Apax Global Alpha
Annual Report & Accounts 2023
Diversified. Tradeable. Accessible
Apax Global Alpha Limited ("AGA" or the
"Company") aims to offer shareholders superior long-term returns by
providing access to a diversified portfolio of high-quality
companies owned by the Apax Private Equity Funds. Capital not
invested in Private Equity is deployed into a portfolio of
predominantly debt instruments to generate additional returns and
income.
About AGA
Public market access to private
equity
A share in AGA gives public market investors
access to a portfolio of mostly private companies, owned by the
Apax Private Equity Funds, which public market investors cannot buy
elsewhere. This is combined with a smaller portfolio of
predominantly debt instruments which represents an additional
source of alpha and provides income to investors.
AGA has a premium listing on the London Stock
Exchange and is a constituent of the FTSE 250 index (LSE: APAX).
The Company is actively managed and is overseen by an independent
Board of Directors.
AGA uses the Alternative Performance Measures
("APMs") of Adjusted NAV and Total NAV Return to enhance
transparency for shareholders. Adjusted NAV represents total NAV
(€1,294.2m) reduced by the performance fee accrued in the period
(€6.6m). Total NAV Return reflects the movement in Adjusted NAV
including dividends paid. The definition and reconciliation to IFRS
of the APMs is shown on p.73.
FY 2023 Highlights
FY 2023 Total NAV Return1
4.1%
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FY 2023 dividends
11.34p
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Adjusted NAV2
€1,288m
at 31 December 2023
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Share price
£1.61
at 29 December 2023
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Adjusted NAV2 per share
€2.62
at 31 December 2023
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Adjusted NAV2 per share
£2.27
at 31 December 2023
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1. Total NAV Return is an
Alternative Performance Measure ("APM"). It means the return on the
movement in the Adjusted NAV per share over the period plus any
dividends. Further details can be seen on p.73 and p.119
2. Adjusted NAV reflects Total
NAV of €1,294.2m, net of performance fee reserve of €6.6m at 31
December 2023. Further details can be seen on p.73 and
p.118
Why AGA?
Access to a portfolio of 'hidden
gems', mostly private
companies which shareholders can't buy elsewhere
· Exposure to
high-quality companies, the majority of which were acquired by the
Apax Funds in control buyout transactions.
· Mostly
companies that operate in the mid-market and in parts of the
economy where there are strong economic fundamentals.
See p.23 for an overview of AGA's top 30
private equity investments.
"All-weather" investment strategy well-suited
to generate alpha
· Focus on
business improvement with earnings growth rather than market
tailwinds driving value creation across Private Equity portfolio
companies.
· Sector-led
strategy providing access to a globally diversified portfolio
across Tech & Digital, Services, Healthcare, and
Internet/Consumer.
See p.22 for an overview of Apax's investment
strategy.
Robust balance sheet, strengthened by portfolio
of debt investments
· Capital not
invested in Private Equity is deployed into a smaller portfolio of
predominantly debt instruments to generate additional returns and
income. Debt positions are identified leveraging the insights
gained by Private Equity sector teams.
· AGA also has a
Revolving Credit Facility ("RCF") which can be drawn to
provide additional liquidity.
See p.36 and p.37 for more information about
AGA's debt investments.
Capital allocation - attractive dividend
policy
· The Board aims
to create significant exposure to private equity investments by
committing to Apax Funds.
· The Board
recognises the importance of returning cash to shareholders and in
the last five years, AGA has paid out €304m in
dividends.
· Strategy
overseen by an independent Board.
See p.5 for more information about AGA's
capital allocation.
12.8%
Five-year annualised
Cumulative Return1
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€304m
Dividends paid to investors
in last five years
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1. 5-year annualised Cumulative
Return represents IRR return.
Further details on p.118 of the glossary.
Capital allocation
AGA invests as a Limited Partner in the Apax
Private Equity Funds. Capital not invested in Private Equity is
deployed into a portfolio of predominantly debt investments. When
the Funds sell or refinance portfolio companies AGA receives
distributions from the Private Equity Funds (net of fees and
carried interest). AGA also receives income from its Debt portfolio
and the Company has a RCF which provides a further source of
capital.
AGA uses liquidity that is not reinvested in
Private Equity (after paying for fees and expenses, including
financing costs relating to the RCF) to distribute dividends to
shareholders in line with AGA's dividend policy of paying 5% of NAV
p.a. Since IPO, the Company has returned a total of €444m in
dividends, equivalent of c.50% of the original IPO NAV, to
shareholders.
Any excess liquidity is invested in a portfolio
of predominantly Debt instruments. This portfolio generates
additional returns and income for AGA. It also enables the Company
to be fully invested and to make substantial commitments to new
Apax Private Equity Funds whilst remaining within its liquidity
risk appetite.
During 2023, and in light of the increasing
share price discount to NAV, the Board undertook a detailed review
of the Company's capital allocation policy in the context of future
Private Equity calls and the capacity of AGA's RCF and Debt
portfolio. It was concluded that returning capital to shareholders
via the existing dividend policy remains appropriate and that any
additional mechanism of returning capital to shareholders should be
kept under review in the context of the Company's available liquid
resources.
Principal strategic objectives
Adding value for shareholders
Strategic objective
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What we have achieved
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Focus for 2024 and beyond
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Principal risks1
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Deliver over-the-cycle target Total NAV Return
of 12-15%
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AGA has delivered a five-year annualised
Cumulative Return of 12.8%
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Continue to manage liquidity in anticipation of
capital calls from the Apax Funds. AGA will also continue to
provide shareholders with exposure to future Apax Private Equity
Funds as they come to market
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A continued difficult market environment and
the underperformance of individual portfolio companies in the Apax
Funds could impact overall investment performance
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Target annual dividend of 5% of NAV
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In the last five years AGA has returned €304m
to shareholders, equivalent to 24% of the 31 December 2023 NAV and
in line with the dividend policy of paying 5% of NAV
p.a.
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Maintain AGA's dividend policy of paying 5% of
NAV p.a.
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The principal test for AGA to pay a dividend is
sufficient liquidity (rather than income) and therefore risk of not
meeting the dividend policy is considered low
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Invest in Apax Private Equity Funds for
long-term growth
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Over the last five years, AGA made new
commitments of $1.3bn to five Apax Funds, including two global
buyout funds, Apax Digital Fund II, AMI II, and Apax Global
Impact
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Following significant commitments made in 2022,
AGA will continue to manage liquidity in anticipation of capital
calls from the Apax Funds. AGA will also continue to provide
shareholders with exposure to future Apax Private Equity Funds as
they come to market
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Low investment rate of the Apax Funds to which
AGA has made commitments resulting in new Fund launches being
delayed
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Manage Debt portfolio to generate additional
returns on capital not invested in Private Equity
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Debt portfolio has delivered a five-year
annualised return of 9.2%
2.7% outperformance per annum against the
S&P/LSTA Leveraged Loan Index in the last five years
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Continue to evaluate debt investment
opportunities to ensure liquidity of the instruments are
appropriate in the context of AGA's Private Equity commitments and
expected future calls
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Availability of attractive opportunities,
credit spreads, base rates, and underperformance of investee
companies
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Remain fully invested
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93% invested at 31 December 2023
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Remain fully or close to fully invested whilst
maintaining liquidity within risk appetite
Continue to adjust liquidity risk profile of
debt portfolio as appropriate depending on liquidity needs to meet
new calls from Private Equity
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Significant slowdown in pace of deployment in
Private Equity combined with reduced availability of attractive
investment opportunities in debt in target sectors
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1. Strategic Report
Chairman's statement
Well-positioned to take advantage of
opportunities
The global economy displayed remarkable
resilience in 2023. As the year went on, fears of a widespread
recession were replaced by a growing confidence that policymakers
would achieve an economic soft landing. In the first part of 2023,
central banks continued to raise interest rates to levels not seen
for many years. However, with inflation moderating, rates are now
expected to have peaked. Looking ahead, growth remains slow,
geopolitical tensions high, and rates are likely to stay elevated
until signs are clearer that inflation is under control.
Against this backdrop, public equity markets
have rebounded, closing what was widely perceived as a disconnect
between private and public valuations in 2022. Whilst the drivers
of market recovery remain narrow, the MSCI World Index (EUR)
rallied and closed the year almost 20% above its January 2023
level. Not surprisingly, deal activity in Private Equity was more
muted during the first half of 2023, but we saw increased activity
across our portfolio in the second half of the year as visibility
on the economic outlook increased and valuation expectations were
adjusted.
Results
Apax Global Alpha achieved a Total NAV Return
in 2023 of 4.1% (6.1% on a constant currency basis).
Performance was driven by a mix of earnings
growth in Private Equity and strong returns from the Debt
portfolio, partially offset by lower valuation multiples and
negative currency movements.
Over the past five years, AGA's investment
strategy has delivered Cumulative Returns of 71.0% or 12.8% on an
annualised basis. During this same period, the Company has paid out
c.€304m, representing c.24% of its 31 December 2023 Adjusted NAV in
dividends to shareholders.
Portfolio update
At 31 December 2023, AGA was 93% invested, with
the invested portfolio split 74% in Private Equity and 25% in Debt,
with the remaining 1% invested across three listed equity
positions.
The Private Equity portfolio performed well
with average EBITDA growth across portfolio companies in the twelve
months to 31 December 2023 of 18%, broadly in line with the prior
year. Valuation multiples were up during Q4 2023 but fell slightly
from 17.2x to 16.6x year-on-year, with negative movements from
previously IPO'd portfolio companies in the Private Equity
portfolio, particularly Thoughtworks, Viasat, and
Paycor.
Despite continued economic uncertainty in 2023,
AGA, through the Apax Funds, deployed c.€95m across 10 new Private
Equity investments, mostly in the second half as more compelling
opportunities emerged. While the exit environment remained more
challenging than in previous years, AGA received c.€90m in
distributions from the Apax Funds.
Consistent with previous periods, AGA's Debt
portfolio maintained a greater exposure to first lien loans which
are more readily tradeable, and we believe the current proportion
of first lien loans vs debt instruments that are less liquid, is
appropriate in the context of the Private Equity commitments made
by AGA. At 31 December 2023, the Debt portfolio had a yield to
maturity of 12.0% and consisted almost exclusively of floating rate
instruments.
Liquidity, commitments and funding
Outstanding commitments to the Apax Funds
(together with recallable distributions) reduced by c.€86m in the
twelve months to 31 December 2023 to c.€919m at the end of the
period.
The Board takes a prudent approach to liquidity
and capital management with rigorous scenario modelling and stress
testing being done prior to agreeing any new commitments to the
Apax Funds. At the period-end, AGA had cash (including net current
assets) of c.€94m in anticipation of capital calls from Apax XI,
ADF, and AGI and the dividend payable in Q1 2024.
In September 2023, AGA entered into a new
multi-currency RCF of €250m with SMBC Bank International plc and
JPMorgan Chase Bank, N.A., London Branch, replacing the facility
held with Credit Suisse AG, London Branch. The RCF was undrawn at
year-end.
Capital allocation
During 2023, and in light of the increasing
share price discount to NAV, the Board undertook a detailed review
of the Company's capital allocation in the context of future
Private Equity calls, the capacity of AGA's RCF, and the size of
its Debt portfolio. No change was made to the policy, but the need
to ensure that capital continues to be returned to shareholders via
regular dividends was reaffirmed as a key priority. The Board is
pleased to have now returned c.€444m, equivalent to c.50% of the
original IPO NAV, to shareholders in this way.
In line with AGA's dividend policy to
distribute 5% of NAV per annum, the Board has determined a final
dividend of 5.64 pence per share.
The final dividend is expected to be paid on 4
April 2024 to shareholders on the register of members on 14 March
2024.
Board succession
As announced in October 2023, I intend to
retire from the Board in the second half of 2024 having completed
nine years as Chairman. Karl Sternberg, who joined the Board on 1
March 2024, is expected to succeed me in this role. Karl is an
experienced Chairman, and has extensive investment management and
investment trust experience which will be of immense value to the
Board in the future. In parallel with Karl's appointment, Chris
Ambler retired as a Director on 1 March 2024 after nearly nine
years in the role, and, on behalf of myself and my fellow
Directors, I would like to thank him for his commitment and
contribution to the Board.
Directors' fees
The fees payable to individual directors of the
Company (other than the Chairman) were increased by 11% effective
from 1 July 2023.
Directors' fees have remained unchanged since
our IPO in 2015 and, in order to address a widening disparity
relative to similar companies, and to ensure we are able to attract
new directors of a high quality in future, it was determined that
an increase in fees was required.
Discontinuation vote
AGA is a closed-end investment Company, with no
fixed duration. However, its Articles of Association require a
resolution to be put to shareholders on a periodic basis regarding
the continuation of the Company. Accordingly, a "Discontinuation
Resolution" will be proposed at the 2024 Annual General Meeting
("AGM"). This vote gives shareholders the opportunity to vote on
whether to instruct the Directors to bring forward proposals to
wind-up, liquidate, unitise, or restructure the Company.
To ensure the Company continues in its current
form, the Board of Directors recommends that shareholders vote
"Against" the Discontinuation Resolution. AGA has, to date,
provided shareholders with capital appreciation and a consistent
dividend stream, and the quality of the Invested Portfolio means
the Company is well-positioned to continue to create value for
shareholders going forward.
Outlook
We have seen an uptick in deal activity during
the second half of 2024, and believe that the Apax Funds will
continue to identify attractive investment opportunities with a
clear path to value creation through operational
improvements.
Coupled with a prudent approach to balance
sheet management, the Company is well-positioned to navigate the
current environment in 2024 and beyond.
Tim Breedon CBE
Chairman
4 March 2024
Active management
Increased focus on Private Equity investments
and a more diversified portfolio
Since IPO, the Company has grown the portfolio
exposure to Private Equity whilst simultaneously reducing the
allocation to public equity investments.
As a result, shareholders are now able to
access a larger portfolio of mostly private companies and the
superior returns that can be achieved from private equity
investments.
The Board has continued to make commitments to
all new Apax Private Equity Funds since IPO and today, AGA's
portfolio is well diversified across investment phases and
receiving a steady stream of distributions from the fund vintages
that are in harvesting mode.
To ensure the Company can meet increasing
capital calls from Private Equity Funds, it has maintained a higher
share of more liquid first loans in its Debt portfolio. This
provides further robustness to the Company's balance
sheet.
At 31 December 2023, AGA had cash of c.€94m
(including net current assets) in anticipation of capital calls
from Apax XI, ADF II, and AGI, and the dividend payable in Q1
2024.
Portfolio at IPO
Portfolio split
Private Equity
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30%
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Debt
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27%
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Equity
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8%
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Cash1
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35%
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Private Equity portfolio by investment
phase
Investment
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80%
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Harvesting
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20%
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Portfolio at 31 December 2016
Portfolio split
Private Equity
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52%
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Debt
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30%
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Equity
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14%
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Cash1
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4%
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Private Equity portfolio by investment
phase
Investment
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43%
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Maturity
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45%
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Harvesting
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12%
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Portfolio at 31 December 2023
Portfolio split
Private Equity
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69%
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Debt
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23%
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Equity
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1%
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Cash1
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7%
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Private Equity portfolio by investment
phase
Investment
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40%
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Maturity
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38%
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Harvesting
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22%
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1. Cash & Net Current Assets
Responsible investment
The Board believes that responsible investment
is important in protecting and creating long-term value. The Board
relies upon its Responsible Investment policy and the expertise and
practices of Apax to ensure it delivers returns ethically and
responsibly across the Private Equity portfolio.
This section focuses on Apax's sustainability
efforts relating to the Private Equity portfolio. AGA's approach to
sustainability in the Debt portfolio focuses on due diligence
carried out before investment as AGA is typically a minority
investor and therefore there is less scope to influence
sustainability post-investment.
Apax's approach to sustainability in Private
Equity
Sustainability is embedded throughout the Apax
Funds' investment process, from due diligence through to the Funds'
ownership and exit.
Supported by Apax's Operational Excellence
Practice ("OEP"), investment teams are responsible for identifying
and monitoring portfolio companies' sustainability footprint, and
driving value and mitigating risk based on company or
sector-specific material issues.
Apax actively participates in industry-leading
platforms and the firm's approach has been recognised by the
Principles for Responsible Investment ("PRI"). Apax is a member of
the BVCA Responsible Investment Advisory Group, the Thirty Percent
Coalition and the Sustainable Markets Initiative Private Equity
Taskforce, as well as a signatory to ILPA Diversity in Action
Group, and the initiative Climat International.
To learn more about Apax's sustainability
efforts see page 29.
Driven by materiality
Apax's sustainability focus is driven by the
material issues of the sectors invested in, leveraging industry
frameworks and standards.
Apax has collected a large suite of
sustainability indicators since 2012, and regularly reviews and
adapts KPI monitoring across the portfolio in relation to company,
sector and other emerging issues such as cybersecurity, climate
change, and workforce diversity.
For more information about AGA's ESG policy and
responsible investment considerations for the Debt portfolio,
please see:
www.apaxglobalalpha.com/wp-content/uploads/2023/11/2023-11-01-Apax-Global-Alpha_ESG-policy.pdf
For more information about Apax's approach to
sustainability, please see:
www.apax.com/reports/apax-sustainability-report-edition-11/index.html#page=1
Our Section 172(1) Statement
Overview
The Board is committed to promoting the
long-term success of the Company whilst conducting business in a
fair, ethical and transparent manner.
The Board notes that the AIC Code recommends
that matters set out in Section 172 of the Companies Act, 2006
should be considered and reported on. This requires Directors to
act in good faith and in a way that is the most likely to promote
the success of the Company. In doing so, Directors must take into
consideration the interests of AGA's stakeholders, the impact AGA
has on the community and the environment, and take a long-term view
on consequences of the decisions they make. They must also aim to
maintain a reputation for high standards of business conduct and
fair treatment.
The importance of stakeholder considerations,
in particular in the context of decision-making, is taken into
account at every Board meeting. All discussions involve careful
consideration of the longer-term consequences of any decisions and
their implications for stakeholders. The key strategic decisions
taken during 2023 were informed and supported by stakeholder
engagement activities and are set out on p.47 in the Governance
section.
AGA Stakeholders
The Board regularly reviews and assesses which
parties should be considered as stakeholders of the Company and for
the period under review, has concluded that, as an externally
managed investment company without employees or customers, AGA's
key stakeholders comprise its shareholders, the Investment Manager,
Investment Advisor, regulators, communities, and service
providers.
Our Investment Manager
We work closely with AGML, the Company's
investment manager, around portfolio strategy, capital allocation,
and private equity investment decisions. The Board receives regular
updates on portfolio performance and risk management.
Our Investment Advisor
Apax, the investment advisor, is a leading
global private equity advisory firm. We rely on Apax for the
identification and due diligence of investment opportunities. We
also rely on them for investor relations services.
Our Service Provider
We maintain an open relationship with our
service providers and regularly engage with them across a number of
matters relevant to the Company. A formal review of our service
providers is carried out annually.
Regulators
We maintain a constructive and open
relationship with our regulators, engaging on key matters relevant
to the Company.
Communities
We recognise the importance of contributing to
our communities for long-term value creation. We consider these to
be the communities where our service providers operate.
Our Shareholders
Our strategic objective is to provide
shareholders with superior long-term returns through capital
appreciation and regular dividends. The Board engages with
shareholders, including at the Capital Markets Day, and receives
regular briefings from our investor relations team and corporate
broker on investors' views.
Stakeholder engagement
The section below discusses why our
stakeholders are considered important to the Company, and the
actions taken to ensure that their interests are taken into
account.
Shareholders
Why they are important
Shareholder support and engagement are critical
to the continued success of the business and the achievement of our
objectives. We believe shareholders value the strong financial
performance of the Company, prudent balance sheet management, and
commitment to the highest standards of corporate
governance.
A resolution to continue the life of AGA is put
to shareholders every three years. Having been approved by
shareholders at its Annual General Meeting ("AGM") in 2021, a
similar resolution will be put to shareholders at the AGM in
2024.
More information about this resolution is
available on p.52.
Contact details for shareholder queries can be
found on p.108 and on the Company's website at: www.apaxglobalalpha.com/contact
How the Board engages
The Board is committed to a culture of openness
and regular dialogue with shareholders, and it seeks to take into
account the needs and priorities of shareholders during all
discussions and decision-making.
Throughout the year, the Board ensures that
Directors are available for effective engagement, whether at the
AGM, Capital Markets Day, or other investor relations events. The
Chairman also holds one-to-one meetings with shareholders on an
ad-hoc basis and as part of an annual corporate governance
roadshow. The Senior Independent Director, Susie Farnon, is
available for investor meetings on request.
As part of the ongoing engagement, AGA has
retained Apax to provide comprehensive investor relations services.
In addition, the Company's corporate broker, Jefferies
International Limited, and corporate access provider, RMS Partners,
further support shareholder engagement. The Board receives regular
reports and updates from the Apax investor relations team and the
corporate broker.
Shareholder views and feedback are regularly
sought and communicated to the Board to help develop a balanced
understanding of their issues and concerns.
Key activities during the year
AGM - The AGM presents
investors with the opportunity to ask Board members questions, and
to cast their votes. The 2023 AGM was conducted both in person and
via a dial-in format to encourage attendance. The same format will
be adopted in 2024.
Publications - The
Company reports formally to shareholders four times a year, with
updates on transactions and significant events presented on an
ongoing basis. Shareholders may obtain up-to-date information on
the Company through its website at www.apaxglobalalpha.com
Website - To enhance
transparency, the Company launched a new website towards the end of
2023, improving navigation and the information available to
shareholders.
Events - Apax maintains
a comprehensive investor engagement programme with investors and
equity analysts. This includes presentations, roadshows, attendance
at conferences, and other events. The Board always welcomes
feedback at these meetings.
Community
Why they are important
The Board believes that investing responsibly
is important in protecting and creating long-term value. The Board
recognises that the incorporation of material sustainability
considerations can help inform the assessment of overall risk and
opportunities.
AGA does not itself invest directly in Private
Equity portfolio companies. However, the Board recognises the
importance of portfolio companies themselves having proper policies
and procedures in place regarding their employees, suppliers,
customers and other stakeholders. Similarly, for the debt
portfolio, the Board is committed to including sustainability
considerations during the diligence process of debt investment,
whilst recognising that the size and nature of the Company's
investments typically limits its ability to influence decisions
once invested.
How the Board engages
The Board relies upon its Responsible
Investment policy and the practices of the Investment Manager and
Apax. The Board receives updates on Apax's sustainability
activities. Apax integrates sustainability considerations
throughout the investment process and works closely with portfolio
companies on these matters. There has been a substantial focus on
measuring the impact on society and delivering sustainable
financial returns while encouraging sustainable business practices.
The OEP helps deal teams identify key sustainability risks and
value creation opportunities whilst also delivering value creation
or risk mitigation directly to portfolio companies.
Key activities during the year
The Investment Manager regularly updates the
Board on key sustainability initiatives and milestones throughout
the year, including in relation to regulatory changes.
Following a decision made by the Board in 2021
to become carbon neutral, the CO2 emissions relating to AGA's own
activities have been offset via Carbon Footprint Ltd.
Service providers
Why they are important
In addition to supporting the Company to
deliver on its objectives, effective relationships with service
providers help the Company achieve its investment objectives and to
operate in an efficient and compliant manner.
How the Board engages
The Board maintains an ongoing dialogue with
its service providers and receives regular updates from them, both
formally at Board and Audit Committee meetings and informally
outside the Board and Audit Committee meeting schedule.
All service providers are subject to an annual
evaluation process by the Board.
Key activities during the year
Details of the responsibilities of the
Investment Manager (AGML), Investment Advisor (Apax), Registrar
(Link Asset Services), and Company Secretary and Administrator
(Aztec Financial Services (Guernsey) Ltd) can be found on p.45 and
p.51.
Other service providers include our corporate
broker, lenders, auditors, counsel, and other advisors.
2. Investment Manager's Report
Investment Environment and Outlook
Q&A with Salim Nathoo, Partner,
Apax
Q Where in the economic
cycle do you think we are at the moment?
A
While characterised by weak economic activity, the global economy
displayed resilience in 2023. As the year drew to a close, some of
the initial uncertainty faded as rates peaked and deal activity
picked up slightly in the second half of the year.
Q What does the current
more challenging market environment mean for private equity
firms?
A
Absent a major geopolitical event, projections are increasingly
consistent with a "soft landing" scenario where inflation
decelerates albeit unclear to what level. Yet, with growth likely
to remain sluggish and rates elevated, the recovery to pre-pandemic
levels is seemingly distant. The economic outlook is also likely to
differ across markets with 2024 US GDP estimated growth at 1.6% vs
the Euro area forecasts of 0.7%.
For the private equity industry this has the
potential knock-on effect of holding periods lengthening as exits,
particularly for larger assets, remain challenging. The cost of
debt is also expected to remain high.
Q In choppier markets, how
will private equity firms continue to generate value for
investors?
A
For those of us who remember the Global Financial Crisis this
reversal of the markets seen in 2020/2021 underscores the
importance of having multiple operational levers to drive business
improvements as outcomes become harder to predict. Particularly,
and as the market tailwinds of the past few years ease, private
equity firms will be reminded of the value of having portfolio
companies with business models and capital structures able to
perform well in a variety of conditions and withstand macrobumps
through the holding period. It will also be increasingly important
to have the skill to drive alpha through operational
improvement.
We believe that Apax's 'Hidden Gems' investment
strategy is well suited for this environment. It is a strategy that
is not predicated on continued market tailwinds but rather grounded
in enduring and proven disciplines: diversification, backing
businesses with strong underlying economic motors, and driving
'alpha' through business improvement.
Q What does the current
deal environment look like? Where are you finding interesting
opportunities?
A
The deal environment is looking better than a year ago as some
deals are getting repriced to more reasonable levels, and this is a
trend we would expect to continue into 2024.
In H2 2023 we saw an uptick in deal activity
and the quality of the investment pipeline, with Apax XI, the
latest global buyout fund, having now signed five new investments.
These investments fit squarely with the 'Hidden Gems' strategy,
focusing on subsectors we know well and opportunities where we see
a clear path to value creation through operational
improvements.
Of the five Apax XI investments, three are
carveouts with one also being a day-1 combination and all of them
show potential for accretive M&A.
Q What about
leverage
A
It is a fact that leverage has become less abundant and more
expensive. However, it is not stopping us from getting deals done.
The Apax Funds have generally used lower levels of leverage than
the market, with the average across AGA's Private Equity portfolio
of 4.6x net debt/EBITDA.
Indeed, one of the lessons from the Global
Financial Crisis is the importance of focusing on entry multiples
rather than IRR. If the Apax Funds can buy good businesses at
reasonable prices which we believe can be improved during the
Funds' ownership periods, then we are more likely to have found a
good investment, regardless of leverage levels.
On the other side, and looking to AGA's Debt
portfolio where 92% of investments are floating rate, AGA is also
benefitting from higher interest rates.
Q Are there any particular
sectors that you find attractive right now? Why so?
A
We don't cycle in and out of sectors and we're big believers in
investing in areas for the long time. That said, we overlay the
macroenvironment on top of investment recommendations which means
we are more or less selective or cautious of certain areas at
different times. For example, at the start of 2023 we were
deprioritising sub-sectors such as healthcare services where
inflation pass-through can take longer. Today, with AI disruption
risks front of mind, we are selective when it comes to certain
white-collar services businesses.
Q On the topic of AI, how
is that weaved into the investment process?
As mentioned, the team is continuing to assess
the disruptive capabilities of AI in new investment opportunities
for risks, productivity gains, and margin accretion.
Apax is also focusing on the opportunity of AI
in terms of knowledge management for deal team due diligence,
automation of workflows, and experimentation around software
development copilot tools within portfolio companies.
Q What about exits? Some
suggest there is pressure from investors for private equity firms
to exit investments?
A
It is true that private equity deal activity remained relatively
subdued in 2023 and with the IPO window remaining closed, larger
deals were particularly challenging to exit. However, the Apax
Funds focus on investments in the upper mid-market where there is
good exit optionality, and the funds actually returned more capital
than they called in 2023. The Funds also sought to exit investments
during the 'good times' and have therefore felt less pressure to
sell.
The portfolio is generally in good shape and
when companies reach maturity, we think there will be exit options
in our part of the market.
Private equity transaction volumes
Total US private equity transaction value
($bn)
H119
|
111
|
H219
|
139
|
H120
|
100
|
H220
|
86
|
H121
|
177
|
H221
|
186
|
H122
|
147
|
H222
|
39
|
H123
|
76
|
H223
|
58
|
Source: LCD
AGA calls and distributions (last 5 years)
(€m)
|
Calls
|
Distributions
|
H119
|
20
|
149
|
H219
|
146
|
34
|
H120
|
21
|
62
|
H220
|
35
|
35
|
H121
|
79
|
131
|
H221
|
121
|
144
|
H122
|
36
|
117
|
H222
|
158
|
111
|
H123
|
7
|
35
|
H223
|
83
|
55
|
Q Equity markets recovered
strongly in 2023, yet the listed holdings in your private equity
portfolio have been a drag on performance. Why is that?
A
It is true that markets have rallied. However, drivers of US market
performance have been narrow, with the seven largest stocks leading
the market higher rather than the whole market, with AI being a
significant catalyst. In Europe and the UK, markets trade well
below the median.
Looking at the underperformance in Apax Funds
listed private equity holdings, this is particularly driven by
Thoughtworks, Paycor, and Viasat, which faced challenges in the
year. Thoughtworks saw a slowdown in demand whilst Viasat
experienced a satellite failure impacting share price
performance.
Taking a step back, most of the listed holdings
in AGA's look-through Private Equity portfolio are positions in
previously IPO'd portfolio companies where significant value has
already been extracted. At 31 December 2023 these holdings
represented c. 6% of Adjusted NAV, down from 10% at the end of 2022
following the successful sale of Duck Creek in January 2023 at a
53% uplift, and further secondary sales in some of the other
holdings.
Q How are credit markets
performing and what does this mean for AGA?
A
European and North American broadly traded secondary loan markets
have seen a tightening of spreads through 2023. Three-year spreads
for trading US first lien loans tightened by c.141bps to an average
of 474bps over Libor and EU loans tightened by c.170bps to c.535bps
over Euribor.
Tightening of a similar magnitude has been
observed in the public and private primary issuance markets AGA has
been active in. Simultaneously private equity deal activity
remained relatively subdued in 2023.
What this means is that, in the current market
context of low volumes and tight returns, credit investors that
have differentiated investment capabilities will deliver better
returns as they can access opportunities with excess spreads
through differentiated sourcing, and avoid losses through sector
expertise and private equity style diligence. Apax's integrated
approach, where there are no barriers between Private Equity and
Credit teams, positions AGA well to access better risk adjusted
credit returns and the Debt portfolio outperformed in the year,
delivering a Total Return of 11.8% in the twelve months to 31
December 2023.
Q Finally, how do you think
about the market environment in the next 10 years vs the last 10
years?
A
The tide has definitely turned and the era of 'levered beta',
where it was possible to generate strong returns by riding the
markets, is gone. Instead, we're back to a similar reality to the
one we saw post the Global Financial Crisis, where alpha generation
through business improvement is required to generate superior
returns.
For those players with experience and the right
operating capabilities geared towards alpha generation, this is an
exciting time and we think there are good opportunities and fund
vintages to come.
Performance review
AGA Adjusted NAV movements
AGA's Adjusted NAV was €1,288m at 31 December
2023 (FY22: €1,299m), translating to an Adjusted NAV per share of
€2.62 cents / £2.27 pence.
Movement in Adjusted NAV was driven by a €51.5m
increase in NAV of the Debt portfolio followed by a €38.4m increase
in NAV of the Private Equity portfolio. The increase in NAV was
offset by FX movements and the dividend payment to shareholders of
€65.3m in line with the policy to distribute 5% of NAV per
annum.
Since IPO, AGA has paid out c.34% of its 31
December 2023 NAV in dividends to shareholders.
FY 2023 Adjusted nav development
(€m)
Adjusted NAV 31 December 2022
|
1,299.4
|
Private Equity
|
38.4
|
Debt Investments
|
51.5
|
Derived Equity
|
3.2
|
Cost and other movements
|
(6.8)
|
Dividends paid
|
(65.3)
|
Performance fee1
|
(6.6)
|
FX
|
(26.2)
|
Adjusted NAV
31 December
|
1,287.6
|
1. Performance fee reflects the
movement in the accounting of the performance fee reserve in the
period to 31 December 2023
Contributions to Total NAV Return
Total NAV Return was 4.1% (6.1% constant
currency) for FY 2023. The Debt portfolio was the main contributor
to Total NAV Return followed by the Private Equity
portfolio.
Return contribution for Private Equity was
primarily driven by earnings growth across the underlying portfolio
companies. While the Debt portfolio benefitted from an attractive
income yield as well as spreads tightening during the
year.
FX movements were mainly driven by the EUR
strengthening against the USD by 3% in the twelve months to 31
December 2023.
AGA's investment strategy has delivered
Cumulative Returns of 71.0% over the last five years or 12.8% on an
annualised basis1.
FY 2023 Total nav Return contributions
(%)
Private Equity
|
3.0%
|
Debt Investments
|
4.0%
|
Derived Equity
|
0.2%
|
Cost and other movements
|
(0.6)%
|
Performance fee2
|
(0.5)%
|
FX
|
(2.0)%
|
Total NAV
Return3
|
4.1%
|
1. Cumulative Return calculated
based on the movement in Adjusted NAV per share taking into account
any dividends paid during the respective period. 5-year annualised
return represents IRR return. Further details on p.118 of the
glossary
2. Performance fee reflects the
performance fee reserve payable at 31 December 2023
3. Total NAV Return means the
movement in the Adjusted NAV per share over the period plus any
dividends paid
Valuation methodology
In Private Equity, the Apax Funds predominantly
use a comparable-based valuation methodology. Fair value of the
Apax Funds' private investments is largely determined using public
trading comparatives and/or transaction comparables as
appropriate.
Public stock, including the positions in
previously IPO'd portfolio companies, is valued at the closing
share price of the portfolio company as at 31 December
2023.
Equity values are calculated based on a
relevant earnings metric multiplied by applicable valuation
multiples, and after taking into account portfolio company debt
(average at 31 December 2023: 4.6x)1.
Equity values are also net of NAV facilities
used in some of the underlying holding structures. These have been
put in place for Apax IX and Apax X, and both to replace more
volatile margin loan structures and to generally optimise cashflows
to investors and rebalance risk.
At 31 December 2023, the total of these facilities on a
look-through basis was c.8% of Adjusted NAV.
