Information  X 
Enter a valid email address

BMO Private Eq Trust (BPET)

  Print   

Friday 26 November, 2021

BMO Private Eq Trust

3rd Quarter Results

RNS Number : 6474T
BMO Private Equity Trust PLC
26 November 2021
 

 

To: Stock Exchange

For immediate release:

 

26 November 2021

 

BMO Private Equity Trust PLC

Quarterly results for the three months to 30 September 2021 (unaudited)
 

· Dividend yield of 3.9 per cent based on the period end share price (1).

 

(1)  Calculated as dividends of 4.16p paid on 30 April 2021, 4.35p paid on 30 July 2021, 4.77p paid on 29 October 2021 and 5.27p payable on 28 January 2022 divided by the Company's share price of 473.00p as at 30 September 2021.

 

 

Manager's Review

 

Introduction

 

As at 30 September 2021, the net assets of the Company were £434.8 million, giving a Net Asset Value (NAV) per share of 588.06p. Taking into account the dividend of 4.35p paid on 30 July 2021 the NAV total return for the quarter is 7.2%, and 23.8% for the nine months to 30 September 2021.

 

With the discount narrowing significantly from 36.8% at 31 December 2020 to 19.6% at 30 September 2021 the share price total return for this nine-month period was 59.1%.

 

At 30 September 2021 the Company had net debt of £7.3 million and outstanding undrawn commitments of £135.5 million including £24.7 million to funds where the investment period has expired.

 

The next quarterly dividend of 5.27p per share will be paid on 28 January 2022 to shareholders on the register on 7 January 2022. The ex-dividend date is 6 January 2022.

 

Ownership of the Manager

 

On 12 April 2021 BMO announced that it had reached an agreement to sell its asset management business in Europe, the Middle East and Africa to Columbia Threadneedle Investments, the global asset management business of Ameriprise Financial, Inc. This acquisition completed on 8 November 2021 adding £97 billion of assets under management (AUM) to Columbia Threadneedle Investments increasing its AUM to £530 billion.

 

During this acquisition process the Company's Board sought and received confirmation from senior management at Columbia Threadneedle Investments of the importance of maintaining stability and continuity of the teams which presently support your Company. The Board welcomes these assurances and looks forward to deepening the Company's relationship with the new management company for the benefit of shareholders.

 

New Investments

 

The Company has seen strong dealflow this year and much of this came to fruition in the third quarter. Four new commitments have been made to funds, one secondary has been added to the portfolio and no fewer than four new co-investments have been added. Much of this was covered in the Q2 report but is worth recapping.

 

Of the fund investments all the commitments were to funds where we have an existing relationship.

 

In Europe we have committed €5 million to ArchiMed MED III, a €650 million France based mid cap healthcare buyout fund. ArchiMed invest into well established profitable companies across six core healthcare sectors internationally; Medtech, Biopharma, Healthcare IT, Diagnostics, Life Sciences and Consumer Health.

 

In the UK we have made a commitment of £7.5 million to FPE Fund III, a mid-market growth equity fund specialising in the B2B software and services sectors. Also in the growth equity area we have committed £10 million to SEP VI, the latest fund from one of our longest standing investment partners. We have backed another longstanding partner again through Inflexion Buyout Fund VI (£10 million). This fund continues Inflexion's focus on UK mid-market buyouts.

 

The co-investments made shortly after the quarter end are diverse by sector and geography.

 

£5 million has been invested in JT IoT, the Jersey based 'internet of things' infrastructure provider. The company, which is a spin out of the state-owned Jersey Telecom, provides SIMs to a wide range of devices together with a platform that allows connectivity and subscription management services as well as securely connecting IoT devices and controlling SIMs anywhere in the world. The deal is led by the specialist family office backed PE firm Perwyn.

 

€6 million (€5.0 million drawn initially) has been invested in Prollenium Medical Technologies, a Canadian aesthetic company that develops, produces and distributes injectable hyaluronic acid dermal fillers. This is a high growth sector internationally which has proved resilient through the pandemic. The deal is led by ArchiMed.

