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

    Invest online now

    Or contact your usual investment broker

  • 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

    As at 31 December 2016, the Company’s net asset value (‘NAV’) was £259.5m giving a NAV total return over the quarter of 10%. The influence of currency movements in this quarter was minimal with a slight strengthening of the pound versus the euro being offset by a more significant weakness against the dollar. The Trust’s euro exposure is about three times its US dollar exposure. The NAV total return for the full year was 23.0% and the share price total return was 27.8%.

    The strong flow of realisations has continued into the final quarter with £31.2m of realisations and income, bringing the year’s total to £69.8m which was just below the record £78.9m reached in 2015. New investment through funds and co-investments was £9.0m for the quarter and £33.2m for the year, slightly down on last year’s £35.3m. This has led to a substantial cash balance of £48.6m at the year end, which, after deducting the borrowings under the RBS facility of £25m, gives net cash of £23.5m. Total outstanding undrawn commitments at 31 December were £116.8m, of which approximately £18m was to funds where the investment period has expired.

    One new co-investment was added during the final quarter. Babington is a Derby-based provider of apprenticeships and other business training courses. F&CPET has invested £2.6m for 12% of the company in a deal led by RJD Partners. After the quarter end, F&CPET made a co-investment of $5m in North Carolina-based company Sigma Electric Manufacturing. This is a deal led by Argand, a mid-market specialist team which spun out of the well-established Castle Harlan private equity

    firm. Sigma is a leading manufacturer of metal castings, precision machined components, and sub-assemblies for the US low voltage electrical products market.

    There have been several fresh commitments to funds during the final quarter and in the first quarter of 2017. Our exposure to the Nordic area has been renewed through €7m committed to Procuritas VI and €4m to a new fund, Summa I. After the quarter end, €6m was committed to Vaaka III, a Finnish-focused mid-market buyout fund. In terms of general European exposure, we have committed €5m to Agilitas 2015 Private Equity Fund. Agilitas is well known to us as we co-invested with them in Ionisos, which was successfully sold earlier this year, and in Recover Nordic, which is making good progress. F&CPET has always had a small but worthwhile portfolio of US-based investments. We added to this after the quarter end with a commitment of $6m to Graycliff Private Equity Partners III, a spin-out from HSBC Private Equity focused on the lower midmarket buyout sector of the US. From the funds in the portfolio, there were drawdowns totalling £6.4m. The new deals were typically diverse in sector and geography. France-based pan-European fund Astorg VI called £0.9m for two investments: HRA (mainly gynaecological pharmaceuticals) and Parkeon (hardware and software for parking meters). In Germany, DBAG VI called £0.4m for Polytech (silicone implants) and £0.5m for Frimo (tooling for plastic components for car interiors). Inflexion continue to be very active. Inflexion Buyout Fund IV called £0.5m for two investments: Bedell Trust (independent corporate and trust administration) and Group IMD (cloud-based provider of distribution technology for the global advertising industry). Inflexion Partnership Capital called £0.5m for Outdoor Plus, the leading provider of high-profile digital advertising sites in the UK. TDR Capital II called £0.7m for refinancing its longstanding modular buildings company, Algeco Scotsman. In Finland, Vaaka II called £0.5m for two investments: Tietokeskus (ICT infrastructure services) and Molok (below-ground waste bins for municipalities).

    This has been a remarkable quarter for realisations with £31.2m coming in. A large proportion of this amount came from SEP III’s spectacular exit of Edinburgh-based flight search engine Skyscanner, which was sold to NASDAQ-listed Chinese travel group Ctrip for £1.4bn. The proceeds to F&CPET were £18.1m. There were some other notable exits during the quarter. Primary Capital III sold Leisure Pass Group (visitor passes and operating systems) to a company backed by private equity house Exponent. Proceeds to F&CPET were £2.3m, representing 7x cost and an IRR of 69%. Piper V sold bar chain Loungers to Lion Capital, returning £1.1m (4.1x cost, 36% IRR). DBAG V sold aircraft production machinery company Broetje to a large Chinese-listed conglomerate, returning £1.3m (4.2x cost and 35% IRR). Chequers Capital XV sold TCR, a lessor of ground handling equipment, to an infrastructure consortium, returning £1.1m (8.4x cost and 28% IRR). Bluepoint Capital II, the US mid-market fund, sold Trademark, a virtual manufacturer and wholesaler of branded and licensed goods to online retailers, to Bertram Capital, returning £1.0m. Lastly, Argan Capital sold down some more of Swedish healthcare assistance group Humana, which is now listed, returning £0.9m.