Debt Investments are valued with reference to
observable broker quotes where available and/or models using market
inputs.
Spotlight on Private Equity
valuations
Uplifts at exit demonstrate robustness of
methodology and value in AGA's Private Equity portfolio.
Buyout funds
|
|
AEVII
|
24%
|
AVIII
|
19%
|
AIX
|
35%
|
AX
|
49%
|
|
|
Strategic specific
|
|
ADF
|
40%
|
AMI
|
152%
|
Uplifts on exit compares to the previous
unaffected valuation i.e. the last carrying value of an investment
or 'undisturbed' value before the impact of a potential
transaction.
1. Net debt/EBITDA multiple representing
77% of Private Equity portfolio NAV. Calculation excluded companies
where EBITDA was not meaningful such as financial services or
companies with negative EBITDA, or high growth business valued on a
revenue basis. Due to these adjustments, the comparatives may not
be on a like-for-like basis.
Commitments and funding
At 31 December 2023 the Private Equity
portfolio represented 74% of AGA's invested portfolio and AGA was a
limited partner in 11 Apax Funds, providing exposure to c.80
private equity portfolio companies.
AGA Assets and Commitments (€m)
Outstanding commitments to the Apax Funds
(together with recallable distributions) reduced by c.€86m in the
twelve months to 31 December 2023 to c.€919m at the end of the
period.
As most of the Apax Funds operate capital call
facilities to bridge capital calls from investors for periods of up
to 12 months, AGA has significant visibility on future calls
resulting from these commitments, facilitating the Company's
liquidity planning.
At the period-end, AGA had cash (including net
current assets) of c.€94m in anticipation of capital calls from
Apax XI, ADF II, and AGI and the dividend payable in Q1 2024. AGA
also had a RCF of €250m which was undrawn at the end of
2023.
AGA calls and distributions
Despite a generally more challenging exit
environment AGA has, in the last three years, received total
distributions from the Apax Funds of c.€593m compared to calls made
of c.€484m.
Balance Sheet
Private Equity
|
€891m
|
|
Debt Investments
|
€294m
|
|
Derived Equity
|
€16m
|
|
Cash1
|
€94m
|
|
RCF
|
€250m
|
|
|
|
|
|
|
|
Unfunded commitments
|
|
€919m
|
1. Represents net current assets (inclusive of
cash and excluding financial liabilities at FVTPL)
Portfolio Review
Access to a portfolio of "hidden
gems"
AGA aims to offer shareholders superior
long-term returns by providing access to a portfolio of "hidden
gems". These are mostly private companies that shareholders can't
buy elsewhere.
They are typically mid-market businesses that
operate globally across the core Apax sectors of tech &
digital, services, healthcare, and internet/consumer.
AGA also has a portfolio of
predominantly Debt investments. This is a unique feature of AGA and
absorbs capital not invested in Private Equity, generates
additional returns and income for shareholders whilst also
providing robustness to the Company's balance sheet and reducing
cash drag.
At 31 December 2023 74% of AGA's invested
portfolio was in Private Equity, 25% in Debt, and the remaining 1%
invested across three remaining listed equity positions. The
portfolio was also well diversified across sectors, where Tech
& Digital made up the largest exposure at year-end. In Private
Equity, the portfolio is balanced across Apax Fund vintages, giving
shareholders exposure to both older Funds in the harvesting phase
and more recent Funds that are currently being invested.
Invested portfolio by asset type
Private Equity
|
74%
|
Debt Investments
|
25%
|
Derived Equity
|
1%
|
Invested portfolio by sector
Tech & Digital
|
41%
|
Services
|
27%
|
Healthcare
|
15%
|
Internet & Consumer
|
17%
|
Private Equity Lifecycle1
Investing
|
40%
|
Maturity
|
38%
|
Harvesting
|
22%
|
1. Represents % of commitments of
respective funds in each lifecycle stage
Portfolio review - Private Equity
"All-weather" investment strategy well-suited
to generate alpha
The Apax Funds' investment strategy is grounded
in enduring and proven disciplines: diversification, backing
businesses with strong underlying economic motors, and driving
'alpha' through business improvement. Furthermore, it is a strategy
that, for the most part, produces businesses where public market,
strategic, or private equity exits are viable.
'Alpha' is measured by judging firstly, the
extent to which the Apax funds' portfolio companies accelerate
their growth during the ownership period and, secondly, the extent
to which the valuation multiples re-rate faster than, or relative
to, their peers. This approach has the benefit of neutralising the
effect of market 'beta' and as such is a better measure of business
quality improvement during the funds' ownership.
24%
Average discount to peers at
entry1
1. Apax analysis of
discount/premium of Apax VIII, Apax IX and Apax X portfolio company
multiples at entry against trading multiples of relevant peer
companies as determined by Apax and weighted by invested
capital
Top 30 portfolio companies
The Apax Funds' investment strategy is sector
led, with deal teams focused on identifying opportunities across
four attractive sectors. AGA's Private Equity portfolio reflects
this strategy with the largest sector being Tech & Digital,
followed by Services, Healthcare and Internet/Consumer.
At 31 December 2023 the top 30 portfolio
companies represented 63% of AGA's Adjusted NAV and 72% of the
Private Equity portfolio.
Private Equity Total Return
2.4% / 4.5%
FY 2023 / FY 2023 constant currency
|
Total Private Equity portfolio
€890.7m
31 December 2023
|
Tech & Digital Services
|
Valuation €m
|
% of NAV
|
IBS Software
|
35.2
|
3%
|
Bonterra
|
33.4
|
3%
|
Odido
|
28.3
|
2%
|
Lutech
|
27.1
|
2%
|
Paycor
|
24.7
|
2%
|
Infogain*
|
21.8
|
2%
|
EcoOnline
|
20.5
|
2%
|
ECI
|
16.0
|
1%
|
Coalfire
|
16.0
|
1%
|
Services
|
Valuation €m
|
% of NAV
|
Assured Partners (AIX)
|
58.7
|
5%
|
TOI TOI & DIXI
|
45.0
|
3%
|
PIB Group*
|
44.8
|
3%
|
SavATree
|
31.9
|
3%
|
Safetykleen Europe
|
30.6
|
2%
|
Oncourse Home Solutions
|
29.4
|
2%
|
Authority Brands (AX)
|
26.2
|
2%
|
Lexitas
|
20.6
|
2%
|
Palex
|
19.4
|
1%
|
Alcumus
|
16.6
|
1%
|
Healthcare
|
Valuation €m
|
% of NAV
|
Candela
|
34.1
|
3%
|
Vyaire Medical*
|
27.0
|
2%
|
Rodenstock
|
25.2
|
2%
|
Healthium
|
17.6
|
1%
|
Eating Recovery Center
|
15.7
|
1%
|
Internet/Consumer
|
Valuation €m
|
% of NAV
|
Trade Me*
|
37.9
|
3%
|
Cole Haan
|
32.0
|
3%
|
Cadence Education
|
25.7
|
2%
|
Bazooka Candy Brands
|
25.5
|
2%
|
Nulo
|
16.7
|
1%
|
Ole Smoky Distillery
|
15.7
|
1%
|
* denotes overlap with Debt Investments
portfolio and Derived Equity portfolio
Well diversified across the private equity
lifecycle
The Private Equity portfolio is well
diversified across the private equity lifecycle, with 40% in the
investment phase, 38% in the maturity phase, and 22% in the
harvesting phase.
At 31 December 2023, AGA's largest exposure was
to Apax X which is now 95% invested and committed, having closed 25
investments, with the remaining capital mainly reserved for
follow-on investments.
Looking at the funds in the investment phase,
Apax XI made its first five investments in 2023 and, in December
2023, Apax Global Impact held
a final fund close with commitments of
c.$0.9bn.
The buyout funds in the harvesting phase
continue to focus on identifying opportunities to exit their
remaining portfolio companies at attractive valuations.
Investment phase
40%
Apax XI
|
|
AGA NAV:
|
€4.1m
|
Distributions:
|
€0.0m
|
% of AGA PE portfolio:
|
0%
|
Vintage:
|
2022
|
Commitment:
|
€198.4m + $490.0m
|
Invested and committed:
|
12%
|
Fund size:
|
TBC²
|
Apax Digital II
|
|
AGA NAV:
|
€8.9m
|
Distributions:
|
€0.0m
|
% of AGA PE portfolio:
|
1%
|
Vintage:
|
2021
|
Commitment:
|
$90.0m
|
Invested and committed:
|
23%
|
Fund size:
|
$1.9bn
|
AMI II
|
|
AGA NAV:
|
(€0.5m)
|
Distributions:
|
€0.0m
|
% of AGA PE portfolio:
|
0%
|
Vintage:
|
2022
|
Commitment:
|
$40.0m
|
Invested and committed:
|
8%
|
Fund size:
|
TBC²
|
Apax Global Impact
|
|
AGA NAV:
|
€6.0m
|
Distributions:
|
€0.0m
|
% of AGA PE portfolio:
|
1%
|
Vintage:
|
2022
|
Commitment:
|
$60.0m
|
Invested and committed:
|
24%
|
Fund size:
|
$0.9bn
|
MATURITY PHASE
38%
Apax X
|
|
AGA NAV:
|
€447.3m
|
Distributions¹:
|
€45.1m
|
% of AGA PE portfolio:
|
50%
|
Vintage:
|
2020
|
Commitment:
|
€199.8m + $225.0m
|
Invested and committed:
|
95%
|
Fund size:
|
$11.7bn
|
Apax IX
|
|
AGA NAV:
|
€268.0m
|
Distributions¹:
|
€397.8m
|
% of AGA PE portfolio:
|
30%
|
Vintage:
|
2016
|
Commitment:
|
€154.5m + $175.0m
|
Invested and committed:
|
94%
|
Fund size:
|
$9.5bn
|
AMI
|
|
AGA NAV:
|
€14.9m
|
Distributions¹:
|
€59.2m
|
% of AGA PE portfolio:
|
2%
|
Vintage:
|
2015
|
Commitment:
|
$30.0m
|
Invested and committed:
|
88%
|
Fund size:
|
$0.5bn
|
Apax Digital
|
|
AGA NAV:
|
€53.6m
|
Distributions¹:
|
€21.9m
|
% of AGA PE portfolio:
|
6%
|
Vintage:
|
2017
|
Commitment:
|
$50.0m
|
Invested and committed:
|
103%
|
Fund size:
|
$1.1bn
|
HARVESTING PHASE
22%
Apax VIII
|
|
AGA NAV:
|
€60.9m
|
Distributions¹:
|
€595.5m
|
% of AGA PE portfolio:
|
7%
|
Vintage:
|
2012
|
Commitment:
|
€159.5m + $218.3m
|
Invested and committed:
|
110%
|
Fund size:
|
$7.5bn
|
Apax Europe VII
|
|
AGA NAV:
|
€25.2m
|
Distributions¹:
|
€91.4m
|
% of AGA PE portfolio:
|
3%
|
Vintage:
|
2007
|
Commitment:
|
€86.1m
|
Invested and committed:
|
108%
|
Fund size:
|
€11.2bn
|
Apax Europe VI
|
|
AGA NAV:
|
€2.3m
|
Distributions¹:
|
€13.7m
|
% of AGA PE portfolio:
|
0%
|
Vintage:
|
2005
|
Commitment:
|
€10.6m
|
Invested and committed:
|
107%
|
Fund size:
|
€4.3bn
|
1. Represents all distributions received by AGA
since 15 June 2015
2. Apax XI and AMI II have yet to hold their
final closes
Earnings growth was the main driver of
performance
Earnings growth across the Private Equity
portfolio companies remained the main driver of performance despite
a more challenging economic backdrop.
Earning growth was offset by negative movements
in comparables, mainly from Thoughtworks, Paycor, and Viasat, where
the end-of-period share price was used to value the
companies.
The increase in management fees accrued during
the period largely reflects AGA's $700m commitment to the latest
Apax global buyout fund in 2022. Private Equity fund returns
typically exhibit a J curve pattern in the early years, where
initial fees and expenses outweigh gains as the fund has only
commenced investing. We would expect this to dampen over time as
the Fund continues to invest.
FX movements were mainly driven by the EUR
strengthening against the USD.
Private Equity Performance (%)
Movement in underlying portfolio
companies' earnings
|
17.8%
|
Movement in net debt1
|
(3.3%)
|
Movement in comparable companies' valuation
multiple2
|
(4.0%)
|
One-off and other3
|
(1.4%)
|
Management fees and carried interest accrued by
the Apax Funds4
|
(4.6%)
|
FX
|
(2.1%)
|
LTM Total Return
|
2.4%
|
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 multiple-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. Includes adjustments for dilutions from
management incentive plans (as a result of growth in the
portfolio's value) and costs related to NAV facilities
4. This also includes movements in the
performance fee reserve of the Eligible Private Equity portfolio,
if applicable. This was nil for the twelve months to 31 December
2023
Continued momentum across the
portfolio
The Private Equity portfolio continued to
perform well and average LTM EBITDA growth across portfolio
companies was 18% at 31 December 2023, broadly in line with the
prior year.
As a result of the comparables based valuation
methodology for Private Equity portfolio companies, it is not
surprising that valuation multiples have come down since December
2021. In the year to 31 December 2023 multiples decreased slightly
from 17.2x to 16.6x at year-end, mainly reflecting negative
movements from the Apax Funds' listed holdings, and particularly
Thoughtworks, Viasat, and Paycor. Share prices for these
investments trended up in Q4 but not sufficiently to offset
declines earlier in the year. At 31 December the Apax Funds' listed
exposure represented c.7% of the Private Equity portfolio, down
from 14% at the end of 2022.
The Apax Funds have generally used lower levels
of leverage than the market, with the average across AGA's Private
Equity portfolio of 4.6x net debt/EBITDA at the end of 2023. c.82%
of portfolio companies have maturities extending beyond
2027.
LTM EBITDA growth¹
Dec-21
|
35.3%
|
Dec-22
|
18.5%
|
Dec-23
|
18.0%
|
|
EV/EBITDA multiple¹
Dec-21
|
23.2x
|
Dec-22
|
17.2x
|
Dec-23
|
16.6x
|
|
Net Debt/EBITDA¹
Dec-21
|
4.2x
|
Dec-22
|
4.8x
|
Dec-23
|
4.6x
|
|
1. Gross Asset Value weighted average of
the respective metrics across the portfolio. Investments can be
excluded for reasons such as: investments in the financial services
sector; companies with negative EBITDA (or moving from negative to
positive EBITDA in the case of growth metrics); investments that
are written off and companies where EBITDA is not meaningful for
company-specific reasons.
Investment activity picked up in H2
2023
Investments
AGA deployed c.€95m on a look-through basis
across ten new investments during the year. The majority of this
capital was invested in the second half, as the outlook improved,
and more compelling opportunities emerged. Apax XI made four new
investments in IBS Software, Palex, Bazooka Candy Brands, and
OCS/Finwave. Apax XI also signed one further investment in WSGN
before year-end. The Apax Global Impact Fund made two investments
in Swing Education and GAN Integrity and the Apax Digital Fund II
made one new investment in Petvisor.
Exits
In what was generally a difficult
exit environment, the Apax Funds realised six investments at an
average uplift of 20% to previous unaffected valuations and an
average Gross MOIC of 1.6x in the twelve months to 2023. The Apax
Funds also continued to reduce public positions and holdings in
Paycor and Baltics Classifieds Group were sold down in the period.
AGA received total distributions of c.€90m, primarily from these
exits.
Total invested1
€95m
|
Total distributions
€90m
|
Gross MOIC2
1.6x
|
Average uplift3
20%
|
1. AGA's investment cost / realisations
on a look-through basis. Amounts remain subject to close until
investments have closed
2. Average Gross MOIC and Gross IRR
calculated based on the expected aggregate cash flows in EUR since
inception. Individual Gross MOIC by investment calculated based on
return in the Funds underlying currency or where AGA invests in two
currency sleeves it represents the EUR return unless otherwise
stated
3. Valuation uplifts on exits are calculated
based on the total actual or estimated sales proceeds and income as
appropriate since the last Unaffected Valuation. Unaffected
Valuation is determined as the fair value in the last quarter
before exit, when valuation is not affected by the exit process
(i.e. because an exit was signed, or an exit was sufficiently close
to being signed that the Apax Funds incorporated the expected exit
multiple into the quarter end valuation). Where applicable, average
uplifts of partial exits and IPO's includes proceeds received and
the closing fair value at period end
Investments
TEch & Digital
|
Internet / consumer
|
SErvices
|
TEch & Digital
|
services
|
January 23
Magaya
·
--€6.9m
· ADF
II
· Digital
freight software platform
|
March 23
Zoo Eretz
·
€2.4m
· AMI
II
· Israel's
leading pet products wholesaler
and retailer
|
May 23
IBS Software
·
€26.0m
· AXI
· Provider of
modern software solutions to
the global travel and logistics industry
|
June 23
Swing Education
·
€2.0m
· AGI
· Online
marketplace that connects schools and substitute
teachers
|
July 23
Palex Medical
·
€16.9m
· AXI
· A leading
distributor
of medical technology equipment and solutions in Southern
Europe
|
|
|
|
|
|
tech & Digital
|
tech & Digital
|
tech & Digital
|
Internet / consumer
|
services
|
August 23
Chavat Daat
·
€0.7m
· AMI
II
· Private
specialty veterinarian hospital
for household pets
in the centre of Israel
|
October 23
GAN Integrity
·
€3.1m
· AGI
· Provider of
third-party and employee-centric ethics and compliance
software
|
October 23
Bazooka
·
€19.5m
· AXI
· Portfolio of
non-chocolate confectionary brands
|
November 23
Petvisor
·
€3.3m
· ADF
II
· Veterinary and
pet services business management and
client engagement software platform
|
December 23
OCS/ Finwave
·
€14.0m
· AXI
Italian finance software provider
|
Exits
TEch & Digital
|
services
|
services
|
TEch & Digital
|
Internet / consumer
|
January 23
Duck Creek
· 5.2x Gross
MOIC/
53% Uplift
·
AVIII
· Software
provider to property and casualty insurers
|
February 23
Shriram
· 0.8x Gross
MOIC
(14%) Discount
·
AVIII
· Non-bank
finance company focused on
the micro enterprises segment in India
|
July 23
Global-e
· 35.6x Gross
MOIC / 23% Uplift
· AMI
· Provider of
cross-border e-commerce solutions
|
July 23
Go Global
Travel
· 2.8x Gross
MOIC/
13% Uplift
· AMI
· Supplier of
search engine technologies
and related services
for travel industry
|
September 23
Manappuram Finance
Ltd.
· 1.1x Gross
MOIC/
3% Uplift
· AIX
· Non-bank
finance company
|
|
|
|
|
|
Internet / consumer
|
|
|
|
|
December 23
Matches Fashion
· 0.0x Gross
MOIC/ (100%) discount
· AIX
· A global
luxury
e-commerce platform
|
|
|
|
|
Sustainability Governance at Apax
Sustainability is embedded throughout the Apax
Funds' investment process, from due diligence through to the Funds'
ownership and exit.
Philosophy
Apax's governance philosophy in Private Equity
emphasises that all investment team members should actively
integrate responsible investing into their daily tasks. The
management teams of portfolio companies, along with their boards,
bear the ultimate responsibility for sustainability performance.
This responsibility is supported by specialists from the OEP,
informed by materiality and guided by the Sustainability
Committee.
Approach
The Sustainability Committee convenes monthly
to review matters across the firm and the portfolio. The Committee
is made up of nine members from across the firm who each bring
valuable perspectives and considerations to help management and
deal teams navigate the ecosystem and unlock value throughout the
investment lifecycle.
Embedding sustainability in the Private Equity
investment lifecycle
Pre Investment
Due diligence & gap analysis
·
Due diligence:
Sustainability due diligence is conducted,
reviewed by members of the sustainability and compliance teams and
incorporated into the final investment committee
documentation.
·
Gap analysis:
Gap analysis with key diligence findings and
Apax' sustainability priority areas is performed to determine
remediation actions post investment.
YEAR 1
oNBOARDING
· Onboarding
Onboarding: Portfolio companies are onboarded
on Apax data platforms and introduced to the Apax team and
programme.
·
Remediation:
A roadmap is developed to address identified
areas of remediation.
YEAR 2 - 3
Monitoring & reporting
·
Monitoring & Assessing: sustainability performance is reviewed regularly with deal
teams and through check-ins with management.
The OEP team engages with and supports
portfolio companies on specific initiatives on a case by case
basis.
YEAR 3 - 4+
·
Reporting:
Annual Apax portfolio company sustainability
survey conducted to track performance. KPIs are shared with the
Apax Funds' investors via an online data platform and also
published in the Apax Sustainability Report.
YEAR 5
Exit preparation
·
Engagement:
Engagement around portfolio company
sustainability reporting & disclosure to maximise
value.
Governance and cybersecurity at Apax
Spotlight
Apax recognises that the backbone of corporate
success is robust governance. Companies with sound governance
standards foster transparency and accountability, gaining the trust
of shareholders, employees, and customers while minimising
financial, legal, and reputational risks.
In terms of approach, Apax deal teams evaluate
the governance structures of potential Private Equity investments,
emphasising the need for strong anti-corruption frameworks, clear
codes of conduct, and rigorous cybersecurity protocols. New
portfolio companies, especially those with nascent governance
practices, receive support to establish and implement these
policies, particularly core anti-bribery and anti-corruption
measures, within their first year in the portfolio.
ClearBank's cybersecurity leadership
Case study: Private Equity
The Apax Digital Funds invested in ClearBank,
one of the fastest-growing UK tech companies, in 2022. At the time
of launch, ClearBank was the first new clearing bank in the UK in
over 250 years. It is a regulated bank and the only next generation
payments provider with direct access to all banking payment schemes
in the UK.
"Our customers are hyper aware of security, and
we receive extremely thorough due diligence questionnaires from our
customers."
Bernard Wright | CISO
ClearBank
As both a regulated bank, and a truly
cloud-native bank with a mission to revolutionise the financial
payment space through cloud technology, cybersecurity is inherently
important to ClearBank as a business, from both a commercial and
regulatory perspective. With a customer base of over two hundred
financial institutions and fintech businesses, the Company needs to
be well prepared against all threats.
With this in mind, Mark Beith, Partner at Apax,
spoke with Bernard Wright, Chief Information Security Officer
(CISO) at ClearBank about the firm's cybersecurity journey to date,
the criticality of good cyber governance as a regulated bank, how
Apax and ClearBank have collaborated on cybersecurity policy, and
his views on the impact of generative AI in this space.
Case study: Private Equity
"I think a real value-add is being a part of
the Apax network and the ability to knowledge share with the
portfolio."
Bernard Wright | CISO
ClearBank
Q Tell us
about your approach to cybersecurity at ClearBank, particularly as
you have developed from a "start-up" to regulated
bank.
A
ClearBank was founded nearly eight years ago and was the
first new clearing bank in the UK for over two centuries. Much of
our early years were spent focused on gaining our license from the
Bank of England, which we were granted in 2017. As a cloud-based
bank, this was a particular challenge, as both the regulator and
the payment schemes we needed to connect to had concerns around the
security of cloud-based operations. We spent a lot of time
educating our stakeholders around controls and security in the
cloud.
Fast forward to today, we have gone from 200
people, and a security team of seven, to over 700 people today and
a security team of nearly 30. Our approach to cybersecurity has
naturally grown with the organisation, and we have added expertise
across the various security disciplines to ensure we are always
ahead of the curve, particularly around identity, access and
control, data, and future threats.
Q You clearly need to
evidence your security standards to the regulator, but as a 'bank
for banks', how important is cybersecurity from a commercial
perspective?
A
It is extremely important. Our customers are hyper aware of
security, and we receive extremely thorough due diligence
questionnaires from our customers. They rightfully want to know
details about everything security-related, from our development
practices to our access permissions and how our code is released.
Given the regulated environment we operate in, we must be able to
evidence our security operations.
Q What are your areas of
focus currently?
A
We have several areas of focus. As our brand has grown, and
our visibility has increased, we've seen a real increase in
attention from 'bad actors'. This has put a focus on scaling our
security team and we are constantly evaluating areas where we need
specific expertise. We're also focused on cultural change. We do
mostly all of our own development, and so we have put a large
emphasis on development security operations, bridging the gap
between security and our engineers. This ensures that security is
baked-in from the very beginning of any project. Separately, a big
focus for the organisation is the international build-out, and this
presents its own challenges from a security perspective, given the
varying rules and regulations within Europe and beyond.
Q How have you worked with
the Apax team to drive forward your cyber strategy
A
We work closely with Apax's Operational Excellence Practice,
particularly Apax's technology and cybersecurity specialist. Early
on post-investment we held several sessions with the Apax team who
shared their insights and helped us identify gaps and plug into
their control framework. I think a real value-add is being a part
of the Apax network and the ability to knowledge share within the
portfolio. Often, organisations can be cagey with sharing
information that concerns cybersecurity, and so the Apax network
gives access to useful information, including third party
recommendations, updates on tools, and so on.
Q Finally, any thoughts on
the impact of Artificial Intelligence ("AI") on
security?
A
There's a huge amount of noise on all forms of AI at the
moment. There was a lot of education needed at the beginning. We
also had to question: what is our ethics policy concerning AI? This
was something we had to address and pull together. What we have
done is run a number of 'hackathon' sessions for our internal
technology teams focused on AI, addressing it is an opportunity
rather than just a potential risk. A number of interesting ideas
have come out of that in regard to how we can improve our internal
processes, and that work is ongoing.
Q: Mark Beith, Partner at Apax
A: Bernard
Wright, CISO ClearBank
Creating a business of scale through a carveout
and day-1 combination
Case Study: Private Equity
OCS / Finwave
In August 2023, Apax XI invested in OCS, an
Italian consumer finance software provider servicing Italian banks
and financial institutions. Concurrent with the transaction, Apax
XI also acquired the proprietary fintech and credit management
software division Finwave from Lutech, an Apax X portfolio company,
and combined it with OCS.
"The combination of OCS and Finwave will create
a truly unique, European financial software platform of scale, with
huge potential for future growth."
Gabriele Cipparrone |
Partner at Apax
The combination of OCS and Finwave creates a
€100 million revenue European financial software platform of scale.
Together, the companies will leverage their collective expertise
and talent to accelerate the development of innovative software
solutions to support the evolving needs of financial institutions
and operators. As a combined group, OCS and Finwave will be better
positioned to serve their customers in Italy and internationally,
with a large offering covering consumer finance, corporate finance
and capital markets software and solutions.
Both OCS and Finwave are considered "hidden
gems", with Apax XI acquiring them at Italian mid- market
valuations. There is therefore significant scope to drive a
re-rating closer to European financial services technology
providers at exit.
Why is this an Apax Funds' deal?
· Software is
one of Apax's main subsectors where the Funds have a strong track
record, having deployed c.$7.6bn across 27 deals.
· Complex
carveout and day-1 combination: OCS was acquired from founders and
a sponsor whereas Finwave was carved out of Lutech, an Apax X
portfolio company.
· Apax has
strong market experience in Italy with past investments in
Engineering and Lutech.
· Mid-market
deal with multiple levers of value creation, including tech
modernisation, greater scale and diversification of the combined
group.
% of AGA NAV
1%
at 31 December 2023
|
AGA valuation
€14.0m
at 31 December 2023
|
Unlocking value through separation
Case Study: Private Equity
Oncourse Home Services
In December 2021, Apax X acquired the homeowner
services subsidiary of American Water Works via a
carveout.
The subsidiary, now rebranded to Oncourse Home
Solutions ("OHS"), provides various warranty protection programmes
and other home services to residential customers across the US. It
services 1.5 million homeowners across 43 states and Washington,
D.C.
Carveouts are complex transactions where a new
business is created through the separation of a subsidiary from a
much larger business. Often they're under resourced units but with
potential for value creation and over the last seven years the Apax
OEP has been building out their capabilities in this
area.
At the time of the acquisition of OHS, Apax X
had tracked the company for 18 months and identified it as a
high-quality business with multiple organic and inorganic value
creation levers available to drive growth. Additionally, the
utilities home warranty sector represents an attractive market
given its high margins, high retention rates, high barriers to
entry and ample opportunities for cross-sell.
"The Apax Funds have deep domain experience
across the home services market and insurance and warranty product
dynamics, with prior investments in Authority Brands, Assured
Partners and Hub for example."
Ashish Karandikar |
Partner at Apax
Building on the initial investment thesis
around inorganic growth through strategic M&A, in February
2024, OHS, agreed to acquire and carveout the Consumer Energy
Appliance Service Plan business from CMS Energy (NYSE:
CMS).
The transaction is an opportunity for OHS to
quickly build scale and diversity its range of products,
partnerships, geographies and revenue mix, unlocking significant
cross-sell opportunities.
% of AGA NAV
2%
at 31 December 2023
|
AGA valuation
€29.4m
at 31 December 2023
|
Portfolio review - Debt Investments
Strong performance in 2023
Capital not invested in Private Equity is
primarily invested in Debt Investments. This portfolio absorbs
excess liquidity not invested in Private Equity, thereby limiting
cash drag, producing additional returns, and enhancing the
robustness of AGA's balance sheet to support unfunded commitments
to the Apax Private Equity Funds. It also provides an additional
source of funding to support the dividend payment.
As at 31 December 2023, AGA held €294.2m of
Debt Investments, representing 25% of the Total Invested Portfolio.
The portfolio primarily comprises Debt Investments in companies and
sectors where Apax can leverage insights from its private equity
activities. The integrated approach of having no barriers between
Private Equity and Credit teams helps position the portfolio to
access better risk adjusted credit returns. Whilst individual
investments are identified through a bottom-up process, the
portfolio is actively managed top-down from a risk and liquidity
perspective. Exposure to positions where the outlook was more
uncertain was being actively reduced.
In the year to 31 December 2023, the Debt
portfolio achieved a strong Total Return of 11.8% (14.4% constant
currency). Over the last five years, the portfolio has achieved a
45.9% cumulative constant currency Total Return, versus 32.5% for
the S&P/LSTA Leveraged Loan Index.
FY 2023 Debt Investments performance
(%)
Income
|
10.9%
|
Realised gains
|
1.8%
|
Unrealised gains
|
3.6%
|
Performance fee1
|
(1.9%)
|
FX
|
(2.6%)
|
LTM Total
Return
|
11.8%
|
1. Performance fee reflects the
performance fee reserve payable at 31 December 2023
Debt Total Return
11.8%
FY 2023
|
Total Debt Investments
€294.2m
at 31 December 2023
|
Continued exposure to more liquid
instruments
The largest position in the Debt portfolio
represents c.2% of AGA's Adjusted NAV, and 61% of the Debt
investments are invested in first lien loans. Syndicated first lien
loans tend to be more readily tradeable when compared to debt
instruments that are more junior in the capital structure, and we
believe the current proportion of first lien loans held is
appropriate in the context of the Private Equity commitments made
by AGA.
AGA also maintained higher liquidity balances
in 2023 in anticipation of calls from the Apax Funds.
92% of Debt Investments were invested in
floating rate loans to minimise duration risk. With base rates
having increased, the portfolio generated a 10.4% income yield. As
spreads tightened in the year and the second half of the year saw
rates stabilise, there was an uptick in fair value of the portfolio
whilst the average yield to maturity of the overall portfolio was
steady at 12.0% at 31 December 2023, compared to prior year-end
(12.1% at 31 December 2022).
In 2023 AGA invested €45.2m across four new
Debt positions and received €100.6m from 10 full and partial
disposals.
In addition to the Debt portfolio, AGA also has
a small exposure to Derived Equity, which represented 1% of the
invested portfolio at 31 December 2023. In the year, AGA exited two
positions, with three positions remaining in the portfolio valued
at €15.6m. The portfolio achieved a Total Return of 14.8% (16.8%
constant currency) in FY 2023.
First lien term loan
|
Valuation €m
|
% of NAV
|
PIB Group*
|
22.8
|
2%
|
Exact Software
|
15.2
|
1%
|
Neuraxpharm
|
15.1
|
1%
|
Theramex
|
15.0
|
1%
|
Infogain*
|
14.8
|
1%
|
Vyaire Medical*
|
14.0
|
1%
|
Precisely Software
|
13.4
|
1%
|
WIRB-Copernicus Group
|
13.3
|
1%
|
PCI
|
10.6
|
1%
|
Mitratech
|
9.0
|
1%
|
Navicure
|
8.8
|
1%
|
Aptean
|
6.6
|
1%
|
PSSI
|
6.6
|
<1%
|
Parts Town
|
6.1
|
<1%
|
Therapy Brands
|
6.0
|
<1%
|
* Denotes overlap with the Private Equity
portfolio
second lien term
loan
|
Valuation €m
|
% of NAV
|
Confluence
|
16.8
|
1%
|
Aptean
|
15.2
|
1%
|
Precisely Software
|
12.9
|
1%
|
Therapy Brands
|
12.2
|
1%
|
Trade Me*
|
11.8
|
1%
|
Mitratech
|
11.7
|
1%
|
MDVIP
|
6.8
|
<1%
|
Syndigo
|
4.4
|
<1%
|
Other
|
Valuation €m
|
% of NAV
|
MindBody
|
10.0
|
1%
|
Engineering Bonds
|
10.0
|
1%
|
Confluence
|
5.1
|
<1%
|
3. Governance & Risk Management
Contents
Chairman's introduction
Long-term success
Dear Shareholder,
On behalf of the Board, I am pleased to
introduce the Company's corporate governance statement on p.47 and
p.48.
Promoting long-term
success
This will be my last year as Chair of AGA - a
role I have had the privilege to hold since the Company's 2015 IPO.
Today the Company is well diversified and well-positioned to take
advantage of future opportunities. During the year under review,
the Board of Directors has acted to promote the long-term success
of the Company for the benefit of shareholders whilst having due
regard to the matters set out in section 172 of the UK Companies
Act 2006. You can read more about this on p.12. This was also
confirmed by the internal Board evaluation conducted in 2023, more
details of which can be found on p.46.
Our Board of Directors
The Company has a strong, fully independent
Board of experienced Directors. The Directors, all of whom are
Non-Executive and considered to be independent for the purposes of
Chapter 15 of the Listing Rules, are responsible for the
determination of the strategy and investment policy of the Company
and overseeing its day-to-day activities. Biographies of the Board
of Directors, including details of their relevant experience and
current appointments, are available on p.42 to p.44 and the
Company's website at: www.apaxglobalalpha.com/who-we-are/board-of-directors/
At 31 December 2023, the Board was composed of
60% male and 40% female Directors.