 

€3.5 million (€3.1 million drawn initially) has been invested into Habitus, a Denmark based leading private provider of complex social care services for high acuity citizens. The deal is led by healthcare specialist Apposite who have made similar investments in the UK.

 

£3.4 million has been invested in Contained Air Solutions, the UK market leading producer of clean air containment products for the healthcare, research and pharma sectors. Based in Manchester, it manufactures and services biological safety cabinets, fume cupboards, robotic enclosures and filter consumables. The deal is led by the new private equity manager Accord Investment Partners.

 

During the quarter we have also taken part in a so-called 'GP led secondary' where the managers of the Swiss based Capvis III fund gave investors the option of either cashing out at a discount to NAV equivalent to 10.1% to the March NAV or rolling their investment over into a new vehicle. There are three assets left in the fund each of which has reasonable prospects but the portfolio will require a few more years to be realised. In respect of our holding we have elected to rollover but we have also been able to acquire the positions held by two older Limited Partnership funds which are also under our management and to elect to roll these positions into the new vehicle.  This has the net effect of increasing our position in the Capvis III fund from €2 million to €5 million (an additional £2.5 million bringing exposure to £4.2 million) which is a worthwhile position and from which we expect to make a good return over the next two to three years.

 

The excellent dealflow has continued into the current quarter and a further two fund commitments and three co-investments have been made.

 

We have committed £7.5 million to Piper Private Equity VII, the latest fund from these consumer brands specialists with whom we have invested since the early 1990s. We have once again backed the Sweden based sustainability specialist private equity manager Summa through their fund III to the extent of €7 million.

 

The new co-investments are typically heterogeneous. £5 million has been invested in the Piper led investment in Omlet, the market leading direct to consumer chicken coop and pet accessories company. This company has grown substantially over the last 15 years entirely through its e-commerce offering within established international markets which are poised for further growth. We have invested CAD 3.5 million into Pathfactory, a Toronto headquartered SaaS-based marketing content automation platform, which allows B2B marketers to deliver personalised relevant content experiences to B2B buyers throughout their buying journey. This allows B2B sellers to accelerate campaigns and increase the number and effectiveness of these campaigns. Lastly, we have invested £5 million into the August Equity led co-investment Orbis, the Wales based leading provider of residential and education services for high acuity children and adults. August have been invested in the company since 2016 but believe that there is considerable further growth in prospect and so have transferred the investment into its current fund and a new SPV.

 

The funds in our portfolio were active in making new investments during the quarter and a total of £10.7 million was called. Of the underlying new investments made, the larger ones give an impression of the sectors that are attracting private equity interest internationally of late.

 

Apposite Healthcare III called £0.9 million for CrestOptics, a world leading manufacturer of advanced systems for fluorescence confocal microscopy used in biological and medical research. FPE called £0.5 million for Zest, an employee benefits software company. Also in the growth equity area, SEP V called £0.5 million for Tyk, a London based provider of API (Application Programming Interfaces) management software.

 

The total of new co-investments and drawdowns for funds for this quarter was £27.9 million.

 

Realisations

 

This quarter has seen a substantial inflow from realisations as the current phase of exits continues. Total realisations in the quarter amounted to £48.5 million. Together with £2.7 million of associated income the combined total is £51.2 million. For the first nine months of the year realisations and income have totalled £120.8 million which is more than three times the total for all of last year and is already an annual record for the Company.

 

Some of this quarter's larger contributors are noted below.

 

Our co-investments have led the way again with Inflexion exiting the builders' merchant chain Huws Gray and returning £18.4 million including £2.3 million of income (including the positions in Inflexion Supplemental IV and Inflexion Partnership I Huws Gray returned a total of £19.8 million). Pet Network, the Rohatyn Group led investment in a South Eastern Europe large format pet retailer was sold to PE firm AMCE returning £16.3 million which represents 4.2x cost and an IRR of 54% after a three year hold.

 

There were a large number of other exits during the quarter coming from a diverse range of funds. The larger ones illustrate the breadth of the realisation activity.

 

Our longstanding investment with TDR Capital in their Fund II, Annex Fund and holding in Algeco/Scotsman distributed £2.1 million. This is part of the realisation of the modular buildings group of companies that they have successfully built up.

