0% | |
| Other | 1% | 1% | 1% | |
| Total | 938.3 | 100% | 100% | 100% |
| Geographic analysis | €m | Invested Portfolio17% | PrivateEquity% | Derived Investments% |
| North America | 51% | 49% | 53% | |
| Europe | 23% | 28% | 16% | |
| United Kingdom | 8% | 7% | 12% | |
| Israel | 4% | 5% | 0% | |
| India | 7% | 5% | 10% | |
| China | 2% | 2% | 3% | |
| Rest of World | 5% | 4% | 6% | |
| Total | 938.3 | 100% | 100% | 100% |
| Summary of top 30 investments in Private Equity and Derived Investments | Valuation€m | NAV% |
| Top 30 Private Equity portfolio (look-through basis) – AGA’s indirect exposure | ||
| ThoughtWorks | 55.6 | 5% |
| Cole Haan | 48.5 | 5% |
| Acelity | 39.7 | 4% |
| Idealista | 38.2 | 4% |
| Engineering | 36.9 | 4% |
| Unilabs | 36.7 | 4% |
| Vyaire Medical* | 35.6 | 3% |
| Neuraxpharm | 32.3 | 3% |
| EVRY* | 30.1 | 3% |
| Duck Creek Technologies | 28.4 | 3% |
| Paycor* | 27.5 | 3% |
| Trade Me* | 23.6 | 2% |
| Candela | 21.9 | 2% |
| AssuredPartners | 20.6 | 2% |
| Wehkamp | 19.9 | 2% |
| Safetykleen* | 19.6 | 2% |
| MATCHESFASHION.COM | 18.0 | 2% |
| ECi Software Solutions* | 17.6 | 2% |
| Quality Distribution* | 16.5 | 2% |
| Authority Brands | 16.2 | 2% |
| Shriram City Union | 11.6 | 1% |
| Tosca Services | 11.0 | 1% |
| Boats Group* | 10.6 | 1% |
| Genius Sports | 10.0 | 1% |
| Attenti | 8.6 | 1% |
| Tivit | 8.2 | 0% |
| Go Global Travel | 8.2 | 0% |
| Psagot | 7.8 | 0% |
| Healthium | 7.5 | 0% |
| Kepro | 7.5 | 0% |
| Other (Other investments, carried interest, facility & non-current assets) | (91.5) | (9%) |
| Total Private Equity | 582.9 | 56% |
| Derived Investments portfolio | ||
| Paycor* | 23.7 | 2% |
| KRKA | 22.1 | 2% |
| Syncsort | 21.9 | 2% |
| Exact Software | 20.0 | 2% |
| Quality Distribution* | 17.5 | 2% |
| Rocket software | 17.1 | 2% |
| Vyaire Medical* | 15.3 | 1% |
| Development Credit Bank | 14.1 | 1% |
| PowerSchool | 13.3 | 1% |
| ECi Software Solutions* | 13.1 | 1% |
| AccentCare | 13.1 | 1% |
| Alexander Mann | 12.8 | 1% |
| Trade Me* | 12.6 | 1% |
| AmeriLife 1L | 12.4 | 1% |
| Airtel Africa | 11.3 | 1% |
| Sinopharm | 11.0 | 1% |
| Sophos* | 10.4 | 1% |
| Lonza | 9.9 | 1% |
| Safetykleen* | 9.6 | 1% |
| QAD | 8.8 | 1% |
| LegalShield | 8.8 | 1% |
| Can Fin Homes | 7.0 | 1% |
| Strides Pharma Science | 6.7 | 1% |
| Just Group | 6.6 | 1% |
| Repco Home Finance | 6.5 | 1% |
| Boats Group* | 5.9 | 1% |
| Veritext | 4.4 | 1% |
| AmeriLife 2L | 4.4 | 0% |
| EVRY | 4.4 | 0% |
| ServPro | 3.5 | 0% |
| Other | 7.2 | 1% |
| Total Derived Investments | 355.4 | 34% |
| Total Invested Portfolio | 938.3 | 91% |
| Cash | 116.3 | 11% |
| Revolving credit facility drawn | 0.0 | 0% |
| Net current liabilities | (20.1) | (2%) |
| Total NAV | 1,034.5 | 100% |
| Performance fee reserve | (2.6) | |
| Total Adjusted NAV | 1,031.9 |
Commenting on the results, Tim Breedon CBE, Chairman of Apax Global Alpha, said:
“AGA’s interim results have been exceptional and the strongest since IPO. NAV has also grown to over €1bn, an important milestone. The Board is also pleased to have approved a healthy dividend to shareholders”
Ralf Gruss, COO of Apax Partners, said:
“The strong operational momentum and exits of the Private Equity portfolio continued into 2019, translating into value accretion and good performance for AGA. In addition, I’m pleased that AGA has committed $450m to the new Apax Partners fund, Apax X which will help diversify AGA’s exposure to vintages and investments.”