In October 2023, the Directors announced that
Karl Sternberg had accepted an invitation to join the Board as a
Non-Executive Director and a member of AGA's Audit Committee with
effect from 1 March 2024. He brings significant investment
management and Investment Trust experience, and he is expected to
succeed me as Chairman when I retire later this year. Coinciding
with Karl joining the Board, Chris Ambler has decided to retire as
a Non-Executive Director of the Company after nearly nine years in
the role. I want to take the opportunity to thank Chris for his
long-standing commitment and contribution to the
Company.
AGM / Discontinuation
vote
Our ninth AGM will be held at 11.15 am (UK
time) on 1 May 2024 at East Wing, Trafalgar Court, Les Banques, St
Peter Port, Guernsey, Channel Islands, GY1 3PP.
In common with many closed-end investment funds
without a fixed duration, AGA's articles require a resolution to be
put to shareholders on a periodic basis regarding the continuation
of the Company. Accordingly, a "Discontinuation Resolution" will be
proposed at the 2024 AGM. To ensure the Company continues in its
current form, the Board of Directors recommend that shareholders
vote against the Discontinuation Resolution, which all of the
Directors intend to do with respect to their own
shareholdings.
Information about the Discontinuation
Resolution, the notice, agenda, and form of proxy will be
circulated to shareholders at least 21 working days prior to the
AGM and will be made available on the UK National Storage Mechanism
and the Company's website at www.apaxglobalalpha.com.
Shareholders will again be able to attend the
AGM either in person, or via a telephone dial-in to listen to the
AGM. Questions can be submitted in advance to the Company Secretary
by email at: AGA-admin@aztecgroup.co.uk For more information about
the AGM visit: www.apaxglobalalpha.com/investors/investor-centre/
Compliance with the AIC Code, the UK
Corporate Governance Code, and the GFSC Code
The Directors recognise the importance of sound
corporate governance and, as a closed-ended investment Company,
have adopted the Association of Investment Companies ("AIC") Code
of Corporate Governance (the "AIC Code"), which has been endorsed
by the Financial Reporting Council.
The Board considers that reporting against the
principles and recommendations of the AIC Code, which incorporates
the UK Corporate Governance Code (the "UK Code") and the Guernsey
Financial Services Commission Finance Sector Code of Corporate
Governance (the "GFSC Code"), provides better information to
shareholders. I am pleased to report that for the year under
review, we have consistently applied the principles of good
governance contained in the AIC Code and you can find more details
on this on the subsequent pages.
You can find a copy of the AIC Code on the AIC
website at: www.theaic.co.uk
Tim Breedon CBE |
Chairman
4 March 2024
Governance at a glance
The Board aims to promote the Company's
long-term success and to preserve and strengthen stakeholder
confidence in our business integrity. This is achieved through the
application and maintenance of the highest standards of corporate
governance.
Board diversity
|
Number of Board members
|
Percentage of the board
|
Male
|
3
|
60%
|
Female
|
2
|
40%
|
Minority ethnic background
|
-
|
-
|
The Board acknowledges the importance of
diversity for the effective functioning of the Board which helps
create an environment for successful and effective decision-making.
The Board currently comprises of 40% women with Susie Farnon acting
as the Senior Independent Director and Chair of the Audit
Committee. The Company does not currently comply with the ethnic
diversity target set out in the Listing Rules. However the Board
continues to keep this under review in the context of planned Board
succession opportunities. The Board has adopted a Board Management
Policy which includes issues relating to diversity. In view of the
nature, scale and complexity of the Company, the Board believes a
formal diversity policy for the Company is not necessary at this
time. Diversity of the Board is further considered on at least an
annual basis through the Board evaluation process.
Major Board activities in 2023
Major decisions taken by the Board and its
Committees during 2023 included:
· Conducted a
review of the Company's strategy and determined that it remained
fit for purpose despite changes in the macroenvironment.
· Comprehensive
search for and appointment of a new Non-Executive Director and
future Chair.
· Thorough
review of AGML's credit strategy and capabilities.
· Discussion and
review of capital allocation in the context of future Private
Equity calls and the capacity of AGA's RCF and debt
portfolio.
· Refinancing of
the Company's Revolving Credit Facility "RCF".
· Review and
amendment to Directors' fees.
Election and re-election of Directors at the
2024 AGM
· In accordance
with the Company's Articles of Incorporation and the principles of
the AIC Code, all Directors of the Company will offer themselves
for re-election or election at the 2024 AGM.
· As announced
in October 2023, Karl Sternberg has joined the Board as a new
Non-Executive Director, effective 1 March 2024. His biography is
available on the Company's website: www.apaxglobalalpha.com/about-us/board-and-governance
· Tim Breedon
has indicated that he wishes to retire from the Board in 2024, at
which point he will have completed nine years in the role. It is
intended that Karl Sternberg will succeed him as Chairman of Apax
Global Alpha in the second half of 2024, allowing for an
appropriate handover period.
· After nearly
nine years as Non-Executive Director, Chris Ambler retired on 1
March 2024. It is proposed to shareholders that Tim Breedon, Susie
Farnon, Mike Bane, and Stephanie Coxon be re-elected and that Karl
Sternberg be elected at the 2024 AGM.
Leading a responsible business
A summary of the Directors' attendance at
meetings which they were eligible to attend is provided below.
Eligibility to attend the relevant meetings is shown in
brackets.
|
Total Board
|
Total Audit Committee
|
Tim Breedon
|
5 (5)
|
n/a
|
Susie Farnon
|
5 (5)
|
9 (9)
|
Chris Ambler
|
5 (5)
|
9 (9)
|
Mike Bane
|
5 (5)
|
9 (9)
|
Stephanie Coxon
|
5 (5)
|
9 (9)
|
· The Board will
appoint committees of the Board on occasion to deal with specific
operational matters; these committees are not established under
separate terms of reference as their appointment is conditional
upon terms resolved by the Board in formal Board meetings and
authority conferred to such committees will expire upon the due
completion of the duty for which they have been appointed. Such
committees are referred to as "other" committee meetings
· The Chairman
of the Company, Tim Breedon, whilst not required to attend meetings
of the Audit Committee, does so on occasion, particularly where
financial reports are being reviewed
AGA Board of Directors
Tim Breedon
Chairman
Tenure
8 years, 8 months
|
Susie Farnon
Non-Executive Director,
Senior Independent Director,
Chair of Audit Committee
Tenure
8 years, 5 months
|
Chris Ambler
Non-Executive Director
Tenure
8 years, 8 months
Retired 1 March 2024
|
|
|
|
Mike Bane
Non-Executive Director
Tenure
5 years, 6 months
|
Stephanie Coxon
Non-Executive Director
Tenure
3 years, 9 months
|
|
Skills and experience
Tim Breedon joined the AGA Board on 28 April
2015. He worked for the Legal & General Group plc for 25 years,
most recently as Group Chief Executive between 2006 and 2012. He
was a Director of the Association of British Insurers ("ABI"), and
also served as its Chairman between 2010 and 2012. He served as
Chairman of the UK Government's non-bank lending task force, an
industry-led task force that looked at the structural and
behavioural barriers to the development of alternative debt markets
in the UK.
He is a Non-Executive Director of Barclays plc
and Quilter plc, and was Chairman of Northview Group from 2017 to
2019. He was previously lead Non-Executive Director of the Ministry
of Justice between 2012 and 2015. Tim was formerly a Director of
the Financial Reporting Council and was on the board of the
Investment Management Association. He has over 25 years of
experience in financial services and has extensive knowledge and
experience of regulatory and government relationships. He brings to
the Board experience in asset management and knowledge of leading a
major financial services company.
Current appointments
Non-Executive Director of: Barclays plc.;
Quilter plc.
Qualifications
Graduate of Oxford University. MSc in Business
Administration from the London Business School.
Susie Farnon
Non-Executive Director, Senior Independent
Director, Chair of Audit Committee
Tenure
8 years, 5 months
Skills and experience
Susie Farnon joined the AGA Board on 22 July
2015 and was appointed as Chairman of its Audit Committee on 1 July
2016 and elected as Senior Independent Director on 18 November
2016. She served as President of the Guernsey Society of Chartered
and Certified Accountants, as a member of The States of Guernsey
Audit Commission and as a Commissioner of the Guernsey Financial
Services Commission. Susie was a Banking and Finance Partner with
KPMG Channel Islands from 1990 until 2001 and was Head of Audit at
KPMG in the Channel Islands from 1999 until 2001.
Current appointments
Non-Executive Director of: Real Estate Credit
Investments Ltd.; Bailiwick Investments Limited; Ruffer Investment
Company Limited.
Board member of: The Association of Investment
Companies.
Qualifications
Fellow of the Institute of Chartered
Accountants in England and Wales.
Chris Ambler
Non-Executive Director
Tenure
8 years, 8 months, Retired 1 March
2024
Skills and experience
Chris Ambler joined the AGA Board on 28 April
2015. He has experience in a number of senior positions in the
global industrial, energy and materials sectors working for major
corporations including ICI/Zeneca, The BOC Group and
Centrica/British Gas, as well as in strategic consulting
roles.
Current appointments
Chief Executive of Jersey Electricity plc;
Non-Executive Director of: Foresight Solar Fund Limited.
Qualifications
Graduate of Queens' College, Cambridge; MBA
from INSEAD; Chartered Director; Chartered Engineer;
Member of the Institution of Mechanical Engineers.
Mike Bane
Non-Executive Director
Tenure
5 years, 6 months
Skills and experience
Mike Bane joined the AGA Board on 3 July 2018.
He has more than 35 years of audit and advisory experience with a
particular focus on the asset management industry. Mike retired
from EY in June 2018 where he was a member of EY's EMEIA Wealth and
Asset Management Board. Following an earlier career in London with
PwC, he has been a Guernsey resident for over 25 years and has
served as President of the Guernsey Society of Chartered and
Certified Accountants.
Current appointments
Non-Executive Chair of HICL Infrastructure
plc.; Non-Executive Director of: ABRDN Property Income Trust
Limited (Formerly Standard Life Investments Property Income Trust
Limited).
Qualifications
Mathematics graduate of Magdalen College,
Oxford University. Chartered Accountant.
Stephanie Coxon
Non-Executive Director
Tenure
3 years, 9 months
Skills and experience
Stephanie joined the AGA Board on 31 March
2020. She is a Fellow of the Institute of Chartered Accountants in
England and Wales and is a non-executive director on several London
listed companies. Prior to becoming a Non-Executive director,
Stephanie led the investment trust capital markets team at PwC for
the UK and Channel Islands. During her time at PwC, she specialised
in advising FTSE 250 and premium London listed companies on
accounting, corporate governance, risk management and strategic
matters.
Current appointments
Non-Executive Director of: JLEN Environmental
Assets Group Limited.; PPHE Hotel Group Limited; International
Public Partnerships Limited; PraxisIFM Group Limited. Board member
of The Association of Investment Companies.
Qualifications
Fellow of the Institute of Chartered
Accountants in England and Wales.
An effective Board
Our Board is composed of highly skilled
professionals who bring a range of expertise, perspectives and
corporate experience to our boardroom. In accordance with the AIC
Code, the role of the Board is to promote the long-term sustainable
success of the Company, generate value for shareholders, and
contribute to wider society.
Compliance with the AIC Code, the UK Code, and
the GFSC code
Compliance with the principles and
recommendations of the AIC Code enables the Directors to satisfy
the requirement to comply with the UK Code and the GFSC Code where
relevant.
As an externally managed investment Company the
UK Corporate Governance Code provisions relating to the role of the
Chief Executive, Executive Directors' remuneration, employees, and
need for an internal audit function are not relevant to AGA and the
Company has therefore not reported further in respect of these
provisions. This position is reassessed on an annual
basis.
An internal evaluation of the Board was
undertaken in 2023, following the external evaluation conducted in
2021 which concluded that the Board continued to display a strong
corporate governance culture and a high degree of
effectiveness.
Considering the nature, scale, and complexity
of the Company, AGA has made certain exceptions to the AIC Code,
including:
- Management engagement committee
AGA does not have a Management Engagement
Committee. The Board as a whole fulfils this function and regularly
reviews the performance of the Investment Manager, other service
providers, and relevant fee arrangements.
- Nomination committee
All duties expected of the Nomination Committee
are carried out by the Board and the establishment of a separate
Nomination Committee is considered to be unnecessarily burdensome
given the scale and nature of the Company's activities and the
current composition of the Board.
- Remuneration committee
The Company does not have a Remuneration
Committee as it does not have any executive officers. The Board as
a whole considers matters relating to the Directors' remuneration
and it is satisfied that any relevant issues that arise can be
appropriately considered by the Board or by the Company's
shareholders at AGMs.
Responsibilities
The Board
The Board is primarily responsible for setting
the Company's strategy for delivering long-term value to our
shareholders and other stakeholders, providing effective oversight
of the Investment Manager with respect to the execution of the
investment strategy and ensuring the Company maintains an effective
risk management and internal control system.
The Investment Advisor and AGA investment
committee
AGML draws on the resources and expertise of
Apax for investment advice through an Investment Advisory Agreement
and the AGA Investment Committee. The AGA Investment Committee is
composed of several senior team members from Apax.
Biographies of the members of the AGA
Investment Committee are available on the Company's website at:
www.apaxglobalalpha.com/about-us/board-and-governance?tab=investment-committee
The Investment Manager
AGA has entered into an Investment Management
Agreement with AGML to manage the investments on a discretionary
basis.
AGML is responsible for the implementation of
the investment policy of the Company and has overall responsibility
for the management of the assets and investments of the
Company.
AGML reports to the Board at each quarterly
meeting regarding the performance of the Company's investment
portfolio, which provides the Board with an opportunity to review
and discuss the implementation of the investment policy of the
Company. In addition, the Board attends regular meetings with AGML
in order to review the performance of the underlying investments
and portfolio outlook.
The Board reviewed and evaluated the
performance of AGML during the year to 31 December 2023 and has
determined that it is in the interests of the shareholders to
continue with AGML's appointment as Investment Manager.
Biographies of the Directors of AGML are
available on the Company's website at:
www.apaxglobalalpha.com/about-us/board-and-governance?tab=investment-manager
Statement of independence
AGA's Board of Directors is comprised entirely
of independent Non-Executive Directors. As such it complies with
the AIC Code's recommendation regarding Board composition which
sets out that at least half the Board of Directors of a UK-listed
company, excluding the Chairman, should comprise Non-Executive
Directors determined by the Board to be independent in character
and judgement and free from relationships or circumstances that may
affect, or could appear to affect, the Directors'
judgement.
In addition to this provision the Code
stipulates that a majority of the Board of Directors should be
independent of the Investment Manager. AGA continued to comply with
this requirement throughout the reporting period.
Independence is determined by ensuring that,
apart from receiving fees for acting as Directors or owning shares,
Non-Executive Directors do not have any other material
relationships with, nor derive additional remuneration from, or as
a result of transactions with, the Company, its promoters, its
management or its partners, which in the opinion of the Board may
affect, or could appear to affect, the independence of their
judgement. All of AGA's Directors are considered to be independent
of the Investment Manager.
The AIC Code also recommends that the Chairman
should meet certain independence criteria as set out in the AIC
Code on appointment.
Board evaluation
In accordance with the Board management policy,
the Company conducted an internal Board evaluation exercise in
2023, having commissioned an external review in 2021. The
evaluation was managed by the Company Secretary and the results
indicated that the Board continues to operate effectively. There
were a small number of recommendations as to how the Board could
improve further the quality of its oversight of the business of the
Company and these will be considered for implementation in
2024.
Disclosure of dividend information
The Company targets the payment of a dividend
equal to 5% of NAV per annum. This dividend policy should not be
taken as an indication of the Company's expected future performance
or results over any period and does not constitute a profit
forecast. It is intended to be a target only and there is no
guarantee that it can or will be achieved. Accordingly, prospective
or current investors should not place any reliance on the target
dividend payment stated above in making an investment decision
regarding the Company.
As a non-UK issuer, the Company does not
require approval from shareholders for the payment of dividends in
accordance with The Companies (Guernsey) Law, 2008 and the Articles
of Incorporation of the Company.
However, in response to feedback from
shareholders, an ordinary resolution is proposed at each AGM
concerning approval of the dividend policy of the
Company.
EU alternative investment fund managers
directive ("AIFMD")
Please refer to p.110 and p.111 for further
information in respect of the AIFMD.
The unregulated collective investment schemes
and close substitutes instrument 2013 ("NMPI rules")
Information regarding the Company's status
under the NMPI Rules is available on its website at: www.apaxglobalalpha.com/about-us/board-and-governance
Greenhouse gas emissions
All of the Company's activities are outsourced
to third parties. As such, the Company does not have any physical
assets, property, employees or operations of its own and does not
generate gas or other emissions reportable under the Companies Act
2006 (Strategic Report and Directors' Report) Regulations 2013. Any
greenhouse gas emissions linked to the Company relates to the
Director's travel necessary to carry out their duties. Since 2021,
the Company's carbon emissions have been offset via Carbon
Footprint Ltd. Under the Listing Rule 15.4.29(R), AGA, as a
closed-ended investment Company, is exempt from complying with the
Task Force on Climate-related Financial Disclosures.
Further details of the Investment Manager's
approach to responsible investment practices and ESG standards can
be found on p.29 to p.35.
Modern slavery act statement
AGA has a number of outsourced and third party
vendor relationships, the most significant of which are the
Investment Manager and Apax. When selecting third party suppliers,
AGA will assess their reputation and how well established they are
in their field. Risk-based due diligence on AGA's critical third
parties is conducted on an annual basis and any modern slavery
issues identified are discussed by the Board. See AGA's website for
the Company's Modern Slavery and Human Trafficking Statement:
www.apaxglobalalpha.com/modern-slavery-act/
Stakeholder engagement
As highlighted in the Section 172 statement on
p.12, the Company does not have any employees and is entirely
externally managed. Therefore, the primary stakeholders consist of
its shareholders, suppliers, community, and the
environment.
Shareholder support and engagement is critical
to the continued success of the business and the achievement of our
objectives. The Board is committed to a culture of openness and
regular dialogue with shareholders, and it seeks to take into
account the needs and priorities of shareholders during all
discussions and decision-making. Contact details for shareholder
queries can be found on p.108 and the Company's website at:
www.apaxglobalalpha.com/contact
In addition to assisting the Company to deliver
on our objectives, effective relationships with our service
providers help the Company to operate in a controlled and compliant
manner. Further details of our service providers engagement can be
found on p.12 and p.13.
The Board believes investing responsibly is
important in protecting and creating long-term value. The Board
recognises that the incorporation of material sustainability
considerations can help inform the assessment of overall risk and
opportunities. Further details can be found on p.11 and in our
Responsible Investment policy which is available on our website at:
www.apaxglobalalpha.com/sustainability
Corporate Governance Statement
2023 Key activities
Key activities of the Board
The Board met five times during the
year.
Additional meetings were arranged as necessary
for the Board to properly discharge its duties.
An overview of some of the Board's activities
is provided here.
Principal Strategic Objectives
1
|
Deliver over-the-cycle target Total NAV Return
of 12-15%,
including a dividend of 5% of NAV
|
2
|
Continue to invest in Private Equity, providing
shareholders with exposure to the Apax Funds for long-term
growth
|
3
|
Use Debt Investments as an effective capital
management tool with an attractive return
|
4
|
Remain fully invested whilst maintaining
liquidity risk within appetite
|
Strategy and financing
Held a strategy day with a range of key topics
including:
· High-level
exploratory discussions to challenge whether the strategy remains
fit for purpose, including considering of alternative
approaches
· Review and
discussions around AGA's credit and private equity portfolios and
their performance in the medium and long-term
Regularly reviewed the Company's strategy and
financial position, including:
· Entered a new
multi-currency Revolving Credit Facility to replace the prior RCF
which reverted to a conventional fixed-term arrangement
· Capital
allocation priorities given increasing share price discount to
NAV
Search for and appointment of a new
Non-Executive Director
Risk Management
· Reviewed the
Company's risk appetite statement and principal risks
· Performed a
review of the Company's internal financial controls
Stakeholder engagement
· Hosted the AGM
on 3 May 2023
· Hosted a
Chairman's corporate governance roadshow
· Held a Capital
Markets Day for investors and analysts
· Commissioned
additional research from Hardman & Co
Governance
· Participated
in an internal evaluation of the Board's effectiveness to identify
areas for improvement and inform training plans
· Undertook a
formal annual review of key service providers
· Received
regular updates from the Company Secretary on regulatory and
corporate governance matters
Corporate Governance Statement
2023 calendar of events
|
JAN
|
FEB
|
MAR
|
APR
|
MAY
|
JUN
|
Board
meetings
|
|
√
|
√
|
√
|
√ AGM
|
√
|
Key
dates
|
|
|
FY22 Results
|
|
Q1 Results
|
Capital Markets Day
|
Dividend
paid
|
|
|
|
√
|
|
|
|
JUL
|
AUG
|
SEP
|
OCT
|
NOV
|
DEC
|
Board
meetings
|
|
|
√
|
|
√
|
|
Key
dates
|
|
|
Interim Results
New RCF signed
|
Board Strategy Day
|
Q3 Results
|
|
Dividend
paid
|
|
|
|
√
|
|
|
Directors' duties
In 2023, the Board of the Company was composed
of five independent Non-Executive Directors. The Board considers
that the range and experience of its members is sufficient to
fulfil its role effectively and provide the required level of
leadership, governance, and assurance.
The terms and conditions of appointment for
Non-Executive Directors are outlined in their letters of
appointment, and are available for inspection at the Company's
registered office during normal business hours and at the AGM for
15 minutes prior to and during the AGM.
Role
Chairman of the Board of directors
Tim Breedon fulfils the role of independent
Non-Executive Chairman of the Board of Directors.
Role overview
The Chairman is responsible for the leadership
of the Board, the creation of conditions necessary for overall
Board and individual Director effectiveness and ensuring a sound
framework of corporate governance, which includes a channel for
shareholder communication.
Responsibilities
· chairing the
Board and general meetings of the Company, including setting the
agenda of such meetings;
· promoting the
highest standards of integrity, probity and corporate governance
throughout the Company, and in particular at Board
level;
· ensuring that
the Board receives accurate, timely and clear
information;
· ensuring
effective engagement between the Board, the Company's shareholders
and other key stakeholders;
· facilitating
the effectiveness of the contributions and constructive
relationships between the Directors of the Company;
· ensuring that
any incoming Directors of the Company participate in a full, formal
and tailored induction programme; and
· ensuring that
the performance of the Board, its Committees and individual
Directors is evaluated at least once a year.
Chairman of the Audit Committee
Susie Farnon fulfils the role of Chairman of
the Audit Committee. The Audit Committee is appointed under terms
of reference from the Board of Directors, available on the
Company's website at: www.apaxglobalalpha.com/about-us/board-and-governance
Role overview
The Chairman of the Audit Committee is
appointed by the Board of Directors. The role and responsibility of
the Chairman of the Audit Committee is to set the agenda for
meetings of the Audit Committee and, in doing so, take
responsibility for ensuring that the Audit Committee fulfils its
duties under its terms of reference.
Responsibilities
· reviewing in
detail the content of the interim report and the annual report, the
work of the service providers in producing them and the results of
the external audit;
· reviewing the
findings of the audit with the external auditor; including a
discussion of the major issues arising from the audit;
· overseeing the
selection and review processes for the external auditor,
considering and making recommendations to the Board on the
appointment, reappointment and removal of the external auditor and
the remuneration of the external auditor as well as on the annual
audit plan, including all proposed materiality levels;
· assessing the
independence and objectivity of the external auditor on at least an
annual basis, taking into consideration the level of non-audit
services;
· reviewing and
considering, as appropriate, the rotation of the external audit
partner and tender of the external audit firm;
· reviewing and
recommending to the Board for approval, the audit, audit-related
and non-audit fees payable to the external auditor and approving
their terms of engagement;
· reviewing the
Company's internal control and financial and operational risk,
management systems, whistleblowing, and fraud; and
· monitoring the
risks faced by the Company and conducting a robust assessment of
the principal risks in order to implement the relevant controls to
manage or mitigate these risks.
Non-Executive Directors
Role overview
The Non-Executive Directors have a
responsibility to ensure that they allocate sufficient time to the
Company to perform their responsibilities effectively. Accordingly,
Non-Executive Directors are required to make sufficient effort to
attend Board or Committee meetings, to disclose other significant
commitments to the Board before accepting such commitments and to
inform the Board of any subsequent changes. In determining the
extent to which another commitment proposed by a Non-Executive
Director would have an impact on their ability to sufficiently
discharge their duties to the Company, the Board will give
consideration to the extent to which the proposed commitment may
create a conflict with:
· their time
commitment to the Company;
· a direct
competitor of the Company, the Investment Manager or the Investment
Advisor;
· a significant
supplier or potential significant supplier to the Company;
and
· the Investment
Manager or other related entity operating in substantially the same
investment markets as the Company.
Responsibilities
· Shareholders
are provided with the opportunity to elect and re-elect the
Non-Executive Directors on an annual basis at the AGM of the
Company and to review their remuneration in doing so. The role of
the Non-Executive Directors includes, but is not limited
to:
· constructively
challenging and developing proposals on strategy;
· appointing
service providers based on agreed goals and objectives;
· monitoring the
performance of service providers;
· reviewing the
risks disclosed within the Company's risk framework and proposing
additional controls for risk management and mitigation;
and
· satisfying
themselves of the integrity of the financial information and that
financial controls and systems of risk management are robust and
defensible.
Senior Independent Director
Susie Farnon fulfils the role of Senior
Independent Director ("SID").
Role overview
The position of the SID provides shareholders
with someone to whom they can turn if they have concerns that have
not or cannot be resolved through the normal channel of the
Chairman. The SID is available as an intermediary between fellow
Directors and the Chairman. The role serves as an important check
and balance in the governance process.
Responsibilities
· providing a
sounding board for the Chairman and serving as an intermediary for
the other Directors when necessary;
· being
available to shareholders if they have concerns about contact
through the normal channel of the Chairman, or have failed to
resolve, through the normal channels, or for which such contact is
inappropriate;
· meeting with
the other Non-Executive Directors at least annually to appraise the
Chairman's performance and on such other occasions as may be deemed
appropriate;
· taking
responsibility for the orderly succession process for the Chairman,
as appropriate; and
· maintaining
Board and Company stability during times of crisis and
conflict.
Governance framework
Governance systems
The Board has considered the current
recommendations of the AIC Code and has adopted various policies,
procedures and control systems; a summary of each of these is
available on the Company's website at: www.apaxglobalalpha.com/about-us/board-and-governance
In summary, these principally
include:
· a schedule of
matters reserved for the Board which includes, but is not limited
to:
- strategy and
management;
- structure and
capital;
- financial reporting
and controls;
- internal and risk
management controls;
- contracts and
expenditure;
- Board membership and
other appointments;
- corporate governance
matters; and
- policies and
codes
· a Board
management policy which includes, but is not limited to:
- succession planning,
including Board composition and diversity guidelines;
- Director induction
and training; and
- Board
evaluation.
- a conflicts of
interests policy;
- disclosure panel
policy;
- a social
responsibility policy;
- a share dealing
code;
- an insider dealing
and market abuse policy;
- a policy on the
provision of non-audit services; and
- a Responsible
Investment policy
Administrator and Company Secretary
The Company has appointed Aztec Financial
Services (Guernsey) Limited ("Aztec Group") as Administrator and
Company Secretary of the Company.
The Administrator is responsible for the
Company's general administrative requirements such as the
calculation of the Net Asset Value and Net Asset Value per share
and maintenance of the Company's accounting and statutory records.
The Administrator may delegate certain accounting and bookkeeping
services to Apax Partners Fund Services Limited or other such
parties and/or Group entities, as directed by the
Company.
The Administrator is licensed by the GFSC under
the Protection of investors (Bailiwick of Guernsey) Law to act as
"designated administrator" under that law and provide
administrative services to closed-ended investment
funds.
In fulfilling the role of Company Secretary,
Aztec Group has due regard to the provisions of the GFSC Code and
the AIC Code and statutory requirements in this respect.
Registrar
Link Asset Services ("Link") has been appointed
as Registrar of the Company. The Registrar is licensed by the GFSC
under the POI Law to provide registrar services to closed-ended
investment funds.
Information and support
The Board ensures that it receives, in a timely
manner, information of an appropriate quality to enable it to
adequately discharge its responsibilities. Papers are provided to
the Directors in advance of the relevant Board or Committee meeting
to enable them to make further enquiries about any matters prior to
the meeting, should they so wish. This also allows Directors who
are unable to attend to submit views in advance of the
meeting.
The Company Secretary takes responsibility for
the distribution of Board papers and aims to circulate such papers
at least five working days prior to Board or committee meetings.
The Board has adopted electronic board pack software which aids in
the efficiency and adequacy of delivery of board papers.
Ongoing charges
Ongoing charges to 31 December 2023 were 1.8%
(31 December 2022: 1.5%), reflecting an increase in management fees
following AGA's $700m commitment to Apax XI, Apax's latest global
buyout fund. The Company's ongoing charges are calculated in line
with guidance issued by the AIC. They comprise recurring costs such
as administration costs, management fees paid to AGML and
management fees paid to the underlying Private Equity Funds'
general partners. They specifically exclude deal costs, taxation,
financing costs, performance fees and other non-recurring costs.
Ongoing charges is an APM, and a reconciliation to the costs
included in the financial statement can be found on
p.116.
Management and performance fees
Management fees for the year to 31 December
2023 represented 1.4% of NAV and performance fees were 0.5% of NAV.
Management fees represent fees paid to both the Investment Manager
and the Apax Funds. No fees are paid to the Investment Manager on
Apax Funds where the Company already pays a fee. Please see p.115
for more information about fees.
Revolving credit facility
AGA had a €250m revolving credit facility with
Credit Suisse AG, London Branch, since November 2018 which featured
an evergreen term, with a rolling minimum notice period of two
years. In January 2023, AGA received notice that the RCF will
revert to a conventional fixed-term arrangement with an expiry date
of 10 January 2025. On 5 September 2023 AGA entered into a new
multi-currency RCF of €250m with SMBC Bank International plc and JP
Morgan Chase Bank, N.A., London Branch, replacing the facility held
with Credit Suisse AG. The new RCF was undrawn at 31 December 2023
and will continue to be used for the Company's general corporate
purposes, including short-term financing of investments such as the
drawdown on commitments to the Apax Funds.
Key information document
In accordance with the UK Packaged Retail and
Insurance-based Investment Products Regulation and the EU Packaged
Retail and Insurance-based Investment Products Directive
Regulation, AGA's latest Key Information Documents (UK KID and EU
KID) are available on the Company's website at:
www.apaxglobalalpha.com/investor-centre/key-information-documents
Board attendance
A summary of the Directors' attendance at
meetings which they were eligible to attend is provided below.
Eligibility to attend the relevant meetings is shown in
brackets.
|
BOARD TOTAL
|
TOTAL AUDIT COMMITTEE
|
Tim Breedon
|
5 (5)
|
n/a
|
Susie Farnon
|
5 (5)
|
9 (9)
|
Chris Ambler
|
5 (5)
|
9 (9)
|
Mike Bane
|
5 (5)
|
9 (9)
|
Stephanie Coxon
|
5 (5)
|
9 (9)
|
- The Board will appoint
committees of the Board on occasion to deal with specific
operational matters; these committees are not established under
separate terms of reference as their appointment is conditional
upon terms resolved by the Board in formal Board meetings and
authority conferred to such committees will expire upon the due
completion of the duty for which they have been appointed. Such
committees are referred to as "other" committee
meetings.
- The Chairman of the
Company, Tim Breedon, whilst not required to attend meetings of the
Audit Committee, does so on occasion, particularly where financial
reports are being reviewed.
Frequency and attendance at Board and Committee
meetings
The Board aims to meet formally at least four
times a year and met five times in the year from 1 January 2023 to
31 December 2023.
The Audit Committee aims to meet formally at
least four times a year as appropriate in terms of the financial
cycle of the Company and met nine times in the year from 1 January
2023 to 31 December 2023.
Election and re-election of directors at the
2024 AGM
In accordance with the Company's Articles of
Incorporation and the principles of the AIC Code, and with the
exception of Chris Ambler who retired from the Board on 1 March
2024 after nearly nine years in the role, all Directors of the
Company will offer themselves for re-election at the 2023
AGM.
In 2023, Russel Reynolds Associates Ltd, an
independent external consultancy firm, was appointed to conduct the
search for a new Non-Executive Director. Post year-end, on 1 March
2024, Karl Sternberg, was appointed. Karl was a founding Partner of
Oxford Investment Partners, which was acquired by Towers Watson in
2013. Prior to that, he held a number of positions at Morgan
Grenfell/Deutsche Asset Management, including as Chief Investment
Officer for Europe, Australia, and Asia Pacific. Karl has
significant investment trust experience, and he is currently
Chairman of Clipstone Industrial REIT plc, Monks Investment Trust
plc and a NED of Herald Investment Trust plc1 and
Jupiter Fund Management plc.
Tim Breedon has indicated that he wishes to
retire from the Board in 2024, at which point he will have
completed nine years in the role. It is intended that Karl
Sternberg will succeed him as Chairman of AGA in the second half of
2024, after allowing for an appropriate handover period.
Following the successful evaluation of the
Board (see p.46), it is proposed to shareholders that Tim Breedon,
Susie Farnon, Mike Bane, and Stephanie Coxon be re-elected and that
Karl Sternberg be elected at the 2024 AGM.
Discontinuation vote
In common with many closed-end investment funds
without a fixed duration, AGA's articles require a resolution to be
put to shareholders on a periodic basis regarding the continuation
of the Company. Accordingly, a "Discontinuation Resolution" will be
put forward at the 2024 AGM. To ensure the Company continues in its
current form, the Board of Directors recommends that shareholders
vote "Against" the Discontinuation Resolution.
Information about the Discontinuation
Resolution, the notice, agenda and form of proxy will be circulated
to shareholders at least 21 working days prior to the AGM and will
be made available on the UK National Storage Mechanism and the
Company's website at: www.apaxglobalalpha.com
IPO lock-up arrangements
Certain existing and former Apax employees
acquired shares in the Company under a share-for-share exchange
agreement at IPO. Those shareholders were subject to certain
lock-up arrangements in respect of the shares issued to them for a
period of either five or ten years.
The five-year lock-up period expired on 15 June
2020, and those shares are therefore no longer subject to the
lock-up arrangements. Of the ten-year locked-up shares held by Apax
executives, a further tranche of 20% of the Company's ordinary
shares was released on 15 June 2023, with a further 40% of
locked-up shares due to be released in two tranches over the next
two years.