 

FPE II continued their strong run of exits returning £1.8 million primarily from the sale of software company TNP (5.6x cost, 76% IRR). Dunedin Capital Partners II exited automotive refinish products company U-Pol returning £1.5 million (4.4x cost, 16% IRR). Other exits came from diverse geographies and sectors. A further milestone payment of £0.8 million was received by US fund Healthpoint Capital III related to a previous sale in 2019 of dental technology company OrthoSpace. Blue Point III returned £1.0 million from the sale of Perimeter Brands, a refrigerated foods producer. In Italy Aliante 3 exited sparkling wine company Contri Spumanti returning £0.7 million (2.0x cost, c.20% IRR). In the UK Horizon 2013 Fund sold specialist care company Sequence Care returning £0.7 million (2.0x cost, 11% IRR).

 

Valuations Movements

 

There were many upgrades during the quarter. These reflected actual or pending exits as well as improvements in trading which have accompanied the recovery from the pandemic. All areas of the portfolio have benefitted. Our co-investments have done well with STAXS (+£4.0 million), TWMA (+£2.1 million), Accuvein (+£1.3 million) and Ashtead Technology (+£1.1 million) all benefitting from good trading. Pet Network (+£1.7 million) was exited as noted above. A number of the fund holdings were up notably. These included DBAG VII Series (+£1.3 million), Bencis V (+£1.1 million), Procuritas V (+£1.0 million), Astorg VI (+£1.0 million), Chequers XVI (+£0.9 million) and Inflexion Partnership Capital I (+£0.8 million).

 

There were a much smaller number of downgrades. San Siro our co-investment in the Italian funeral homes sector was down by £0.9 million reflecting a slightly lower trailing profits figure as a strong comparative period dropped out.

 

Financing

 

The Company was very modestly geared at 30 September with just £7.3 million of net debt. This has gone up slightly to c.£14 million with new investments since. There is plenty of capacity for new investments and the recently made fund commitments together with the continuing flow of co-investment opportunity will act to increase gearing somewhat. The exceptional flow of realisations has meant that the Company has much lower gearing than forecast at the start of the year. This provides very useful flexibility, especially for making secondary investments and co-investments which require immediate commitments of capital.

 

Outlook

 

The private equity sector internationally is currently the recipient of substantial inflows of capital. This is partly due to the increased recognition of the benefits of this style of equity investment management with the active involvement of private equity managers and their long term investment horizons having been highlighted during the recent crisis. This has boosted the exit environment considerably and led to some upward pressure on pricing of new investments. Our dealflow is strong and diverse and this coupled with our continuing focus on emerging managers, primarily in the European mid-market, means that we find no shortage of opportunities to redeploy realisation proceeds. The pandemic is by no means over and it is likely that some restrictions will remain in place for some time yet. The process of adjustment to these conditions for all but the most exposed companies is largely complete and this bodes well for the private equity sector in general and this Company's shareholders in particular as the end of 2021 approaches.

 

 

 

 

Hamish Mair

Investment Manager

BMO Investment Business Limited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BMO PRIVATE EQUITY TRUST PLC

 

Statement of Comprehensive Income for the

nine months ended 30 September 2021 (unaudited)

 

 

 

 

 

Revenue

£'000

Capital

£'000

Total

£'000

 

Income

 

 

 

Gains on investments held at fair value

-

87,235

87,235

Exchange gains

-

2,790

2,790

Investment income

4,488

-

4,488

Other income

1

-

1

Total income

4,489

90,025

94,514

 

 

 

 

Expenditure

 

 

 

Investment management fee - basic fee

(283)

(2,550)

(2,833)

Investment management fee - performance fee

-

(4,427)

(4,427)

Other expenses

(744)

-

(744)

Total expenditure

(1,027)

(6,977)

(8,004)

 

 

 

 

Profit before finance costs and taxation

3,462

83,048

86,510

 

 

 

 

Finance costs

(193)

(1,738)

(1,931)

 

 

 

 

Profit before taxation

3,269

81,310

84,579

 

 

 

 

Taxation

-

-

-

 

