Princess Private Equity (Princess) has published its annual report for the year ended 31 December 2016. During the year, Princess’ audited net asset value (NAV) increased to EUR 10.16 per share, which it says represents an increase of 12.9% on a total return basis, adjusted for the total dividend of EUR 0.54 per share. This equates to an annualized dividend yield of 5.7% of opening NAV for the year. Princess’ share price increased to EUR 8.63 per share, representing a share price total return of 17.2%.
Princess says that positive valuation developments were mainly responsible for its NAV growth. The largest contributors were direct investments including VAT Group AG, Action, KinderCare Education, MultiPlan (2014) and Hofmann Menue Manufaktur. During 2016, Princess invested EUR 69.6 million in nine new direct private equity and EUR 30.0 million in twelve new direct debt investments, bringing the allocation to direct investments to 76% of the portfolio value compared to 68% at the end of 2015. Overall, EUR 116.6 million was deployed which brought the investment level to 92.6% of NAV, against 93.5% at the start of the year. Princess says that, throughout 2016, realization activity remained high, with Princess’ portfolio generating record proceeds of EUR 185.5 million compared to EUR 130.7 million in 2015. 76% of the distributions came from the direct portfolio with the balance from the legacy fund portfolio.
Looking at individual holdings, the manager says that VAT GROUP AG has displayed consistently strong performance since its IPO in April 2016, resulting in an 88.6% increase in share price as of 31 December 2016. For the quarter ended 30 September 2016, net sales were reported at CHF 129.7 million, representing an increase of 17% compared to the same period last year with EBITDA for the first half of the year (only disclosed semi-annually) growing by 16.9% to CHF 73.9 million. The total order intake for the same period increased by 40% to CHF 137 million compared to the previous year. The manager says that this growth was largely driven by favorable market demand from technology advances in the display and semiconductor segments. This generated higher equipment purchases due to the need for complex production processes and the increasing switch from LCD to OLED (Organic light-emitting diode) displays has also provided considerable stimulus for further growth.
The manager says that non-food discount retailer Action continued its international expansion activity, particularly in Germany and France. The company has over 850 stores in six countries, with almost 200 new stores opened during 2016. This strong international growth, driven by new store openings, continues the organization’s evolution from a predominantly domestic-focused Dutch business into a pan-European discount retailer.
KinderCare Education (US provider of early childhood education and care services for children) showed continued strength in operational performance accordign to Princess’ manager. The company reported higher than forecasted center occupancy rates and an EBITDA increase of 9% over the last quarter. Furthermore the cash flow generation was also strong in 2016, pacing ahead of budget.
Princess’ maanger says that MultiPlan is the largest provider of transaction-based solutions that reduce medical costs. The company uses technology, analytics and data to generate over USD 13 billion in savings annually for commercial, property and casualty insurers, and government payers of medical claims. In June, Princess received gross proceeds of EUR 57.8 million following the realization of MultiPlan, which was acquired by Hellman & Friedman. Princess retained a minority investment in the company, reinvesting a portion of its proceeds alongside Hellman & Friedman to participate in further value creation activities.
Hofmann Menue Manufaktur (German producer and supplier of customized frozen food products to small business canteens and social organizations) serves over 10’000 customers. Princess’ manager says that it is well-positioned to take advantage of certain secular trends such as an aging population and the trend towards outsourced catering. Since investment in 2014, Partners Group has supported the company’s expansion to the adjacent markets of Switzerland and Austria and introduced new product lines.
Princess Private Equity NAV growth driven by ‘positive valuation developments’ : PEY