1. On 22 February 2024, Herald Investment Trust
plc announced that Karl Sternberg will retire from the board at the
conclusion of the AGM in April 2024
Audit Committee report
I am pleased to present the Audit Committee
report for 2023 detailing the activities undertaken this year to
fulfil its responsibilities.
The main areas of activity for the Audit
Committee have been:
· reviewed its
terms of reference against the requirements of the Minimum Standard
for Audit Committees and External Audit issued by the FRC (the
"Standard"). The Audit Committee is of the view that an early
adoption of the Standard would enhance their terms of reference but
also the internal processes put in place by the Company in relation
to auditor evaluation and reporting. The Audit Committee will also
consider the requirements of the Standard when undertaking an audit
tender. Following the review, the Audit Committee concluded that
the terms of reference and internal processes remain fit for
purpose. An annual assessment of the terms of reference and
internal processes against the Standard will be conducted to
identify any potential shortcomings;
· reviewed in
detail the content of the interim report and this annual report,
the work of the service providers in producing them and the results
of the external audit;
· considered
those areas of judgement or estimation arising from the application
of International Financial Reporting Standards to the Company's
activities and documenting the rationale for the decisions made and
estimation techniques selected. This includes the valuation of
investments;
· kept under
review the policy on the supply of non-audit services by the
external auditor, which has taken into account ethical guidance and
related legislation;
· conducted an
annual review of the audit quality and performance of the external
auditor, which has included a general review of the coordination of
the external audit function with the activities of the Company, any
appropriate internal controls, and the suitability and independence
of the external auditor;
· kept under
review the risk management and control framework with the
assistance of the Investment Manager and the Company
Secretary;
· met with the
external auditor, KPMG Channel Islands Limited ("KPMG"), to review
and discuss their independence, objectivity and proposed scope of
work for their review of the interim report and their audit of this
annual report and accounts; and
· met with the
Company's principal service providers to review the controls and
procedures operated by them to ensure that the Company's
operational risks are properly managed and that its financial
reporting is complete, accurate and reliable;
· kept under
review the ESG initiatives and reporting, and commitment to
Responsible Investing.
The scope of the Committee with respect to
internal control does not include controls relating to risks
arising from the Company's investment portfolio. Such risks are
overseen directly by the Board, which sets policies in this area to
govern the day-to-day management of these risks by the Investment
Manager.
Susie Farnon | Chair of
the Audit Committee
4 March 2024
Role of the Audit Committee
The Audit Committee membership currently
consists of Susie Farnon, Chris Ambler, Mike Bane, and Stephanie
Coxon. A summary of meetings held during the year and
attendance at those meetings is available on page 52. The
Chairman of the Company, Tim Breedon, whilst not required to attend
meetings of the Audit Committee, does so on occasion, particularly
those meetings in which financial reports are reviewed.
Role of the Audit Committee
The Audit Committee is appointed under terms of
reference from the Board of Directors, available on the Company's
website at: www.apaxglobalalpha.com/about-us/board-and-governance
Review of areas for judgement or
estimation
The Audit Committee has determined that the key
area for judgement and estimation is the fair value of the
Company's investment portfolio. For investments not traded in an
active market, the fair value is determined by using valuation
techniques and methodologies, as deemed appropriate by the
Investment Manager. These assumptions may give rise to valuations
that differ from amounts realised in the future. The Audit
Committee has also considered the calculation of the performance
fee to be an area of judgement given the complexity of the
calculation. Further details and considerations of the Committee
are set out overleaf.
Valuation of investments
The valuation of investments is a significant
area of judgement in the preparation of the financial statements
and performance reporting and represents a particular focus for the
Audit Committee. The Audit Committee is satisfied that it is
reasonable overall and has been prepared in accordance with the
Company's stated accounting policies.
The Audit Committee focus on Private Equity,
Debt Investments and unlisted Derived Equity which are illiquid and
valued less easily.
At each quarterly valuation point, and
particularly at the year-end, members of the Audit Committee
reviewed the detailed valuation schedules prepared by the
Investment Manager.
Discussions were also held with the Investment
Manager, Investment Advisor and the external auditor (in respect of
the interim and year-end valuations only). The aim of these reviews
and discussions was to ensure, as far as possible, that the
valuations were prepared in line with the valuation process and
methodology set out in the Company's accounting policies. No
material discrepancies were identified.
The valuation of the Private Equity
Investments, Debt Investments and Derived Equity has been reviewed
by the external auditor who has reported to the Committee and the
Board on whether, in their opinion, the valuations used are
reasonable and in accordance with the stated accounting
policies.
Performance fee
The basis for calculation of the performance
fee due to the Investment Manager is summarised in the notes to the
financial statements. Although this fee may not always be material
to the financial performance or position of the Company, it is
payable to the Investment Manager, and therefore the Audit
Committee considers it important by nature.
The Audit Committee has commissioned and
received a specific report on the calculation of the fee prior to
payment. At 31 December 2023, a performance fee of €6.6m was
payable.
External audit
KPMG has been the Company's external auditor
since 2015. As is good practice, the contract is reviewed regularly
and put out to tender every 10 years and a review will take place
in the second half of 2024. During the year, and up to the date of
this report, the Audit Committee has met formally with KPMG on 5
occasions. Additionally, the Chairman and other members of the
Audit Committee met them informally on a number of occasions during
the period. These informal meetings have been held to ensure the
Audit Committee is kept up to date with the progress of their work
and that their formal reporting meets their needs.
The formal meetings included detailed reviews
of the proposed scope of the work to be performed by the auditor in
their review of the Company's report for the period to 30 June 2023
and in their audit for the year ended 31 December 2023. They also
included detailed reviews of the results of this work, their
findings and observations. I am pleased to report that there are no
matters arising that should be brought to the attention of
shareholders.
The Audit Committee has also reviewed KPMG's
report on their own independence and objectivity, including their
team structure for the audit of the Company and of the underlying
Apax Funds, and the level of non-audit services provided by them.
In addition, the Audit Committee assessed the audit quality and
effectiveness of KPMG as the Company's external auditor.
The Company has a policy in place to ensure the
independence and integrity of the external auditor, where non-audit
services are to be provided by them. In the first instance, all
non-audit services require pre-approval of the Chairman of the
Audit Committee and/or the Chairman of the Board. Full
consideration of the financial and other implications on the
independence of the auditor arising from any such engagement are
considered before proceeding. Note 6 of the financial statements
includes a summary of fees paid to KPMG.
The Audit Committee has concluded that KPMG are
independent and objective, carry out their work to a high standard
and provide concise and useful reporting. Accordingly, the Audit
Committee has recommended to the Board that KPMG be put forward to
shareholders for reappointment at the next AGM.
Risk management, internal controls, and
corporate risks
An outline of the risk management framework and
principal risks is provided on p.62 to p.65.
The Audit Committee has kept, and continues to
keep, under review financial risks, operational risks and emerging
risks, which includes reviewing and obtaining assurances from key
service providers in respect of the controls of which they are
responsible. The Audit Committee undertakes an annual review of the
internal control reports from each of its key service providers. In
addition, the key processes and controls of APFS are reviewed by
Aztec and the outcome of this review is considered by the Audit
Committee annually. The Audit Committee has not identified any
areas of concern as a result.
Additionally the Audit Committee recognises
that the UK Corporate Governance Code may include additional
responsibilities for the Board and is keeping this under
review.
FRC review of 2022 Annual Report
In November 2023, the Company received a letter
from the FRC, requesting clarification on the Company's use of APMs
and valuation of private equity investments. The FRC was satisfied
with the Company's response but recommended that further
disclosures on the use of APMs in the future may be helpful to
shareholders. As a result, further details have been included on
page 73 of the 2023 Annual Report.
The FRC sets out the scope and limitations of
their review below:
Our review is based on your Annual
Report and Accounts and does not benefit from detailed knowledge of
your business or an understanding of the underlying transactions
entered into. It is, however, conducted by staff of the FRC who
have an understanding of the relevant legal and accounting
framework.
This, and any subsequent letter,
provides no assurance that your Annual Report and Accounts are
correct in all material respects; the FRC's role is not to verify
the information provided to it but to consider compliance with
reporting requirements. Our letters are written on the basis that
the FRC (which includes its officers, employees and agents) accepts
no liability for reliance on them by the company or any third
party, including but not limited to investors and
shareholders.
Service providers
The Audit Committee has met regularly with the
key service providers (besides KPMG) involved in the preparation of
the Company's reporting to its shareholders and in the operation of
controls on its behalf, the Administrator and sub-Administrator,
both of whom have attended each formal Audit Committee meeting as
well as other informal meetings. Through these meetings, supported
by review and challenge of supporting documentation, the Audit
Committee has satisfied itself, as far as is possible in the
circumstances of a Company with outsourced functions, that
financial and operational risks facing the Company are
appropriately managed and controlled.
Unadjusted differences in the financial
statements
The external auditor, KPMG, has reported to the
Audit Committee that they found one reportable difference during
the course of their audit work. The difference arose in an area of
judgement, was immaterial and was not indicative of control
deficiencies.
Whistleblowing
The Company does not have any employees. Each
of the service providers has whistleblowing policies in
place.
Anti-bribery and corruption
The Company has a zero tolerance approach to
bribery and corruption, in line with the UK Bribery Act 2010. A
social responsibility policy covering anti-bribery and corruption
has been adopted and is kept under review.
Annual report
The Audit Committee members have
each reviewed this annual report and earlier drafts of it in
detail, comparing its content with their own knowledge of the
Company, reporting requirements and shareholder expectations.
Formal meetings of the Audit Committee have also reviewed the
report and its content and have received reports and explanations
from the Company's service providers about the content and the
financial results.
The Audit Committee has concluded that the
annual report, taken as a whole, is fair, balanced and
understandable, and that the Board can reasonably and with
justification make the statement of Directors' responsibilities on
p.61.
Directors' remuneration report
Directors are remunerated in the form of fixed
fees
Provisions relating to Executive Directors'
remuneration are not deemed relevant to AGA, being an externally
managed investment Company with a Board comprised wholly of
Non-Executive Directors.
In particular, the Company's day-to-day
management and administrative functions are outsourced to third
parties. As a result, the Company has no Executive Directors,
employees, or internal operations. The Company has therefore not
reported further in respect of these provisions.
Remuneration report
The Directors who served in the period from 1
January 2023 to 31 December 2023 received the fees detailed on the
next page.
No taxable benefits were paid to Directors in
respect of this period and no remuneration above that was paid to
the Directors for their services. Remuneration paid reflects the
duties and responsibilities of the Directors and the value of their
time. No element of the Directors' remuneration is
performance-related.
Directors' fees and expenses
Fees are pro-rated where an appointment takes
place during a financial year. None of the fees disclosed below
were payable to third parties by the Company. Chris Ambler is
obliged to pay 20% of the fee he receives from the Company for his
services as a Non-Executive Director to a third-party, being the
company to which he is appointed as an Executive
Director.
The Board currently comprises five Directors.
The Directors are entitled to be reasonably reimbursed for expenses
incurred in the exercise of their duties as Directors. There having
been no changes to Directors' fees since IPO, it was determined
that an increase of 11% should be applied effective from 1 July
2023. No change was made to the Chairman's fee. Details are set out
in the table below.
Director
|
Position
|
Annual Fees
2022 (GBP)
|
Fee increase (GBP)
|
Annual Fees effective from
1 July 2023 (GBP)
|
Tim Breedon
|
Chairman
|
125,000
|
-
|
125,000
|
Susie Farnon
|
Audit Committee Chair
|
55,000
|
6,000
|
61,000
|
Chris Ambler
|
NED
|
45,000
|
5,000
|
50,000
|
Mike Bane
|
NED
|
45,000
|
5,000
|
50,000
|
Stephanie Coxon
|
NED
|
45,000
|
5,000
|
50,000
|
Total
|
|
315,000
|
21,000
|
336,000
|
Expenses paid to the Directors in the period
are listed in the table below
Remuneration policy
The Company's remuneration policy is that fees
payable to Directors should reflect the time they spend on the
Company's affairs and the responsibilities they bear.
The fees should also be sufficient to attract,
retain, and motivate Directors of a quality required to run the
Company successfully.
Directors' fees and expenses for the year to 31
December 2023
Director
|
Fees (GBP)
|
Expenses (GBP)
|
Fees (EUR)
|
Expenses (EUR)
|
Tim Breedon
|
125,000
|
422
|
143,843
|
485
|
Susie Farnon
|
58,000
|
1,161
|
66,744
|
1,341
|
Chris Ambler
|
47,500
|
1,562
|
54,661
|
1,785
|
Mike Bane
|
47,500
|
1,473
|
54,661
|
1,695
|
Stephanie Coxon
|
47,500
|
284
|
54,661
|
328
|
Total
|
325,500
|
4,902
|
374,570
|
5,634
|
Directors' holdings at 31 December
2023
|
|
|
|
|
Director
|
Class of share
|
Shares held
|
Direct
|
Indirect
|
Direct
|
Indirect
|
Tim Breedon
|
Ordinary shares of NPV1
|
70,000
|
70,000
|
-
|
0.014%
|
-
|
Susie Farnon
|
Ordinary shares of NPV1
|
43,600
|
43,600
|
-
|
0.009%
|
-
|
Chris Ambler
|
Ordinary shares of NPV1
|
33,796
|
33,796
|
-
|
0.007%
|
-
|
Mike Bane
|
Ordinary shares of NPV1
|
18,749
|
18,749
|
-
|
0.004%
|
-
|
Stephanie Coxon
|
Ordinary shares of NPV1
|
10,000
|
10,000
|
-
|
0.002%
|
|
1. No par value
Directors' report
The Directors submit their annual report
together with the audited financial statements of the Company for
the year ended 31 December 2023.
The Company's registered office and principal
place of business is East Wing, Trafalgar Court, Les Banques, St
Peter Port, Guernsey GY1 3PP
Listing on the London Stock Exchange
On 15 June 2015, the entire issued ordinary
share capital of the Company was admitted to the Premium Listing
segment of the Official List of the Financial Conduct Authority and
to unconditional trading on the London Stock Exchange's Main Market
for listed securities.
Dividend
The Directors have approved a dividend of 5.64
pence per share as a final dividend in respect of the financial
period ended 31 December 2023 (2022: 5.82 pence). An interim
dividend of 5.70 pence was paid on 3 October 2023 (2022: 6.00
pence).
Board of Directors
Biographies of the Board of Directors,
including details of their relevant experience, are available on
the Company's website at:
www.apaxglobalalpha.com/about-us/board-and-governance?tab=board-of-directors
The Non-Executive Directors do not have service
agreements.
Power of Directors
The business of the Company is managed by the
Directors who may exercise all the powers of the Company, subject
to any relevant legislation, any directions given by the Company by
passing a special resolution and to the Company's Articles of
Incorporation (the "Articles"). The Articles, for example, contain
specific provisions concerning the Company's power to borrow money
and issue shares.
Appointment and removal of Directors
Rules relating to the appointment and removal
of the Directors are contained within the Company's Articles, which
can be found in full on the Company's website at: www.apaxglobalalpha.com/about-us/board-and-governance
Amendment of articles of
incorporation
The Company may only make amendments to the
Articles of Incorporation of the Company by way of special
resolution of the shareholders, in accordance with The Companies
(Guernsey) Law, 2008, as amended.
Employees
The Company does not have any
employees.
Political donations and expenditure
The Company has made no political donations in
the period since incorporation or since admission.
Share capital
As at the date of this report, the Company had
an issued share capital of €873.8m. The rights attaching to the
shares are set out in the Articles of Incorporation. There are no
restrictions on the transfer of ordinary shares in the capital of
the Company other than those which may be imposed by law from time
to time. There are no special control rights in relation to the
Company's shares and the Company is not aware of any agreements
between holders of securities that may result in restrictions on
the transfer of securities or on voting rights, except for the
lock-ups agreed at the time of admission as set out in the
prospectus. In accordance with the Disclosure Guidance and
Transparency Rules, Board members and certain employees of the
Company's service providers are required to seek approval to deal
in the Company's shares.
Allotment of shares and pre-emption
rights
Details of the Company's ability to allot
shares and pre-emption rights are included in the Articles of
Incorporation.
Voting rights
In a general meeting of the Company, on a show
of hands, every member who is present in person or by proxy and
entitled to vote shall have one vote. On a poll, every member who
is present in person or by proxy shall have one vote for every
share of which they are the holder.
Restrictions on voting
Unless the Directors otherwise determine, a
shareholder shall not be entitled to vote either personally or by
proxy:
· if any call or
other sum currently payable to the Company in respect of that share
remains unpaid; or
· having been
duly served with a notice requiring the disclosure of a member's
interests given under article 10 of the Articles of Incorporation
of the Company, and has failed to do so within 14 days, in a case
where the shares in question represent at least 0.25% of the number
of shares in issue of the class of shares concerned, or within 28
days, in any other case, from the date of such notice.
Directors' interest in shares
The Directors' share interests in the Company
are detailed on the prior page.
Material interests in shares
The Company has been notified in accordance
with DTR 5 of the Disclosure Guidance and Transparency Rules of the
interests in its issued ordinary shares as at 31 December 2023
detailed in the table on the right.
Table of shareholders over 5% at 31 December
20231
|
|
|
|
|
Shareholder.
|
CLASS OF SHARE
|
Shares held
|
Direct
|
Indirect
|
Direct
|
Indirect
|
Threshold
|
Berlinetta Limited
|
Ordinary shares of NPV2
|
28,778,552
|
28,778,552
|
-
|
5.9%
|
-
|
5%
|
Rathbones Group PLC
|
Ordinary shares of NPV2
|
27,988,583
|
27,988,583
|
-
|
5.7%
|
-
|
5%
|
Witan Investment Trust
|
Ordinary shares of NPV2
|
27,890,000
|
27,890,000
|
-
|
5.7%
|
-
|
5%
|
1. The figures shown above reflect the
position of the shareholders as most recently disclosed to and by
the Company pursuant to DTR 5.1 (Notification of the acquisition or
disposal of major shareholdings) and may not reflect the actual or
current position of the shareholders as at the date of this
report
2. No par value
Significant agreements
The following agreements are considered
significant to the Company:
· AGML as
Investment Manager under the terms of the Investment Management
Agreement;
· Aztec Group as
Administrator, Company Secretary and Depositary under the
Administration Agreement and Depositary Agreement;
· Apax Partners
Funds Services Limited ("APFS") and Apax Partners LLP Services
Agreement for investor relations services;
· Link as
Registrar under the Registration Agreement; - Jefferies
International as corporate broker; and
· KPMG as
appointed external auditor.
Compensation for loss of office
There are no agreements between the Company and
its Directors providing for compensation for loss of office that
occurs because of a change of control.
Disclosures required under listing rule
9.8.4R
There are no disclosures required under Listing
Rule section 9.8.4R.
Events after the reporting period
The Audit Committee noted that there were three
post-balance sheet events:
· on 1 March
2024, Karl Sternberg was appointed Non-Executive Director of the
Board. On the same day, Chris Ambler resigned as a Director, having
served on AGA's Board for nearly 9 years.
· On 1 March
2024, the Company's revolving credit facility was extended by six
months, with a new expiry date of 4 September 2026.
· on 5 March
2024, the Board of Directors announced a dividend of 5.64 pence per
share in respect of the financial period ended 31 December
2023.
Going concern
After making enquiries and given the nature of
the Company and its investments, the Directors, after due
consideration, conclude that the Company should be able to continue
for the foreseeable future.
In reaching this conclusion, the Board is
mindful of the nature of the Company's assets and ability to meet
its liabilities as they fall due. Further details of the Board's
considerations in relation to going concern and the effect of the
discontinuation resolution to be put to shareholders at the 2024
AGM are set out in note 2 to the financial statements.
Accordingly, they are satisfied that it is
appropriate to adopt the going concern basis in preparing these
financial statements.
Disclosure of information to the
auditor
Having made enquiries of fellow Directors and
key service providers, each of the Directors confirms
that:
· to the best of
their knowledge and belief, there is no relevant audit information
of which the Company's auditor is unaware; and
· they have
taken all the steps a Director might reasonably be expected to have
taken to be aware of relevant audit information and to establish
that the Company's auditor is aware of that information.
Reappointment of auditor
Resolutions for the reappointment of KPMG
Channel Islands Limited as the auditor of the Company and to
authorise the Directors to determine its remuneration are to be
proposed at the next AGM.
As is good practice, the contract is
reviewed regularly and put out to tender every ten years and a
review will take place in the second half of 2024.
AGM
The next AGM will be held on 1 May 2024 at
11.15 am (UK time) at East Wing, Trafalgar Court, Les Banques, St
Peter Port, Guernsey, Channel Islands GY1 3PP.
The Company's articles require a resolution to
be put to shareholders on a periodic basis regarding the
continuation of the Company. Accordingly, a "Discontinuation
Resolution" will be put forward at the 2024 AGM.
The notice, agenda and form of proxy will be
circulated to shareholders at least 21 working days prior to the
AGM and will be made available on the UK National Storage Mechanism
and the Company's website at: www.apaxglobalalpha.com
Shareholders will be able to attend the AGM in
person or dial in remotely to listen to the AGM. Shareholders can
submit questions in advance to the Company Secretary by email at:
AGA-admin@aztecgroup.co.uk
The Directors' report has been approved by the
Board and is signed on its behalf by:
Tim Breedon CBE |
Chairman
4 March 2024
Viability statement
The Directors have duly considered the risks
facing the Company
The company's main corporate objective is to
provide shareholders with capital appreciation from its investment
portfolio and regular dividends. The Directors, in assessing the
viability of the Company, have paid particular attention to the
risks faced by the Company in seeking to achieve its stated
objectives. The principal risks are set out on p.63 to p.65. The
Board has established a risk management framework within which the
Investment Manager operates and which is intended to identify,
measure, monitor, report and, where appropriate, mitigate the risks
to the Company's investment objective.
The Directors confirm that their assessment of
the emerging and principal risks facing the Company was robust and
in doing so they have considered models projecting future cash
flows during the three years to 31 December 2026. These models have
also been stress tested to reflect the impact on the portfolio of
some severe but plausible scenarios similar to those experienced by
investment markets recently and historically. The projections
consider cash balances, covenants, limits, the split of the
investment portfolio, and commitments to existing and future Apax
Funds. The stress testing examines the potential impact of the
principal risks occurring individually and together.
These projections are based on the Investment
Manager's expectations of future investment performance, income,
and costs. The viability assessment covers a period of three years,
which reflects the average holding period of Debt Investments and
the expected period between the launch of new buyout funds by
Apax.
The Company also has access to a significant
credit facility to enable it to manage cash demands without
resorting to urgent sales of its less liquid portfolio assets. As
at 31 December 2023, the RCF was undrawn. Diversification of the
portfolio, split between Private Equity and Debt Investments, also
helps the Company withstand the risks it is most likely to
meet.
The continuation of the Company in its present
form is dependent on the Investment Management Agreement ("IMA")
with the Investment Manager remaining in place. The Directors note
that the IMA with the Investment Manager is terminable with a
minimum of one year's notice by either party. The Directors have no
current reason to believe that either the Company or the Investment
Manager would serve notice of termination of the IMA during the
three-year period covered by this viability statement. The initial
term of the IMA was six years, and it was automatically renewed on
15 June 2021 for another three years.
The Articles require that the Directors put a
discontinuation resolution to the AGM every three years, with the
next resolution being put forward at the upcoming 2024 AGM.
Following recent investor feedback and the result of the 2021 AGM,
where 99.8% of votes cast supported a continuation of the Company,
the Directors have reasonable grounds to believe that it is
unlikely that the extraordinary resolution would be passed and for
the purposes of the viability assessment they have assumed that it
will not do so.
The Directors, having duly considered the risks
facing the Company, their mitigation and the cash flow modelling,
have a reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due
over the three-year period of their assessment. For more
information on how AGA is satisfied with its ability to operate as
a going concern, see p.77.
Statement of Directors'
responsibilities
Annual report and financial
statements
The Directors are responsible for preparing the
annual report and financial statements in accordance with
applicable law and regulations.
Company Law requires the Directors to prepare
financial statements for each financial year. Under that law they
are required to prepare financial statements that show a true and
fair view. The Directors have chosen to prepare the financial
statements in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the EU to meet the requirements of
applicable law and regulations.
Under Company Law, the Directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the Directors are required
to:
· select
suitable accounting policies and apply them
consistently;
· make
judgements and estimates that are reasonable, relevant and
reliable;
· state whether
applicable accounting standards have been followed, subject to any
material departures disclosed and explained in the financial
statements;
· assess the
Company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and
· use the going
concern basis of accounting unless they either intend to liquidate
the Company or to cease operations, or have no realistic
alternative but to do so.
The Directors are responsible for keeping
proper accounting records, that are sufficient to show and explain
the Company's transactions and disclose with reasonable accuracy at
any time the financial position of the Company and to enable them
to ensure that the financial statements comply with the Companies
(Guernsey) Law, 2008 (as amended). They are responsible for such
internal control as they determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error. They have general
responsibility for taking such steps as are reasonably open to them
to safeguard the assets of the Company and to prevent and detect
fraud and other irregularities.
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.
Responsibility statement of the Directors in
respect of the annual financial report
The annual report and financial statements are
the responsibility of, and have been approved by, the Directors who
confirm, to the best of their knowledge and belief, that they have
complied with the above requirements in preparing the financial
statements.
During the course of this assessment, the
Directors have received input from the Audit Committee, the
Investment Manager, the Investment Advisor, the Company Secretary
and Administrator, and the Directors confirm that:
· the annual
report includes a fair review of the development and performance of
the business and the position of the Company, together with a
description of the principal risks and uncertainties that the
Company faces; and
· the financial
statements, prepared in accordance with IFRS adopted by the EU,
give a true and fair view of the assets, liabilities, financial
position and results of the Company, taken as a whole, as required
by DTR 4.1.6, and are in compliance with the requirements set out
in the Companies (Guernsey) Law 2008 (as amended); and the annual
report and financial statements, taken as a whole, provide the
information necessary to assess the Company's position and
performance, business model and strategy, and is fair, balanced and
understandable.
Signed on behalf of the Board of Directors
by:
Tim Breedon CBE
Chairman
4 March 2024
Susie Farnon
Non-Executive Director
4 March 2024
Risk management framework
The Board has established a set of risk
management policies, procedures and controls, and maintains
oversight through regular reviews by the Board and the Audit
Committee.
The Board and Audit Committee monitor the
Company's principal risks on a quarterly basis and a more detailed
review is done at least annually.
The risk governance framework is
designed to identify, evaluate and mitigate the risks deemed by the
Board as being of significant relevance to the Company's business
model and to reflect its risk profile and risk appetite. The
underlying process aims to assist the Board to understand and where
possible mitigate, rather than eliminate, these risks and,
therefore, can only provide reasonable and not absolute assurance
against loss.
The Board regularly reviews a register of
principal risks and uncertainties (the "Risk Register") maintained
on behalf of the Board by the Company Secretary. The Risk Register
serves as a detailed assessment and tracking undertaken by the
Board of the Company's exposure to risks in three core categories:
strategic and business risks, operational risk, and financial and
portfolio risks.
Ownership and governance
While the Board remains ultimately responsible
for the identification and assessment of risk, as well as
implementing and monitoring procedures to control such risks, and
for reviewing them on a regular basis, the Board places reliance on
its key service providers, to whom it has delegated aspects of the
day-to-day management of the Company. This delegation includes the
design and implementation of controls over risks.
The Board undertakes an annual review of its
risk appetite, considering recommendations from the Audit Committee
and key service providers responsible for implementing the controls
related to risks identified by the Board, as noted above. The Board
and Audit Committee consider existing and emerging risks at each
quarterly Board meeting and more frequently if
necessary.
Investment performance
In accordance with the Investment Management
Agreement between the Company and the Investment Manager,
responsibility for delivering investment performance in line with
the Company's strategic and business objectives, as well as
remaining within the parameters of its investment risk appetite, is
delegated to the Investment Manager.
The Board approves commitments to new Private
Equity funds whilst the remaining investment decisions are taken by
the Investment Manager within parameters of authority approved by
the Board, while separate risk functions within the Investment
Manager support and review decision-making.
Risk assessment
In assessing each category of risk, the Board
considers systemic and non-systemic risks as well as the control
framework established to reduce the likelihood and impact (the
"residual risk rating") of individual inherent risks. The Board
does not consider political risk in isolation but incorporates it
within its consideration of other principal risks. The Board is
not, practically, in a position to consider every risk. However,
where possible, it does seek to identify, assess and mitigate
remote and emerging risks which might have a significant
consequence or might not be controllable.
In considering the framework around the
policies and procedures adopted to reduce the potential impact of
individual risks, the Board takes account of the nature, scale and
complexity of the Company, its investment objectives and strategy,
and the role of the key service providers.
The wider control environment of the Company
includes the policies and procedures adopted by the key service
providers. The Board considers these policies and procedures in its
assessment of individual risks and emerging risks. The Board seeks
regular reporting and assurance from its main service providers on
the robustness of their control environments and, based on such
assurances, assesses the suitability, adequacy and relevance of
those policies and procedures.
Individual risks are assessed based on the
likelihood of occurrence and consequential impact. For the
avoidance of doubt, likelihood and consequence are assessed after
considering the mitigating effect of the control framework. Risks
are then ranked in order of residual risk rating likelihood and
then consequence. Judgement is applied in determining which risks
rank above the others where such risks have the same residual risk
rating, likelihood and consequence.
Emerging risks are identified and
assessed as part of the quarterly review process undertaken by the
Board and Audit Committee. These are risks that may have a material
effect on the Company if they were to occur. Where possible,
mitigating measures are considered by the Board but due to the
unknown nature of future events the impact of these risks may not
materialise. There were no emerging risks identified in the
period.
Though not included in the key principal risks
highlighted on the following page, the Board does monitor ESG
within its risk register. The Board assesses its impact on the
wider Company risks, including performance risk, and reputational
risk and reviews the mitigating measures in place.
The Board recognises that it has limited
control over many of the risks it faces, such as political and
macroeconomic events and changes in the regulatory environment, and
it periodically reviews the potential impact of such ongoing risks
on the business and actively considers them in its
decision-making.
Principal risks
The Board is ultimately accountable for
effective risk management affecting the Company.
The Audit Committee has undertaken an exercise
to identify, assess and manage the risk within the Company. The
principal risks identified have been assessed based on residual
likelihood and consequence and are summarised on the heat
map:
Strategic and Business
|
SB1: Company performance
|
SB2: Discount to NAV
|
SB3: Market risk
|
SB4: Economic environment
|
|
Operational
|
OP1: Continuity risk
|
OP2: Service provider risk
|
|
Financial and portfolio
|
FR1: Liquidity risk
|
FR2: Currency risk
|
FR3: Portfolio risk
|
|
The Company's principal risks are split between
three main risk categories
SB Strategic and
business risks
OP Operational
risks
FR Financial and
portfolio risks
↑ Increase
↔ No change
↓ Decrease
Item
|
Risk
|
Current year assessment
|
Mitigating measures
|
Risk
status
|
SB1
|
Company performance
The target return and target dividend yield are
based on estimates and assumptions.
The actual rate of return and dividend yield
may be lower than targets.
|
The Company had a Total NAV Return of 4.1%
during the period with both the Private Equity and Debt Investments
portfolios contributing to returns - please refer to the
performance review section from p.17 to p.20 for further
details.
|
· Performance,
positioning and investment restrictions are analysed and monitored
constantly by the Investment Manager
· Investment
performance is reviewed, challenged, and monitored by the Board.
The Board continues to monitor emerging risks that may impact the
Company's performance
|
↔
|
SB2
|
Discount to NAV
Persistent high discount to NAV and market
pressure for companies to implement share buyback programmes may
create dissatisfaction amongst shareholders.
|
The Company's shares continued to trade at a
discount to NAV during the year, with the rolling one-year discount
exceeding 23% throughout the year. The increase is partly
attributable to broader equity market volatility.
In light of the widening discount, the Board
undertook a detailed review of the Company's capital allocation
policy in the context of future Private Equity calls and the
capacity of AGA's RCF and Debt portfolio.
|
· The Company
returns capital to shareholders via the existing dividend policy of
5% of NAV p.a. Any additional mechanism of returning capital to
shareholders is kept under review in the context of the Company's
available liquid resources
· The Board
receives weekly reports from its corporate broker and updates from
the Investment Advisor's investor relations team on a quarterly
basis
· These reports
provide insight into shareholder sentiment, movements in the NAV
and share price discount and an assessment of discount management
strategies if required
|
↔
|
SB3
|
Market risk
Increases in borrowing costs negatively impact
NAV.
|
Central banks continued to increase interest
rates during the year as they tried to cool down
inflation.
The Board noted that although AGA's revolving
credit facility is floating rate, the potential impact is limited
as it is not used for structural leverage and was undrawn at 31
December 2023. Additionally, the Company's Debt Investments
portfolio is primarily invested in floating rate instruments which
re-fix regularly and any upward changes to interest rates tend to
have a positive impact on interest income.
For more details on the potential impact on the
underlying Private Equity portfolio companies see p.15 and
p.16.
|
· The Board has
delegated viability/cash flow projections and modelling to the
Investment Manager. They include the impact of increased borrowings
under a number of stress test scenarios and note that even if fully
drawn the impact of increased borrowing costs are offset by the
invested Debt portfolio
|
↔
|
SB4
|
ECONOMIC ENVIROnMENT
Increasing inflation, geopolitical uncertainty,
and the potential impact of interest rate movements on equity
valuations could lead to increased NAV volatility.
|
Geopolitical uncertainty remained heightened,
persistent inflation and interest rate rises all contributed to a
volatile macroeconomic environment, however the second half of the
year saw inflation slowing and growth is expected to remain
sluggish.
|
· The Board
receives quarterly reports from its Investment Manager and the
Investment Advisor on performance and asset allocation
· The underlying
Private Equity portfolio is diversified across sub-sectors which
are less affected by the impacts of inflation and geopolitical
uncertainty
|
↑
|
OP1
|
Continuity risk
Business continuity, including that provided by
service providers, may be impacted by a natural disaster,
cyber-attack, infrastructure damage or other "outside"
factors.
|
During the year, the Company's key service
providers reported that their business continuity plans remained in
place and that they have remained appropriate and
effective.
|
· All key
service providers have in place business continuity procedures
which are tested on a regular basis and are subject to minimum
regulatory standards in their jurisdictions
|
↔
|
OP2
|
Service provider risk
Control failures at key service providers may
result in decreased service quality, loss of information,
information security breach, theft or fraud.
|
Control failures at key service providers are
reported and reviewed. No material issues were brought to the
Board's attention or identified as part of the formal review
conducted by the Board and no issues were reported resulting in a
reduction in the consequence rating.
|
· The Board
conducts a formal review of all key service providers on an annual
basis
· All key
service providers have controls and procedures in place to mitigate
risks related to the loss of information, security breaches, theft
and fraud
|
↔
|
FR1
|
Liquidity risk
Decreases in the value of investments due to
market weakness may affect the pace and value of realisations,
leading to reduced liquidity and/or ability to maintain credit
facilities and meet covenant requirements.
|
The Board recognises the macroenvironment
surrounding the Apax Funds has been volatile and uncertainty
remains going forward into the next year. The Apax Funds continued
to see good levels of investment activity. See p.27 for more
details.
