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Apax Global Alpha has strong results despite market negativity

Apax Global Alpha

Apax Global Alpha has strong results despite market negativity – Apax Global Alpha has announced its 2018 results today. NAV return in total terms was +7.1% or +5.4% in constant currency (which adjusts figures to remove the impact of foreign exchange rates). This demonstrates a solid performance of the private equity portfolio and a strong contribution from direct debt. The second semi-annual dividend of 4.12p per share was declared, which is equivalent to 2.5% of euro NAV at 31 December 2018. This will be paid out on 5 April 2019. Apax remains 98% invested with €17.3 million in cash. Outstanding debt commitments to Apax funds total to €251.8 million, and funding sources are €479.3 million.

The NAV total return of +7.1% is realised by private equity (+9.2%), direct investments (-2.5%), FX (+1.7%), and costs and other movements (-1.3%). The total return of private equity was 17.4% (15.9% constant currency). Direct debt delivered Total Return of 4.5% (0.3% constant currency). Direct equity had negative Total Return of -17.6% (-17.4% constant currency).

The reason for the direct equity portfolio having a subpar year was the generally weak market backdrop for listed equity. Also, investor sentiment towards the Indian financial sector worsened, hurting the return from those investments, even though the operating performance was good. There were a few company-specific issues that hurt certain investments.

The NAV had a strong performance mainly due to earnings growth in investee companies. Foreign exchange also played a positive role, as the US dollar strengthened relative to the Euro. A number of companies outperformed during the year with ThoughtWorks, AssuredPartners and Exact Software producing significant value increases. ThoughtWorks enjoyed a very strong start under the Apax funds’ ownership. New client wins alongside increasing demand from existing customers drove the top line, and cost reduction initiatives created a positive margin impact.

AGA invested €73.3 million in private equity investments which closed during 2018, adding eight new companies. The pace of investment was lower than last year, but reflects caution in regards to high private equity valuations in the market.

Tim Breedon, the chairman of Apax Global Alpha, said “AGA’s results demonstrate the value accretion potential of our strong portfolio over the long-term.” Furthermore, the COO of Apax, Ralf Gruss, said AGA delivered positive returns in a year where most markets turned negative. The private equity portfolio had pleasing returns driven by the strong operational momentum in the portfolio companies and three lucrative exits. In derived investments, the quality of the derived debt portfolio allowed for outperformance against credit markets. Listed equity investments however disappointed and could not withstand market volatility.”

APAX : Apax Global Alpha has strong results despite market negativity

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