9th Dec 2016 07:00
ABERDEEN PRIVATE EQUITY FUND LIMITED
UNAUDITED HALF YEARLY REPORT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2016
CHAIRMAN'S STATEMENT
I am pleased to present to shareholders the Half Yearly Report and condensed financial statements of the Company for the six months ended 30 September 2016.
Performance and Dividend
During the period under review the Net Asset Value ("NAV") per Share rose by 9.7% to 146.3p. Inclusive of the 2.2p dividend paid in September 2016, shareholders received a Sterling NAV total return of 11.5% for the period.
The movement in NAV was driven by positive investment performance and further strengthening in the US Dollar vs. Sterling (the portfolio retains a significant allocation to US Dollar denominated assets).
Given the timing differences in committing to new private equity funds and co-investments, and the varying nature of many of the underlying assets, there is no one appropriate benchmark with which to compare performance. Your Board however reviews the monthly NAV performance both in absolute and relative terms against the Company's peer group.
At the September 2016 Annual General Meeting the Company announced that, in the absence of unforeseen circumstances, the Company would expect to pay minimum total dividends of 4.0p per share per annum, commencing with two dividends of 2.0p per share relating to the financial year to 31 March 2017 (2016 - 2.2p). This represents a change from the previous distribution policy (announced and implemented, July 2011) whereby the Company would distribute approximately 10% of the received distributions (net of recallable distributions) each year subject to a minimum of at least 1p per Share per annum. Accordingly, we are pleased to announce the payment of a dividend of 2.0p for the Half Year (2015 - zero) per Share which will be payable on 17 March 2017 to Shareholders on the register on 23 February 2017.
Share Capital Management
During the period under review no Shares were purchased in the market. The Board will continue to monitor the level of discount to NAV at which the shares trade, both in absolute terms and against the discounts of comparable companies. The Board has sought approval to buy back shares but will continue to take into account the market capitalisation of the Company and compare potential returns available from new investments.
Discount
As at 30 September 2016 the share price discount to NAV stood at 29.0%. Since the period end the NAV has increased to 152.8p per Share (based upon 31 October 2016 figures[1],) and the discount has narrowed to 27.4%, based on the Share price as at that date.
Discounts (to NAV) have prevailed for most listed private equity funds in the years following the onset of the global financial crisis in 2007. In my recent Full Year review[2] I made the point that NAV growth for the sector had been strong and this sector had avoided many of the cyclical industries which otherwise might have given some justification for continuing discounts. This argument remains as valid now as it did then, particularly as our rolling five year NAV total returns continue to improve (currently 9.4%[3] per annum).
In the period following the Half Year end, there has been high-profile corporate activity in the sector[4], which combined with the marked weakness in Sterling vs. the US Dollar has seen NAVs rise (for Sterling priced, US asset biased Companies) and also share prices rally.
It remains to be seen whether a general sector re-rating can be achieved, but your Board believes that the extent of this Company's current discount is unjustified. We believe that the value in the sector is becoming more widely recognised and we will continue to engage with the Manager on reducing the discount level.
Gearing
On 31 March 2016 the Company entered into a new £40m revolving credit facility with Lloyds Banking Group, an increase from the previous £15m facility. The facility has been renewed at this higher level to support an increased level of investment and to ensure efficient capital usage. Future drawings under the facility will be at LIBOR plus 2.75%. The Manager does expect to draw on this facility though the timing of that is dependent on the pace of investment and underlying capital calls and distributions.
Continuation Vote
In 2011 the Company's Articles of Incorporation were amended to introduce a three-yearly continuation vote with the first vote being passed in 2013. The Company's second three-yearly vote took place this year in September and was passed with a high level of Shareholder support. At the Annual General Meeting convened on 13 September 2016 the Company announced that (in addition to the revised Dividend policy, above) it would hold an annual continuation vote (to replace the existing triennial vote) commencing with the AGM in September 2017. At the same time a new reduced and simplified management fee[5] was introduced.
Together with the increased focus on co-investments, your Board believe that these changes should enhance the appeal of the Company to current Shareholders and prospective investors.
Activity Levels
The Manager has continued to be active over the period, sourcing two new fund commitments:
MTS Health Investors VI, a US lower mid-market healthcare focused fund;
Northzone VIII, a Nordic venture capital fund (the Company previously committed to Northzone's 6th fund in 2010).
Subsequent to the half year-end the Manager also committed to an additional two funds:
Nazca IV, a Spanish lower-mid market fund;
Summa Equity I, a first time fund investing in the Nordic region.
In addition the Company committed further capital to the Dell co-investment to fund the acquisition of EMC and expects shortly to announce two new co-investments.
The Company has seen high levels of activity within its funds including sales from the Thoma Bravo portfolio, and within the MML Capital Partners VI fund, the acquisition of SVP Group, a major business services provider in France.
Portfolio performance
The Board is pleased to note the good performance, which has been generated from a wide range of investments.
Of particular note is the positive impact of the portfolio's 2013 vintage commitments, (CCMP Capital Investors III, Longreach Capital Partners 2 and The Resolute Fund III). These funds are still active in their investment periods but they are starting to see early deals mature and create value for the Company.
Silver Lake Partners III and Pine Brook Capital Partners were 2007 commitments and also helped performance with valuation increases from their remaining underlying investments. Pine Brook, a fund invested in energy and financial-sector assets, benefitted from the increased oil price and Silver Lake's publicly-listed investments saw strong performance.
Outlook
In my 2016 full year Report I emphasised the Company's exposure to US denominated assets, which have continued to position us well from a currency perspective. With both Brexit, and the as yet uncertain policy direction in the US, longer term USD/GBP positioning remains difficult to call, and we are cautious on the Eurozone given continued growth and political issues in that region.
As the residual value in the portfolio's earlier vintage investments[6] reduces following further exit activity the Manager is reviewing some of those investments, and may consider targeted disposals via the secondary private equity market which remains buoyant.
Whilst the management team retain their positive stance on US private equity, any secondary market activity could serve to reduce the portfolio's aggregate exposure to the US. Notwithstanding this, with President-elect Trump likely to pursue a pro-domestic growth agenda, the US election result could turn out to be fortuitous for businesses in the US lower mid-market segment. Therefore potential US investments will continue to be a significant part of the Manager's deal pipeline.
We are confident that the Manager's increased focus on co-investments will continue to bear fruit and so we expect that our direct investment allocation will continue to rise over the coming years. Despite the increased risk that individual assets will always bring in any portfolio, we see these investments as being an important driver of future performance for the Company. Furthermore, this strategy will reduce the overall fee burden and will therefore be increasingly efficient from a 'look-through' TER[7] perspective.
Finally, my predecessor[8] and I have commented regularly through the current private equity cycle on the rise in the amount of older, unspent private equity commitments ('dry powder') which are again sitting at record levels. Together with large amounts of private capital being raised in new funds it is inevitable that deal pricing has remained full. As institutional demand continues to rise for this asset class these pricing levels, in the absence of a market shock, are likely to remain elevated for the foreseeable future. This may mean that holding periods for private equity owned companies lengthen and the higher IRR[9] numbers that the industry has been so good at posting moderate a little. The corollary to this is that supportive conditions for a vibrant private equity secondary market (higher dry powder levels and the need to deploy those) could create the opportunity for earlier exits, though pressure (from LPs and from within GPs) to not overpay remains strong.