The Debt Investments portfolio has benefitted
from the increased interest rates resulting in higher levels of
income for the Company, remaining a reliable source of cash
flow.
The Board regularly assesses liquidity in
highly stressed conditions as part of its assessment to continue as
a going concern. Further details are given in the viability
statement on p.60.
|
· Cash flow
modelling is prepared and tested under various stress test
scenarios
· Revolving
credit facility is available in the event of substantial liquidity
issues
· The investing
Apax Funds operate capital call facilities which provide good
visibility of future expected calls
· A higher
proportion of the Debt Investments portfolio is invested in first
lien instruments which have better liquidity
· The majority
of the Debt Investments portfolio is invested in floating rate
instruments providing a strong income yield
|
↔
|
FR2
|
Currency risk
The Company has established a global investment
mandate and has appointed an Investment Manager whose policy is to
not hedge currency exposures. Movements in exchange rates create
NAV volatility when the value of investments is translated into the
Company's reporting currency (the Euro).
|
The depreciation of the US dollar against the
Euro led to weaker returns being reported in the year than were
achieved by the investment portfolio in local currency terms. The
Company's sensitivity to movements in exchange rates is explained
in detail in note 12.
|
· The Investment
Manager has implemented an investment framework to manage and
monitor the investment portfolio of the Company
· Currency
exposure analysis and monitoring forms part of the investment
framework
· The Investment
Manager maintains a monitoring tool that constantly tracks
portfolio exposures
· Transparency
allows investors to hedge their own exposure as desired
|
↔
|
FR3
|
Portfolio risk
Risk of error, process failure or incorrect
assumptions lead to incorrect valuation of portfolio
holdings.
|
The majority of the Company's assets are in
Private Equity, which are valued based on NAV statements provided
by the Apax Funds. The Company's Debt Investments portfolio is
valued based on broker quotes and/or models which use market
inputs.
|
· The Investment
Manager prepares the valuations on a quarterly basis
· The review
process includes a meeting with the Board and Investment Advisor
where the key assumptions are challenged and explained
· AGA valuations
are reviewed by the Company's auditors in June and audited in
December each year
|
↔
|
4. Financial Statements & Shareholder
Information
Financial statements independent auditor's
report
To the members of Apax Global Alpha
Limited
Our opinion is unmodified
We have audited the financial statements of
Apax Global Alpha Limited (the "Company"), which comprise the
statement of financial position as at 31 December 2023, the
statements of profit or loss and other comprehensive income,
changes in equity and cash flows for the year then ended, and
notes, comprising material accounting policies and other
explanatory information.
In our opinion, the accompanying financial
statements:
· give a true
and fair view of the financial position of the Company as at 31
December 2023, and of the Company's financial performance and cash
flows for the year then ended;
· are prepared
in accordance with International Financial Reporting Standards as
adopted by the EU; and
· comply with
the Companies (Guernsey) Law, 2008.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) ("ISAs (UK)") and
applicable law. Our responsibilities are described below. We have
fulfilled our ethical responsibilities under, and are independent
of the Company in accordance with, UK ethical requirements
including the FRC Ethical Standard as required by the Crown
Dependencies' Audit Rules and Guidance. We believe that the audit
evidence we have obtained is a sufficient and appropriate basis for
our opinion.
Key audit matters: our assessment of the risks
of material misstatement
Key audit matters are those matters that, in
our professional judgement, were of most significance in the audit
of the financial statements and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) identified by us, including those which had the greatest
effect on: the overall audit strategy; the allocation of resources
in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
In arriving at our audit opinion above, the key audit matter was as
follows (unchanged from 2022):
|
The risk
|
Our response
|
Valuation of financial assets and liabilities
held at fair value through profit or loss
("Investments")
Financial assets - €1,200,989,000
Financial liabilities - (€495,000)
(2022 Financial assets -
€1,241,200,000)
(2022 Financial liabilities -
(€6,063,000))
Refer to p.54 in the Role of the Audit
Committee, note 3 (Initial recognition
and subsequent measurement
of financial instruments), (Critical accounting
estimates and judgements),
note 8 (Investments) and note 13
(Fair value estimation).
|
Basis:
As at 31 December 2023, the Company had
invested the equivalent of 93% of its net assets in private equity
funds advised by the Company's Investment Advisor ("Private Equity
Investments"), and in debt and equities in public and private
companies ("Debt Investments" and "Derived Equity"
respectively).
The Company's holdings in Private Equity
Investments (representing 74% of Investments) are valued based on
the net asset values provided by the underlying funds' general
partners, adjusted if considered necessary by the Board of
Directors, including any adjustment necessary for carried
interest.
The Company's holdings in quoted equities
(representing 1% of Investments) are valued based on the bid or
last traded price depending upon the convention of the exchange on
which the investment is quoted.
The Company's holdings in unquoted debt and
equities (representing 25% of Investments) are valued based on
models that take into account the factors relevant to each
investment and use relevant third-party market data where
available.
Risk:
The valuation of the Company's Investments is
considered a significant area of our audit, given that it
represents the majority of the net assets of the Company and in
view of the significance of estimates and judgements that may be
involved in the determination of fair value.
|
Our audit procedures included:
Internal Controls:
We assessed the design and implementation of
the Investment Manager's review control in relation to the
valuation of Investments.
Challenging managements' assumptions and inputs
including use of KPMG valuation specialists:
For Private Equity Investments, we agreed the
fair values to capital account or other similar statements
("Statements") received from the underlying funds' general
partners. For the majority of Private Equity Investments, we
obtained the coterminous audited financial statements and agreed
the audited net asset value to the Statements. In order to assess
whether the fair value required adjustment, we considered: the
basis of preparation together with accounting policies applied; and
whether the audit opinion was modified.
For Debt Investments and Derived Equity, we
used our own valuation specialist to independently price 100% of
quoted equities and 100% of Debt Investments based on third-party
data sources.
Assessing disclosures:
We also considered the Company's disclosures
(see note 4) in relation to the use of estimates and judgements
regarding the fair value of investments and the Company's
investment valuation policies adopted and fair value disclosures in
note 3, note 8 and note 13 for compliance with International
Financial Reporting Standards as adopted by the EU.
|
Our application of materiality and an overview
of the scope of our audit
Materiality for the financial statements as a
whole was set at €26,000,000, determined with reference to a
benchmark of net assets of €1,294,164,000, of which it represents
approximately 2% (2022: 2%).
In line with our audit methodology, our
procedures on individual account balances and disclosures were
performed to a lower threshold, performance materiality, so as to
reduce to an acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a material
amount across the financial statements as a whole. Performance
materiality for the Company was set at 75% (2022: 75%) of
materiality for the financial statements as a whole, which equates
to €19,500,000. We applied this percentage in our determination of
performance materiality because we did not identify any factors
indicating an elevated level of risk.
We reported to the Audit Committee any
corrected or uncorrected identified misstatements exceeding
€1,300,000, in addition to other identified misstatements that
warranted reporting on qualitative grounds.
Our audit of the Company was undertaken to the
materiality level specified above, which has informed our
identification of significant risks of material misstatement and
the associated audit procedures performed in those areas as
detailed above.
Going concern
The directors have prepared the financial
statements on the going concern basis as they do not intend to
liquidate the Company or to cease its operations, and as they have
concluded that the Company's financial position means that this is
realistic. They have also concluded that there are no material
uncertainties that could have cast significant doubt over its
ability to continue as a going concern for at least a year from the
date of approval of the financial statements (the "going concern
period").
In our evaluation of the Directors'
conclusions, we considered the inherent risks to the Company's
business model and analysed how those risks might affect the
Company's financial resources or ability to continue operations
over the going concern period. The risks that we considered most
likely to affect the Company's financial resources or ability to
continue operations over this period were:
· availability
of capital to meet operating costs and other financial
commitments;
· the
recoverability of financial assets subject to credit risk;
and
· the outcome of
the upcoming discontinuation vote.
We considered whether these risks could
plausibly affect the liquidity in the going concern period by
comparing severe, but plausible downside scenarios that could arise
from these risks individually and collectively against the level of
available financial resources indicated by the Company's financial
forecasts.
We also considered the risk that the outcome of
the discontinuation vote could affect the going concern period, by
considering the outcome of the previous discontinuation vote held
by the Company, general voting records of shareholders, assessing
the indications of intent from key shareholders, and considering
key financial metrics including discount of the Company's share
price against its reported net asset value per share, over the past
12 months.
We considered whether the going concern
disclosure in note 2 to the financial statements gives a full and
accurate description of the directors' assessment of going
concern.
Our conclusions based on this work:
· we consider
that the Directors' use of the going concern basis of accounting in
the preparation of the financial statements is
appropriate;
· we have not
identified, and concur with the Directors' assessment that there is
not, a material uncertainty related to events or conditions that,
individually or collectively, may cast significant doubt on the
Company's ability to continue as a going concern for the going
concern period; and
· we have
nothing material to add or draw attention to in relation to the
Directors' statement in the notes to the financial statements on
the use of the going concern basis of accounting with no material
uncertainties that may cast significant doubt over the Company's
use of that basis for the going concern period, and that statement
is materially consistent with the financial statements and our
audit knowledge.
However, as we cannot predict all future events
or conditions and as subsequent events may result in outcomes that
are inconsistent with judgements that were reasonable at the time
they were made, the above conclusions are not a guarantee that the
Company will continue in operation.
Fraud and breaches of laws and regulations -
ability to detect
Identifying and responding to risks of material
misstatement due to fraud
To identify risks of material misstatement due
to fraud ("fraud risks") we assessed events or conditions that
could indicate an incentive or pressure to commit fraud or provide
an opportunity to commit fraud. Our risk assessment procedures
included:
· enquiring of
management as to the Company's policies and procedures to prevent
and detect fraud as well as enquiring whether management have
knowledge of any actual, suspected or alleged fraud;
· reading
minutes of meetings of those charged with governance;
and
· using
analytical procedures to identify any unusual or unexpected
relationships.
As required by auditing standards, we perform
procedures to address the risk of management override of controls,
in particular the risk that management may be in a position to make
inappropriate accounting entries. On this audit we do not believe
there is a fraud risk related to revenue recognition because the
Company's revenue streams are simple in nature with respect to
accounting policy choice, and are easily verifiable to external
data sources or agreements with little or no requirement for
estimation from management. We did not identify any additional
fraud risks.
We performed procedures including:
· identifying
journal entries and other adjustments to test based on risk
criteria and comparing any identified entries to supporting
documentation; and
· incorporating
an element of unpredictability in our audit procedures.
Identifying and responding to risks of material
misstatement due to non-compliance with laws and
regulations
We identified areas of laws and regulations
that could reasonably be expected to have a material effect on the
financial statements from our sector experience and through
discussion with management (as required by auditing standards), and
from inspection of the Company's regulatory and legal
correspondence, if any, and discussed with management the policies
and procedures regarding compliance with laws and regulations. As
the Company is regulated, our assessment of risks involved gaining
an understanding of the control environment including the entity's
procedures for complying with regulatory requirements.
The Company is subject to laws and regulations
that directly affect the financial statements including financial
reporting legislation and taxation legislation and we assessed the
extent of compliance with these laws and regulations as part of our
procedures on the related financial statement items.
The Company is subject to other laws and
regulations where the consequences of non-compliance could have a
material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or
litigation or impacts on the Company's ability to operate. We
identified financial services regulation as being the area most
likely to have such an effect, recognising the regulated nature of
the Company's activities and its legal form. Auditing standards
limit the required audit procedures to identify non-compliance with
these laws and regulations to enquiry of management and inspection
of regulatory and legal correspondence, if any. Therefore if a
breach of operational regulations is not disclosed to us or evident
from relevant correspondence, an audit will not detect that
breach.
Context of the ability of the audit to detect
fraud or breaches of law or regulation
Owing to the inherent limitations of an audit,
there is an unavoidable risk that we may not have detected some
material misstatements in the financial statements, even though we
have properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-compliance
with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely the
inherently limited procedures required by auditing standards would
identify it.
In addition, as with any audit, there remains a
higher risk of non-detection of fraud, as this may involve
collusion, forgery, intentional omissions, misrepresentations, or
the override of internal controls. Our audit procedures are
designed to detect material misstatement. We are not responsible
for preventing non-compliance or fraud and cannot be expected to
detect non-compliance with all laws and regulations.
Other information
The Directors are responsible for the other
information. The other information comprises the information
included in the annual report but does not include the financial
statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and we do
not express an audit opinion or any form of assurance conclusion
thereon.
In connection with our audit of the financial
statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be
materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing
to report in this regard.
Disclosures of emerging and principal risks and
longer-term viability
We are required to perform procedures to
identify whether there is a material inconsistency between the
directors' disclosures in respect of emerging and principal risks
and the viability statement, and the financial statements and our
audit knowledge. We have nothing material to add or draw attention
to in relation to:
· the directors'
confirmation within the Viability Statement (p.60) that they have
carried out a robust assessment of the emerging and principal risks
facing the Company, including those that would threaten its
business model, future performance, solvency or
liquidity;
· the emerging
and principal risks disclosures describing these risks and
explaining how they are being managed or mitigated; and
· the directors'
explanation in the Viability Statement (p.60) as to how they have
assessed the prospects of the Company, over what period they have
done so and why they consider that period to be appropriate, and
their statement as to whether they have a reasonable expectation
that the Company will be able to continue in operation and meet its
liabilities as they fall due over the period of their assessment,
including any related disclosures drawing attention to any
necessary qualifications or assumptions.
We are also required to review the Viability
Statement, set out on p.60 under the Listing Rules. Based on the
above procedures, we have concluded that the above disclosures are
materially consistent with the financial statements and our audit
knowledge.
Corporate governance disclosures
We are required to perform procedures to
identify whether there is a material inconsistency between the
directors' corporate governance disclosures and the financial
statements and our audit knowledge.
Based on those procedures, we have concluded
that each of the following is materially consistent with the
financial statements and our audit knowledge:
· the Directors'
statement that they consider that the annual report and financial
statements taken as a whole is fair, balanced and understandable,
and provides the information necessary for shareholders to assess
the Company's position and performance, business model and
strategy;
· the section of
the annual report describing the work of the Audit Committee,
including the significant issues that the Audit Committee
considered in relation to the financial statements, and how these
issues were addressed; and
· the section of
the annual report that describes the review of the effectiveness of
the Company's risk management and internal control
systems.
We are required to review the part of Corporate
Governance Statement relating to the Company's compliance with the
provisions of the UK Corporate Governance Code specified by the
Listing Rules for our review. We have nothing to report in this
respect.
We have nothing to report on other matters on
which we are required to report by exception
We have nothing to report in respect of the
following matters where the Companies (Guernsey) Law, 2008 requires
us to report to you if, in our opinion:
· the Company
has not kept proper accounting records; or
· the financial
statements are not in agreement with the accounting records;
or
· we have not
received all the information and explanations, which to the best of
our knowledge and belief are necessary for the purpose of our
audit.
Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set
out on p.61, the Directors are responsible for: the preparation of
the financial statements including being satisfied that they give a
true and fair view; such internal control as they determine is
necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error;
assessing the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
using the going concern basis of accounting unless they either
intend to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities
Our objectives are to obtain reasonable
assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and
to issue our opinion in an auditor's report. Reasonable assurance
is a high level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of the financial
statements.
A fuller description of our responsibilities is
provided on the FRC's website at www.frc.org.uk/auditorsresponsibilities.
The purpose of this report and restrictions on
its use by persons other than the Company's members as a
body
This report is made solely to the Company's
members, as a body, in accordance with section 262 of the Companies
(Guernsey) Law, 2008. Our audit work has been undertaken so that we
might state to the Company's members those matters we are required
to state to them in an auditor's 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 and the Company's
members, as a body, for our audit work, for this report, or for the
opinions we have formed.
Deborah Smith
For and on behalf of KPMG Channel Islands
Limited
Chartered Accountants and Recognised
Auditors
Guernsey
4 March 2024
Financial statements statement of financial
position
|
|
|
|
AT
31 DECEMBER 2023
|
NOTES
|
31 DECEMBER
2023
€'000
|
31 DECEMBER
2022
€'000
|
Assets
|
|
|
|
Non-current assets
|
|
|
|
Financial assets held at fair value
through profit or loss ("FVTPL")
|
8a
|
1,200,989
|
1,241,200
|
Total non-current assets
|
|
1,200,989
|
1,241,200
|
Current assets
|
|
|
|
Cash and cash equivalents
|
|
101,375
|
67,966
|
Investment
receivables
|
|
2,540
|
1,699
|
Other receivables
|
|
2,217
|
429
|
Total current assets
|
|
106,132
|
70,094
|
Total assets
|
|
1,307,121
|
1,311,294
|
Liabilities
|
|
|
|
Financial liabilities held at
FVTPL
|
8a
|
495
|
6,063
|
Investment payables
|
|
10,773
|
3,980
|
Accrued expenses
|
|
1,689
|
1,875
|
Total current liabilities
|
|
12,957
|
11,918
|
Total liabilities
|
|
12,957
|
11,918
|
Capital and retained earnings
|
|
|
|
Shareholders'
capital
|
14
|
873,804
|
873,804
|
Retained earnings
|
|
413,784
|
425,572
|
Total capital and retained earnings
|
|
1,287,588
|
1,299,376
|
Share-based payment performance fee
reserve
|
10
|
6,576
|
-
|
Total equity
|
|
1,294,164
|
1,299,376
|
Total shareholders' equity and
liabilities
|
|
1,307,121
|
1,311,294
|
Tim
Breedon CBE | Chairman
4 March 2024
|
Susie Farnon | Chair of the Audit
Committee
4 March 2024
|
|
|
31 DECEMBER 2023
|
31 DECEMBER
2023
|
31 DECEMBER
2022
|
31 DECEMBER
2022
|
AT
31 DECEMBER 2023
|
NOTES
|
€
|
£
EQUIVALENT1
|
€
|
£
EQUIVALENT1
|
Net Asset Value ("NAV") ('000)
|
|
1,294,164
|
1,121,924
|
1,299,376
|
1,150,390
|
Performance fee
reserve
|
10
|
(6,576)
|
(5,701)
|
-
|
-
|
Adjusted NAV ('000)
|
|
1,287,588
|
1,116,223
|
1,299,376
|
1,150,390
|
NAV per share
|
|
2.64
|
2.28
|
2.65
|
2.34
|
Adjusted NAV per
share
|
|
2.62
|
2.27
|
2.65
|
2.34
|
|
|
|
|
31 DECEMBER
2023
|
31 DECEMBER
2022
|
AT
31 DECEMBER 2023
|
|
|
|
%
|
%
|
Total NAV Return
|
|
|
|
4.1%
|
(7.4)%
|
1. The sterling equivalent has been
calculated based on the GBP/EUR exchange rate at 31 December 2023
and 31 December 2022, respectively
The accompanying notes form an
integral part of these financial statements.
ALTERNATIVE PERFORMANCE MEASURES
AGA uses the Alternative Performance
Measures of Adjusted NAV and Total NAV Return to enhance
transparency for shareholders. The purpose is to show shareholders
the NAV which is due to them, net of the performance fee reserve.
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.
Total NAV Return for the year
means the return on the movement in the Adjusted NAV per share at
the end of the year together with all the dividends paid during the
year divided by the Adjusted NAV per share at the beginning of the
year. Adjusted NAV per share used in the calculation is rounded to
5 decimal places.
Tim
Breedon CBE | Chairman
4 March 2024
|
Susie Farnon | Chair of the Audit
Committee
4 March 2024
|
Financial statements statement of profit or loss and other
comprehensive income
|
|
YEAR ENDED
|
YEAR ENDED
|
|
|
31 DECEMBER 2023
|
31 DECEMBER 2022
|
FOR
THE YEAR ENDED 31 DECEMBER 2023
|
NOTES
|
€'000
|
€'000
|
Income
|
|
|
|
Investment income
|
|
37,545
|
24,476
|
Net gains/(losses) on financial
assets at FVTPL
|
8b
|
29,555
|
(119,740)
|
Net gains/(losses) on financial
liabilities at FVTPL
|
8c
|
2,643
|
(6,063)
|
Realised foreign currency
gains
|
|
439
|
1,276
|
Unrealised foreign currency
losses
|
|
(210)
|
(74)
|
Total income/(loss)
|
|
69,972
|
(100,125)
|
Operating and other expenses
|
|
|
|
Performance fee
|
10
|
(6,576)
|
(22)
|
Management fee
|
9
|
(3,363)
|
(3,712)
|
Administration and other operating
expenses
|
6
|
(3,328)
|
(2,797)
|
Total operating expenses
|
|
(13,267)
|
(6,531)
|
Total income/(loss) less operating
expenses
|
|
56,705
|
(106,656)
|
Finance costs
|
11
|
(3,054)
|
(3,150)
|
Profit/(loss) before tax
|
|
53,651
|
(109,806)
|
Tax charge
|
7
|
(173)
|
(231)
|
Profit/(loss) after tax
|
|
53,478
|
(110,037)
|
Other comprehensive income
|
|
-
|
-
|
Total comprehensive income/(loss) attributable to
shareholders
|
|
53,478
|
(110,037)
|
Earnings/(loss) per share (cents)
|
15
|
|
|
Basic and diluted
|
|
10.89
|
(22.41)
|
Adjusted1
|
|
10.81
|
(22.41)
|
1.
The Adjusted earnings per share has
been calculated based on the profit/(loss) attributable to ordinary
shareholders over the weighted average number of ordinary shares in
issue adjusted for performance shares awarded on a liquidation
basis at 31 December 2023 and 31 December 2022, respectively, as
per note 15
The accompanying notes form an
integral part of these financial statements.
Financial statements statement of changes in
equity
|
|
SHAREHOLDERS'
CAPITAL
|
TOTAL CAPITAL AND RETAINED
EARNINGS
|
RETAINED
EARNINGS
|
SHARE-BASED PAYMENT
PERFORMANCE FEE RESERVE
|
TOTAL
|
FOR
THE YEAR ENDED 31 DECEMBER 2023
|
NOTES
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
Balance at 1 January 2023
|
|
873,804
|
425,572
|
1,299,376
|
-
|
1,299,376
|
Total comprehensive income
attributable to shareholders
|
|
-
|
53,478
|
53,478
|
-
|
53,478
|
Share-based payment performance fee
reserve movement
|
10
|
-
|
-
|
-
|
6,576
|
6,576
|
Dividends paid
|
16
|
-
|
(65,266)
|
(65,266)
|
-
|
(65,266)
|
Balance at 31 December 2023
|
|
873,804
|
413,784
|
1,287,588
|
6,576
|
1,294,164
|
|
|
SHAREHOLDERS'
CAPITAL
|
TOTAL CAPITAL AND
RETAINED
EARNINGS
|
RETAINED
EARNINGS
|
SHARE-BASED PAYMENT
PERFORMANCE FEE RESERVE
|
TOTAL
|
FOR
THE YEAR ENDED 31 DECEMBER 2022
|
NOTES
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
Balance at 1 January 2022
|
|
873,804
|
607,873
|
1,481,677
|
8,390
|
1,490,067
|
Total comprehensive income
attributable to shareholders
|
|
-
|
(110,037)
|
(110,037)
|
-
|
(110,037)
|
Share-based payment performance fee
reserve movement
|
10
|
-
|
-
|
-
|
(8,390)
|
(8,390)
|
Dividends paid
|
16
|
-
|
(72,264)
|
(72,264)
|
-
|
(72,264)
|
Balance at 31 December 2022
|
|
873,804
|
425,572
|
1,299,376
|
8,390
|
1,490,067
|
The accompanying notes form an
integral part of these financial statements.
Financial statements statement of cash
flows
|
|
YEAR ENDED
31 DECEMBER 2023
|
YEAR ENDED
31 DECEMBER 2022
|
FOR
THE YEAR ENDED 31 DECEMBER 2023
|
NOTES
|
€'000
|
€'000
|
Cash flows from operating activities
|
|
|
|
Interest received
|
|
37,341
|
23,577
|
Interest paid
|
|
(834)
|
(521)
|
Dividends received
|
|
250
|
1,815
|
Operating expenses
paid
|
|
(9,247)
|
(6,038)
|
Tax paid
|
|
(6)
|
-
|
Capital calls paid to Private Equity
Investments
|
|
(89,821)
|
(194,380)
|
Capital distributions received from
Private Equity Investments
|
|
90,549
|
227,821
|
Purchase of Debt
Investments
|
|
(38,367)
|
(53,640)
|
Sale of Debt
Investments
|
|
100,665
|
39,752
|
Sale of Derived
Equity
|
|
10,663
|
3,476
|
Net
cash from operating activities
|
|
101,193
|
41,862
|
Cash flows used in financing
activities
|
|
|
|
Financing costs
paid
|
|
(2,813)
|
(2,822)
|
Dividends paid
|
|
(64,761)
|
(71,070)
|
Purchase of own
shares
|
|
-
|
(8,412)
|
Revolving credit facility
drawn
|
11
|
55,446
|
17,393
|
Revolving credit facility
repaid
|
11
|
(55,446)
|
(17,393)
|
Net
cash used in financing activities
|
|
(67,574)
|
(82,304)
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the
year
|
|
67,966
|
108,482
|
Net increase/(decrease) in cash and
cash equivalents
|
|
33,619
|
(40,442)
|
Effect of foreign currency
fluctuations on cash and cash equivalents
|
|
(210)
|
(74)
|
Cash and cash equivalents at the end of the
year
|
12a.ii
|
101,375
|
67,966
|
The accompanying notes form an
integral part of these financial statements.
Financial statements notes to
the financial statements
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
objective is 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 an investment management
agreement. The Investment Manager obtains investment advice from
Apax Partners LLP (the "Investment Advisor").
2.
BASIS OF PREPARATION
STATEMENT OF COMPLIANCE
The financial statements, which give
a true and fair view, have been prepared in compliance with the
Companies (Guernsey) Law, 2008 and in accordance with International
Financial Reporting Standards as adopted by the European Union
("IFRS"). They are for the year from 1 January 2023 to 31 December
2023 and were authorised for issue by the Board of Directors of the
Company on 4 March 2024.
BASIS OF MEASUREMENT
The financial statements have been
prepared on the historic cost basis except for financial assets and
financial liabilities, which are measured at
FVTPL.
FUNCTIONAL AND PRESENTATION CURRENCY
The financial statements are
presented in euro (€), which is the Company's functional and
presentation currency. All amounts are stated to the nearest one
thousand euro unless
otherwise stated.
INVESTMENT ENTITY
The Company has determined that it
meets the definition of an investment entity in accordance with
IFRS 10 "Consolidated Financial Statements" and is therefore
required to account for subsidiaries that also qualify as
investment entities at FVTPL. It does not consolidate such
entities.
Under the definition of an
investment entity, all three of the following tests must be
satisfied:
·
obtains funds from one or more investors for the
purpose of providing these investors with investment management
services;
·
commits to its investors that its business purpose
is to invest funds solely for returns from capital appreciation;
investment income, or both (including having an exit strategy for
investments); and
·
measures and evaluates the performance of
substantially all of its investments on a fair value
basis.
The Directors consider that the
Company meets the three requirements and has therefore accounted
for its investment entity subsidiaries at FVTPL. See note 4 for
further details.
GOING CONCERN
The Directors consider that it is
appropriate to adopt the going concern basis of accounting in
preparing the financial statements. In reaching this assessment,
the Directors have considered a wide range of information relating
to present and future conditions, (for at least 12 months from 4
March 2024, the authorisation date of these financial statements),
including the statement of financial position, future projections
(which include highly stressed scenarios), cash flows, revolving
credit facility, net current assets and the longer-term strategy of
the Company. The impact of inflation and geopolitical uncertainty
was also considered by the Directors; and whilst the long-term
effect remains to be seen, it was noted that the direct impact on
the Company's ability to meet its liabilities as they fall due has
been limited to date. The Directors are satisfied, based on their
assessment of reasonably possible outcomes, that the Company has
sufficient liquidity, including the undrawn revolving credit
facility, to meet current and expected obligations up to the going
concern horizon. They are also satisfied, based on their assessment
of reasonably possible outcomes and the results of the previous
discontinuation vote, that no material uncertainty with respect to
going concern arises from the Discontinuation Vote (see
below).
DISCONTINUATION VOTE
The Company's Articles require that
a shareholder resolution on whether the Company should wind-up,
liquidate, reconstruct or unitise (the "Discontinuation Vote") be
presented for the third time at the AGM in May 2024 and, if not
passed, every three years thereafter. The Directors, based on
discussions with a number of key shareholders, consider that it is
unlikely that a Discontinuation Vote will be passed. Accordingly,
no provisions have been made for costs that might arise if the
Company were to be liquidated, wound-up or otherwise
restructured.
3. ACCOUNTING POLICIES
The accounting policies adopted by
the Company and applied consistently in these financial statements
are set out below and overleaf:
INITIAL RECOGNITION AND SUBSEQUENT MEASUREMENT OF FINANCIAL
INSTRUMENTS
The Company designates all financial
assets and financial liabilities, except loans payable, investment
payables, other payables, investment receivables, other receivables
and cash, at FVTPL. These are initially recognised at cost which
equates to the best indicator of fair value on the trade date, the
date on which the Company becomes a party to the contractual
provisions of the instrument. All transaction costs are immediately
recognised in profit or loss. Subsequently, these financial assets
and financial liabilities are recognised at fair market value.
Financial assets or financial liabilities not at FVTPL are
initially recognised at cost plus transaction costs that are
directly attributable to their acquisition or issue.
FAIR VALUE MEASUREMENT OF FINANCIAL
INSTRUMENTS
Fair value is a market-based
measurement, that estimates the price at which an asset could be
sold or a liability transferred, in an orderly transaction between
market participants, on the measurement date. When available, the
Company measures the fair value of an instrument using quoted
prices in an active market for that instrument. A market is
regarded as "active" if quoted prices are readily and regularly
available and represent actual and regularly occurring market
transactions on an arm's-length basis. If a market for a financial
instrument is not active, then the Company establishes fair value
using an alternative valuation technique.
The Company uses alternative
valuation techniques, taking into account the International Private
Equity and Venture Capital Valuation ("IPEV") guidelines, in the absence of an
active market. Valuation techniques include, but are not limited
to, market multiples, using recent and relevant arm's-length
transactions between knowledgeable, willing parties (if they are
available), reference to the current fair value of other
instruments that are substantially the same, statistical methods,
discounted cash flow analyses and option pricing models. The chosen
valuation technique seeks to maximise the use of market inputs and
incorporates factors that market participants might consider in
setting a price.
Inputs to valuation techniques aim
to reasonably represent market expectations and measures of the
risk-return factors inherent in the financial instrument. The
Company calibrates valuation techniques where possible using prices
from observable current market transactions in the same instrument
or based on other available observable market
data.
The Company has three main
investment portfolios that are split between "Private Equity Investments",
"Debt Investments" and
"Derived Equity". Private
Equity Investments comprise primary and secondary commitments to,
and investments in, existing Private Equity funds advised by the
Investment Advisor. Debt Investments comprise investments in debt
and investments in subsidiaries. Derived Equity Investments
comprise investments in listed and unlisted equities. At each
reporting date these are measured at fair value, and changes
therein are recognised in the statement of profit or loss and other
comprehensive income.
Fair values of the Private Equity
Investments are generally considered to be the Company's
attributable portion of the NAV of the Private Equity funds, as
determined by the general partners of such funds, adjusted if
considered necessary by the Board of Directors, including any
adjustment necessary for carried interest. The general partners
consider the IPEV guidelines when valuing the Private Equity
funds.
The fair value of unlisted debt
investments (for which there are insufficient, reliable pricing
data) is calculated based on models that take into account the
factors relevant to each investment and use applicable third-party
market data where available. The fair value of unlisted equities
and equities not traded in an active market, is calculated based on
comparable company multiples and precedent transaction analysis.
The Company reviews and considers the appropriateness of the fair
value analysis prepared by the Investment Manager and Investment
Advisor when determining the fair value for such
assets.
The fair value of investments in
subsidiaries is considered to be the NAV of the underlying
subsidiaries calculated by measuring the fair value of the
subsidiaries' assets and liabilities at fair value in accordance
with the Company's accounting policies. The fair value of the
underlying investments held are included within the Debt
Investments disclosures as relevant.
The fair value of investments traded
in an active market is determined by taking into account the latest
market bid price available, or the last traded price depending upon
the convention of the exchange on which the investment is
quoted.
DERECOGNITION OF FINANCIAL INSTRUMENTS
The Company derecognises a financial
asset when the contractual rights to the cash flows from the
financial asset expire or it transfers the financial asset and the
transfer qualifies for derecognition in accordance with IFRS 9
"Financial Instruments:
Recognition and Measurement". The Company uses the first-in
first-out method to determine realised gains and losses on
derecognition. A financial liability is derecognised when the
obligation specified in the contract is discharged, cancelled or
expired.
SHARE-BASED PAYMENTS
The Company applies the requirements
of IFRS 2 "Share-based
Payment" to its performance fee. The Company maintains a
separate performance fee reserve in equity, showing the expected
performance fee calculated on a liquidation basis on eligible
assets. This is revised at each reporting period and the movement
is credited or expensed through the statement of profit or loss and
other comprehensive income. Further details are given in note
10.
OPERATING SEGMENTS
The criteria for identifying an
operating segment in accordance with IFRS 8 "Operating Segments"
are that the chief operating decision-maker of the Company
regularly reviews the performance of these operating segments and
determines the allocation of resources based on these results. It
is determined that the Company's Chief Operating Decision-Maker is
the Board of Directors. As previously noted, the Company invests
into three (2022: two) separate portfolios, Private Equity
Investments, Debt Investments and Derived Equity. These have been
identified as segments on the basis that the Board of Directors
uses information based on these segments to make decisions about
assessing performance and allocating resources. This is a change
from the two segments identified in the previous years. See note 5
for the basis of the change. The Company has a fourth
administration segment for central functions which represents
general administration costs that cannot be specifically allocated
to the three portfolios. The analysis of results by operating
segment is based on information from the Company's management
accounts. The segmental analysis of the Company's results and
financial position is set out in note 5.