 

 

 

Profit for period/total comprehensive income

3,269

81,310

84,579

 

 

 

 

Return per Ordinary Share

4.42p

109.97p

114.39p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BMO PRIVATE EQUITY TRUST PLC

 

Statement of Comprehensive Income for the

nine months ended 30 September 2020 (unaudited)

 

 

 

 

 

Revenue

£'000

Capital

£'000

Total

£'000

 

Income

 

 

 

Losses on investments held at fair value

-

(1,786)

(1,786)

Exchange losses

-

(3,590)

(3,590)

Investment income

1,789

-

1,789

Other income

7

-

7

Total income

1,796

(5,376)

(3,580)

 

 

 

 

Expenditure

 

 

 

Investment management fee - basic fee

(209)

(1,884)

(2,093)

Investment management fee - performance fee

-

-

-

Other expenses

(725)

-

(725)

Total expenditure

(934)

(1,884)

(2,818)

 

 

 

 

Profit/(loss) before finance costs and taxation

862

(7,260)

(6,398)

 

 

 

 

Finance costs

(178)

(1,597)

(1,775)

 

 

 

 

Profit/(loss) before taxation

684

(8,857)

(8,173)

 

 

 

 

Taxation

-

-

-

 

 

 

 

Profit/(loss) for period/total comprehensive income

684

(8,857)

(8,173)

 

 

 

 

Return per Ordinary Share

0.92p

(11.98)p

(11.06)p

 

 

 

 

 

 

 

 

BMO PRIVATE EQUITY TRUST PLC

 

Statement of Comprehensive Income for the

year ended 31 December 2020 (audited)

 

 

 

 

 

Revenue

£'000

Capital

£'000

Total

£'000

 

Income

 

 

 

Gains on investments held at fair value

-

74,076

74,076

Exchange losses

-

(2,705)

(2,705)

Investment income

4,988

-

4,988

Other income

8

-

8

Total income

4,996

71,371

76,367

 

 

 

 

Expenditure

 

 

 

Investment management fee - basic fee

(294)

(2,650)

(2,944)

Investment management fee - performance fee

-

(3,007)

(3,007)

Other expenses

(952)

-

(952)

Total expenditure

(1,246)

(5,657)

(6,903)

 

 

 

 

Profit before finance costs and taxation

3,750

65,714

69,464

 

 

 

 

Finance costs

(260)

(2,337)

(2,597)

 

 

 

 

Profit before taxation

3,490

63,377

66,867

 

 

 

 

Taxation

-

-

-

 

 

 

 

Profit for year/total comprehensive income

3,490

63,377

66,867

 

 

 

 

Return per Ordinary Share

4.72p

85.71p

90.43p

 

 

 

 

 

 

 

BMO PRIVATE EQUITY TRUST PLC

 

Balance Sheet

 

 

 

 

As at 30 September 2021

As at 30 September 2020

As at 31 December

2020

 

(unaudited)

(unaudited)

(audited)

 

£'000

£'000

 '000

Non-current assets

 

 

 

Investments at fair value through profit or loss

448,007

357,290

426,249

 

 

 

 

Current assets

 

 

 

Other receivables

1,074

17

562

Cash and cash equivalents

37,098

4,169

8,344

 

38,172

4,186

8,906

 

 

 

 

Current liabilities

 

 

 

Other payables

(6,988)

(2,002)

(4,492)

Interest-bearing bank loan

(23,758)

(50,330)

(49,666)

 

(30,746)

(52,332)

(54,158)

Net current assets/(liabilities)

7,426

(48,146)

(45,252)

Total assets less current liabilities

455,433

309,144

380,997

Non-current liabilities

 

 

 

Interest-bearing bank loan

(20,613)

(21,751)

(21,514)

Net assets

434,820

287,393

359,483

 

 

 

 

Equity

 

 

 

Called-up ordinary share capital

739

739

739

Share premium account

2,527

2,527

2,527

Special distributable capital reserve

15,040

15,040

15,040

Special distributable revenue reserve

31,403

31,403

31,403

Capital redemption reserve

1,335

1,335

1,335

Capital reserve

383,776

236,349

308,439

Shareholders' funds

434,820

287,393

359,483

 