This notification is made in accordance with DTR 6.1.13 of the Disclosure and Transparency Rules.
The Directors of the Company are pleased to declare that a dividend will be payable, for the financial period ended 30 June 2019, in accordance with the following timetable:
Ex-Dividend Date: 22 August 2019
Record Date: 23 August 2019
Payment Date: 13 September 2019
Total Dividend Payment: GBP 23,867,497
Dividend Per Share: GBP 4.86p
FX Rate:
EUR / GBP of 0.92285 as at 7 August 2019
Footnotes
- Total NAV Return means the movement in the Adjusted NAV per share over the period plus any dividends paid. Total Return reflects the sub-portfolio performance on a stand-alone basis. It excludes items at overall AGA level such as cash, management fees and costs
- Constant currency returns calculated the same as Total NAV Return adjusted to remove the impact of FX
- LTM = Last Twelve Months to 30 June 2019
- Net cash after liabilities of €96.2m calculated by taking cash of €116.3 less net current liabilities of €20.1m at 30 June 2019
- Aggregate Gross IRR and Gross MOIC on full exits calculated based on the expected aggregate cash flows in euro across all funds for the deals transacted in the period; Exact and Assured Partners closed in May 2019 and Acelity and Electro stocks were signed in May 2019 and June 2019 respectively. They are expected to close in 2H19 and Gross IRR and MOIC are subject to change once final proceeds have been received. Gross IRR represents concurrent Gross IRR
- Gross IRR and Gross MOIC calculated based on aggregate euro cash flows since inception of deals realised during the year
- Adjusted NAV represents NAV of €1,034.5m adjusted for the performance fee reserve of €2.6m at 30 June 2019
- 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
- Gross Asset Value weighted average of the respective metric across the portfolio. At June 2019 and December 2018, 14 and 12 investments were respectively excluded as these are financial services companies often valued on book value or for which earnings financials are not available e.g. complex carve-outs or growth investments. For EV/EBITDA and net debt/EBITDA figures exclude MATCHESFASHION.COM and Vyaire Medical due to low EBITDA from opex investments and short-term fluctuations in EBITDA respectively. The December 2018 comparative for LTM revenue growth and LTM EBITDA growth initially excluded MATCHESFASHION.COM and Vyaire Medical, as these have been included in the June 2019 metrics the comparative has been amended for their inclusion accordingly
- New investments in the first six months of 2019. Fractal Analytics closed in February 2019; Trade Me and AssuredPartners closed in May 2019 and Huayue Education closed in June 2019. Inmarsat was signed in March 2019, Baltics Classifieds Group was signed in June 2019 and both are expected to close in 2H19. Additionally a new services investment was signed in June 2019 but remains subject to customary closing procedures
- Represents exits which were closed and signed but not yet closed in 1H19. Both AssuredPartners and Exact Software closed in May 2019. Acelity and Electro Stocks signed in May 2019 and June 2019 respectively and are expected to close in 2H19
- Represents exits which were closed and signed but not yet closed in 1H19. Both AssuredPartners and Exact Software closed in May 2019. Acelity and Electro Stocks signed in May 2019 and June 2019 respectively and are expected to close in 2H19
- Investments of €82.3m consists of €65.5m from six new debt investments, €14.8m from two equity positions (€13.3m in one new position Airtel Africa and €1.5m add-on to existing position QAD) and €2.0m related to debt and equity received as part of the restructuring of FullBeauty in February 2019
- Gross Asset Value weighted average of the respective metric across the Derived Investments Debt portfolio
- Gross Asset Value weighted average of the current full year income (annual coupon/clean price as at the respective date) for each debt position in the Derived Debt portfolio as at the respective date
- Gross Asset Value weighted average of the respective metric across the Derived Investments Equity portfolio. (QAD was excluded from LTM earnings growth and P/E ratio due to negative earnings and Answers was excluded as information was not available)
- Invested Portfolio excludes cash and cash equivalents, revolving credit facility drawn and net current liabilities; including these, the NAV is €1,034.5m. Adjusted NAV excludes the performance fee reserve of €2.6m and is €1,031.9m at 30 June 2019
