Apax has its best year since IPO – the 22.7% return on NAV that Apax Global Alpha posted for 2019 was its best result since its IPO in 2015. That figure is in euros, in sterling the return was 20.5%. The equity and debt portions of the portfolio generated returns of 9.1% and 11.8% respectively but the real action was in the private equity portfolio which produced returns of 33.9% (again all in euros). The 9.54p total dividend for the year is 12.9% higher than for 2018.
Exits from the private equity portfolio generated €182.4m, €169.5m of this was redeployed into new private equity investments. A commitment of $450m was made by the company to the Apax X Fund. This will be drawn down as the manager invest the money. Half of the money is going into the euro portfolio and the balance in the dollar portfolio.
“The private equity portfolio delivered very strong performance in the year, largely as a result of continued earnings growth in the underlying portfolio. 2019 was a busy year for investment activity. On a look-through basis, AGA invested €104.0m with 13 new companies added to the portfolio. Distributions in the year were higher than prior year and were mainly driven by three strong exits: AssuredPartners, Exact Software and Acelity.”
Fee changes
The board has made some changes to fees. These are fairly complex but at the base level, what was a 1.25% fee on listed equity, debt and those private equity investments that are not subject to Apax management fees (private equity investments in Apax funds are charged the going rate for investment in those funds) will become 1% p.a. on debt and 0.5% p.a. for listed equity and private equity.
The performance fee has been reduced from 20% to 15% of returns for debt, with a revised hurdle rate of 6% net of fees (previously: 8% gross). For equities and private equity, the performance fee rate remains at 20% but the hurdle rate has been increased to 8% net of fees (previously: 8% gross). Performance fees will now be payable on the net annual performance of each portfolio.
Overall fees payable will be capped at 3% p.a. of NAV. These changes took effect from 1 January 2020. The board says that it expects a material overall reduction in investment management fees to result from these changes, in a substantial majority of cases.
APAX : Apax has its best year since IPO