INVESTMENT RECEIVABLES
Investment receivables are
recognised initially at fair value and subsequently measured at
amortised cost. At each reporting date, the Company measures the
loss allowance on investment receivables at an amount equal to the
lifetime expected credit losses if the credit risk has increased
significantly since initial recognition. If, at the reporting date,
the credit risk has not increased significantly since initial
recognition, the Company measures the loss allowance at an amount
equal to 12 month expected credit losses. Significant financial
difficulties of the counterparty, probability that the counterparty
will enter bankruptcy or financial reorganisation and default in
payments are all considered indicators that a loss allowance may be
required. Changes in the level of impairment are recognised in the
statement of profit or loss and other comprehensive income.
Investment receivables are also revalued at the reporting date if
held in a currency other than euro.
LIABILITIES
Liabilities, other than those
specifically accounted for under a separate policy, are stated at
the amounts which are considered to be payable in respect of goods
or services received up to the reporting date on an accruals
basis.
INVESTMENT PAYABLES
Investment payables are recognised
in the Company's statement of financial position when it becomes
party to a contractual provision for the amount payable. Investment
payables are held at their nominal amount. Investment payables are
also revalued at the reporting date if held in a currency other
than euro.
LOANS PAYABLE
Loans payable are held at amortised
cost. Amortised cost for loans payable is defined as the amount at
which the loan is measured at initial recognition, less principal
repayments, plus or minus the cumulative amortisation using the
effective interest method.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise
cash balances and cash held in money market funds with original
maturities of three months or less.
INTEREST INCOME
Interest income comprises interest
income on cash and cash equivalents and interest earned on
financial assets on the effective interest rate
basis.
DIVIDEND INCOME
Dividend income is recognised in the
statement of profit or loss and other comprehensive income on the
date that the Company's right to receive payment is established,
which in the case of listed securities is the ex-dividend date. For
unlisted equities, this is usually the date on which the payee's
board approves the payment of a dividend. Dividend income of €0.2m
(31 December 2022: €1.8m) from equity securities designated at
FVTPL has been recognised in the statement of profit or loss and
other comprehensive income in the current year.
NET
GAINS AND LOSSES ON FINANCIAL ASSETS AND LIABILITIES AT
FVTPL
UNREALISED GAINS AND
LOSSES
Net change in Debt Investments and
Derived Equity at FVTPL includes all unrealised changes in the fair
value of investments (financial assets and financial liabilities),
including foreign currency movements, since the beginning of the
reporting period or since designated upon initial recognition as
held at FVTPL and excludes dividend and interest
income.
Net change in the fair value of
Private Equity Investments is calculated based on the movement of
fair value since the beginning of the reporting period adjusted for
all calls paid and distributions received. Distributions received
from Private Equity Investments are treated as unrealised movements
until the commitment for primary investments, or cost and undrawn
commitment for secondary investments, have been fully
repaid.
REALISED GAINS AND
LOSSES
Realised gains and losses from
financial assets and financial liabilities at FVTPL represents the
gain or loss realised in the period. The unit of account for Debt
Investments and Derived Equity is the individual share or debt
nominal which can be sold on an individual basis. The unit of
account for Private Equity Investments is commitment. The resulting
accounting treatment for the realised gains and losses is based on
these units of account.
The realised gain or loss for Debt
Investments and Derived Equity is calculated based on the carrying
amount of a financial instrument at the beginning of the reporting
period, or the transaction price if it was purchased in the current
reporting period, and its sale or settlement price. Realised gains
and losses on disposals of these investments are calculated using
the first-in first-out method. Realised gains on the Private Equity
Investments portfolio are recognised when the commitment on primary
investments or the cost and undrawn commitment for secondary
investments has been fully repaid.
Distributions received in excess of
the commitment for a primary investment or the cost and undrawn
amount for a secondary investment are recognised as realised gains
in the statement of profit or loss and other comprehensive
income.
BROKERAGE FEES AND OTHER TRANSACTION
COSTS
Brokerage fees and other transaction
costs are costs incurred to acquire investments at FVTPL. They
include fees and commissions paid to agents, brokers and dealers.
Brokerage fees and other transaction costs, when incurred, are
immediately recognised in the statement of profit or loss and other
comprehensive income as an expense.
OTHER EXPENSES
Fees and other operating expenses
are recognised in the statement of profit or loss and other
comprehensive income on an accruals basis.
PROVISIONS AND CONTINGENT LIABILITIES
Provisions are recognised when the
Company has a present legal or constructive obligation as a result
of past events, it is probable that an outflow of resources
embodying economic benefits will be required to settle the
obligation, and a reliable estimate of the amount of the obligation
can be made. Contingent liabilities are possible obligations whose
existence will be confirmed only by uncertain future events or
present obligations where the transfer of economic benefit is
uncertain or cannot be reliably measured. Contingent liabilities
are not recognised but are disclosed unless the probability of
their occurrence is remote.
FOREIGN CURRENCY TRANSACTIONS
Transactions in foreign currencies
are translated to the functional currency of the Company at the
exchange rates at the date of the transactions. Monetary assets and
liabilities denominated in foreign currencies at the reporting date
are translated to the functional currency at the exchange rate at
that date.
For loans payable, the foreign
currency gain or loss is the difference between the amortised cost
in the functional currency at the beginning of the period, adjusted
for interest payments during the period, and the amortised cost in
foreign currency translated at the exchange rate at the end of the
reporting period. Foreign currency differences arising on the
repayments or retranslation are recognised in the statement of
profit or loss and other comprehensive income.
Non-monetary assets and liabilities
denominated in foreign currencies that are measured at fair value
are retranslated to the functional currency at the exchange rate at
the date that the fair value was determined. Non-monetary items
that are measured in terms of historical cost in foreign currency
are translated using the exchange rate at the date of the
transaction. Foreign currency differences arising on retranslation
of non-investment assets are recognised in the statement of profit
or loss and other comprehensive income. For financial assets and
financial liabilities held at FVTPL, foreign currency differences
are reported as part of their net changes at
FVTPL.
TAXATION
The Company may incur withholding
taxes imposed by certain countries on investment income or capital
gains taxes upon realisation of its investments. Such income or
gains are recorded gross of withholding taxes and capital gains
taxes in the statement of profit or loss and other comprehensive
income. Withholding taxes and capital gains taxes are shown as
separate items. Where applicable, tax accruals are raised by the
Company based on an investment's expected holding
period.
SHAREHOLDERS' CAPITAL AND RESERVES
SHAREHOLDERS'
CAPITAL
Shareholders' capital issued by the
Company is recognised as the proceeds or fair value received.
Incremental costs directly attributable to the issue, net of tax
effects, are recognised as a deduction from equity. Ordinary shares
have been classified as equity as they do not meet the definition
of liabilities in IAS 32.
DIVIDENDS
Dividends on ordinary shares are
recognised in equity in the period in which they become payable,
which is when they are approved by the Company's Board of
Directors.
EARNINGS/(LOSS) PER
SHARE
Earnings/(loss) per share is
calculated based on the profit/(loss) attributable to ordinary
shareholders and the weighted average number of ordinary shares in
issue during the year.
Diluted earnings per share is
calculated based on the profit attributable to ordinary
shareholders and the weighted average number of ordinary shares in
issue during the year adjusted for items that would cause a
dilutive effect on the ordinary shares.
Adjusted earnings per share is
calculated based on the profit attributable to ordinary
shareholders and the weighted average number of ordinary shares in
issue during the year adjusted for the performance
fee.
ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET
ADOPTED
The Company has applied all new and
amended standards with an effective date from 1 January 2023.
Additionally, it has reviewed and assessed changes to current
accounting standards issued by the IASB with an effective date from
1 January 2024; none of these have had or are expected to have a
material impact on the Company's financial
statements.
4.
CRITICAL ACCOUNTING ESTIMATES AND
JUDGEMENTS
In preparing the financial
statements, the Company makes judgements and estimates that affect
the reported amounts of assets, liabilities, income and expenses.
Actual results could differ from those estimates. Estimates and
judgements are continually evaluated and are based on the Board of
Directors and Investment Managers' experience and their
expectations of future events. Revisions to estimates are
recognised prospectively.
(i)
Estimates
The estimate that has the most
significant effect on the amounts recognised in the Company's
financial statements relates to valuation of financial assets and
financial liabilities held at FVTPL other than those traded in an
active market.
The Investment Manager is
responsible for the preparation of the Company's valuations and
meets quarterly to discuss and approve the key valuation
assumptions. The meetings are open to the Board of Directors and
the Investment Advisor to enable them to challenge the valuation
assumptions and the proposed valuation estimates and to the
external auditor to observe. 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.
(ii) Judgements
The judgement that has the most
significant effect on the amounts recognised in the Company's
financial statements relates to investment assets and liabilities.
These have been determined to be financial assets and liabilities
held at FVTPL and have been accounted for accordingly. See note 3
for further details. The Company also notes that the assessment of
the Company as an investment entity is an area of
judgement.
(iii) Assessment of the Company as an investment
entity
The Board of Directors believes that
the Company meets the definition of an investment entity per IFRS
10 as the following conditions exist:
·
the Company has obtained funds from investing
shareholders for the purpose of providing them with professional
investment and management services;
·
the Company's business purpose, which was
communicated directly to investors, is investing for returns from
capital appreciation and investment income; and
·
all of the Company's investments are measured and
evaluated on a fair value basis.
As the Company believes it meets all
the requirements of an investment entity as per IFRS 10
"Consolidated Financial
Statements", it is required to measure all subsidiaries at
fair value rather than consolidating them on a line-by-line
basis.
5.
SEGMENTAL ANALYSIS
The segmental analysis of the
Company's results and financial position, which is prepared using
the accounting policies in note 3, is set out below. The Company's
segment Derived Investments have been disclosed as two separate
segments, Debt Investments and Derived Equity. These investment
segments follow different investment strategies as monitored by the
Chief Operating Decision Maker, the Board of Directors, which
monitors the portfolio allocation to ensure that it is in line with
the investment strategy and to provide investors with better
transparency on the two respective investment strategies within
this portfolio. Comparative segmental data has been restated to
show this additional level of granularity.
REPORTABLE SEGMENTS
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
|
PRIVATE EQUITY
INVESTMENTS
|
DEBT
INVESTMENTS
|
DERIVED
EQUITY
|
CENTRAL
FUNCTIONS1
|
TOTAL
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
Investment income
|
-
|
34,293
|
250
|
3,002
|
37,545
|
Net gains on financial assets at
FVTPL
|
17,873
|
9,032
|
2,650
|
-
|
29,555
|
Net gains on financial liabilities
at FVTPL
|
2,643
|
-
|
-
|
-
|
2,643
|
Realised foreign exchange
(losses)/gains
|
-
|
(115)
|
51
|
503
|
439
|
Unrealised foreign currency
losses
|
-
|
-
|
-
|
(210)
|
(210)
|
Total income
|
20,516
|
43,210
|
2,951
|
3,295
|
69,972
|
Performance
fees2
|
-
|
(6,014)
|
(562)
|
-
|
(6,576)
|
Management fees
|
(123)
|
(3,156)
|
(84)
|
-
|
(3,363)
|
Administration and other operating
expenses
|
-
|
(93)
|
(36)
|
(3,199)
|
(3,328)
|
Total operating expenses
|
(123)
|
(9,263)
|
(682)
|
(3,199)
|
(13,267)
|
Total income/(loss) less operating
expenses
|
20,393
|
33,947
|
2,269
|
96
|
56,705
|
Finance costs
|
-
|
-
|
-
|
(3,054)
|
(3,054)
|
Profit/(loss) before taxation
|
20,393
|
33,947
|
2,269
|
(2,958)
|
53,651
|
Tax charge
|
-
|
(173)
|
-
|
-
|
(173)
|
Total comprehensive income/(loss) attributable to
shareholders
|
20,393
|
33,774
|
2,269
|
(2,958)
|
53,478
|
|
PRIVATE EQUITY
INVESTMENTS
|
DEBT
INVESTMENTS
|
DERIVED
EQUITY
|
CASH AND
OTHER NCAs3
|
TOTAL
|
STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER
2023
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
Total assets
|
891,236
|
296,397
|
15,541
|
103,947
|
1,307,121
|
Total liabilities
|
(495)
|
(10,773)
|
-
|
(1,689)
|
(12,957)
|
NAV
|
890,741
|
285,624
|
15,541
|
102,258
|
1,294,164
|
1. Central functions represents
interest income earned on cash balances and general administration
and finance costs that cannot be allocated to investment
segments
2. Represents the movement in each
respective portfolio's overall performance fee
reserve
3. NCAs refers to net current assets
of the Company
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
(RESTATED)
|
PRIVATE EQUITY
INVESTMENTS
|
DEBT
INVESTMENTS
|
DERIVED
EQUITY
|
CENTRAL
FUNCTIONS1
|
TOTAL
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
Investment income
|
-
|
23,138
|
1,815
|
(477)
|
24,476
|
Net gains on financial assets at
FVTPL
|
(101,900)
|
(20,643)
|
2,803
|
-
|
(119,740)
|
Net gains on financial liabilities
at FVTPL
|
(6,063)
|
-
|
-
|
-
|
(6,063)
|
Realised foreign exchange
(losses)/gains
|
-
|
(544)
|
-
|
1,820
|
1,276
|
Unrealised foreign currency
losses
|
-
|
-
|
-
|
(74)
|
(74)
|
Total (loss)income
|
(107,963)
|
1,951
|
4,618
|
1,269
|
(100,125)
|
Performance
fees2
|
-
|
(22)
|
-
|
-
|
(22)
|
Management fees
|
(143)
|
(3,436)
|
(133)
|
-
|
(3,712)
|
Administration and other operating
expenses
|
-
|
(154)
|
(12)
|
(2,631)
|
(2,797)
|
Total operating expenses
|
(143)
|
(3,612)
|
(145)
|
(2,631)
|
(6,531)
|
Total (loss)/income less operating
expenses
|
(108,106)
|
(1,661)
|
4,473
|
(1,362)
|
(106,656)
|
Finance costs
|
-
|
-
|
-
|
(3,150)
|
(3,150)
|
(Loss)/profit before taxation
|
(108,106)
|
(1,661)
|
4,473
|
(4,512)
|
(109,806)
|
Tax charge
|
-
|
(231)
|
-
|
-
|
(231)
|
Total comprehensive (loss)/income attributable to
shareholders
|
(108,106)
|
(1,892)
|
4,473
|
(4,512)
|
(110,037)
|
|
PRIVATE EQUITY
INVESTMENTS
|
DEBT
INVESTMENTS
|
DERIVED
EQUITY
|
CASH AND
OTHER NCAS3
|
TOTAL
|
STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2022
(RESTATED)
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
Total assets
|
877,021
|
342,338
|
23,540
|
68,395
|
1,311,294
|
Total liabilities
|
(6,063)
|
(3,980)
|
-
|
(1,875)
|
(11,918)
|
NAV
|
870,958
|
338,358
|
23,540
|
66,520
|
1,299,376
|
1. Central functions represents
interest income earned on cash balances and general administration
and finance costs that cannot be allocated to investment
segments
2. Represents the movement in each
respective portfolio's overall performance fee
reserve
3. NCA refers to net current assets
of the Company
GEOGRAPHIC INFORMATION
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
|
NORTH
AMERICA
|
EUROPE
|
REST OF
WORLD
|
TOTAL
|
€'000
|
€'000
|
€'000
|
€'000
|
Investment income
|
28,341
|
7,729
|
1,475
|
37,545
|
Net gains on financial assets at
FVTPL
|
12,757
|
10,948
|
5,850
|
29,555
|
Net gains/(losses) on financial
liabilities at FVTPL
|
2,366
|
1,020
|
(743)
|
2,643
|
Realised foreign exchange
(losses)/gains
|
(125)
|
510
|
54
|
439
|
Unrealised foreign currency
losses
|
-
|
(210)
|
-
|
(210)
|
Total income
|
43,339
|
19,997
|
6,636
|
69,972
|
Performance fee
|
(4,581)
|
(1,454)
|
(541)
|
(6,576)
|
Management fee
|
(2,512)
|
(721)
|
(129)
|
(3,363)
|
Administration and other operating
expenses
|
-
|
(3,328)
|
-
|
(3,328)
|
Total operating expenses
|
(7,093)
|
(5,503)
|
(671)
|
(13,267)
|
Total income less operating expenses
|
36,246
|
14,494
|
5,965
|
56,705
|
Finance costs
|
-
|
(3,054)
|
-
|
(3,054)
|
Profit before tax
|
36,246
|
11,440
|
5,965
|
53,651
|
Tax charge
|
-
|
(173)
|
-
|
(173)
|
Total comprehensive income attributable to
shareholders
|
36,246
|
11,267
|
5,965
|
53,478
|
STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER
2023
|
NORTH
AMERICA
|
EUROPE
|
REST OF
WORLD
|
TOTAL
|
€'000
|
€'000
|
€'000
|
€'000
|
Total assets
|
702,302
|
577,662
|
27,157
|
1,307,121
|
Total liabilities
|
-
|
(12,462)
|
(495)
|
(12,957)
|
NAV
|
702,302
|
565,200
|
26,662
|
1,294,164
|
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
|
NORTH
AMERICA
|
EUROPE
|
REST OF
WORLD
|
TOTAL
|
€'000
|
€'000
|
€'000
|
€'000
|
Investment income
|
19,893
|
2,984
|
1,599
|
24,476
|
Net (losses)/gains on financial
assets at FVTPL
|
(67,759)
|
(44,137)
|
(7,844)
|
(119,740)
|
Net losses on financial liabilities
at FVTPL
|
(4,379)
|
(1,020)
|
(664)
|
(6,063)
|
Realised foreign exchange
(losses)/gains
|
(533)
|
1,817
|
(8)
|
1,276
|
Unrealised foreign currency
losses
|
-
|
(74)
|
-
|
(74)
|
Total (loss)/income
|
(52,778)
|
(40,430)
|
(6,917)
|
(100,125)
|
Performance fee
|
(13)
|
49
|
(58)
|
(22)
|
Management fee
|
(2,830)
|
(711)
|
(171)
|
(3,712)
|
Administration and other operating
expenses
|
-
|
(2,797)
|
-
|
(2,797)
|
Total operating expenses
|
(2,843)
|
(3,459)
|
(229)
|
(6,531)
|
Total (loss)/income less operating
expenses
|
(55,621)
|
(43,889)
|
(7,146)
|
(106,656)
|
Finance costs
|
-
|
(3,150)
|
-
|
(3,150)
|
(Loss)/Profit before tax
|
(55,621)
|
(47,039)
|
(7,146)
|
(109,806)
|
Tax charge
|
-
|
(231)
|
-
|
(231)
|
Total comprehensive (loss)/income attributable to
shareholders
|
(55,621)
|
(47,270)
|
(7,146)
|
(110,037)
|
STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER
2022
|
NORTH
AMERICA
|
EUROPE
|
REST OF
WORLD
|
TOTAL
|
€'000
|
€'000
|
€'000
|
€'000
|
Total assets
|
752,094
|
511,671
|
47,529
|
1,311,294
|
Total liabilities
|
(4,441)
|
(6,813)
|
(664)
|
(11,918)
|
NAV
|
747,653
|
504,858
|
46,865
|
1,299,376
|
6.
ADMINISTRATION AND OTHER OPERATING EXPENSES
|
|
YEAR ENDED
31 DECEMBER 2023
|
YEAR ENDED
31 DECEMBER 2022
|
|
NOTES
|
€'000
|
€'000
|
Director's fees
|
|
375
|
362
|
Administration and other
fees
|
|
679
|
692
|
Corporate and investor relations
services fee
|
9
|
485
|
512
|
Deal transaction, custody and
research costs
|
|
129
|
166
|
Legal and other professional
fees
|
|
633
|
209
|
General expenses
|
|
772
|
623
|
Auditors'
remuneration
|
|
|
|
Statutory
audit
|
|
179
|
173
|
Other assurance services -
interim review
|
|
59
|
54
|
Other assurance services -
agreed upon procedures
|
|
17
|
-
|
Total administration and other operating
expenses
|
|
3,328
|
2,791
|
Included in legal and other
professional fees was €0.5m of legal fees related to the
refinancing of the revolving credit facility during the year.
Included within general expenses was €0.01m of fees relating to the
audit of Alpha US Holdings L.P, see note 8b for further
information.
The Company has no employees and
there were no pension or staff cost liabilities incurred during the
year.
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 £1,200 (31 December 2022: £1,200).
The Company may be required, at
times, to pay tax in other jurisdictions as a result of specific
trades in its investment portfolio. During the year ended 31
December 2023, the Company had a net tax expense of €0.2m (31
December 2022: €0.2m), related to tax incurred on debt interest in
the United Kingdom. No deferred income taxes were recorded as there
are no timing differences.
8.
INVESTMENTS
8A.
FINANCIAL INSTRUMENTS HELD AT FVTPL
|
YEAR ENDED
31 DECEMBER 2023
|
YEAR ENDED
31 DECEMBER 2022
|
€'000
|
€'000
|
Private Equity
Investments
|
890,740
|
870,958
|
Private Equity financial assets
|
891,235
|
877,021
|
Private Equity financial liabilities
|
(495)
|
(6,063)
|
Debt
Investments1
|
294,213
|
340,639
|
Derived Equity
|
15,541
|
23,540
|
Closing fair value
|
1,200,494
|
1,235,137
|
Financial assets held at FVTPL
|
1,200,989
|
1,241,200
|
Financial liabilities held at FVTPL
|
(495)
|
(6,063)
|
1. Included in Debt Investments and
throughout the financial statements is the fair value of the debt
investment held by the subsidiary, see note 8(d) for further
details
|
YEAR ENDED
31 DECEMBER 2023
|
YEAR ENDED
31 DECEMBER 2022
|
€'000
|
€'000
|
Opening fair value
|
1,235,137
|
1,348,410
|
Calls
|
89,699
|
194,380
|
Distributions
|
(90,431)
|
(228,316)
|
Purchases
|
45,154
|
57,186
|
Sales
|
(111,263)
|
(10,720)
|
Net gains/(losses) on financial
assets at FVTPL
|
29,555
|
(119,740)
|
Net gains/(losses) on financial
liabilities at FVTPL
|
2,643
|
(6,063)
|
Closing fair value
|
1,200,494
|
1,235,137
|
Financial assets held at FVTPL
|
1,200,989
|
1,241,200
|
Financial liabilities held at FVTPL
|
(495)
|
(6,063)
|
8B.
NET GAINS/(LOSSES) ON FINANCIAL ASSETS AT
FVTPL
|
YEAR ENDED
31 DECEMBER 2023
|
YEAR ENDED
31 DECEMBER 2022
|
|
€'000
|
€'000
|
Private Equity financial assets
|
|
|
Gross unrealised
gains
|
75,229
|
145,601
|
Gross unrealised
losses
|
(87,465)
|
(260,095)
|
Total net unrealised losses on Private Equity financial
assets
|
(12,236)
|
(114,494)
|
Gross realised
gains
|
30,109
|
12,595
|
Total net realised gains on Private Equity financial
assets
|
30,109
|
12,595
|
Total net gains/(losses) on Private Equity financial
assets
|
17,873
|
(101,899)
|
Debt Investments
|
|
|
Gross unrealised
gains
|
15,248
|
3,061
|
Gross unrealised
losses
|
(7,837)
|
(17,784)
|
Total net unrealised gains/(losses)
on Debt Investments
|
7,411
|
(14,723)
|
Gross realised
gains
|
4,644
|
797
|
Gross realised
losses
|
(3,023)
|
(6,717)
|
Total net realised gains/(losses) on
Debt Investments
|
1,621
|
(5,920)
|
Total net gains/(losses) on Debt
Investments
|
9,032
|
(20,643)
|
Derived Equity
|
|
|
Gross unrealised
gains
|
6,055
|
13,978
|
Gross unrealised
losses
|
(439)
|
(5,313)
|
Total net unrealised gains on
Derived Equity
|
5,616
|
8,665
|
Gross realised
gains
|
-
|
-
|
Gross realised
losses
|
(2,966)
|
(5,863)
|
Total net realised losses on Derived
Equity
|
(2,966)
|
(5,863)
|
Total net gains on Derived Equity
|
2,650
|
2,802
|
|
|
|
Total net gains/(losses) on investments at fair value through
profit or loss
|
29,555
|
(119,740)
|
8C.
NET GAINS/(LOSSES) ON FINANCIAL LIABILITIES AT
FVTPL
|
YEAR ENDED
31 DECEMBER 2023
|
YEAR ENDED
31 DECEMBER 2022
|
|
€'000
|
€'000
|
Private Equity financial
liabilities
|
|
|
Gross unrealised
gains
|
3,386
|
-
|
Gross unrealised
losses
|
(743)
|
(6,063)
|
Total net unrealised gains /(losses) on Private Equity
financial liabilities
|
2,643
|
(6,063)
|
8D.
INVESTMENTS IN SUBSIDIARIES
The Company established two
wholly-owned subsidiaries in 2021 for investment purposes. In
accordance with IFRS 10, these subsidiaries have been determined to
be controlled subsidiary investments, which are measured at fair
value through profit or loss and are not consolidated. The fair
value of these subsidiary investments, as represented by their NAV,
is determined on a consistent basis to all other investments
measured at fair value through profit or loss.
The table below describes these
unconsolidated subsidiaries. The maximum exposure is the loss in
the carrying amount of the financial assets held.
NAME OF SUBSIDIARY
|
FORMATION DATE
|
TYPE OF FUND
|
PROPORTION OF OWNERSHIP INTEREST AND VOTING POWER
HELD
|
PRINCIPAL PLACE OF BUSINESS AND PLACE OF
INCORPORATION
|
NAV INCLUDED IN INVESTMENTS
AT FVTPL
€'000
|
Alpha US Holdings
L.P.
|
21 October 2021
|
Special purpose
entity
|
100%
|
United States of
America
|
9,888
|
Alpha US GP LLC
|
12 October 2021
|
Special purpose
entity
|
100%
|
United States of
America
|
-
|
The Company transferred an
investment in a Debt Investment to Alpha US Holdings L.P. during
2021. Net flows from subsidiaries are summarised below. Total fair
value has also been included in Debt Investments above as related
to the debt portfolio.
|
YEAR ENDED
31 DECEMBER 2023
|
YEAR ENDED
31 DECEMBER 2022
|
|
€'000
|
€'000
|
Opening fair value
|
9,598
|
8,908
|
Fair value movement on investment
subsidiaries
|
290
|
690
|
Closing fair value
|
9,888
|
9,598
|
Debt investment held at
FVTPL
|
9,988
|
9,660
|
Other net current
liabilities
|
(100)
|
(62)
|
Closing fair value
|
9,888
|
9,598
|
8E.
INVOLVEMENT WITH UNCONSOLIDATED STRUCTURED
ENTITIES
The Company's Private Equity
Investments are considered to be unconsolidated structured
entities. Their nature and purpose is to invest capital on behalf
of their limited partners. These Private Equity Investments pursue
sector-focused strategies, investing in four key sectors: Tech
& Digital, Services, Healthcare and Internet/Consumer. The
Company commits to a fixed amount of capital, in the form of a
commitment to these Private Equity Investments, which may be drawn
(and returned) over the life of the fund. The Company pays capital
calls when due and receives distributions from the Private Equity
Investments , once an asset has been sold.
The liquidity risk section of note
12 summarises outstanding commitments and recallable distributions
to the 11 underlying Private Equity Investments held which amounted
to €919.3m at year-end (31 December 2022: €1,005.1m). The fair
value of these were €890.7m at 31 December 2023 (31 December 2022:
€871.0m), whereas total value of the Private Equity funds was
€21.7bn (31 December 2022: €21.3bn). During the year, the Company
did not provide financial support and has no intention of providing
financial or other support to these unconsolidated structured
entities.
9.
RELATED PARTY TRANSACTION
The Investment Manager was appointed
by the Board of Directors under a discretionary Investment
Management Agreement ("IMA") dated 22 May 2015 and amendments dated
22 August 2016 and 2 March 2020, which sets out the basis for the
calculation and payment of the management and performance
fees.
Management fees earned by the
Investment Manager decreased in the year to €3.4m (31 December
2022: €3.7m), of which €0.8m was included in accruals at 31
December 2023. The management fee is calculated in arrears at a
rate of 0.5% per annum on the fair value of non-fee paying Private
Equity Investments and Derived Equity and 1.0% per annum on the
fair value of Debt Investments.
The Investment Manager is also
entitled to a performance fee. The performance fee is calculated
based on the overall gains or losses net of management fees and
Direct Deal costs (being costs directly attributable to due
diligence and execution of investments) in each financial year.
When the portfolio Total Return hurdle is met a performance fee
arises. Further details are included in note 10.
The IMA automatically renews every
three years unless written notice to terminate the IMA is served
one year in advance of the renewal date by either the Investment
Manager or the Company (by a special resolution). The Company is
required to pay the Investment Manager all fees and expenses
accrued and payable for the notice period through to the
termination date.
The Investment Advisor 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 an amendment dated 22
August 2016, exists between the two parties. Though not legally
related to the Company, the Investment Advisor has been determined
to be a related party. The Company paid no fees and had no
transactions with the Investment Advisor during the year (31
December 2022: €Nil).
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 some of the Company's accounting and
bookkeeping to Apax Partners Fund Services Limited ("APFS"), a
related party of the Investment Advisor, under a sub-administration
agreement dated 22 May 2015. A fee of €0.5m (31 December 2022:
€0.5m) was paid by the Company in respect of administration fees
and expenses, of which €0.3m (31 December 2022: €0.3m) was paid to
APFS.
Separately, the Company entered into
a service agreement with Apax Partners LLP and its affiliate, APFS,
with a fee calculated as 0.04% of the Invested Portfolio per annum
for corporate and investor services. During the year a fee of €0.5m
(31 December 2022: €0.5m) was paid by the Company to
APFS.
At 31 December 2023, the Company has
an intercompany balance outstanding with the subsidiary Alpha US
Holdings L.P. of €0.1m. This relates to administration fees
incurred by the subsidiary and paid by the Company. See note 8(d)
for further details.
Post year-end, there were changes to
the composition of the Board of Directors and Audit Committee. On 1
March 2024, Chris Ambler retired from the Board and Audit Committee
and Karl Sternberg was appointed as a new Non-Executive Director to
both the Board and Audit Committee. At the time of signing Karl (or
any person that may be a connected party to Karl) holds 19,000
shares. The table below summarises shares held by the
Directors:
|
31 DECEMBER
2023
|
% OF TOTAL SHARES IN
ISSUE
|
31 DECEMBER
2022
|
% OF TOTAL SHARES IN
ISSUE
|
Tim Breedon
|
70,000
|
0.014%
|
70,000
|
0.014%
|
Susie Farnon
|
43,600
|
0.009%
|
43,600
|
0.009%
|
Chris Ambler
|
33,796
|
0.007%
|
33,796
|
0.007%
|
Mike Bane
|
18,749
|
0.004%
|
18,749
|
0.004%
|
Stephanie Coxon
|
10,000
|
0.002%
|
10,000
|
0.002%
|
A summary of the Directors' fees and
expenses is set out on p.57 of the report.
10.
PERFORMANCE
|
31 DECEMBER 2023
|
31 DECEMBER 2022
|
|
€'000
|
€'000
|
Opening performance fee reserve
|
-
|
8,390
|
Performance fee charged to statement
of profit or loss and other comprehensive income
|
6,576
|
22
|
Performance fee
settled
|
-
|
(8,412)
|
Closing performance fee reserve
|
6,576
|
-
|
The performance fee is payable on an
annual basis once the hurdle threshold is met by eligible
portfolios. Performance fees are only payable to the extent they do
not dilute the returns below the required benchmark for each
respective portfolio as detailed in the table below. Additionally,
net losses are carried forward and netted against future gains. The
table below summarises the performance fee hurdles and percentage
payable by eligible portfolio.
|
NET PORTFOLIO
TOTAL RETURN HURDLE¹
|
PERFORMANCE
FEE
RATE
|
Debt Investments
|
6%
|
15%
|
Derived Equity
|
8%
|
20%
|
Eligible Private Equity
Investments
|
8%
|
20%
|
1
Net portfolio Total Return
means the sub-portfolio performance in a given period is calculated
by taking total gains or losses and dividing them by the sum of
Gross Asset Value 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. Net
portfolio Total Return is gross of performance fees but net of
management fees and relevant Direct Deal costs
The performance fee is payable to
the Investment Manager by way of ordinary shares of the Company.
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 charged through the statement of profit or loss and
other comprehensive income and allocated to a share-based payment
performance fee reserve in equity.
In the year ended 31 December 2023,
the performance fee payable to the Investment Manager was €6.6m.
This is expected to be settled by purchasing the Company's shares
equivalent to the value of the performance fee accrual and
transferring them to the Investment Manager to settle the
performance fee accrued at 31 December 2023 (31 December 2022:
€0.0m).
At 31 December 2023, management's
best estimate of the expected performance fee was calculated on the
eligible portfolio on a liquidation basis.
11.
REVOLVING CREDIT FACILITY AND FINANCE COSTS
The Company entered into a new
multi-currency revolving credit facility of €250m with SMBC Bank
International plc and JPMorgan Chase Bank, N.A., London Branch, on
5 September 2023, for general corporate purposes replacing the
facility held with Credit Suisse AG, London Branch. The new
facility has an initial term of 2.5 years, the interest rate
charged is SOFR or EURIBOR plus a margin between 300-335bps and a
non-utilisation fee of 115bps per annum. The facility was drawn
once during the year and fully repaid by 31 December
2023.
On 1 March 2024 the facility was
extended by six months, with a new expiry date of 4 September 2026,
with no changes to the terms noted above.
Summary of finance costs are
detailed in the table below:
|
YEAR ENDED
31 DECEMBER 2023
|
YEAR ENDED
31 DECEMBER 2022
|
|
€'000
|
€'000
|
Interest paid
|
446
|
114
|
Arrangement fee
|
75
|
900
|
Non-utilisation fee
|
2,533
|
2,136
|
Total finance costs
|
3,054
|
3,150
|
Under the Loan Agreement, the
Company is required to provide Private Equity Investments as
collateral for each utilisation. The loan-to-value must not exceed
35% of the eligible Private Equity NAV, which the Company met
throughout the year. There were no covenant breaches during the
year. As at 31 December 2023 the facility was undrawn (31 December
2022: €Nil).
12.
