F & C Investments

F&C Private Equity Trust

  • Tapping into to the exciting potential of private equity

  • How to Invest

    Open an F&C Savings Plan

    Call: 0800 136 420

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  • Performance

    The Trust seeks to generate long term capital growth through investment in private equity assets. It also seeks to pay its shareholders a predictable and above average level of dividend.

  • F&C Private Equity Trust - market update

  • Fund manager commentary

    At 30 June 2016 the net asset value (‘NAV’) of the Company was £232.2m, giving a fully diluted NAV per ordinary share of 314.08p. Taking into account the final dividend of 5.83p per ordinary share paid on 31 May, the NAV total return over the quarter was 5.7%. This quarter’s result was aided to the extent of c. 2.4% by the significant weakness in sterling following the Brexit vote on 23 June, but most of the increase was attributable to healthy underlying progress in the portfolio. At 30 June the Company had net debt of £5.7m, giving gearing of 2.4% of NAV. We have been building up commitments to new funds from a historical low point and at 30 June outstanding undrawn commitments totalled £86.8m with £17m of these to funds whose investment period has expired.

    Four new fund commitments were made during the quarter and a further five have been made since the quarter end. We have reinforced our commitment to the UK mid-market through commitments of £10m to August Equity IV and commitments of £3m to Inflexion Enterprise IV and £2m to Inflexion Supplemental IV. These funds are all managed by longstanding and successful investment partners with whom we have previously invested. Inflexion Enterprise IV is a £250m fund focusing on companies with an enterprise value in the range £20m – £45m, an area where Inflexion built its reputation. The Inflexion Supplemental Fund IV, also £250m, will invest alongside the two recently raised Inflexion funds: Buyout Fund IV and Partnership Capital Fund. In addition we have committed £7.5m to venture capital fund SEP V, one of our longstanding investment partners.

    Following the quarter we have made five commitments that add to our substantial exposure to the European mid-market buyout sector. €9m has been committed to Bencis V, a mid-market fund focusing on companies with enterprise value between €20m and €100m in the Benelux region. We have also committed €5m to Montefiore IV, a primarily France focused fund with a preference for the services sector and covering companies of enterprise value €25m – €250m. These are new relationships for us, albeit we have been tracking them for some time. We have committed to our main German-speaking Europe partners, DBAG, through their fund VII (€6.3m) and VII B (€1.2m). The main fund VII invests in companies with enterprise value in the range €75m-€250m and the smaller VII B fund will invest in a limited number of Fund VII deals as a ‘top up’ on preferential economics for investors. Lastly, we have committed £5m to consumer brands specialists Piper for their Fund VI which has held a second close at around £100m.

    Dealflow for UK and European funds is good and we will continue to refresh the portfolio steadily with new commitments. Outside Europe, particularly in the US, there are a small number of commitments under consideration.

    There were no new co-investments during the second quarter, but the portfolio of funds made £7.2m of new investments in a diverse spread of sectors and geographies.

    The largest individual drawdown was £1.4m for Babington (RJD III), a leading provider of apprenticeship training courses in the English Midlands. This company stands to benefit from government policy focused on increasing the number of apprenticeships significantly. Other notable UK investments include Sabio, a telecoms services company where Lyceum III has invested (£0.6m) and David Phillips, the furniture company servicing the private rental sector, where FPE has refinanced the company (£0.4m). In Continental Europe GCP Europe invested in Factory – CRO, a Netherlands-based contract research organisation focusing exclusively on clinical trials for medical devices (£0.9m). ILP, the Italian mid-market specialist, made a follow on investment in Italian travel company Alpitour (£0.5m). There were a number of other smaller investments made in a range of sectors in the UK and Continental Europe by various funds.

    The second quarter saw a pick-up in realisations compared with the beginning of the year with £11.6m coming in during the quarter bringing the total for the first half to £19.2m. This is about 55% of the level at the same stage last year, but around the same level as at this stage in 2014. There were no full exits from the co-investment portfolio during the quarter, although there was a small tail-end realisation of our remaining position in European Boating Holidays which yielded £0.2m and we received a further £0.8m from Park Holidays which has refinanced some of its debt.

