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New fee structure, new investment policy and new name for Standard Life European Private Equity

Standard Life European Private Equity delivered a total return for the year ended 30 September 2016 of 24.8%. By contrast, the MSCI Europe Index delivered a total return of 20.2% over the same period. The closing mid-market price of the Company’s ordinary shares on 30 September 2016 was 267.3p, an increase of 24.9% over the year and a discount of 22.8% to NAV. The full year dividend totalled 5.4p (up from 5.25p). The Board believes that providing a strong, stable dividend is attractive to shareholders. To that end, the decision has been taken to increase the annual dividend to 12.0 pence per share, for the year ending 30 September 2017, equating to a yield of approximately 3.5% on net asset value per ordinary share. The Board is committed to maintaining the real value of this new enhanced dividend and growing it at least in line with inflation, in the absence of unforeseen circumstances. In line with the current dividend policy, the Board has proposed a final dividend, for the year ended 30 September 2016, of 3.6 pence per share equating to an annual dividend of 5.4 pence per share.

The Board is recommending to shareholders that they approve a change in the name of the company to Standard Life Private Equity Trust PLC.

The net asset value rose 23.0% to 346.4p (30 September 2015 – 281.6p). The increase in NAV during the period included 14.9% of net realised gains and income from the portfolio of 49 private equity fund interests, 3.8% of unrealised losses on a constant exchange rate basis, 13.1% of positive exchange rate movements on the portfolio, and the payment of dividends during the year ended 30 September 2016.

The Board is in the process of finalising new fee arrangements with the Manager and has negotiated the adoption of a single management fee of 0.95% of net asset value to replace the previous management fee and incentive fee. The Board believes the new fee structure delivers value for shareholders.

They made three new fund commitments during the year, with commitments of EUR45.0 million to Advent International GPE VIII, EUR28.1 million to the Sixth Cinven Fund and EUR23.0 million to Astorg VI. In addition, the Company assumed outstanding commitments of GBP10.4 million on the secondary acquisition of TowerBrook Investors III. A new commitment of EUR34.0 million was made to IK VIII in October 2016.

Distributions received by, and draw downs from, the portfolio during the year were GBP126.9 million and GBP66.2 million respectively. In addition, they acquired through the secondary market one private equity fund interest for GBP19.1 million. During the period from 30 September 2016 to 1 December 2016 they received distributions of GBP14.4 million and funded GBP7.4 million of draw downs.

At 1 December 2016 they had a cash balance of GBP111.0 million and outstanding commitments of GBP325.1 million.

The Board has also concluded that it would be beneficial to increase the private equity opportunity set available to the Manager, by removing the current size restrictions and broadening the geographic reach on private equity investments in the company’s investment policy. In addition, to maximise the returns on cash held pending investment in private equity funds, a product of the company’s over-commitment strategy, the Board recommends broadening the investment policy in regard to cash management to incorporate listed direct private equity investments, to be utilised opportunistically in suitably liquid investment companies. The Board is proposing at the Annual General Meeting that shareholders approve the requisite amendments to the investment policy to action these changes. Shareholders should not expect a radical shift in the composition of the company’s portfolio, which will remain conviction oriented with a European focus.

SEP : New fee structure, new investment policy and new name for Standard Life European Private Equity

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