Dollar and exits power 17.5% return for Aberdeen Private Equity – Aberdeen Private Equity says that for the financial year ended 31 March 2017, its NAV rose by 14.2% to 152.24p. Inclusive of the two dividends, 2.2p and 2.0p (total 4.2 pence) paid respectively in September 2016 and March 2017, shareholders received a sterling NAV total return of 17.5% for the period. The movement in NAV was driven by positive investment performance and by the exposure in the portfolio to US assets as a result of the strengthening in the US dollar against sterling over the year.
In local currency terms the portfolio generated a total return of 8.8% for the period under review. Thoma Bravo IX Fund LP, a 2008 commitment, was the single largest contributor to performance. Silver Lake Partners III LP and Resolute Fund III LP, respectively 2007 and 2013 investments also delivered strong returns. The investment portfolio’s performance was helped by a considerable number (23) of company exit events, whether by IPO, trade or secondary sale from funds. The majority of these exits (18) were at a premium to held value. Further investment performance was delivered via uplifts in carrying value for ongoing investments.
Thoma Bravo Fund IX, a US growth and buyout fund, saw Deltek and LANDesk Software produce the largest uplifts following their sales to Roper Technologies and Clearlake Capital respectively. This consistently strong performing fund is now drawing to the end of its life. The remaining investments in Silver Lake III increased by 21% over 2016. Throughout the year the fund also provided liquidity for investors by selling shares of its positions in NYSE listed Alibaba Group Holding Ltd and Godaddy Inc. Transcendia (formerly Transilwrap Company) and DiversiTech Corporation were the main drivers for the performance of Resolute Fund III. The former manufactures plastic film for a range of end industries, and the latter provide parts for the HVAC trade. Pine Brook Capital Partners’ valuation uplift was driven by uplifts for Essent Group (NYSE listed), Forge Energy, Origin Bancorp and Green Bancorp (NASDAQ listed). The performance produced by CCMP Capital Investors III resulted from their investments in Jetro Cash & Carry, PQ Corporation and Jamieson Laboratories. PQ Corporation is a producer of speciality inorganic chemicals, and Jamieson Laboratories is a manufacturer and distributor of vitamins.
On the negative side of things, Lion Capital Fund III’s portfolio experienced decreases in value across a range of portfolio holdings including Bumble Bee, All Saints and John Varvatos. Lion had previously agreed a sale for Bumble Bee in 2015 which failed to complete. HgCapital 5 Co-Invest1 LP, the holding partnership for APEF’s co-investment in Achilles, was marked down due to weaker growth at a time of increasing expenditure on technology and customer service. The business has some sensitivity to declining spending in the Oil and Gas industry. Northzone VI, a venture capital fund, saw valuation declines in portfolio companies Widespace, Sticky and eProspects. Despite this, the fund remains a top performer, having already seen exits at significant multiples of cost. The fund’s DPI ratio is greater than 1, meaning that all our original capital has been returned via these distributions. The decline for APEF Investments (Europe) S.a.r.l., the holding vehicle for recent investment in the Spanish lower mid-market fund Nazca IV, relates to the set-up costs for this holding structure. Nazca IV had a marginally positive year. The small decrease in Lion Seneca Cayman 3, the holding partnership for our co-investment in French optical retailer Alain Afflelou, reflects a narrow miss on their budgeted EBITDA targets. Despite this, the business is performing well and developing a range of additional businesses and product lines.
APEF : Dollar and exits power 17.5% return for Aberdeen Private Equity