All that said, we are still optimistic on the outlook as the 'hands-on' value-add that comes from private equity ownership drives total returns.
Howard Myles
Chairman
8 December 2016
Principal Risk Factors
The principal risks and uncertainties affecting the Company are set out in detail on pages 9 and 10 of the Annual Report and Financial Statements for the year ended 31 March 2016 and there have been no significant changes. They can be summarised under the following headings:
- Investment Strategy and Objectives - the setting of an unattractive strategic proposition to the market and the failure to adapt to changes in investor demand may lead to the Company becoming unattractive to investors, a decreased demand for shares and a widening discount;
- Investment Portfolio and Investment Management Risks - investing outside of the investment restrictions and guidelines set by the Board could result in poor performance and inability to meet the Company's objectives;
- Gearing Risks - increasing the level of gearing could result in the Company becoming over-geared, unable to meet its financial obligations, or unable to take advantage of potential opportunities and any of these could result in a loss of shareholder value;
- Financial Risks - the financial risks associated with the portfolio could result in losses to the Company. PE investments are long-term in nature and they may take a considerable period to be realised. Unquoted investments are less readily realisable than quoted securities. Such investments may therefore carry a higher degree of risk than quoted securities. In valuing its investments the Company relies to a significant extent on the accuracy of financial and other information the funds in its portfolio provide to the Manager; this information is typically unaudited and updated on a quarterly or six-monthly basis; and,
- Operational Risks - the Company is dependent on third parties for the provision of all systems and services (in particular, those of the Aberdeen Group and Ipes) and any control failures and gaps in these systems and services could result in a loss or damage to the Company. In addition, failure to comply with relevant regulation (including Guernsey Company Law, the Financial Services and Markets Act, the Alternative Investment Fund Managers Directive, Accounting Standards and the FCA's Listing Rules, Disclosure and Prospectus Rules) may have an impact on the Company.
Alternative Investment Fund Managers Directive ("AIFMD")
To comply with the AIFMD, the Company has appointed AFML as its AIFM. The management agreement with AFML complies with the AIFMD regulatory regime and under this arrangement, AFML has been appointed to provide investment management, risk management, administration and promotional activities. The Company's portfolio is managed by AAML by way of a group delegation agreement in place between AFML and AAML. In addition, AFML has sub-delegated promotional services to AAML.
AFML has notified the UK Financial Conduct Authority in accordance with the requirements of the UK National Private Placement Regime of its intention to market the Company (as a non-EEA AIF under the Directive) in the UK. The Alternative Investment Fund Managers Directive requires AFML, as the AIFM of the Company, to make available to investors certain information prior to such investors' investment in the Company. The Company's Pre-investment Disclosure Document ("PIDD") is available for viewing on the Company's website, aberdeenprivateequity.co.uk.
Going Concern
Note 20 to the Annual Report and financial statements for the year ended 31 March 2016 includes the Company's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposure to credit risk and liquidity risk. The Directors have undertaken a rigorous review of the Company's ability to continue as a going concern including reviewing the level of the Company's assets and significant areas of financial risk including the level of liquidity, the estimated draw down of commitments and timing of realisations from the portfolio.
Notwithstanding the introduction of an annual ordinary resolution, that is to be proposed at each AGM, to approve the continuation of the Company and having reassessed the principal risks, the Directors have, at the time of approving these financial statements considered it appropriate to adopt the going concern basis of accounting in preparing the Half Yearly Report and Condensed Half Yearly financial statements of the Company.
Directors' Responsibility Statement
The Directors are responsible for preparing this Half-Yearly Report in accordance with applicable law and regulations.
The Directors confirm that:
- the Half-Yearly Report and Condensed Half-Yearly Financial Statements have been prepared in accordance with IAS 34 'Interim Financial Reporting';
- the Condensed Half Yearly Financial Statements give a true and fair view of the assets, liabilities, financial position and profit of the Company as required by the Disclosure and Transparency Rules (DTR) 4.2.4R; and,
- the Chairman's Statement, Interim Board Report and Manager's Report (together constituting the Interim Management Report) include a fair review of the information required by DTR 4.2.7R (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year) and 4.2.8R (being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could so do).
The Directors of the Company are listed on page 27 of the Half-Yearly Report.
For and on behalf of the Board of Aberdeen Private Equity Fund Limited
David Staples
Director
8 December 2016
MANAGER'S REPORT
At the end of September 2016, 81.2% of the Company's NAV was invested in 31 private equity funds and 7.4% in six co-investments.
Performance Commentary
The 31 private equity funds in the Company's portfolio invest across a wide range of sectors, geographies and private equity stages, providing exposure in aggregate to 347 underlying companies[10].
In local currency terms the portfolio generated a total return of 4.2%[11] for the period under review. CCMP Capital Investors III L.P., a 2013 vintage commitment, was the single largest contributor to performance. Performance across the portfolio was broadly positive despite market conditions.
We show in the Half Yearly Report the movement of the Company's investment portfolio from the opening value to the closing value in US Dollars terms[12]:
Largest Positive Performance by Fund[13]
Fund | Performance ($m) | |
CCMP Capital Investors III L.P. | 1.2 | |
Longreach Capital Partners 2 - USD, L.P. | 1.1 | |
Resolute Fund III L.P. | 0.9 | |
Silver Lake Partners III L.P. | 0.8 | |
Pine Brook Capital Partners L.P. | 0.8 | |
The CCMP Capital Investors III portfolio performed well over the period. PQ Corporation, which merged with Eco Services in May 2016, produced the most significant uplift and Jetro Cash & Carry also increased in value.
The value of the Longreach Capital Partners 2 portfolio increased with Primo, the Asian bridal jewellery business being the driver of this uplift. Primo has the potential to be publicly floated.
The performance of Resolute Fund III was driven by Transilwrap, a manufacturer of specialty film products, and DiversiTech, a manufacturer of heating and ventilation components.
Silver Lake Partners III generated strong performance over the period with positive contributions from Vantage Data Centers, Alibaba Group and GoDaddy. The latter two are now public companies.
Pine Brook Capital Partners which invests in energy and financial assets had a positive six months following a difficult period for the fund. Essent Group, Forge Energy and Green Bancorp were among the strongest performers.
Largest Negative Performance by Fund[14]
Fund | Performance ($m) | |
Northzone Ventures VI L.P. | -0.8 | |
Lion Capital Fund III L.P. | -0.7 | |
Rho Ventures VI L.P. | -0.1 | |
The performance for Northzone VI was driven lower by a valuation fall for Widespace, a mobile advertising network business. This was due to weaker performance in the Nordic markets.
Lion Capital Fund III saw valuation declines for Bumble Bee Foods, AllSaints, John Varvatos and Buscemi, the latter being a small investment in this eponymously named luxury footwear brand.
