abrdn Private Equity Opportunities (APEO) has announced its interim results for the six months ended 31 March 2023. Key highlights from the results announcement are as follows:
- Performance – NAV total return (NAV TR) for the six months to 31 March 2023 was 3.0%. The valuation of the underlying portfolio increased by 5.4% during the period (excluding FX).
- Investment Activity – five new primary commitments were made during the period, two direct co-investments, two follow-on investments into two existing direct co-investments and one secondary investment during the period, totalling £140.8m (31 March 2022: £239.7m).
- Co-investments – direct co-investment has continued to grow as a proportion of the portfolio and has now reached a portfolio of 25* underlying companies and 22% of portfolio NAV (30 September 2022: 22 underlying companies and 19% of portfolio NAV).
- Cashflows – the portfolio generated distributions of £83.6m (31 March 2022: £120.6m) and had total drawdowns of £104.4m in the six months to 31 March 2023 (31 March 2022: £145.5m).
- Outstanding Commitments – outstanding commitments at the year-end amounted to £699.7m (31 March 2022: £627.1m). The over-commitment ratio of 37.6% at year-end (31 March 2022: 38.9%) was at the lower end of the company’s target range (30-75%).
- Balance Sheet & Liquidity – the revolving credit facility was increased to £300.0m in size (from £200.0m) and extended in duration by a year (to December 2025). APEO had cash and cash equivalents of £19.9m (31 March 2022: £26.6m) and had £207.2m undrawn on its revolving credit facility (31 March 2022: £175.6m undrawn).
Commitments, investments and distributions
The six months ended 31 March 2023 was an active period for new investment, with APEO making new commitments totalling £140.8m. Specifically, APEO made five new primary commitments (£121.3m), two new direct co-investments (£9.3m), two follow-on investments in existing co-investments (£5.6m) and one secondary investment (£4.6m). Direct co-investment has continued to grow as a proportion of the portfolio and has now reached a portfolio of 25 separate underlying companies and 22% of portfolio NAV (30 September 2022: 22 separate underlying companies and 19% of portfolio NAV).
Outstanding commitments at the year-end amounted to £699.7m (31 March 2022: £627.1m). The value of outstanding commitments in excess of liquid resources as a percentage of portfolio value (referred to as the “over-commitment ratio”) was 37.6% at 31 March 2023 (31 March 2022: 38.9%). This is broadly in line with the figure twelve months prior and is at the lower end of the long-term target range of 30%-75%.
APEO received £83.6m of distributions from investments during the period (31 March 2022: £120.6m), in spite of the wider slowdown in private equity M&A activity. The realised return from the distributions equated to 2.6 times cost (31 March 2022: 2.2 times). The total drawdowns during the period of £104.4m (31 March 2022: £145.5m) were higher than amounts received as distributions. However, it is worth noting that £20.6m of this relates to new co-investment and secondaries (31 March 2022: £60.2m).
Liquidity & bank facility
APEO’s balance sheet remains in a strong position, having extended its revolving credit facility during the period, from £200.0m to £300.0m, and extended the maturity by a year to December 2025. The increase, provided by RBS International, Société Générale and State Street Bank International, provides APEO with additional capacity for new investment activity. APEO had £207.2m remaining undrawn on its £300.0m revolving credit facility at 31 March 2023 (31 March 2022: £175.6m undrawn) and held cash and cash equivalents of £19.9m (31 March 2022: £26.6m).
APEO has paid one quarterly dividend of 4.0 pence per share so far this year and the board has announced a second quarterly dividend of 4.0 pence per share. This will be paid on 28 July 2023 to shareholders on the register on 23 June 2023. The board says that it expects, in the absence of any adverse market event, the third and fourth interim dividends will also be 4.0 pence per ordinary share, payable in October 2023 and January 2024 respectively. This suggests a total dividend payment for the year ending 30 September 2023 of 16.0 pence per ordinary share.