 

 

 

Net asset value per Ordinary Share

588.06p

388.68p

486.17p

 

 

 

 

 

 

BMO PRIVATE EQUITY TRUST PLC

 

Reconciliation of Movements in Shareholders' Funds

 

 

 

 

 

Nine months ended

30 September

2021

Nine months ended

30 September 2020

Year

ended

31 December 2020

 

(unaudited)

(unaudited)

(audited)

 

£'000

£'000

£'000

Opening shareholders' funds

359,483

304,277

304,277

Profit/(loss) for the period/total

comprehensive income

 

84,579

 

(8,173)

 

66,867

Dividends paid

(9,242)

(8,711)

(11,661)

 

Closing shareholders' funds

 

 

434,820

 

287,393

 

359,483

 

 
 

Notes (unaudited)

 

1.  The unaudited quarterly results have been prepared on the basis of the accounting policies set out in the statutory accounts of the Company for the year ended 31 December 2020.  Earnings for the nine months to 30 September 2021 should not be taken as a guide to the results for the year to 31 December 2021.

 

 

2.  Investment management fee:

 

 

 

Nine months ended

30 September 2021

  (unaudited)

 

 

Nine months ended

30 September 2020

  (unaudited)

 

 

Year ended

31 December 2020

   (audited)

 

Revenue

£'000

Capital

£'000

Total

£'000

Revenue

£'000

Capital

£'000

Total

£'000

Revenue

£'000

Capital

£'000

Total

£'000

 

 

 

 

 

 

 

 

 

 

Investment management  fee - basic fee

 

283

 

2,550

 

2,833

 

209

 

1,884

 

2,093

 

294

 

2,650

 

2,944

Investment management  fee - performance fee

 

-

 

4,427

 

4,427

 

-

 

-

 

-

 

-

 

3,007

 

3,007

 

 

283

 

6,977

 

7,260

 

209

 

1,884

 

2,093

 

294

 

5,657

 

5,951

 

 

 

 

 

 

 

 

 

 

 

3.  Finance costs:

 

 

 

Nine months ended

30 September 2021

  (unaudited)

 

 

Nine months ended

 30 September 2020

  (unaudited)

 

 

Year ended

31 December 2020

  (audited)

 

Revenue

£'000

Capital

£'000

Total

£'000

Revenue

£'000

Capital

£'000

Total

£'000

Revenue

£'000

Capital

£'000

Total

£'000

 

 

 

 

 

 

 

 

 

 

Interest payable on bank loans

193

1,738

1,931

178

1,597

1,775

260

2,337

2,597

 

 

 

 

 

 

 

 

 

 

 

4.  Returns and net asset values

 

   Nine months ended

30 September 2021

  (unaudited)

   Nine months ended

 30 September 2020

  (unaudited)

  Year ended

31 December 2020

  (audited)

The returns and net asset values per share are based on the following figures:

 

 

 

 

Revenue Return

£3,269,000

£684,000

£3,490,000

Capital Return

£81,310,000

£(8,857,000)

£63,377,000

Net assets attributable to shareholders

£434,820,000

£287,393,000

£359,483,000

Number of shares in issue at end of period

73,941,429

73,941,429

73,941,429

Weighted average number of shares in issue during the period

73,941,429

73,941,429

73,941,429

 

 

 

 

 

 

 

 

5.  The financial information for the nine months ended 30 September 2021, which has not been audited or reviewed by the Company's auditor, comprises non-statutory accounts within the meaning of Section 434 of the Companies Act 2006.  Statutory accounts for the year ended 31 December 2020, on which the auditor issued an unqualified report, have been lodged with the Registrar of Companies.  The quarterly report is available on the Company's website www.bmoprivateequitytrust.com

 

Legal Entity Identifier: 2138009FW98WZFCGRN66

 

For more information, please contact:

 

Hamish Mair (Investment Manager)

0131 718 1184

Scott McEllen (Company Secretary)

0131 718 1137

[email protected]  / [email protected]

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
QRTEAKFSAANFFFA

a d v e r t i s e m e n t