The valuation of Rho Ventures VI fell due to underperformance in investments such as Crosstrees and Magnetic.
Portfolio Activity
The Company has continued to be active, and during the period under review made two further fund commitments in May to MTS Health Investors VI ($15m) and Northzone VIII (€12m). MTS are a New York based manager focused on small buy outs in the healthcare services arena, and Northzone are a well-established Nordic based venture capital manager. We know both managers well, and the latter has had long term representation in this portfolio via the successful Northzone VI investment made in 2010.
The Company completed one further commitment shortly after the period end in October, to Nazca IV (€10m), although during the period under review a Luxembourg holding structure, APEF Investments (Europe) S.à r.l[15] was established, to hold the Nazca investment. Nazca are a manager specialising in the Spanish lower mid-market.
The Company's co-investment portfolio continues to develop. Dell has now completed its merger with EMC and is known as Dell Technologies. The Company made a small follow on co-investment as this merger concluded, and we believe the business is well placed to provide a range of leading technology solutions. Post the period end, Lion Capital has announced plans to IPO Alain Afflelou, a strong player in the European optical services segment, in France. The Company's more recent commitments continue to bed down well.
Calls for new investments
The Company paid calls of $16.1m during the period under review in relation to its underlying investments (same period 2015: $9.0m)[16] funding a number of new and follow-on underlying investments.
Five Largest Aggregate Fund Calls (excluding Co - investments) | US$m | |
MML Capital Partners Fund VI LP | 3.3 | |
Lion Capital Fund III LP | 1.1 | |
Exponent Private Equity Partners III LP | 1.1 | |
Wisequity IV | 1.0 | |
Resolute Fund III LP | 1.0 | |
MML Capital Partners VI completed the acquisition of SVP Group, a major business services company in France. The fund also executed on a number of follow-on investments for portfolio companies Blue Max, CH&Co, Learning Curve and Iqarus.
Lion Capital Fund III completed its investment period with a final investment in Authentic Brands Group, a brand development and licensing platform.
Capital was called by Exponent Private Equity Partners III to fund its investment in The Racing Post, the well-established UK horse racing and sports betting newspaper. The paper provides independent news, race information and data via print, website and mobile.
Wisequity IV completed its first investment in Corob, a leading supplier of advanced tinting equipment for the global paints and coatings industry.
Resolute Fund III announced the acquisitions of Parts Authority and TKE Holdings, as well as a number of follow-on investments.
Distributions
The Company received cash distributions of $11.7m during the period under review (same period 2015: $19.3m).
Five Largest Aggregate Fund Distributions (excluding sold investments) | US$m |
Thoma Bravo IX Fund LP | 3.7 |
Silver Lake Partners III LP | 2.2 |
Gores Capital Partners III LP | 1.4 |
A8 A Feeder LP | 0.8 |
Goldman Sachs Capital Partners VI LP | 0.7 |
The proceeds received from Thoma Bravo IX Fund resulted from the sale of InfoVista to Apax Partners, the partial exit of Wizard Parent LLC, the holding company of The Attachmate Group, and significant dividend proceeds from LANDesk Software.
A large proportion of Silver Lake Partners III's distributions came from the partial sell-down of Alibaba shares. The fund continues to hold a significant stake in the company but is opportunistically selling down its shareholding in the public markets.
Gores Capital Partners III distributed proceeds in relation to the sale of the Hay Group to Musashi Seimitsu, a Japan-based manufacturer of automotive components, and the recapitalisation of US Farathane.
Apax 8 (via our A8 A Feeder investment) completed partial realisations for two portfolio companies, EVRY AS and Garda.
Goldman Sachs Capital Partners VI distributed proceeds from Zimmer Biomet Holdings following the final sell-down of publicly-listed shares. The fund also sold shares in two of its other public companies, Enstar Group and TransUnion.
Market News and Private Equity Environment
In our last full year report[17] we said that a "degree of balance (to global economic sentiment) remains in place" and that "we remained broadly optimistic". Certainly, public equity movements over the period seem to have reflected that outlook, with the S&P 500 and FTSE 100 delivering returns of 5.3% and 11.7% respectively[18], and from a macro perspective, markets appear to be weathering Brexit uncertainties.
Brexit is likely to remain a force for market sentiment and the November UK High Court ruling that Parliament must be consulted before Article 50[19] can be triggered by the UK Government, points to some further uncertainty, particularly for currencies.
Of greater immediate focus for markets is the result of the US Presidential election. President-elect Trump is in the process of putting together key advisor positions, and with Republican control of both House and Senate, he has more scope to enact policy priorities than his predecessor had. Markets will be closely monitoring policy intent and formation over the coming months, as greater detail emerges on his intentions with respect to monetary, and fiscal policy, and his well-publicised rhetoric on de-globalisation. As long term investors we remain optimistic on our investments in the US, and our bias toward US lower mid-market could be rewarded from any pro-domestic corporate stance that may be more prevalent in a Trump administration.
To some extent the global economy is still challenged by a "new mediocre" of low growth. China seems to be stabilising in the short term, but there remains much speculation about that economy's medium term outlook. The US Fed remains cautious, and a rate rise in December is expected.
Private Equity has been good at demonstrating its ability to look through immediate periods of volatility, and in an environment where both Brexit and the run up to the US elections have influenced sentiment, private equity fundraising has been robust with funds raised by GPs[20] during our reporting period of $173bn[21].
Industry dry powder continues to grow, and by June 2016 had reached a record $818bn[22]. We commented in our last full year report that this issue would test GPs' discipline on larger deal sizes. Whilst many GPs maintain they are holding that discipline, data in the US suggest that EV/EBITDA multiples in 2016 have risen to 11.3x, up from 10.3x in 2015[23]. LPs[24] continue to exert pressure on the industry to not overpay, but with ever larger dry powder levels and high levels of funds raised it is perhaps inevitable that pricing has trended higher.
Global IPO activity has been impacted by the UK's European membership referendum and by way of example, in Europe, IPO activity in the first half of 2016 was 46%[25] of the level in previous year's corresponding period (at €14.4bn).
Lastly, from a financing perspective, the median debt percentage in Q2 2016 was 49%, some way off its peak of 61.6% in 2013.[26] Risk aversion appears to remain prevalent in both lenders and borrowers.
Portfolio Strategy and Outlook
Post the reporting period end, and as flagged in the portfolio activity section, the Company committed to Nazca IV, a Spanish lower mid-market fund. This GP has a strong track record in buying businesses (often as the first institutional investor) at lower pricing multiples than elsewhere in Europe. The Company has also since committed to a first time Nordic manager, Summa, where the principals have worked together previously and have exceptionally strong track records.
We have talked previously about our ambitions to increase the portfolio's exposure to co-investments, and have a strong current deal pipeline. The Company has, for example, recently committed to a co-investment alongside a GP we recently backed for this portfolio which we expect to close shortly. With the existing co-investment portfolio performing well we are able to look at selected deals that may be more complex or challenging, and offer stronger upside potential. We are maintaining our overall co-investment exposure target of around 20-25% of the portfolio.