    After the quarter end, we received the proceeds from the sale of our co-investment in Park Holidays, the fourth-largest caravan holiday park company in the UK. This Caledonia-led investment was sold to ICG for an enterprise value of £197m. We originally invested £3.25m in May 2014 and our proceeds of £7.6m, in addition to £1.4m already received, represents 2.8x cost and an IRR of 48%.

    Many of the valuation changes reflect the exits referred to above: notably, SEP III (+£5.2m), Park Holidays UK (+£2.0m), Chequers Capital XV (+£1.9m), and DBAG V (+£1.0m). In addition, there were a number of other encouraging upward valuations based on good trading. Ambio, the MVM-led pharmaceutical manufacturer, is trading well and has been uplifted by £2.4m to 1.5x cost. Ticketscript, the FPE-led SaaS-based online ticketing solution provider, has been sold to Eventbrite, a larger strategic player in the same sector. The consideration was largely in Eventbrite shares, and it is hoped the company will list in the medium term. The valuation ascribed gave an uplift for Ticketscript of £2.0m to 1.9x cost. Stirling Square Capital Partners II was up by £1.2m, reflecting the sale of waste collection container business ESE World early in 2017 to UK-listed packaging company RPC Group. Lastly, our longstanding co-investment in Stirling Square-led security products company 3si is trading strongly and was uplifted by £1.2m. On the downside, Pinebridge New Europe continues to struggle with its remaining investments and is down £0.8m. RJD Partners II has written down two of its four holdings due to weak trading and is down by £0.8m. Our RJD-led co-investment Burgess Marine has also been weak and is down by £0.4m. Procuritas IV is down by £0.6m, reflecting a lower multiple used to value its large holding in supported living company Bosana.

    The prevailing theme in the European private equity market at present is that pricing of new deals is edging towards historic highs. Fortunately, the increase in prices is markedly less acute at the lower end of the mid-market where most of our commitments, whether to funds or co-investments, are made. Secondly, the managers we invest with are all aware of the importance of maintaining pricing discipline. Whilst it may seem obvious, our own performance data shows there is a very strong correlation between paying a low or moderate price and achieving a high return. A feature of this portfolio over the years has been the very extensive list of niche industries in which portfolio companies are involved. These companies have been selected from thousands of opportunities

    principally for their growth potential. This combination of moderate pricing and high-growth potential may be temporarily harder to find, but because of the skills and networks of our investment partners it definitely remains possible to identify them. The other vital ingredient of investment success is the confidence of businesses and investors. Notwithstanding the substantial political shocks of 2016, this remains at good levels. Private equity investors tend not to react reflexively. It is a naturally deliberative investment activity with long lead times and long holding periods, and the ability to plan and adapt is one of its key strengths. Following a strong year in 2016, F&CPET is well placed to continue to increase shareholder value in 2017.

    As at 31 March 2017

  •  Private Equity Trust - performance chart(1)

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

    Performance (%) as at 31.12.16

    Cumulative performance 1 month Year to date 1 Year 3 Years 5 Years
    NAV

    N/A

    23.0 23.0 46.1 71.5
    Share price 1.4 27.8 27.8 64.2 154.0
    Standardised annual performance 2016 2015 2014 2013 2012
    NAV 23.0 10.6 7.3 9.9 6.8
    Share price 27.8 16.5 10.3 17.4 31.7

    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.

  • Share price

    345.94p4.31p

    25 April 2017

  • Hamish Mair BSc, MBA, ASIP

    Hamish Mair BSc, MBA, ASIP

    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.

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