Another impressive set of results from Standard Life Private Equity

Another impressive set of results from Standard Life Private Equity – Standard Life Private Equity (SLPE) has announced results for the year ended 30 September 2020. Over the period the trust produced an NAV total return of 11.7%. This compares to a return of -16.6% from the All-Share Index. The total shareholder return was -4.6%. [Here is the killer stat:] The company has delivered returns in excess of the wider market in all years since inception.

Quarterly dividends of 3.3p totalled 13.2p for the year, 3.1% up on the previous year.

In response to the pandemic, the board and manager adopted a deliberately cautious approach. Over the company’s financial year, SLPE made commitments totalling £140.0m (2019: £188.0m) into six new primary investments, two secondary investments and two co-investments. Outstanding commitments at the year end amounted to £471.4m (2019: £450.3m). The trust has an untapped £200m multi-credit facility that matures in December 2024 plus, at the end of September, cash and cash equivalents of £33.1m, not including a further £15.3m of deferred consideration from investments sold in 2019, which was received after the year end.

SLPE received £140.7m of distributions in the year (2019: £107.4m), realising 3.5 times cost on average for investments sold from its core portfolio. The biggest contributor to realised gains was 3i Eurofund V, as a result of the realisation of its underlying company Action. Excluding 3i Eurofund V, the realised return was 2.3 times (2019: 2.2 times cost).

The company retained some exposure to Action – the largest new investment was a £22.6m co-investment / re-investment into that company. Other notable new investments in the year included:

  • Visma (Hg Saturn 2 / co-investment) – a European provider of mission-critical software to SMEs;
  • ERT (Nordic Capital IX) – an international provider of data collection solutions for use in clinical drug development;
  • All4labels (Triton V) – a European manufacturer of labels for the consumer industry;
  • Recordati (CVC VII) – an international specialty pharmaceutical group;
  • Froneri (PAI SPs) – an international ice cream manufacturer; and
  • Litera (HgCapital 8) – a global provider of software to the legal and life sciences industries.

The manager notes that the company’s high exposure to relatively resilient sectors, notably technology, healthcare and consumer Staples, helped it to increase in value by 20.2% on a constant currency basis over the second half of its financial year.

[At one point last year, SLPE’s discount ballooned to 56.7%. We have tried, in various articles, notes and interviews, to stress how undeserved this is. At last night’s close, SLPE was trading on an almost 25% discount to the end September NAV. This, for a fund that has consistently beaten equity markets seems wrong to us.]

SLPE : Another impressive set of results from Standard Life Private Equity

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