Given the ongoing strength in secondary market pricing, which appears to be driven by both availability of leverage and the large pools of dry powder held by 'funds of secondary funds', we are reviewing some of the older vintage investments as potential sale candidates. Having executed on a number of secondary sales historically for this portfolio, we intend to remain active here should the potential opportunity gains of reinvestment warrant such transactions.
Our closing comments in the 2016 full year report referenced the recently increased credit facility of £40m[27] and our intention to use this to increase the investment pace. Including post-reporting period commitments, we have successfully increased that investment pace (which has the effect of increasing unfunded commitments and bringing cash levels down). Going forward we may draw on the facility.
One of the challenges that all managers of listed fund of private equity funds ("LFoPEFs") face is maintaining the right balance between retaining cash to meet calls from GPs and minimising the effect of 'cash drag' on portfolio performance. This risk can be gauged in several ways for LFoPEFs, and monitoring commitment cover ratios against all resources to fund 'calls' on those commitments is crucial. We monitor active[28] and total commitments against cash plus the credit facility, and we will maintain an appropriate level going forward. We undertake regular stress testing of our investment and currency assumptions and also call/distribution rates.
Our investment pipeline for the remainder of 2016 and 2017 is now more focused on investments that bring a lower relative level of unfunded commitments into the portfolio. Co-investments and secondary fund purchases serve to do this well, as do 'seasoned' primary funds[29].
In conclusion, and as noted earlier, valuations of potential new investments remain full. We believe that the strategy of careful selection of differentiated co-investments and lower mid-market funds (whether Secondary or Primary) where pricing is typically lower than larger funds helps to part mitigate this valuation issue. Accordingly, we remain optimistic on the outlook for the asset class and the portfolio.
Alexander Barr & Colin Burrow
Aberdeen Asset Managers Limited
8 December 2016
FINANCIAL HIGHLIGHTS
(Unaudited) | (Audited) | ||
30 September 2016 | 31 March 2016 | % Change | |
Net assets (US$'000) | 207,429 | 209,135 | -0.8 |
Share price (mid-market) (pence) | 103.86 | 87.88 | +18.2 |
Net asset value per share (pence) | 146.32 | 133.33 | +9.7 |
Discount to net asset value | 29.0% | 34.1% |
PERFORMANCE (TOTAL RETURN)A
Six months ended | Year ended | |
30 September 2016 | 31 March 2016 | |
Share price | +20.8% | +2.3% |
Net asset value per share | +11.5% | +6.6% |
Source: Aberdeen Asset Management & Morningstar | ||
{A} Total return represents capital return plus dividends reinvested on the dividend date. | ||
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Six months ended | Six months ended | Year ended | ||
30 September 2016 | 30 September 2015 | 31 March 2016 | ||
(unaudited) | (unaudited) | (audited) | ||
Notes | US$'000 | US$'000 | US$'000 | |
Gains on investments | 8 | 4,782 | 7,213 | 11,180 |
Income | 9 | 77 | 31 | 78 |
Currency (losses)/gains | (10) | (8) | 40 | |
Investment management fee | 14 | (1,437) | (1,411) | (2,833) |
Performance fee | 14 | (713) | - | - |
Other operating expenses | (790) | (607) | (1,211) | |
Tax (incurred)/recovered on distribution income | 10 | (158) | 5 | (142) |
_________ | _________ | _________ | ||
Profit attributable to equity shareholders | 1,751 | 5,223 | 7,112 | |
_________ | _________ | _________ | ||
Earnings per share (sterling pence) | 11 | 1.24 | 3.16 | 4.53 |
_________ | _________ | _________ | ||
The Company does not have any income or expense that is not included in profit for the period, and therefore the "(Loss)/profit attributable to equity shareholders" is also the "Total comprehensive income for the period", as defined in International Accounting Standard 1 (revised). | ||||
All items in the above statement derive from continuing operations. | ||||
All income is attributable to the equity shareholders of Aberdeen Private Equity Fund Limited. | ||||
The accompanying notes are an integral part of these condensed set of interim financial statements. | ||||
CONDENSED BALANCE SHEET
As at | As at | As at | ||
30 September 2016 | 30 September 2015 | 31 March 2016 | ||
(unaudited) | (unaudited) | (audited) | ||
Notes | US$'000 | US$'000 | US$'000 | |
Non-current assets | ||||
Financial assets held at fair value through profit or loss | 6 | 185,515 | 173,689 | 173,104 |
Current assets | ||||
Cash and cash equivalents | 22,882 | 34,017 | 36,574 | |
Trade and other receivables | 587 | 32 | 666 | |
_________ | _________ | _________ | ||
23,469 | 34,049 | 37,240 | ||
_________ | _________ | _________ | ||
Creditors: amounts falling due within one year | ||||
Trade and other payables | (1,412) | (492) | (1,050) | |
Net current assets | 22,057 | 33,557 | 36,190 | |
Creditors: amounts falling due after more than one year | ||||
Trade and other payables | (143) | - | (159) | |
_________ | _________ | _________ | ||
Net assets | 207,429 | 207,246 | 209,135 | |
_________ | _________ | _________ | ||
Capital and reserves | ||||
Stated capital | 229,199 | 229,199 | 229,199 | |
Revenue reserves | 13 | (21,770) | (21,953) | (20,064) |
_________ | _________ | _________ | ||
Equity shareholders' funds | 207,429 | 207,246 | 209,135 | |
_________ | _________ | _________ | ||
Net asset value per share (sterling pence) | 12 | 146.32 | 125.37 | 133.33 |
_________ | _________ | _________ | ||
CONDENSED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 September 2016 (unaudited) | |||
Stated | Revenue | ||
capital | reserves | Total | |
US$'000 | US$'000 | US$'000 | |
As at 31 March 2016 | 229,199 | (20,064) | 209,135 |
Profit attributable to equity shareholders | - | 1,751 | 1,751 |
Dividend paid | - | (3,457) | (3,457) |
_________ | _________ | _________ | |
As at 30 September 2016 | 229,199 | (21,770) | 207,429 |
_________ | _________ | _________ | |
Six months ended 30 September 2015 (unaudited) | |||
Stated | Revenue | ||
capital | reserves | Total | |
US$'000 | US$'000 | US$'000 | |
As at 31 March 2015 | 229,199 | (23,414) | 205,785 |
Profit attributable to equity shareholders | - | 5,223 | 5,223 |
Dividend paid | - | (3,762) | (3,762) |
_________ | _________ | _________ | |
As at 30 September 2015 | 229,199 | (21,953) | 207,246 |
_________ | _________ | _________ | |
Year ended 31 March 2016 (audited) | |||
Stated | Revenue | ||
capital | reserves | Total | |
US$'000 | US$'000 | US$'000 | |
As at 31 March 2015 | 229,199 | (23,414) | 205,785 |
Profit attributable to equity shareholders | - | 7,112 | 7,112 |
Dividend paid | - | (3,762) | (3,762) |
_________ | _________ | _________ | |
As at 31 March 2016 | 229,199 | (20,064) | 209,135 |
_________ | _________ | _________ |
CONDENSED STATEMENT OF CASH FLOWS
Six months ended | Six months ended | Yearended | |
30 September 2016 | 30 September 2015 | 31 March2016 | |
(unaudited) | (unaudited) | (audited) | |
US$'000 | US$'000 | US$'000 | |
Cash flows from operating activities | |||
Profit for the period | 1,751 | 5,223 | 7,112 |
Net interest income from cash and cash equivalents | (77) | (31) | (78) |
Gains on investments | (4,782) | (7,213) | (11,180) |
Distribution income from investments | 1,334 | 1,906 | 2,497 |
Realised gains on investee distributions | 6,344 | 11,779 | 28,125 |