FINANCIAL RISK MANAGEMENT
The Company holds a variety of
financial instruments in accordance with its Investment Management
strategy. The investment portfolio comprises Private Equity
Investments, Debt Investments and Derived Equity as shown in the
table below:
|
31 DECEMBER 2023
|
31 DECEMBER 2022
|
|
€'000
|
€'000
|
Private Equity
Investments
|
74%
|
71%
|
Private Equity financial assets
|
74%
|
72%
|
Private Equity financial liabilities
|
0%
|
-1%
|
Debt Investments
|
25%
|
27%
|
Derived Equity
|
1%
|
2%
|
Total
|
100%
|
100%
|
Private Equity Investments have a
limited lifecycle as the average legal term of a fund is ten years,
unless extended by investor consent. The Company actively manages
Debt Investments and Derived Equity and realises these as
opportunities arise. This facilitates liquidity planning and allows
the Company to meet calls as they become due from Private Equity
Investments and other liabilities where necessary.
The Company's overall risk
management programme seeks to maximise the returns derived for the
level of risk to which the Company is exposed and seeks to minimise
potential adverse effects on the Company's financial performance.
Investments made by the Company potentially carry a significant
level of risk. There can be no assurance that the Company's
objectives will be achieved or that there will be a return of
capital invested.
The management of financial risks is
carried out by the Investment Manager under the policies approved
by the Board of Directors. The Investment Manager regularly updates
the Board of Directors, a minimum of four times a year, on its
activities and any material risk identified.
The Investment Manager manages
financial risk against an investment reporting and monitoring
framework tailored to the Company. The framework monitors
investment strategy, investment limits and restrictions as detailed
in the prospectus along with additional financial metrics deemed to
be fundamental in the running and monitoring of the Invested
Portfolio. The Invested Portfolio is monitored in real time which
enables the Investment Manager to keep a close review on
performance and positioning.
The Company's activities expose it
to a variety of financial risks: credit risk, liquidity risk and
market risk including price risk, foreign currency risk and
interest rate risk. The Company is also exposed to operational
risks such as custody risk. Custody risk is the risk of loss of
securities held in custody occasioned by the insolvency or
negligence of the custodian. Although an appropriate legal
framework is in place that mitigates the risk of loss of title of
the securities held by the custodian, in the event of failure, the
ability of the Company to transfer the securities might be
impaired. At 31 December 2023 and 31 December 2022, the Company's
custodians were ING and HSBC, both with A- credit
ratings.
The Company considers concentration
risk and noted that though it follows a sector-focused strategy,
with four key sectors, the Private Equity Investments' underlying
portfolios, Debt Investments and Derived Equity are diversified
within each key sector, operate in a number of different geographic
regions and are also diversified by vintage.
12A. CREDIT RISK
Credit risk is the risk of financial
loss to the Company if a counterparty to a financial instrument
fails to meet its contractual obligations. This risk arises
principally from the Company's investment in debt, cash and cash
equivalents, investment receivables and other
receivables.
|
31
DECEMBER 2023
|
|
|
€'000
|
% OF
NAV
|
€'000
|
% OF
NAV
|
Debt Investments
|
294,213
|
23%
|
340,639
|
26%
|
Cash and cash
equivalents
|
101,375
|
8%
|
67,966
|
5%
|
Investment
receivables
|
2,540
|
0%
|
1,699
|
1%
|
Other receivables
|
2,217
|
0%
|
429
|
0%
|
Total
|
400,345
|
31%
|
410,733
|
32%
|
12A.I. DEBT INVESTMENTS
The Investment Manager manages the
risk related to Debt Investments by assessing the credit quality of
the issuers and monitoring this through the term of investment.
The credit quality of the Company's
Debt Investments is summarised in the table below:
|
31 DECEMBER
2023
|
% OF
DEBT
INVESTMENTS
|
% OF
NAV
|
31 DECEMBER
2022
|
% OF DEBT
INVESTMENTS
|
% OF
NAV
|
RATING (S&P)
|
€'000
|
€'000
|
B
|
30,181
|
10%
|
3%
|
39,211
|
12%
|
3%
|
B-
|
96,080
|
33%
|
7%
|
138,303
|
41%
|
11%
|
CCC+
|
6,801
|
2%
|
1%
|
20,261
|
6%
|
2%
|
CCC
|
77,128
|
26%
|
6%
|
60,648
|
17%
|
5%
|
N/R¹
|
84,023
|
29%
|
6%
|
82,216
|
24%
|
6%
|
Total
|
294,213
|
100%
|
23%
|
340,639
|
100%
|
26%
|
|
31 DECEMBER
2023
|
% OF
DEBT
INVESTMENTS
|
% OF
NAV
|
31 DECEMBER
2022
|
% OF DEBT
INVESTMENTS
|
% OF
NAV
|
RATING (S&P)
|
€'000
|
€'000
|
First Lien term
loan
|
177,324
|
61%
|
14%
|
230,221
|
67%
|
18%
|
Second Lien term
loan
|
91,852
|
31%
|
7%
|
95,432
|
28%
|
7%
|
Convertible debt
|
9,988
|
3%
|
1%
|
9,660
|
3%
|
1%
|
Senior secured note
|
9,952
|
3%
|
1%
|
-
|
0%
|
0%
|
PIK note &
other
|
5,097
|
2%
|
0%
|
5,327
|
2%
|
0%
|
Total
|
294,213
|
100%
|
23%
|
340,639
|
100%
|
26%
|
1. Not currently rated by
S&P
The Investment Manager also reviews
the Debt Investments' industry sector direct concentration. The
Company was exposed to concentration risk in the following industry
sectors. A wider analysis of key sector concentration risk is
included in note 12c.iv.:
|
31 DECEMBER
2023
|
% OF DEBT
INVESTMENTS
|
% OF
NAV
|
31 DECEMBER
2022
|
% OF DEBT
INVESTMENTS
|
% OF
NAV
|
|
€'000
|
€'000
|
Tech & Digital
|
178,163
|
61%
|
14%
|
166,554
|
49%
|
13%
|
Services
|
35,594
|
12%
|
3%
|
64,545
|
19%
|
5%
|
Healthcare
|
68,625
|
23%
|
5%
|
97,631
|
29%
|
8%
|
Internet/Consumer
|
11,831
|
4%
|
1%
|
11,909
|
3%
|
1%
|
Total
|
294,213
|
100%
|
23%
|
340,639
|
100%
|
26%
|
12A.II. CASH AND CASH
EQUIVALENTS
The Company limits its credit risk
exposure in cash and cash equivalents by depositing cash with
adequately rated institutions. No allowance for impairment is made
for cash and cash equivalents. The exposure to credit risk to cash
and cash equivalents is set out below:
|
CREDIT RATING
|
31 DECEMBER
2023
|
31 DECEMBER
2022
|
|
€'000
|
€'000
|
Cash held in banks
|
A
|
71
|
3,397
|
Cash held in banks
|
A-
|
154
|
582
|
Cash held in banks
|
BBB+
|
32,595
|
63,987
|
Cash held in money market
funds
|
AAA
|
68,555
|
-
|
Total
|
|
101,375
|
67,966
|
The Company's cash is held with RBS
International, HSBC, ING and JP Morgan, Goldman Sachs and Deutsche
Bank money market funds.
12A.III. INVESTMENT RECEIVABLES AND OTHER
RECEIVABLES
The Company monitors the credit risk
of investment receivables and other receivables on an ongoing
basis. These assets are not considered impaired nor overdue for
repayment.
12B. LIQUIDITY RISK
Liquidity risk is the risk that the
Company will not be able to meet its financial obligations as they
fall due. Such obligations are met through a combination of
liquidity from the sale of investments, revolving credit facility
as well as cash resources. In accordance with the Company's policy,
the Investment Manager monitors the Company's liquidity position on
a regular basis; the Board of Directors also reviews it, at a
minimum, on a quarterly basis.
The Company invests in three
portfolios, Private Equity Investments, Debt Investments and
Derived Equity. Each portfolio has a different liquidity
profile.
The Debt portfolio has a mixed
liquidity profile as some positions may not be readily realisable
due to an inactive market or due to other factors such as
restricted trading windows during the year. Debt Investments held
in actively traded bonds are considered to be readily realisable.
Derived Equity in the form of listed
securities are considered to be liquid investments that the Company
may realise on short notice. These are determined to be readily
realisable, as the majority are listed on major global stock
exchanges. Unlisted equity may not be readily realisable due to an
inactive market.
The Company's Private Equity
Investments are not readily realisable although, in some
circumstances, they could be sold in the secondary market,
potentially at a discounted price. The timing and quantum of
Private Equity distributions is difficult to predict, however, the
Company has some visibility on capital calls as the majority of the
underlying funds operate capital call facilities. These are
typically drawn by the underlying funds for periods of c.12 months
to fund investments and fund operating expenses. Reporting from
these Private Equity Investments provides reasonable visibility of
calls for this period.
The table below summarises the
maturity profile of the Company's financial liabilities,
commitments, and recallable distributions at 31 December 2023 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.
The Company does not manage
liquidity risk on the basis of contractual maturity, instead the
Company manages liquidity risk based on expected cash
flows.
|
UP TO 3
MONTHS
|
3-12
MONTHS
|
1-5
YEARS
|
TOTAL
|
31
DECEMBER 2023
|
€'000
|
€'000
|
€'000
|
€'000
|
Investment payables
|
10,773
|
-
|
-
|
10,773
|
Accrued expenses
|
1,689
|
-
|
-
|
1,689
|
Private Equity Investments
outstanding commitments and recallable
distributions
|
27,420
|
110,130
|
781,781
|
919,331
|
Debt Investment
commitments
|
-
|
5,656
|
-
|
5,656
|
Total
|
39,882
|
115,786
|
781,781
|
937,449
|
|
UP TO 3
MONTHS
|
3-12
MONTHS
|
1-5
YEARS
|
TOTAL
|
31
DECEMBER 2022
|
€'000
|
€'000
|
€'000
|
€'000
|
Investment payables
|
3,980
|
-
|
-
|
3,980
|
Accrued expenses
|
1,875
|
-
|
-
|
1,875
|
Private Equity Investments
outstanding commitments and recallable
distributions
|
15,816
|
85,302
|
904,030
|
1,005,148
|
Debt Investment
commitments
|
-
|
2,245
|
-
|
2,245
|
Total
|
21,671
|
87,547
|
904,030
|
1,013,248
|
The Company has outstanding
commitments and recallable distributions to Private Equity
Investments as summarised below:
|
31 DECEMBER
2023
|
31 DECEMBER
2022
|
|
€'000
|
€'000
|
Apax Europe VI
|
225
|
225
|
Apax Europe VII
|
1,030
|
1,030
|
Apax VIII
|
14,475
|
14,713
|
Apax IX
|
29,694
|
30,157
|
Apax X
|
67,993
|
107,914
|
Apax XI
|
642,294
|
656,143
|
AMI Opportunities
|
6,491
|
9,977
|
AMI Opportunities
II
|
35,346
|
37,366
|
Apax Digital Fund
|
7,541
|
10,637
|
Apax Digital Fund
II
|
69,357
|
80,938
|
Apax Global Impact
|
44,885
|
56,048
|
Total
|
919,331
|
1,005,148
|
At 31 December 2023, the Company had
undrawn commitments and recallable distributions of €919.3m (31
December 2022: €1,005m). Within 12 months, €137.6m (31 December
2022: €101.1m) is expected to be drawn mainly due to Apax XI, Apax
Digital Fund II and Apax X. Additionally, the Company expects draw
downs of €5.7m from Debt Investments in the next 12 months for
delayed draw and revolving credit facility debt positions
held.
As explained in note 11, the Company
has access to a revolving credit facility up to €250.0m to bridge
short term liquidity including to meet calls from Private Equity
Investments or settle Debt Investments and Derived
Equity.
At year-end, the Company's
investments are recorded at fair value. The remaining assets and
liabilities are of a short-term nature and their fair values
approximate their carrying values.
12C MARKET
RISK
Market risk is the risk that changes in market
prices such as foreign currency exchange rates, interest rates and
equity prices will affect the Company's income or the value of its
investments. The Company aims to manage this risk within acceptable
parameters while optimising the return.
12C.I. PRICE RISK
The Company is exposed to price risk
on its Private Equity Investments, Debt Investments and Derived
Equity. All positions within the portfolio involve a degree of risk
and there are a wide variety of risks that affect how the price of
each individual investment will perform. The key price risks in the
Company's portfolio include, but are not limited to: investment
liquidity - where a significant imbalance between buyers and
sellers can cause significant increases or decreases in prices; the
risk that a company which has issued a bond or a loan has its
credit rating changed, which can lead to significant pricing risk;
and general investment market direction, where various factors such
as the state of the global economy or global political developments
can impact prices.
For the year ended 31 December 2023,
the main price risks for the Company's portfolio were assessed to
be market uncertainty due to inflation and geopolitical
uncertainty. The Investment Manager actively manages and monitors
price risk. The table below reflects the sensitivity of price risk
of the Invested Portfolio and the impact on NAV:
|
BASE
CASE
|
BULL CASE
(+20%)
|
BEAR CASE
(-20%)
|
31
DECEMBER 2023
|
€'000
|
€'000
|
€'000
|
Financial assets
|
1,200,989
|
1,441,187
|
960,791
|
Financial
liabilities
|
(495)
|
(396)
|
(594)
|
Change in NAV and profit
|
|
240,099
|
(240,099)
|
Change in NAV (%)
|
|
19%
|
-19%
|
Change in total income
|
|
343%
|
-343%
|
Change in profit for the year
|
|
449%
|
-449%
|
|
BASE
CASE
|
BULL CASE
(+20%)
|
BEAR CASE
(-20%)
|
31
DECEMBER 2022
|
€'000
|
€'000
|
€'000
|
Financial assets
|
1,241,200
|
1,489,440
|
992,960
|
Financial
liabilities
|
(6,063)
|
(4,851)
|
(7,276)
|
Change in NAV and profit
|
|
247,027
|
(247,027)
|
Change in NAV (%)
|
|
19%
|
-19%
|
Change in total loss
|
|
-247%
|
247%
|
Change in loss for the year
|
|
-224%
|
224%
|
12C.II. CURRENCY RISK
The Company is exposed to currency
risk on those investments, cash, interest receivable and other
non-current assets which are denominated in a currency other than
the Company's functional currency, which is the euro. The Company
does not hedge the currency exposure related to its investments.
The Company regards its exposure to exchange rate changes on the
underlying investments as part of its overall investment return and
does not seek to mitigate that risk through the use of financial
derivatives. The Company is also exposed to currency risk on fees
which are denominated in a currency other than the Company's
functional currency.
The Company's exposure to currency
risk on net assets is as follows:
|
EUR
|
USD
|
GBP
|
INR
|
HKD
|
NZD
|
CHF
|
TOTAL
|
AT
31 DECEMBER 2023
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
Financial assets and liabilities at
FVTPL
|
470,533
|
684,967
|
33,163
|
-
|
-
|
11,831
|
-
|
1,200,494
|
Cash and cash
equivalents
|
84,275
|
14,769
|
2,260
|
71
|
-
|
-
|
-
|
101,375
|
Investment
receivables
|
-
|
139
|
-
|
-
|
-
|
-
|
-
|
139
|
Interest receivable
|
434
|
1,584
|
-
|
-
|
-
|
383
|
-
|
2,401
|
Other receivables
|
2,177
|
-
|
40
|
-
|
-
|
-
|
-
|
2,217
|
Investment payables
|
(10,773)
|
-
|
-
|
-
|
-
|
-
|
-
|
(10,773)
|
Accrued expenses
|
(1,689)
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,689)
|
Total net foreign currency
exposure
|
544,957
|
701,459
|
35,463
|
71
|
-
|
12,214
|
-
|
1,294,164
|
|
EUR
|
USD
|
GBP
|
INR
|
HKD
|
NZD
|
CHF
|
TOTAL
|
|
|
|
|
|
|
|
|
|
AT
31 DECEMBER 2022
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
Financial assets and liabilities at
FVTPL
|
429,859
|
753,388
|
31,199
|
351
|
8,431
|
11,909
|
-
|
1,235,137
|
Cash and cash
equivalents
|
35,551
|
28,696
|
321
|
3,397
|
-
|
-
|
1
|
67,966
|
Investment
receivables
|
-
|
632
|
-
|
-
|
-
|
-
|
-
|
632
|
Interest receivable
|
-
|
1,067
|
-
|
-
|
-
|
-
|
-
|
1,067
|
Other receivables
|
351
|
-
|
78
|
-
|
-
|
-
|
-
|
429
|
Investment payables
|
(3,980)
|
-
|
-
|
-
|
-
|
-
|
-
|
(3,980)
|
Accrued expenses
|
(1,875)
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,875)
|
Total net foreign currency exposure
|
459,906
|
783,783
|
31,598
|
3,748
|
8,431
|
11,909
|
1
|
1,299,376
|
The Company's sensitivity to changes
in foreign exchange movements on net assets is summarised
below:
|
BASE
CASE
|
BULL CASE
(+20%)
|
BEAR CASE
(-20%)
|
31
DECEMBER 2023
|
€'000
|
€'000
|
€'000
|
USD
|
701,459
|
841,751
|
561,790
|
GBP
|
35,463
|
42,556
|
28,370
|
INR
|
71
|
85
|
57
|
NZD
|
12,214
|
14,657
|
9,771
|
Change in NAV and profit
|
|
149,842
|
(149,842)
|
Change in NAV (%)
|
|
12%
|
-12%
|
Change in total income
|
|
214%
|
-214%
|
Change in profit for the year
|
|
280%
|
-280%
|
|
BASE
CASE
|
BULL CASE
(+20%)
|
BEAR CASE
(-20%)
|
31
DECEMBER 2022
|
€'000
|
€'000
|
€'000
|
USD
|
783,783
|
940,539
|
627,026
|
GBP
|
31,598
|
37,918
|
25,278
|
INR
|
3,748
|
4,498
|
2,998
|
HKD
|
8,431
|
10,117
|
6,745
|
NZD
|
11,909
|
14,291
|
9,527
|
CHF
|
1
|
1
|
1
|
Change in NAV and profit
|
|
167,895
|
(167,895)
|
Change in NAV (%)
|
|
13%
|
-13%
|
Change in total loss
|
|
-168%
|
168%
|
Change in loss for the year
|
|
-153%
|
153%
|
12C.III. INTEREST RATE RISK
Interest rate risk arises from the
effects of fluctuations in the prevailing levels of market interest
rates on financial assets and liabilities and future cash flows.
The Company holds Debt Investments, loans payable and cash and cash
equivalents that expose the Company to cash flow interest rate
risk. The Company's policy makes provision for the Investment
Manager to manage this risk and to report to the Board of Directors
as appropriate.
The Company's exposure to interest
rate risk was €395.6m (31 December 2022: €408.6m). The analysis
below assumes that the price remains constant for both bull and
bear cases. The impact of interest rate floors on the debt
portfolio have been included in the bear case and fixed rate debt
positions have been excluded from the below:
|
BASE
CASE
|
BULL CASE
(+500BPS)
|
BEAR CASE
(-500BPS)
|
31
DECEMBER 2023
|
€'000
|
€'000
|
€'000
|
Cash and cash
equivalents
|
101,375
|
106,444
|
96,306
|
Debt Investments
|
294,213
|
308,924
|
283,327
|
Change in NAV and profit
|
|
19,779
|
(15,955)
|
Change in NAV (%)
|
|
2%
|
-1%
|
Change in total income
|
|
28%
|
-23%
|
Change in profit for the year
|
|
37%
|
-30%
|
|
BASE
CASE
|
BULL CASE
(+500BPS)
|
BEAR CASE
(-500BPS)
|
31
DECEMBER 2022
|
€'000
|
€'000
|
€'000
|
Cash and cash
equivalents
|
67,966
|
71,364
|
64,568
|
Debt Investments
|
340,639
|
357,671
|
328,035
|
Change in NAV and profit
|
|
20,430
|
(16,002)
|
Change in NAV (%)
|
|
2%
|
-1%
|
Change in total loss
|
|
-20%
|
16%
|
Change in loss for the year
|
|
-19%
|
15%
|
12C.IV. CONCENTRATION RISK
The Investment Manager also reviews
the concentration risk of the Invested Portfolio. The spread of the
portfolio across the four key sectors is set out
below:
|
% OF PRIVATE EQUITY
INVESTMENTS
|
% OF DEBT
INVESTMENTS
|
% OF DERIVED
EQUITY
|
% OF PRIVATE EQUITY
INVESTMENTS
|
% OF DEBT
INVESTMENTS
|
% OF
DERIVED EQUITY
|
|
31 DECEMBER 2023
|
31 DECEMBER 2023
|
31 DECEMBER 2023
|
31 DECEMBER
2022
|
31 DECEMBER
2022
|
31 DECEMBER
2022
|
Tech & Digital
|
35%
|
61%
|
0%
|
37%
|
49%
|
0%
|
Services
|
31%
|
12%
|
67%
|
31%
|
19%
|
42%
|
Healthcare
|
12%
|
23%
|
0%
|
12%
|
29%
|
36%
|
Internet/Consumer
|
22%
|
4%
|
11%
|
20%
|
3%
|
9%
|
Other
|
0%
|
0%
|
22%
|
0%
|
0%
|
13%
|
Total
|
100%
|
100%
|
100%
|
100%
|
100%
|
100%
|
12D. CAPITAL MANAGEMENT
The Company's capital management
objectives are to maintain a strong capital base to ensure the
Company will continue as a going concern, maximise capital
appreciation and provide regular dividends to its shareholders. The
Company's capital comprises non-redeemable ordinary shares and
retained earnings.
The ordinary shares are listed on
the London Stock Exchange (APAX). The Board receives regular
reporting from its corporate broker which provides insight into
shareholder sentiment and movements in the NAV per share discount.
The Board monitors and assesses the requirement for discount
management strategies. When considering share buybacks, the Board
will also take into account market sentiment and the trading of its
peer group.
13.
FAIR VALUE ESTIMATION
13A. INVESTMENTS MEASURED AT FAIR
VALUE
IFRS 13 "Fair Value Measurement"
requires the Company to classify fair value measurements using a
fair value hierarchy that reflects the significance of the inputs
used to make those measurements. The fair value hierarchy has the
following levels:
·
Quoted prices (unadjusted) in active markets for
identical assets or liabilities (level 1).
·
Valuation techniques based on observable 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). This category
includes instruments valued using: quoted market prices in active
markets for similar but not identical instruments; quoted prices
for identical instruments in markets that are not considered to be
active; and other valuation techniques where all the significant
inputs are directly or indirectly observable from market data
(level 2).
·
Valuation techniques 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
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 and
financial liabilities (by class) measured at fair value at 31
December 2023:
|
LEVEL
1
|
LEVEL
2
|
LEVEL
3
|
Total
|
ASSETS AND LIABILITIES
|
€'000
|
€'000
|
€'000
|
€'000
|
Private Equity financial
assets
|
-
|
-
|
891,235
|
891,235
|
Private Equity financial
liabilities
|
-
|
-
|
(495)
|
(495)
|
Debt Investments
|
9,952
|
274,273
|
9,988
|
294,213
|
Derived Equity
|
10,329
|
-
|
5,212
|
15,541
|
Total
|
20,281
|
274,273
|
905,940
|
1,200,494
|
The following table analyses within
the fair value hierarchy the Company's financial assets and
liabilities (by class) measured at fair value at 31 December
2022:
|
LEVEL
1
|
LEVEL
2
|
LEVEL
3
|
TotalTOTAL
|
ASSETS AND LIABILITIES
|
€'000
|
€'000
|
€'000
|
€'000
|
Private Equity financial
assets
|
-
|
-
|
877,021
|
877,021
|
Private Equity financial
liabilities
|
-
|
-
|
(6,063)
|
(6,063)
|
Debt Investments
|
-
|
330,979
|
9,660
|
340,639
|
Derived Equity
|
18,390
|
-
|
5,150
|
23,540
|
Total
|
18,390
|
330,979
|
885,768
|
1,235,137
|
IFRS 13 requires the Company to
describe movements in and transfers between levels of the fair
value hierarchy. The Company determines if there is a transfer
between each respective level at the end of each reporting period
based on the valuation information available.
There were no transfers to or from
level 1, level 2 or level 3 during the period.
13b. Significant unobservable inputs used in measuring fair
value
The Company values its holdings in
Private Equity Investments based on the NAV statements it receives
from the respective underlying funds.
The Company values Debt Investments
using third-party market data and broker quotes where available.
Where such information is not available, the Company uses models
that take account of factors that are relevant to each investment
and that prioritise the use of observable inputs.
The fair value of investments in
subsidiaries is considered to be the NAV of the underlying
subsidiaries which includes the fair value of investments held net
of other net current assets or liabilities. The fair value of the
underlying investments held are included within the Debt
Investments disclosures as relevant.
The Company values unquoted equities
in the Derived Equity portfolio using recent transaction data where
applicable or models that utilise comparable company multiples
applied to budgeted and historical earnings.
Movements in level 3 investments are
summarised in the table below:
|
YEAR ENDED 31 DECEMBER
2023
|
YEAR ENDED 31 DECEMBER
2022
|
|
PRIVATE EQUITY INVESTMENTS
|
DEBT
INVESTMENTS
|
DERIVED EQUITY
|
TOTAL
|
PRIVATE EQUITY INVESTMENTS
|
DEBT
INVESTMENTS
|
DERIVED
EQUITY
|
TOTAL
|
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
Opening fair value
|
870,958
|
9,658
|
5,152
|
885,768
|
1,012,855
|
8,908
|
9,570
|
1,031,333
|
Additions
|
89,699
|
-
|
-
|
89,699
|
194,380
|
-
|
-
|
194,380
|
Disposals and
repayments
|
(90,431)
|
-
|
-
|
(90,431)
|
(228,316)
|
-
|
(7,098)
|
(235,414)
|
Realised gains/(losses) on financial
assets
|
30,109
|
-
|
-
|
30,109
|
12,595
|
-
|
(6,931)
|
5,664
|
Unrealised (losses)/gains on
financial assets
|
(12,238)
|
330
|
60
|
(11,848)
|
(114,493)
|
750
|
9,611
|
(104,132)
|
Unrealised gains/(losses) on
financial liabilities
|
2,643
|
-
|
-
|
2,643
|
(6,063)
|
-
|
-
|
(6,063)
|
Transfers into level
3
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
Closing fair value
|
890,740
|
9,988
|
5,212
|
905,940
|
870,958
|
9,658
|
5,152
|
885,768
|
Financial assets held at FVTPL
|
891,235
|
9,988
|
5,212
|
906,435
|
877,021
|
9,658
|
5,152
|
891,831
|
Financial liabilities held at FVTPL
|
(495)
|
-
|
-
|
(495)
|
(6,063)
|
-
|
-
|
(6,063)
|
The unrealised losses attributable
to only assets and liabilities held at 31 December 2023 were €9.2m
(31 December 2022: €110.2m ).
The table below sets out information
about significant unobservable inputs used in measuring financial
instruments categorised as level 3 in the fair value
hierarchy:
DESCRIPTION
|
VALUATION TECHNIQUE
|
SIGNIFICANT UNOBSERVABLE INPUTS
|
SENSITIVITY TO CHANGES IN SIGNIFICANT
UNOBSERVABLE INPUTS
|
31 DECEMBER 2023 VALUATION
€'000
|
31 DECEMBER 2022 VALUATION
€'000
|
Private Equity financial
assets
|
NAV adjusted for carried
interest
|
NAV
|
The Company does not apply further
discount or liquidity premiums to the NAV
statements.
A movement of 10% in the value of
Private Equity Investments would move the NAV at the year-end by
6.9% (31 December 2022: 6.7%).
|
891,235
|
877,021
|
Private Equity financial
liabilities
|
|
|
(495)
|
(6,063)
|
Debt Investments
|
The Company holds a convertible
preferred instrument, the value of which is determined by the
probability weighted average of the instrument converting or not
converting at the valuation date
|
Probability of
conversion
|
On a look-through basis the Company
held one debt position (31 December 2022: one) which had
probability of conversion of 60% applied.
A movement of 10% in the conversion
percentage would result in a movement of 0.0% on NAV at period end
(31 December 2022: 0.0%).
|
9,988
|
9,660
|
Derived Equity
|
Comparable company earnings
multiples and/or precedent transaction analysis
|
Comparable company
multiples
|
The Company held two equity
positions (31 December 2022: two) which were valued using
comparable company multiples. The average multiple was 8.9x (31
December 2022: 8.5x).
A movement of 10% in the multiple
applied would move the NAV at year-end by 0.1% (31 December 2022:
0.1%).
|
5,212
|
5,150
|
14.
SHAREHOLDERS' CAPITAL
At 31 December 2023, the Company had
491,100,768 ordinary shares fully paid with no par value in issue
(31 December 2022: 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 2022.
The Company has one share class;
however, a number of investors are subject to lock-up periods,
which restricts them from disposing of ordinary shares issued at
admission. For investors which had five-year lock-up periods at
admission, all of these shares have been released following the
fifth anniversary on 15 June 2020. For investors with ten-year
lock-up periods, 20% of ordinary shares were released from lock-up
on 15 June 2021, with a further 20% being released annually until
15 June 2025. Additionally, performance shares awarded to the
Investment Manager are subject to a one-year lock-up from date of
receipt.
15.
EARNINGS AND NAV PER SHARE
|
YEAR ENDED
|
YEAR
ENDED
|
EARNINGS
|
31 DECEMBER
2023
|
31 DECEMBER
2022
|
Profit/(loss) for the year
attributable to equity shareholders: €'000
|
53,478
|
(110,037)
|
Weighted average number of shares in
issue
|
|
|
Ordinary shares at end of
year
|
491,100,768
|
491,100,768
|
Shares issued in respect of
performance fee
|
-
|
-
|
Total weighted ordinary shares
|
491,100,768
|
491,100,768
|
Dilutive
adjustments
|
-
|
-
|
Total diluted weighted 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 basis1
|
3,545,262
|
-
|
Adjusted shares2
|
494,646,030
|
491,100,768
|
Earnings/(loss) per share
(cents)
|
|
|
Basic
|
10.89
|
-22.41
|
Diluted
|
10.89
|
-22.41
|
Adjusted
|
10.81
|
-22.41
|
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-end adjusted for the performance fee reserve
and then divided by the current number of ordinary shares in issue.
At 31 December 2023, the Adjusted NAV per share for both
methodologies resulted in an Adjusted NAV per share of €2.62
respectively. In the prior year, there was no performance fee
accrued and therefore Adjusted NAV per share remained the same as
NAV per share at €2.65.
At 31 December 2023, there were no
items that would cause a dilutive effect on earnings per share
(2022: Nil). The adjusted earnings per share has been calculated
based on the profit attributable to shareholders adjusted for the
total accrued performance fee at year-end over the weighted average
number of ordinary shares. This has been calculated on a full
liquidation basis.
|
31 DECEMBER 2023
|
31 DECEMBER
2022
|
NAV
€'000
|
|
|
NAV at end of year
|
1,294,164
|
1,299,376
|
NAV
per share (€)
|
|
|
NAV per share
|
2.64
|
2.65
|
Adjusted NAV per
share
|
2.62
|
2.65
|
16.
DIVIDENDS
|
YEAR ENDED 31 DECEMBER
2023
|
YEAR ENDED 31 DECEMBER
2022
|
DIVIDENDS PAID TO SHAREHOLDERS DURING THE
YEAR
|
€'000
|
€
|
£'000
|
£
|
€'000
|
€
|
£'000
|
£
|
Final dividend paid for
2022/2021
|
32,462
|
6.61c
|
28,582
|
5.82p
|
37,417
|
7.59c
|
31,234
|
6.36p
|
Interim dividend paid for
2023/2022
|
32,804
|
6.63c
|
27,993
|
5.70p
|
34,847
|
7.09c
|
29,466
|
6.00p
|
Total
|
65,266
|
13.24c
|
56,575
|
11.52p
|
72,264
|
14.68c
|
60,700
|
12.36p
|
|
YEAR ENDED 31 DECEMBER
2023
|
YEAR ENDED 31 DECEMBER
2022
|
DIVIDENDS PAID TO SHAREHOLDERS DURING THE
YEAR
|
€'000
|
€
|
£'000
|
£
|
€'000
|
€
|
£'000
|
£
|
Final dividend proposed
|
32,364
|
6.59c
|
27,698
|
5.64p
|
32,462
|
6.61c
|
28,582
|
5.82p
|
Interim dividend paid
|
32,804
|
6.63c
|
27,993
|
5.70p
|
34,847
|
7.09c
|
29,466
|
6.00p
|
Total
|
65,168
|
13.22c
|
55,691
|
11.34p
|
67,309
|
13.70c
|
58,048
|
11.82p
|
On 4 March 2024, the Board approved
the final dividend for 2023, 5.64 pence per share (6.59 cents euro
equivalent) (2022: 5.82 pence per share (6.61 cents euro
equivalent)). This represents 2.5% of the Company's euro NAV at 31
December 2023 and will be paid on 4 April 2024.
On 5 September 2023, the Board
approved an interim dividend for the six months ended 30 June 2023,
5.70 pence per share (6.63 cents euro equivalent) (2022: 6.00 pence
per share (7.09 cents euro equivalent)). This represents 2.5% of
the Company's euro NAV at 30 June 2023 and was paid on 3 October
2023.
The Board considered the Company's
future liquidity position and ability to pay dividends and deemed
it appropriate to maintain payment of the interim and final
dividend in respect of 2023.
17.
SUBSEQUENT EVENTS
Post year-end, there were changes to
the composition of the Board of Directors and Audit Committee. On 1
March 2024, Chris Ambler retired from the Board and Audit Committee
and Karl Sternberg was appointed as a new Non-Executive Director to
both the Board and Audit Committee.
On 1 March 2024 the revolving credit
facility was extended by six months, with a new expiry date of 4
September 2026.
On 4 March 2024, the Board approved
the final dividend for 2023, 5.64 pence per share (6.59 cents euro
equivalent) (2022: 5.82 pence per share (6.61 cents euro
equivalent)). This represents 2.5% of the Company's euro NAV at 31
December 2023 and will be paid on 4 April 2024.