    Realisations came from a good range of funds. DBAG V exited Spheros (heating and ventilation systems for buses and coaches) and this funded the bulk of a £1.4m distribution. The company was sold to trade buyer Valeo (2.5x, 24% IRR). August Equity III sold undertakers’ chain Funeral Service Partners to Montagu Private Equity, after a very short hold for this latest fund returning £1.2m (2.5x, 196% IRR). RJD Partners II sold Holiday Parks company Verdant Leisure to Palatine returning £1.2m (1.7x, 11% IRR). Italian fund Progressio II sold pharmaceutical company Italchimici to trade buyer Recordati Chimica Farmaceutica returning £1.0m (2.5x). The combined proceeds from Capvis III and IV from the IPO of vacuum valves company VAT AG on the Swiss stock market were £1.1m (3.3x). Capvis has retained around half its stake and the performance in the aftermarket has been good. Argan IPO’d its Swedish healthcare business Humana on the Stockholm stock exchange returning £0.5m (5x, 24% IRR). In France Chequers Capital XVI exited manufacturer of power tools Metabo through a sale to Japanese corporate Hitachi Koki and this accounted for the bulk of a £0.8m distribution (4.7x, 55% IRR).

    After the quarter end there were some notable realisations. Our co-investment in French cold sterilisation company Ionisos was sold by Agilitas to larger French PE player Ardian. The proceeds of £5.2m were received in early July, barely 18 months since we invested. The outturn at 2.9x and 97% IRR is excellent and underlines our ability to source strong European co-investments. Inflexion has also announced the sale of judicial services company Marstons to ICG, the latest in a very strong flow of exits from this leading firm. The two funds in which Marstons was held, Inflexion 2010 and Inflexion 2012 Co-Investment Fund are up by £0.9m and £1.5m respectively. The exit of Italchimici in Progressio II was the main contributor to the £0.9m uplift in the Italian Portfolio. Park Holidays has traded strongly and it has been uplifted by £0.9m in line with the increase in EBITDA.

    The Company had modest gearing of only 2.4% at the period end. Subsequent realisations have put the Company back into a modest net cash position. This leaves effectively all of the £70m borrowing facility available to fund investments should drawdowns and co-investments exceed the proceeds from realisations. The Company’s borrowing facility has almost three years to run. We expect that the current unusual economic conditions will give rise to investment opportunities and the Company and its investment partners are well placed to take these in due course. The support which the Bank of England has given to the UK banking sector in the wake of the Brexit vote is to be welcomed as this should avert any debt shortage for appropriately priced buyouts.

    Private equity as a mode of investment, benefits from, but does not require, a strong economic background for success. Private Equity managers are better used to accepting and pricing risk than most market participants. Many of them also have the skills to help managers of portfolio companies adjust and refresh plans in the light of changed circumstances. It is our conviction that the investment partners managing the funds and co-investments in our portfolio are well equipped to embrace change as an opportunity to build value for their investors. With that in mind returns for shareholders should continue to improve through the remainder of 2016.

    As at 30 June 2016

  • Fund Performance

    Private Equity Trust - performance chart(1)

    Source: Lipper. Basis: share price, percentage growth, bid to bid, net income reinvested.

    Performance (%) as at 30.09.16

    Cumulative performance 1 month Year to date 1 Year 3 Years 5 Years
    NAV N/A 11.9 12.9 38.0 57.5
    Share price 3.6 14.4 24.7 49.9 107.9
    Standardised annual performance 2016 2015 2014 2013 2012
    NAV 12.9 15.6 5.7 9.3 4.5
    Share price 24.7 9.6 9.6 32.3 4.9

    Source: Datastream & Lipper. Basis: share price, percentage growth, bid to bid, net income reinvested. Basis in accordance to the regulations of the FSA.
    Past performance is not a guide to future performance. Stock market movements may cause the value of investments and the income from them to fall as well as rise and investors may not get back the amount originally invested.

  • The value of shares and the income from them is not guaranteed and can fall as well as rise due to stock market movements. Past performance is not a guide to future performance. When you sell your shares, you might get back less than you originally invested. If markets fall, gearing can magnify the negative impact on performance. Changes in rates of exchange may have an adverse effect on the value, price or income of investments. Emerging Markets, Unquoted Companies and Smaller companies carry a higher degree of risk and their value can be more sensitive to market movement; their shares may be less liquid and performance may be more volatile.

  • Hamish Mair

    Hamish Mair

    Director and Head of Private Equity

  • Related Video

    F&C Private Equity Trust Fund Manager Video

    Citywire Wealth Manager interviews Hamish Mair, Fund Manager, F&C Private Equity Trust (12 Sep 2016). For the full interview, visit the Citywire Wealth Manager website

Past performance is not a guide to future results. The value of investments can go down as well as up.

The shares of the Company are listed on the London Stock Exchange. Information in this section of the website concerning the Company is directed solely at persons who are located in the UK. Nothing on this website is, or is intended to be, an offer, advice, or an invitation, to buy or sell any investments. Potential investors must read our full terms and conditions before proceeding further with any investment product referred to on this website. The information on this website may not be suitable for everyone, and retail investors unsure whether an investment product referenced on this website will meet their individual needs should seek advice before proceeding further with such product.