Realised currency gains on investment distributions | (312) | (552) | (2,925) |
Capital calls in relation to investee expenses | (1,424) | (1,590) | (3,260) |
Purchases of investments including calls | (18,008) | (9,032) | (26,402) |
Sales of investments and returns of capital | 4,437 | 6,138 | 15,166 |
Increase/(decrease) in trade and other payables | 346 | (1,561) | (844) |
Decrease/(increase) in trade and other receivables | 79 | 32 | (602) |
_________ | _________ | _________ | |
Net cash (outflow)/inflow from operating activities | (10,312) | 5,099 | 7,609 |
Cash flows from investing activities | |||
Net interest income from cash and cash equivalents | 77 | 31 | 78 |
_________ | _________ | _________ | |
Net cash inflow from investing activities | 77 | 31 | 78 |
Cash flows from financing activities | |||
Equity dividend paid | (3,457) | (3,762) | (3,762) |
_________ | _________ | _________ | |
Net cash outflow from financing activities | (3,457) | (3,762) | (3,762) |
_________ | _________ | _________ | |
Net change in cash and cash equivalents for the period | (13,692) | 1,368 | 3,925 |
Cash and cash equivalents at beginning of the period | 36,574 | 32,649 | 32,649 |
_________ | _________ | _________ | |
Cash and cash equivalents at the end of the period | 22,882 | 34,017 | 36,574 |
_________ | _________ | _________ |
NOTES TO THE FINANCIAL STATEMENTS
1. | General information |
Aberdeen Private Equity Fund Limited (the "Company") was incorporated with limited liability and registered in Guernsey on 5 January 2007. The Company's shares were listed on 9 July 2007 whereupon the Company became a closed-ended investment company, domiciled in Guernsey. The Company is authorised by the Guernsey Financial Services Commission. The principal activity of its subsidiary, APEF Investments (Europe) S.a.r.l. which was incorporated with limited liability and registered in Luxembourg on 30 September 2016, is similar in all relevant respects to that of its Guernsey parent. This condensed interim financial information was approved by the Board on 8 December 2016. This condensed interim financial information does not comprise statutory accounts within the meaning of the Companies (Guernsey) Law, 2008. Statutory accounts for the year ended 31 March 2016 were approved by the Board of Directors on 11 July 2016 and the opinion of the auditors on those accounts was unqualified. This interim financial information for the half year period ended 30 September 2016 has been reviewed by the auditors but not audited. |
2. | Basis of preparation |
This condensed interim financial information for the half year ended 30 September 2016 has been prepared on a going concern basis in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority in the UK and with IAS 34, "Interim Financial Reporting". The condensed interim financial information should be read in conjunction with the statutory accounts for the year ended 31 March 2016, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") and with the requirements of Guernsey law. | |
Significant judgements | |
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates which requires management to exercise its judgement in the process of applying the accounting policies. In preparing these condensed half yearly financial statements, the significant judgements made by management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual audited financial statements for the year ended 31 March 2016. |
3. | Accounting policies |
The accounting policies are consistent with those of the annual financial statements for the year ended 31 March 2016. | |
New accounting standards | |
At the date of authorisation of these interim financial statements, the following Standard and Amendments were in issue but not yet effective: | |
IFRS 9 - Financial Instruments (revised, early adoption permitted) (effective for annual periods beginning on or after 1 January 2018). | |
IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (date to be determined) | |
IFRS 15 - Revenue from Contracts with Customers (effective 1 January 2018) | |
IAS 7 - Additional disclosure of changes in liabilities arising from financial activities (effective 1 January 2017). | |
The Directors do not anticipate that the adoption of these Standards and Interpretations in future periods will materially impact the Company's financial results in the period of initial application although there will be revised presentations to the Financial Statements and additional disclosures. The Company intends to adopt the Standards in the reporting period when they become effective. |
4. | Segmental information |
The Company engaged in a single segment of business during the period: investment in the Private Equity Funds (including direct and co-investments) portfolio. A reconciliation of movements in value during the period can be found in notes 6 and 8 where additional information has been provided for the benefit of shareholders. | |
The Company is domiciled in Guernsey. All of the Company's income from investments is from underlying investments that are incorporated in countries other than Guernsey. | |
The Company has a diversified portfolio of investments and in accordance with the Company's investment policy no single investment may account for more than 20% of the Company's net assets at the date of investment. |
Six months ended | Six months ended | Yearended | ||
30 September 2016 | 30 September 2015 | 31 March2016 | ||
5. | Dividends on equity shares | US$'000 | US$'000 | US$'000 |
Amounts recognised as distributions to equity holders in the period: | ||||
Dividend for 2016 - 2.20p (2015 - 2.20p) | 3,457 | 3,762 | 3,762 | |
________ | ________ | ________ |
30 September 2016 | 30 September 2015 | 31 March2016 | ||
Private Equity Funds | Private Equity Funds | Private Equity Funds | ||
6. | Financial assets at fair value through profit or loss | US$'000 | US$'000 | US$'000 |
Cost at beginning of period | 142,967 | 131,609 | 131,609 | |
Additions | 18,008 | 9,032 | 26,402 | |
Disposals and returns of capital | (4,437) | (6,138) | (15,166) | |
Realised gains on investments | - | - | 122 | |
________ | ________ | ________ | ||
Cost at end of period | 156,538 | 134,503 | 142,967 | |
Unrealised gains on investments | 28,977 | 39,186 | 30,137 | |
________ | ________ | ________ | ||
Fair value at end of period | 185,515 | 173,689 | 173,104 | |
________ | ________ | ________ | ||
As at 30 September 2016, 30 September 2015 and 31 March 2016 there was one operating segment, being Private Equity Funds (including direct and co-investments, in addition to the Company owning 100% of the share capital of its subsidiary, APEF Investments (Europe) S.a.r.l, an investment holding company registered in Luxembourg. | ||||
7. | Fair value hierarchy | ||||
IFRS 7 'Financial Instruments: Disclosures' requires an entity to classify fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputs used in making measurements. | |||||
Fair value estimation | |||||
The Company has adopted IFRS 13 'Fair Value Measurement'. The fair value of financial assets and liabilities traded in active markets is based on quoted market prices at the close of trading on the period end. If a significant movement in fair value occurs immediately subsequent to the close of trading on the period end date, valuation techniques will be applied to determine the fair value. An active market is a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. | |||||