Shareholder Information
Administration
Directors
(all Non-Executive)
Tim Breedon CBE
(Chairman)
Susie Farnon (Chair of the Audit
Committee)
Chris Ambler (retired 1 March
2024)
Mike Bane
Stephanie Coxon
Karl Sternberg (appointed 1 March
2024)
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 advisor
Apax Partners LLP
1 Knightsbridge
London
SW1X 7LX
United Kingdom
www.apax.com
|
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
www.aztecgroup.co.uk
Corporate broker
Jefferies International
Limited
100 Bishopsgate
London EC2N 4JL
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
www.linkassetservices.com
|
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.
www.theaic.co.uk
Dividend timetable
Announcement: 5 March
2024
Ex-dividend date: 14 March
2024
Record date:
15 March 2024
Payment date: 4 April 2024
Earnings releases
Earnings releases are expected to be
issued on or around 4 May and 2 November 2023. The interim results
for the six months to 30 June 2022 are expected to be issued around
6 September 2023.
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
and results or if you would like to arrange a meeting, please
contact:
Katarina Sallerfors
Investor Relations -
AGA
Apax Partners LLP
1 Knightsbridge
London
SW1X 7LX
United Kingdom
Tel: +44 (0) 207 872
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, (ii) Debt 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, (iii)
Derived Equity which represent limited investments in equity,
primarily in listed companies. The Company will typically follow
the Apax Group's core sector and geographical focus in making Debt
Investments and Derived Equity, which may be made globally.
For the foreseeable future, the
Board believes that market conditions and the relative
attractiveness of investment opportunities in private equity will
cause the Company to hold the majority of its investments in
private equity assets. 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 Debt Investments and Derived Equity 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.
DEBT INVESTMENTS
These investments may include among
others: (i) direct and indirect investments in debt instruments,
including public and private debt which may include sub-investment
grade and unrated debt instruments; (ii) investments in the same or
different types of debt instruments in portfolio companies of the
Apax Funds; and may include (iii) acquisitions of Debt Investments
from Apax Funds or third-parties.
DERIVED EQUITY
These investments may include among
others: (i) direct and indirect investments in equity, including
equity in private and public companies; (ii) co-investments with
Apax Funds or third parties; (iii) investments in restructurings;
and (iv) 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 Debt Investment or Derived Equity;
and
·
in aggregate, not more than 20% of the Gross Asset
Value is intended to be invested in Derived 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 AIFMD
Alternative Investment Fund Managers
Directive ("AIFMD")
STATUS AND LEGAL FORM
The Company is a Non-EU Alternative
Investment Fund ("AIF")1, being a closed-ended investment company
incorporated in Guernsey and listed on the London Stock Exchange.
The Company's registered office is PO Box 656, East Wing, Trafalgar
Court, Les Banques, St Peter Port, Guernsey GY1
3PP.
REMUNERATION DISCLOSURE
This disclosure contains general
information about the basic characteristics of AGML's (the "AIFM")
remuneration policies and practices as well as some detailed
information regarding the remuneration policies and practices for
board directors whose professional activities have a material
impact on the risk profile of Apax Global Alpha Limited (the
"AIF").
This disclosure is intended to
provide the information contemplated by Section XIII of the ESMA
Guidelines on sound remuneration policies under the AIFMD and
paragraph 8 of the Commission Recommendation (2009/384/ EC of 30
April 2009 on remuneration policies in the financial services
sector) taking into account the nature, scale and complexity of the
AIFM and the AIFs it manages. The AIFM is a non-EU manager and the
AIF is a non-EU closed-ended investment company incorporated in
Guernsey and listed on the London Stock Exchange.
The AIF is externally managed by the
AIFM. The AIFM does not have any employees, however, it does have a
board of directors comprising five people, three of whom are
employees of Apax Partners Guernsey Limited ("APG") and two of whom
are non-executive directors. No other persons are remunerated
directly from the AIFM for work in relation to the AIFM or the AIF.
The directors of the AIFM fall within the Directive definitions as
senior management and risk-takers as detailed
below:
·
"senior management" means the relevant persons
responsible for the supervision of the AIFM and for the assessment
and periodical review of the adequacy and effectiveness of the risk
management process and policies of the AIFM; and
·
"risk-takers" means all staff whose actions have a
material impact on the AIFM's risk profile or the risk profile of
the AIF and, given the size of the AIFM's operations, includes all
staff of the AIFM who are involved directly or indirectly in the
management of the AIF.
GENERAL DESCRIPTION OF POLICY
The board of the AIFM has adopted a
remuneration policy which applies to the directors. The overarching
aim of the policy is twofold: (i) to ensure that there is no
encouragement for risk-taking at the level of the AIF which is
inconsistent with the risk profile and investment strategy of the
AIF; and (ii) to encourage proper governance, risk management and
the use of sound control processes. All directors are responsible
for ensuring the AIF acts in accordance with its investment policy
and managing the AIFM's risks effectively. The policy recognises
that two of the directors are non-executive directors and three
directors are Apax employees (the "Apax
directors").
Remuneration (which excludes carried
interest) paid to the directors is not based on, or linked to, the
overall performance of the AIF. Other than described below, there
is no variable component in the remuneration paid to any of the
directors for their services on the board and thus the policy does
not seek to identify quantitative and qualitative criteria by which
the directors' performance can be assessed for the purposes of
adjusting a variable component of remuneration. Remuneration paid
to the directors is therefore not based on, or linked to, the
overall performance of the AIF.
GENERAL DESCRIPTION OF REMUNERATION
GOVERNANCE
·
The remuneration process is overseen by the AIFM
directors. The board of the AIFM reviews the remuneration policy
annually. The board of the AIFM ensures that the policy is
transparent and easy to understand.
REMUNERATION FRAMEWORK - OBJECTIVES
The remuneration of directors is
described in the table below:
TYPE OF REMUNERATION
|
PURPOSE
|
Non-executive directors of the AIFM
x2 persons
|
·
contractual arrangement in
place for their services
·
receive a set amount of
remuneration each quarter
·
the remuneration of these
directors is detailed in the disclosed remuneration
value
|
APG employees as directors of the
AIFM x3 persons
|
·
the services principally
provided by these directors is included within the total fee
payable for services provided by the administrator to the AIFM and
the performance of these services forms part of the employee's
duties. Where separate remuneration is made to a director via a
contractual arrangement for their services this is detailed in the
disclosed remuneration value
|
Variable remuneration
|
·
the AIFM may receive
performance shares in the AIF (as part of its performance fee
shares awarded) and may choose to award a proportion of those
shares to the APG employees as directors of the AIFM or to other
employees of the Apax Group on a discretionary
basis
|
QUANTITATIVE DISCLOSURES
The table below shows the breakdown
of remuneration for the fiscal year ended 31 December 2023, for the
directors:
Total
|
|
The total amount of fixed
remuneration for the reporting period paid by the AIFM to its
directors
|
|
£240,000
|
Performance shares
|
|
The total number of performance
shares awarded free from consideration during the
year
|
|
-
|
Carried interest
|
|
Not applicable to the
AIF1
|
|
|
1. The AIF will not pay carried
interest, which can be confirmed in its
prospective
SUSTAINABLE RISK FINANCE DISCLOSURE REGULATION (2019/2088)
(THE "DISCLOSURE REGULATION")
The AIFM makes the following
disclosures in accordance with Article 6(1) and Article 7(2) of the
Disclosure Regulation:
INTEGRATION OF SUSTAINABILITY
RISKS
The policy of the AIFM on the
integration of sustainability risks in its investment
decision-making process is to rely on the responsible investment
and sustainability policies and procedures of Apax Partners LLP
(the "Investment Advisor") as set out
at: www.apaxglobalalpha.com/investment-portfolio/sustainability/
In line with the above policy, the
AIFM and the Investment Advisor on which the AIFM relies, has
determined that sustainability risks are relevant to the AIF. It
has reached this determination, having had regard to the types of
investments that may be made in accordance with AIF's investment
policy and objectives and has concluded that environmental or
social characteristics and sustainable investments are relevant but
are not a key objective for the AIF. It has therefore assessed that
investments on behalf of AIF are likely to be subject to specific
sustainability risks and that the AIF returns may be impacted.
The portfolio of the AIF comprises
different direct and indirect investments that may change over time
as a result of specific investment decisions made and accordingly
the identification and assessments of risks, including
sustainability risks, will take place on an
investment-by-investment basis. The Investment Advisor's assessment
(on which the AIFM relies) is that integration of sustainability
risks in investment decisions, combined with a diversified
portfolio, is appropriate for the AIF. In light of its investment
objective and strategy, this should help mitigate the potential
material negative impact of sustainability risks on the returns of
the AIF. Although there can be no assurance that all such risks
will be mitigated in whole or in part, nor identified prior to the
date the risk materialises.
TRANSPARENCY OF ADVERSE
SUSTAINABILITY IMPACTS
The Investment Advisor does not
consider the adverse impacts of investment decisions on
sustainability factors in the manner prescribed by article 4 of the
Disclosure Regulation. Article 4 of the Disclosure Regulation
requires fund managers to make a clear statement as to whether or
not they consider the "principal adverse impacts" of investment
decisions on sustainability factors. Although the Investment
Advisor takes sustainability and ESG very seriously the Investment
Advisor could not gather and/or measure all of the data on which it
expects to be obliged by article 4 of the Disclosure Regulation to
report, or could not do so systematically, consistently, and at a
reasonable cost to investors. This data gap is not expected to
change in the short-term. This is because: (i) various underlying
issuers (which may be global, and many not public interest
entities) are not obliged to, and overwhelmingly do not currently,
report by reference to the same data; or (ii) the underlying
investments and issuers are still in the process of considering
their mandatory data collection and disclosure requirements.
TAXONOMY REGULATION DISCLOSURE
The investments underlying this
financial product do not take into account the EU criteria for
environmentally sustainable economic activities.
MATERIAL CHANGES
Other than the new Disclosure
Regulation, there have been no material changes to the information
disclosed under Article 23 of the AIFMD in the prospectus of the
Company other than the previously disclosed announcements regarding
the new multi-currency revolving credit facility RCF on 6 September
2023 and directorate changes on 2 October 2023.
QUARTERLY RETURNS SINCE 1Q19
|
TOTAL RETURN1
(EURO)
|
RETURN
ATTRIBUTION
|
|
PRIVATE EQUITY
INVESTMENTS
|
DEBT
INVESTMENTS
|
DERIVED
EQUITY
|
PRIVATE EQUITY
INVESTMENTS
|
DEBT
INVESTMENTS
|
DERIVED
EQUITY
|
PERFORMANCE
FEE
|
OTHER
|
TOTAL NAV
RETURN
|
1Q19
|
12.3%
|
4.8%
|
1.2%
|
7.9%
|
0.9%
|
0.1%
|
0.0%
|
(0.2%)
|
8.7%
|
2Q19
|
7.1%
|
0.9%
|
(0.4%)
|
4.8%
|
0.2%
|
0.0%
|
(0.3%)
|
(0.2%)
|
4.4%
|
3Q19
|
6.9%
|
6.0%
|
(3.5%)
|
4.3%
|
1.4%
|
(0.4%)
|
(0.2%)
|
(0.2%)
|
4.9%
|
4Q19
|
3.0%
|
1.8%
|
14.9%
|
2.5%
|
0.1%
|
1.3%
|
(0.5%)
|
0.0%
|
3.4%
|
1Q20
|
(11.6%)
|
(7.7%)
|
(25.1%)
|
(8.0%)
|
(1.8%)
|
(1.8%)
|
0.0%
|
(0.3%)
|
(11.9%)
|
2Q20
|
16.0%
|
7.0%
|
14.8%
|
11.1%
|
1.6%
|
0.7%
|
0.0%
|
(0.2%)
|
13.3%
|
3Q20
|
12.4%
|
2.1%
|
(2.4%)
|
8.4%
|
0.4%
|
(0.1%)
|
0.0%
|
(0.3%)
|
8.5%
|
4Q20
|
8.7%
|
(0.1%)
|
36.1%
|
6.0%
|
0.0%
|
1.0%
|
0.0%
|
(0.1%)
|
6.9%
|
1Q21
|
13.7%
|
6.4%
|
18.3%
|
8.5%
|
1.6%
|
0.7%
|
(0.2%)
|
(0.2%)
|
10.4%
|
2Q21
|
9.5%
|
1.4%
|
8.2%
|
6.1%
|
0.4%
|
0.3%
|
(0.1%)
|
(0.2%)
|
6.5%
|
3Q21
|
13.6%
|
3.4%
|
6.5%
|
9.1%
|
0.9%
|
0.3%
|
(0.2%)
|
(0.2%)
|
9.9%
|
4Q21
|
(0.6%)
|
2.7%
|
(3.7%)
|
(0.4%)
|
0.7%
|
(0.1%)
|
(0.1%)
|
(0.2%)
|
(0.1%)
|
1Q22
|
(3.1%)
|
2.8%
|
(0.7%)
|
(2.0%)
|
0.6%
|
0.0%
|
(0.2%)
|
(0.1%)
|
(1.7%)
|
2Q22
|
(2.6%)
|
0.7%
|
(10.0%)
|
(1.8%)
|
0.1%
|
(0.2%)
|
0.2%
|
(0.2%)
|
(1.9%)
|
3Q22
|
3.0%
|
6.0%
|
(2.9%)
|
2.1%
|
1.6%
|
(0.1%)
|
(0.3%)
|
(0.1%)
|
3.2%
|
4Q22
|
(8.2%)
|
(6.2%)
|
8.0%
|
(9.9%)
|
1.8%
|
0.5%
|
0.5%
|
(0.2%)
|
(7.3%)
|
1Q23
|
1.8%
|
2.8%
|
4.3%
|
1.2%
|
0.9%
|
0.1%
|
(0.1%)
|
(0.2%)
|
1.9%
|
2Q23
|
0.1%
|
2.6%
|
(2.2%)
|
0.1%
|
0.9%
|
0.0%
|
(0.2%)
|
(0.2%)
|
0.6%
|
3Q23
|
(1.7%)
|
5.6%
|
(3.4%)
|
(1.0%)
|
1.4%
|
0.0%
|
(0.2%)
|
(0.3%)
|
(0.1%)
|
4Q23
|
2.1%
|
0.9%
|
14.6%
|
1.5%
|
0.2%
|
0.2%
|
0.1%
|
(0.1%)
|
1.9%
|
|
|
|
|
|
|
|
|
|
|
2019
|
33.9%
|
11.8%
|
9.1%
|
20.2%
|
2.7%
|
1.1%
|
(1.0%)
|
(0.3%)
|
22.7%
|
2020
|
25.4%
|
0.2%
|
(3.8%)
|
15.9%
|
0.0%
|
(0.2%)
|
0.0%
|
(0.9%)
|
14.8%
|
2021
|
41.0%
|
13.4%
|
37.5%
|
25.0%
|
4.0%
|
1.3%
|
(0.7%)
|
(0.9%)
|
28.7%
|
2022
|
(11.3%)
|
2.7%
|
(7.4%)
|
(7.3%)
|
0.6%
|
(0.1%)
|
0.0%
|
(0.6%)
|
(7.4%)
|
2023
|
2.4%
|
11.8%
|
14.8%
|
1.6%
|
3.3%
|
0.2%
|
(0.5%)
|
(0.5%)
|
4.1%
|
NOTE:
All quarterly information included
in the tables above is unaudited
1.
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
2.
Includes management fees and other
general costs. It also includes FX on the euro returns table
only
|
TOTAL RETURN1 (CONSTANT
CURRENCY)
|
|
RETURN
ATTRIBUTION
|
|
PRIVATE EQUITY
INVESTMENTS
|
DEBT
INVESTMENTS
|
DERIVED
EQUITY
|
PRIVATE EQUITY
INVESTMENTS
|
DEBT
INVESTMENTS
|
DERIVED
EQUITY
|
PERFORMANCE
FEE
|
OTHER2
|
FX3
|
TOTAL NAV
RETURN
|
1Q19
|
10.0%
|
2.5%
|
(1.5%)
|
6.4%
|
0.5%
|
(0.2%)
|
0.0%
|
(0.2%)
|
2.2%
|
8.7%
|
2Q19
|
8.0%
|
2.3%
|
0.8%
|
5.3%
|
0.5%
|
0.1%
|
(0.3%)
|
(0.2%)
|
(1.0%)
|
4.4%
|
3Q19
|
4.8%
|
2.5%
|
(5.1%)
|
3.1%
|
0.6%
|
(0.6%)
|
(0.2%)
|
(0.3%)
|
2.3%
|
4.9%
|
4Q19
|
4.1%
|
3.7%
|
15.2%
|
3.2%
|
0.6%
|
1.3%
|
(0.5%)
|
0.0%
|
(1.2%)
|
3.4%
|
1Q20
|
(11.6%)
|
(8.6%)
|
(23.5%)
|
(7.9%)
|
(2.0%)
|
(1.7%)
|
0.0%
|
(0.2%)
|
(0.1%)
|
(11.9%)
|
2Q20
|
16.3%
|
8.4%
|
16.2%
|
11.4%
|
2.0%
|
0.8%
|
0.0%
|
(0.2%)
|
(0.6%)
|
13.3%
|
3Q20
|
15.9%
|
5.7%
|
(1.0%)
|
10.7%
|
1.2%
|
0.0%
|
0.0%
|
(0.2%)
|
(3.2%)
|
8.5%
|
4Q20
|
11.0%
|
3.0%
|
37.2%
|
7.6%
|
0.7%
|
1.1%
|
0.0%
|
(0.1%)
|
(2.4%)
|
6.9%
|
1Q21
|
9.6%
|
2.5%
|
14.1%
|
6.0%
|
0.7%
|
0.6%
|
(0.2%)
|
(0.2%)
|
3.5%
|
10.4%
|
2Q21
|
10.2%
|
1.9%
|
9.2%
|
6.6%
|
0.5%
|
0.4%
|
(0.1%)
|
(0.2%)
|
(0.7%)
|
6.5%
|
3Q21
|
11.8%
|
1.5%
|
5.4%
|
7.9%
|
0.5%
|
0.2%
|
(0.2%)
|
(0.1%)
|
1.6%
|
9.9%
|
4Q21
|
(2.3%)
|
1.0%
|
(5.9%)
|
(1.5%)
|
0.3%
|
(0.1%)
|
(0.2%)
|
(0.2%)
|
1.6%
|
(0.1%)
|
1Q22
|
(5.4%)
|
0.3%
|
(2.1%)
|
(3.6%)
|
0.2%
|
0.0%
|
(0.2%)
|
(0.2%)
|
2.1%
|
(1.7%)
|
2Q22
|
(6.1%)
|
(3.7%)
|
(12.5%)
|
(3.9%)
|
(1.0%)
|
(0.3%)
|
0.2%
|
(0.2%)
|
3.3%
|
(1.9%)
|
3Q22
|
(1.6%)
|
0.4%
|
(6.7%)
|
(1.0%)
|
0.4%
|
(0.1%)
|
(0.3%)
|
(0.2%)
|
4.4%
|
3.2%
|
4Q22
|
(2.1%)
|
1.1%
|
14.6%
|
(1.5%)
|
0.0%
|
0.3%
|
0.3%
|
(0.2%)
|
(6.2%)
|
(7.3%)
|
1Q23
|
2.6%
|
3.9%
|
4.9%
|
1.8%
|
1.2%
|
0.1%
|
(0.1%)
|
(0.2%)
|
(0.9%)
|
1.9%
|
2Q23
|
0.4%
|
3.1%
|
(2.5%)
|
0.3%
|
1.0%
|
0.0%
|
(0.1%)
|
(0.2%)
|
(0.4%)
|
0.6%
|
3Q23
|
(3.6%)
|
3.4%
|
(3.8%)
|
(2.3%)
|
1.0%
|
(0.1%)
|
(0.2%)
|
(0.3%)
|
1.8%
|
(0.1%)
|
4Q23
|
4.9%
|
3.9%
|
16.1%
|
3.3%
|
1.0%
|
0.2%
|
(0.1%)
|
0.1%
|
(2.6%)
|
1.9%
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
31.7%
|
9.6%
|
5.5%
|
19.3%
|
2.2%
|
0.7%
|
(0.7%)
|
(1.0%)
|
2.2%
|
22.7%
|
2020
|
32.6%
|
7.4%
|
2.5%
|
20.6%
|
1.7%
|
0.1%
|
0.0%
|
(0.8%)
|
(6.8%)
|
14.8%
|
2021
|
34.6%
|
6.9%
|
30.2%
|
21.0%
|
2.3%
|
1.1%
|
(0.7%)
|
(0.9%)
|
5.9%
|
28.7%
|
2022
|
(14.8%)
|
(1.7%)
|
(8.6%)
|
(9.5%)
|
(0.4%)
|
(0.2%)
|
0.0%
|
(0.6%)
|
3.3%
|
(7.4%)
|
2023
|
4.5%
|
14.4%
|
16.8%
|
3.0%
|
4.0%
|
0.2%
|
(0.6%)
|
(0.5%)
|
(2.0%)
|
4.1%
|
NOTE:
All quarterly information included
in the tables above is unaudited
1.
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
2.
Includes management fees and other
general costs. It also includes FX on the euro returns table
only
3.
Includes the impact of FX
movements on investments and FX on cash held during each respective
period
Portfolio allocation since
1Q19
|
PORTFOLIO
ALLOCATION1
|
PORTFOLIO NAV
(€M)
|
NAV
(€M)
|
|
PRIVATE EQUITY
INVESTMENTS
|
DEBT
INVESTMENTS
|
DERIVED
EQUITY
|
NET CASH AND NCAS
|
PRIVATE EQUITY
INVESTMENTS
|
DEBT
INVESTMENTS
|
DERIVED
EQUITY
|
NET CASH AND
NCAS
|
TOTAL
NAV
|
TOTAL ADJUSTED
NAV
|
1Q19
|
68%
|
18%
|
11%
|
3%
|
669.5
|
178.9
|
112.0
|
28.1
|
988.5
|
988.2
|
2Q19
|
56%
|
22%
|
12%
|
9%
|
582.9
|
232.1
|
123.3
|
96.2
|
1,034.5
|
1,031.9
|
3Q19
|
61%
|
24%
|
11%
|
4%
|
648.1
|
257.4
|
116.0
|
38.9
|
1,060.4
|
1,055.8
|
4Q19
|
70%
|
23%
|
8%
|
(1%)
|
766.3
|
252.5
|
89.7
|
(9.5)
|
1,099.0
|
1,092.1
|
1Q20
|
69%
|
24%
|
4%
|
3%
|
643.1
|
221.4
|
44.3
|
27.4
|
936.2
|
936.2
|
2Q20
|
70%
|
22%
|
5%
|
3%
|
742.5
|
230.8
|
50.7
|
36.7
|
1,060.7
|
1,060.7
|
3Q20
|
70%
|
22%
|
3%
|
5%
|
784.1
|
243.4
|
32.3
|
64.3
|
1,124.1
|
1,124.1
|
4Q20
|
66%
|
23%
|
3%
|
8%
|
788.3
|
275.7
|
43.7
|
93.5
|
1,201.2
|
1,201.2
|
1Q21
|
64%
|
25%
|
4%
|
7%
|
830.7
|
322.8
|
46.1
|
99.9
|
1,299.5
|
1,296.6
|
2Q21
|
66%
|
28%
|
4%
|
2%
|
916.6
|
388.6
|
50.6
|
29.0
|
1,384.8
|
1,380.3
|
3Q21
|
68%
|
23%
|
3%
|
5%
|
1,016.1
|
348.8
|
51.5
|
73.2
|
1,489.6
|
1,483.0
|
4Q21
|
68%
|
20%
|
2%
|
10%
|
1,012.9
|
304.6
|
30.9
|
141.7
|
1,490.1
|
1,481.7
|
1Q22
|
65%
|
23%
|
2%
|
10%
|
918.4
|
327.1
|
30.7
|
145.7
|
1,421.9
|
1,419.6
|
2Q22
|
63%
|
24%
|
2%
|
11%
|
877.2
|
337.5
|
27.4
|
150.1
|
1,392.2
|
1,392.2
|
3Q22
|
66%
|
26%
|
2%
|
6%
|
922.4
|
369.6
|
24.9
|
89.3
|
1,406.2
|
1,402.1
|
4Q22
|
67%
|
26%
|
2%
|
5%
|
871.0
|
340.6
|
23.6
|
64.2
|
1,299.4
|
1,299.4
|
1Q23
|
69%
|
27%
|
2%
|
2%
|
887.7
|
343.6
|
24.4
|
37.3
|
1,293.0
|
1,291.4
|
2Q23
|
66%
|
26%
|
1%
|
7%
|
858.9
|
341.7
|
13.8
|
87.4
|
1,301.8
|
1,298.7
|
3Q23
|
67%
|
22%
|
1%
|
10%
|
849.5
|
283.2
|
13.1
|
124.1
|
1,269.9
|
1,264.2
|
4Q23
|
69%
|
23%
|
1%
|
7%
|
890.7
|
294.2
|
15.6
|
93.7
|
1,294.2
|
1,287.6
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
64%
|
22%
|
11%
|
4%
|
666.7
|
230.3
|
110.2
|
38.4
|
1,045.6
|
1,042.0
|
2020
|
69%
|
23%
|
4%
|
5%
|
739.5
|
242.8
|
42.8
|
55.5
|
1,080.6
|
1,080.6
|
2021
|
67%
|
24%
|
3%
|
6%
|
944.1
|
341.2
|
44.8
|
86.0
|
1,416.0
|
1,410.4
|
2022
|
65%
|
25%
|
2%
|
8%
|
897.2
|
343.7
|
26.7
|
112.3
|
1,379.9
|
1,378.3
|
2023
|
68%
|
24%
|
1%
|
7%
|
871.7
|
315.7
|
16.7
|
85.6
|
1,289.7
|
1,285.5
|
1. For annual periods the average weighting over four quarters
used
Summary of fees
There is no layering of fees and
there are no fees charged on cash.
For the Private Equity portfolio,
fees are paid at the level of the Apax Funds. As AGA is typically a
sizeable investor in each of the Apax Funds, it benefits from fee
discounts also made available to other investors of similar size.
On Debt Investments and Derived
Equity, AGA pays a management fee plus a performance fee if the
return hurdle is met.
MANAGEMENT FEES
Debt Investments
|
1.0%
|
Derived Equity and Eligible Private
Equity3
|
0.5%
|
The above summarises the fees paid
on Debt Investments, Derived Equity, and Eligible Private Equity.
The fee is calculated and paid quarterly in arrears to
AGML.
PERFORMANCE FEES
|
NET PORTFOLIO TOTAL RETURN
HURDLE
|
PERFORMANCE FEE
RATE
|
Debt Investments
|
6%
|
15%
|
Derived Equity and Eligible Private
Equity3
|
8%
|
20%
|
The performance fee is calculated
based on the overall gains or losses net of management fees and
Direct Deal costs in each financial year. The performance fee is
calculated and paid annually. Performance fee payments are expected
to be made in shares and remain subject to the terms as disclosed
in the Prospectus.
Separate to this is carried interest
which is accrued at the level of the Apax funds. As AGA is a
limited partner in these funds, Private Equity NAV reported by AGA
is already net of this number and no additional performance fee is
charged by AGA.
3. Eligible Private Equity
represents less than 2% of NAV and relates to secondary stakes in
Apax Europe VI and Apax Europe VII acquired by AGA
KEY
TERMS
Eligible Portfolio means the Debt
Investments, Derived Equity, and Eligible Private Equity
portfolios.
Eligible Private Equity means the
Private Equity portfolio eligible for management fees and
performance fee. It represents interests in Private Equity
Investments held that do not pay fees at the Apax Fund
level.
Portfolio Total Return means the
sub-portfolio performance in a given period, is calculated by
taking total gains or losses and dividing them by the sum of GAV 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. Portfolio Total Return is gross of
performance fees but net of management fees and relevant Direct
Deal costs.
Direct Deal costs means costs
directly attributable to the due diligence and execution of deals
completed by the Company (such as broker fees and deal research
costs). For avoidance of doubt it excludes taxes payables and
general fund and administration costs.
Ongoing charges in the reported period
Ongoing charges are calculated in
line with guidance issued by the AIC. They comprise recurring costs
such as administration costs, management fees paid to AGML, and
management fees paid to the underlying Private Equity funds'
general partners. They specifically exclude deal costs, taxation,
financing costs, performance fees and other non-recurring costs. A
reconciliation between costs per the financial statements and those
used in the ongoing charges is set out on the
left.
Note that these calculations differ
from those provided in the Key Information Document ("KID") which
are prepared in line with guidance issued under the Packaged Retail
and Insurance-based Investment Products Regulations. Key difference
is the periods based on which these charges are
prepared.
|
|
|
|
ALL
IN €'000
OPERATING COSTS
|
TOTAL PER STATEMENT OF
PROFIT OR LOSS AND OCI
|
EXCLUDED FROM AIC
ONGOING CHARGES
|
INCLUDED IN AIC
ONGOING CHARGES
|
Performance fee
|
6,576
|
6,576
|
-
|
Management fee
|
3,363
|
-
|
3,363
|
Admin and other
expenses
|
3,328
|
611
|
2,717
|
Other admin and operating
expenses
|
2,566
|
-
|
2,566
|
Deal transaction, custody and
research costs
|
129
|
129
|
-
|
Legal and other professional
fees
|
633
|
482
|
151
|
Total
|
13,267
|
7,187
|
6,080
|
Finance costs
|
3,054
|
3,054
|
-
|
Total costs
|
16,321
|
10,241
|
6,080
|
Look-through management
fees¹
|
|
|
17,644
|
Total ongoing
charges
|
|
|
23,724
|
Average NAV²
|
|
|
1,291,634
|
% of Average NAV
|
|
|
1.8%
|
1.
Represents management fees of the
Apax Funds
2.
Represents the average of five
quarter-end reported NAVs from 31 December 2022 to 31 December
2023
Glossary
ADF means the limited
partnerships that constitute the Apax Digital Private Equity
fund.
ADF
II means the limited partnerships
that constitute the Apax Digital II Private Equity
fund.
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.
AGI means the limited
partnerships that constitute the Apax Global Impact
Fund.
AGML or Investment Manager means Apax Guernsey Managers Limited.
AI artificial
intelligence.
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.
AMI
II means the limited partnerships
that constitute the AMI Opportunities II Fund focused on investing
in Israel.
Apax Global Alpha or Company or AGA means Apax Global Alpha Limited.
Apax Group means Apax Partners
LLP and its affiliated entities, including its sub-advisors, and
their predecessors, as the context may require.
Apax Partners or Apax or Investment Advisor
means Apax Partners LLP.
Apax Private Equity Funds or Apax Funds
means Private Equity funds managed, advised and/or
operated by Apax Partners.
APFS means Apax Partners Fund
Services Limited.
APG means Apax Partners
Guernsey Limited.
AVIII means the limited
partnerships that constitute the Apax VIII Private Equity
fund.
AX means the limited
partnerships that constitute the Apax X Private Equity
fund.
AXI means the limited
partnerships that constitute the Apax XI Private Equity
fund.
Aztec or Aztec Group means
Aztec Financial Services (Guernsey) Limited.
Capital Markets Practice or CMP consists of a dedicated team of specialists within the Apax
Partners Group having in-depth experience of the leveraged finance
debt markets, including market conditions, participants and
opportunities. The CMP was initially set up to support the
investment advisory teams within the Apax Group 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 Investments.
Cumulative Return calculated on
the movement in Adjusted NAV per share taking into
account
any dividends paid during the
respective period whilst annualised Cumulative Return calculated
based on the internal rate of return ("IRR") using the opening
Adjusted NAV, dividend paid and closing Adjusted NAV for the period
stated.
Debt Investments comprise
investments including primary investments in public and private
debt. In each case, these are typically identified by Apax Partners
as part of its private equity activities.
Derived Equity comprise
investments including primary investments in in equity, primarily
in listed companies. In each case, these are typically identified
by Apax Partners as part of its private equity
activities.
Direct Deal costs means costs
directly attributable to the due diligence and execution of deals
completed by the Company (such as broker fees and deal research
costs). For avoidance of doubt it excludes taxes payables and
general fund and administration costs.
EBITDA means Earnings before
interest, tax, depreciation and amortisation.
Eligible Portfolio means the
Debt Investments, Derived Equity and Eligible Private Equity
Investments portfolios.
Eligible Private Equity means
the Private Equity Investments eligible for management fees and
performance fee. It represents interests in Private Equity
Investments held that do not pay fees at the Apax Fund level.
ESG means Environmental, social
and governance.
EV means Enterprise
value.
FRC Financial Reporting
Council.
FVTPL means fair value through
profit or loss.
FX means foreign
exchange.
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 means an aggregate,
annual, compound, internal rate 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 the underlying Private Equity,
Gross 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, Debt
Investments and Derived Equity, however, excluding any other
investments such as legacy hedge funds and cash.
Investor relations team means
such investor relations services as are currently provided to AGA
by the Investment Advisor.
IPO means Initial public
offering.
KPI means Key performance
indicator.
LSE means London Stock
Exchange.
LTM means Last twelve
months.
Market capitalisation is
calculated by multiplying the share price at a particular date by
the number of shares in issue on the same date. The euro equivalent
is translated using the exchange rate at the reporting period
date.
MOIC Multiple of invested
capital.
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 accounting policies.
NTM means Next twelve
months.
OCI means Other comprehensive
income.
Ongoing charges are the
Company's ongoing charges which are calculated in line with
guidance issued by the AIC. They comprise recurring costs such as
administration costs, management fees paid to AGML and management
fees paid to the underlying Private Equity funds' general partners.
They specifically exclude deal costs, taxation, financing costs,
performance fees and other non-recurring costs. A reconciliation
between costs per the financial statements and those used in the
ongoing charges is set out on p.116.
Operational Excellence Practice or OEP
means professionals who support the Apax Funds'
investment strategy by providing assistance to portfolio companies
in specific areas such as devising strategies, testing sales
effectiveness and cutting costs.
Performance fee reserve is the
estimated performance fee reserve calculated in line with the
Investment Management Agreement.
Portfolio Total Return means
the sub-portfolio performance in a given period, and is calculated
by taking total gains or losses and dividing them by the sum of GAV
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. Portfolio Total Return is gross of
performance fees but net of management fees and relevant Direct
Deal costs.
Private Equity Investments or Private Equity
means primary commitments to, secondary purchases
of commitments in, and investments in, existing and future Apax
Funds.
RCF means Revolving Credit
Facility.
Reporting period means the
period from 1 January 2023 to 31 December 2023.
Total NAV Return for a
year/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, divided by 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 under the Total Return
calculation, the sub-portfolio performance in a given period can be
evaluated by taking the 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 or TSR for the period means the net share price change together with
all dividends paid during the period.
Unaffected Valuation is determined
as the fair value in the last quarter before exit, when valuation
is not affected by the exit process (i.e. because an exit was
signed, or an exit was sufficiently close to being signed that the
Apax Funds incorporated the expected exit multiple into the
quarter-end valuation).
Unaffected Valuation is
determined as the fair value in the last quarter before exit, when
valuation is not affected by the exit process (i.e. because an exit
was signed, or an exit was sufficiently close to being signed that
the Apax Funds incorporated the expected exit multiple into the
quarter-end valuation).