Investments in private equity funds, including co-investments, may not have a readily available market and are therefore valued based on the fair value of each private equity fund as reported by the respective general partner as per the capital account summary statement, normally updated and received on a calendar quarterly basis, which includes estimates made by those general partners. The Board and Manager believe that this value, in most cases, represents fair value as of the relevant statement date, although, if other factors lead the Board or Manager to conclude that the fair value attributed by the general partner does not match their estimate of actual fair value, the Board and Manager will adjust the value of the investment from the general partner's estimate. The Board and Manager estimate fair value using publicly available information and the most recent financial information provided by the general partners, as adjusted for cash flows since the date of the most recent financial information. As the key input into the model is official valuation statements, we do not consider it appropriate to put forward a sensitivity analysis on the basis insufficient value is likely to be derived by the end user. 97% by value of the portfolio has been valued using 30 September 2016 quarter-end valuations, 1% has been valued using an estimate of value at 30 September 2016 and 2% has been valued using valuations based on the 30 June 2016 quarter-end, updated to include cash flows in the quarter to 30 September 2016. | |||||
The Company has classified fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: | |||||
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; | |||||
Level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (ie as prices) or indirectly (ie derived from prices); and | |||||
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). | |||||
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement of the instrument in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the financial asset or liability. | |||||
The determination of what constitutes "observable" requires significant judgement by the Directors in consultation with the Investment Manager. The Directors consider observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. | |||||
The following tables summarises by level within the fair value hierarchy the Company's financial assets and liabilities at fair value as follows: | |||||
Level 1 | Level 2 | Level 3 | Total | ||
30 September 2016 | US'000 | US'000 | US'000 | US'000 | |
Financial assets at fair value through profit and loss | - | - | 185,515 | 185,515 | |
________ | ________ | ________ | ________ | ||
Level 1 | Level 2 | Level 3 | Total | ||
30 September 2015 | US'000 | US'000 | US'000 | US'000 | |
Financial assets at fair value through profit and loss | - | - | 173,689 | 173,689 | |
________ | ________ | ________ | ________ | ||
Level 1 | Level 2 | Level 3 | Total | ||
31 March 2016 | US'000 | US'000 | US'000 | US'000 | |
Financial assets at fair value through profit and loss | - | - | 173,104 | 173,104 | |
________ | ________ | ________ | ________ | ||
A reconciliation of fair value measurements in Level 3 is set out in the following table (Private Equity Funds includes co-investments): | |||||
Private Equity | |||||
Funds | |||||
Six months ended 30 September 2016 | US'000 | ||||
Opening balance | 173,104 | ||||
Purchases including calls | 18,008 | ||||
Sales and returns of capital | (4,437) | ||||
Total gains or losses on investments included in Condensed Statement of Comprehensive Income: | |||||
- on assets sold | - | ||||
- on assets held at the period end | (1,160) | ||||
________ | |||||
185,515 | |||||
________ | |||||
Private Equity | |||||
Funds | |||||
Six months ended 30 September 2015 | US'000 | ||||
Opening balance | 175,125 | ||||
Purchases including calls | 9,032 | ||||
Sales and returns of capital | (6,138) | ||||
Total gains or losses on investments included in Condensed Statement of Comprehensive Income: | |||||
- on assets sold | - | ||||
- on assets held at the period end | (4,330) | ||||
________ | |||||
173,689 | |||||
________ | |||||
Private Equity | |||||
Funds | |||||
Year ended 31 March 2016 | US'000 | ||||
Opening balance | 175,125 | ||||
Purchases including calls | 26,402 | ||||
Sales and returns of capital | (15,166) | ||||
Total gains or losses on investments included in Condensed Statement of Comprehensive Income: | |||||
- on assets sold | 122 | ||||
- on assets held at the year end | (13,379) | ||||
________ | |||||
173,104 | |||||
________ | |||||
Financial assets and liabilities other than those at fair value through profit or loss are measured at amortised cost. Due to their short-term nature, the carrying values are considered to approximate to their fair values. | |||||
8. | Net changes in fair value of financial assets at fair value through profit or loss | |||
The net realised and unrealised investment gain or loss from financial assets at fair value through profit or loss shown in the Condensed Statement of Comprehensive Income is analysed as follows: | ||||
Six months ended | Six months ended | Year ended | ||
30 September 2016 | 30 September 2015 | 31 March2016 | ||
US$'000 | US$'000 | US$'000 | ||
Unrealised losses on investments | (1,160) | (4,330) | (13,379) | |
Capital calls in relation to investee expenses{A} | (1,424) | (1,590) | (3,260) | |
Realised gains on disposal of investments | - | - | 122 | |
Realised gains on investee distributions | 6,344 | 11,779 | 28,125 | |
Realised currency losses on investee distributions | (312) | (552) | (2,925) | |
Distribution income from investments | 1,334 | 1,906 | 2,497 | |
________ | ________ | ________ | ||
4,782 | 7,213 | 11,180 | ||
________ | ________ | ________ | ||
{A} Capital call expenses relate to management fees and other expenses paid to investees. | ||||
The Company does not experience any seasonality or cyclicality in its investing activities. | ||||
Six months ended | Six months ended | Year ended | ||
30 September 2016 | 30 September 2015 | 31 March2016 | ||
9. | Income | US$'000 | US'000 | US'000 |
Net interest income from cash and cash equivalents | 77 | 31 | 78 | |
________ | ________ | ________ |
10. | Taxation |
The Company is subject to federal and state tax on effectively connected income ("ECI") received from certain of its underlying portfolio holdings in the US. Such taxes are deducted by the investee from income before being paid to the Company. Upon filing the Company's annual tax return with US authorities the Company will be able to assess whether any ECI tax paid on its behalf may be recoverable. The amount identified as recoverable at 30 September 2016 was US$ nil (30 September 2015 - US$ nil; 31 March 2016 - US$ nil). In certain circumstances, the Company is also in a position to receive recoverable withholding taxes on distribution income from underlying holdings. During the period ended 30 September 2016, the Company incurred state taxes of US$59,000 and withholding tax expenses of US$112,000 and received withholding tax refunds of US$13,000, therefore amounting to a net tax expense for the period of US$158,000. The Company is domiciled and registered for taxation purposes in Guernsey where it pays an annual exempt status fee (which is currently £1,200) under The Income Tax (Exempt Bodies) (Guernsey) Ordinances 1989 (as amended). Consequently, the Company does not pay income or corporation taxes there and, other than in the US as noted above, does not currently suffer such taxes anywhere else. |
11. | Earnings per share |
The basic earnings per share is calculated by dividing the returns attributable to shareholders by the weighted average number of shares in issue during the period, being 109,131,199 (30 September 2015 and 31 March 2016 - 109,131,199). There were no potentially dilutive shares in issue at 30 September 2016 (30 September 2015 and 31 March 2016 - nil). Whilst the Company has chosen to report basic earnings per share in a currency other than its functional and presentation currency as supplementary information it has complied with the requirements of IFRS including the translation method. |
12. | Net asset value per share |
The net asset value per share is determined by dividing the net assets of the Company attributable to the shares of £159,684,000 (US$207,429,000) (30 September 2015 - £136,814,000 (US$207,246,000)) (31 March 2016 - £145,505,000 (US$209,135,000) by 109,131,199 (30 September 2015 and 31 March 2016 - same) shares, being the number of shares in issue at the period end. Whilst the Company has chosen to report net asset value per share in a currency other than its functional and presentation currency as supplementary information it has complied with the requirements of IFRS including the translation method. |
13. | Revenue reserves |
The revenue reserves reflected in the Condensed Balance Sheet at 30 September 2016 include cumulative unrealised gains of US28,977,000 (30 September 2015 - US$39,186,000; 31 March 2016 - US$30,137,000) which relate to the revaluation of investments held at the reporting date. |
14. | Transactions with the Manager |
| During the period AFML provided management services to the Company. |
| |
| Under the terms of the management agreement the basis of the monthly fee to be paid to the Manager is equal to one-twelfth of 1.5% of the NAV of the Company (before deduction of any performance fee) and one-twelfth of 0.75% of cash and cash equivalents. The fee is calculated and accrued as at the last business day of each month and is paid monthly in arrears. During the period US$1,437,000 of management fees were payable (30 September 2015 - US$1,411,000); 31 March 2016 - US$2,833,000) and US$246,000 (30 September 2015 - US$238,000; 31 March 2016 - £239,000) was outstanding at the period end. |
| |
| In addition, the Manager is entitled to a performance fee subject to certain conditions. |
| |
| In order to earn a performance fee all of the following criteria must be met in a performance fee period: |
| - the NAV must have risen by more than 8% in the performance fee period |
| - the NAV must exceed the high watermark (at which a fee was last paid ie 127.41p being the NAV as at 31 March 2015) |
| - the NAV must have risen by more than 8% per annum compound over the previous three performance periods |
| |
| The performance itself is calculated at 10% of the NAV gain above the hurdle rate in the performance period. Furthermore, the total of fees payable to the Manager in any performance period is capped at 3% of NAV. As at 30 September 2016 an accrual has been made in respect of a performance fee being payable of US$713,000 (30 September 2015 and 31 March 2016 - US$nil). Notwithstanding the fact that net asset value has decreased over the period in the Company's functional and presentation currency of US Dollars, the calculation basis of the performance fee is based in Sterling terms and given the fall in Sterling against the US Dollar in the period this gives rise to a performance fee being accrued at the period end. |
| |
| The Company also has an agreement with AAML for the provision of promotional activities in relation to the Company's participation in the Aberdeen Investment Trust Share Plan and ISA. The total fees paid and payable under the agreement were £41,000 (30 September 2015 - £43,000; 31 March 2016 - £74,000) and the sum due to AAML at the period end was £18,000 (30 September 2015 - £35,000; 31 March 2016 - £45,000). |
15. | Related party transactions and transactions with Service Providers |
| During the period the Company had an agreement with AFML for the provision of management services and an agreement with AAML for the provision of promotional activities. Further details of the arrangements can be found within note 14. Additionally, the Company has an agreement with IPES (Guernsey) Limited for the provision of administration and secretarial services, an agreement with IPES (UK) Limited for the provision of depositary services and an agreement with BNP Paribas Securities Services Guernsey for the provision of custody services. |
| |
| Subsequent to the period end management fee arrangements were revised and details can be found in note 16. |
| |
| As at 30 September 2016, the Company had holdings amounting to US$15,218,000 (30 September 2015 - US$25,499,000; 31 March 2016 - US$27,557,000) in Aberdeen Liquidity Funds which are managed and administered by AAML, a wholly owned subsidiary of AAM PLC. The Company pays a management fee of 0.75% per annum on the value of these holdings but no fee is chargeable at the underlying fund level. Details of these holdings can be found within the Investment Portfolio on pages 11 and 12. |
16. | Subsequent events |
| Following a review, a revision of the management fee arrangements has been agreed by the Company and the Manager. From 1 October 2016, the Manager will be paid a monthly fee of 1/12 of 0.9% per annum of the net asset value of the Company after deducting liabilities but excluding long-term structured debt. Arrangements relating to the conditions under which a performance fee may be payable by the Company were unchanged following the review. |
| |
| On 4 November 2016 the Company committed SEK145,500,000 to Summa Equity Fund I (No. 2) AB and on 11 November 2016 the Company committed €2,000,000 to Color Wind S.p.A. |
Independent Review Report to Aberdeen Private Equity Fund Limited
Introduction
We have been engaged by Aberdeen Private Equity Fund Limited (the "Company") to review the condensed unaudited set of interim financial statements in the Half-Yearly Financial Report for the six months ended 30 September 2016, which comprises the Condensed Statement of Comprehensive Income, Condensed Balance Sheet, Condensed Statement of Changes in Equity, Condensed Statement of Cash Flows and related notes. We have read the other information contained in the Half-Yearly Financial Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' Responsibilities
The Half-Yearly Financial Report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Half-Yearly Financial Report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in Note 2, the annual financial statements of the Company are prepared in accordance with International Financial Reporting Standards. The condensed set of financial statements included in this Half-Yearly Financial Report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting'.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the Half-Yearly Financial Report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the International Auditing and Assurance Standards Board. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Half-Yearly Financial Report for the six months ended 30 September 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
PricewaterhouseCoopers CI LLP
Chartered Accountants
Guernsey, Channel Islands
8 December 2016
Publication of Interim Financial Report
(i) The maintenance and integrity of the Company's website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the condensed interim financial statements since they were initially presented on the website.
(ii) Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
SCHEDULE OF INVESTMENTS
AS AT 30 SEPTEMBER 2016
Investments | TotalCommitments | Investmentcalled/cost{C} | Fair Value | % of | ||
Private Equity Portfolio{A} | US$'000{B} | US$'000 | US$'000 | NAV | ||
Apax 8 (A8-A(feeder)) L.P. | € 10,000 | 8,912 | 11,207 | 5.4 | ||
CCMP Capital Investors III L.P. | 15,000 | 7,471 | 9,857 | 4.8 | ||
Coller International Partners V L.P. | 15,000 | - | 3,187 | 1.5 | ||
CVC Capital Partners Asia Pacific IV L.P. | 10,000 | 1,170 | 1,513 | 0.7 | ||
Exponent Private Equity Partners III L.P. | £10,000 | 4,882 | 4,681 | 2.3 | ||
FFL Parallel Fund IV L.P. | 10,000 | 2,490 | 3,130 | 1.5 | ||
Goldman Sachs Capital Partners VI L.P. | 15,000 | 5,355 | 4,103 | 2.0 | ||
Gores Capital Partners III L.P. | 10,000 | 5,083 | 4,204 | 2.0 | ||
HIG Bayside Debt & LBO Fund II L.P. | 15,000 | 9,425 | 12,432 | 6.0 | ||
Latour Capital II | € 10,000 | 54 | 82 | - | ||
Lion Capital Fund III L.P. | € 10,000 | 9,768 | 13,882 | 6.7 | ||
Longreach Capital Partners Ireland 1, L.P. | 7,425 | 8,385 | 4,268 | 2.1 | ||
Longreach Capital Partners 2 - USD, L.P. | 7,500 | 4,072 | 8,276 | 4.0 | ||
MatlinPatterson Global Opportunities Partners III L.P. | 10,000 | 7,351 | 6,822 | 3.3 | ||
MML Capital Partners Fund VI L.P. | € 13,000 | 6,270 | 6,529 | 3.1 | ||
Montagu V L.P. | € 8,000 | - | - | - | ||
MTS Health Investors IV LP | 15,000 | - | - | - | ||
Northzone Ventures VI L.P. | € 10,000 | 5,660 | 6,809 | 3.3 | ||
Northzone VIII L.P. | € 12,000 | 808 | 778 | 0.4 | ||
Oaktree OCM Opportunities Fund VIIb L.P. | 15,000 | - | 1,391 | 0.7 | ||
Pangaea Two Parallel L.P. | 5,000 | 2,626 | 3,115 | 1.5 | ||
Pine Brook Capital Partners L.P. | 10,000 | 6,343 | 6,367 | 3.1 | ||
Resolute Fund III L.P. | 15,000 | 4,421 | 6,155 | 3.0 | ||
RHO Ventures VI L.P. | 10,000 | 9,466 | 7,921 | 3.8 | ||
Silver Lake Partners III L.P. | 15,000 | 6,524 | 9,784 | 4.7 | ||
StepStone International Investors III L.P. (formerly Greenpark International Investors III L.P.) | € 14,600 | 6,808 | 3,880 | 1.9 | ||
Tenaya Capital V L.P. | 12,500 | 7,075 | 7,685 | 3.7 | ||
Tenaya Capital VI L.P. | 5,000 | 3,731 | 4,004 | 1.9 | ||
Thoma Bravo IX Fund L.P. | 10,000 | 799 | 3,403 | 1.6 | ||
Thomas H Lee Parallel Fund VI L.P. | 15,000 | 6,333 | 11,811 | 5.7 | ||
Wisequity IV | € 10,000 | 923 | 948 | 0.5 | ||
_________ | _______ | ______ | ||||
142,205 | 168,224 | 81.2 | ||||
Co-investments{D} | ||||||
CCMP Co-Invest III A L.P. | 1,500 | 1,500 | 1,500 | 0.7 | ||
Finvest L.P. | £2,900 | 2,644 | 2,358 | 1.1 | ||
Hg Capital 5 Co-Invest 1 L.P. | £3,000 | 4,638 | 3,935 | 1.9 | ||
Lion Seneca Cayman 3 L.P. | € 810 | 988 | 1,224 | 0.6 | ||
LVM LP Co-Investment L.P. | 1,500 | 625 | 3,055 | 1.5 | ||
SLP Denali Co-Invest L.P. | 2,080 | 2,074 | 3,355 | 1.6 | ||
_________ | _______ | ______ | ||||
12,469 | 15,427 | 7.4 | ||||
_________ | _______ | ______ | ||||
APEF Investments (Europe) S.a.r.l.{E} | 1,864 | 1,864 | 0.9 | |||
_________ | _______ | ______ | ||||
Total investments | 156,538 | 185,515 | 89.5 | |||
_________ | _______ | ______ | ||||
{A} Includes direct investments and co-investments. | ||||||
{B} All commitments are in US$ unless otherwise stated. | ||||||
{C} Investments called/cost represents commitments drawn down less net distributions. | ||||||
{D} Fair values ascribed to individual co-investments are not disclosed due to commercial sensitivity. | ||||||
{E} 100% owned subsidiary, incorporated on 30 September 2016 and yet to make any investments. | ||||||
Fair Value | % of | |||||
US$'000 | NAV | |||||
Aberdeen Liquidity Funds | ||||||
Sterling Fund Income | 492 | 0.2 | ||||
US Dollar Fund Income | 14,726 | 7.1 | ||||
________ | ______ | |||||
15,218 | 7.3 | |||||
Cash at bank | 7,664 | 3.7 | ||||
________ | ______ | |||||
Cash and cash equivalents{F} | 22,882 | 11.0 | ||||
Other assets less liabilities | (968) | (0.5) | ||||
________ | ______ | |||||
21,914 | 10.5 | |||||
________ | ______ | |||||
Net assets | 207,429 | 100.0 | ||||
________ | ______ | |||||
{F} Represents sum of fixed term deposits, Aberdeen liquidity funds and cash. | ||||||
The Half Yearly Report will shortly be available from the Company's website (aberdeenprivateequity.co.uk) and will be posted to shareholders in early December 2016.
Neither the content of the Company's website nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.
8 December 2016
[1] Latest available figures
[2] Aberdeen Private Equity Fund Ltd Annual Report 31 March 2016
[3] Since Inception 9.6% (30 November 2009)
[4] Competing bids for both SVG Capital plc and its assets
[5] To be 0.9% of the NAV, paid monthly (equal to one twelfth of 0.9%) with no changes to the existing performance fee arrangements
[6] Fund investments spanning 2006-2008
[7] Total Expense Ratio
[8] Jonathan Carr, Chairman, 2009-2014
[9] Internal Rate of Return
[10] Excludes underlying companies in the portfolio's two Secondary funds (Coller V, StepStone III). It also excludes non-material sub-portfolios in the HIG Bayside and Oaktree funds.
[11] This figure includes performance from existing investments and from any new investments made during the year excluding APEF Investments Europe s.à r.l. of $1.9m. It is inclusive of fees charged by underlying managers during the year, including accruals for GPs' performance fees ("carried interest") but does not include management and/or any performance fees charged to Aberdeen Private Equity Fund Ltd.
[12] For the purposes of this analysis, income from investments has been capitalised into the distributions figure.
[13] Source Aberdeen Asset Management, in local currency and inclusive of income distribution
[14] Source Aberdeen Asset Management, in local currency and inclusive of income distribution
[15] Société à Responsabilité Limitée
[16] Excluding the investment in APEF Investments Europe s.à r.l. of $1.9m. In addition the Company also paid calls for this period of $1.4m in relation to GPs fees and expenses
[17] Aberdeen Private Equity Fund Annual Report, 31 March 2016
[18] Source: Bloomberg, local currency, price return only
[19] Article 50 of the (European) Treaty of Lisbon which concerns the procedure for exiting the European Union
[20] General Partners
[21] Preqin, 'Q3 2016 Private Capital fundraising update'. Amalgam of Q2 and Q3 data.
[22] Preqin, Q2 2016 Private Equity update
[23] Pitchbook: US Private Equity landscape, July 19 2016
[24] Limited Partners
[25] PwC IPO Watch Europe Q2 2016
[26] Pitchbook: US Private Equity landscape, July 19 2016
[27] Three year committed revolving credit facility with Lloyds Bank plc, effective 31 March 2016
[28] Where we exclude 'stale' commitments. These relate to 'unused' commitments and occur when a fund's official investment period (typically 5 years) has passed. Stale commitments are rarely called in full, but can sometimes be used to fund follow-on investments. Individual funds' Limited Partnership Agreements provide fund specific guidance.
[29] Primary funds which have already made calls for initial investments, typically to investors who entered at 'first close'.
Related Shares:
APEF.L