PRIVATE EQUITY HOLDING AG Annual Report 2023 / 2024
Private Equity Holding AG
Private Equity Holding offers institutional and private investors the opportunity to invest in a broadly diversified private equity portfolio.
The objective of Private Equity Holding is to generate long-term capital growth for its shareholders.
Private Equity Holding's Investment Portfolio is managed by Alpha Associates.
Alpha Associates is an independent private equity, private debt and infrastructure manager and advisor, building and managing globally diversified private market fund portfolios for institutional and private clients.
Annual Report as of March 31, 2024 | 1
Table of Contents | |
Key Figures | . .2 |
Chairman's Letter for the Financial Year 2023/2024 | . .3 |
Development of Net Asset Value and Share Price. . | . .5 |
Private Equity Holding Portfolio Overview | . .6 |
Largest Exposures | . .7 |
Selected Direct Investments | . .9 |
IFRS Financial Statements | |
Private Equity Holding AG | . 12 |
Report of the Statutory Auditor | |
on the IFRS Financial Statements | . 38 |
Financial Statements | |
Private Equity Holding AG | . 43 |
Report of the Statutory Auditor | |
on the Financial Statements | . 51 |
Corporate Governance | . 55 |
Compensation Report | . 66 |
Report of the Statutory Auditor | |
on the Compensation Report | . 69 |
Information for Investors | . 72 |
Glossary of Terms | . 73 |
- | Annual Report as of March 31, 2024
Key Figures for the Financial Year 2023/2024
Share Value | 31.03.24 | 31.03.23 | Change | 31.03.24 | 31.03.23 | Change |
EUR | EUR | in % 1 | CHF | CHF | in % 1 | |
Net asset value per share, based on fair values | 159.75 | 151.70 | 5.3% | 155.47 | 150.41 | 3.4% |
Price per share (PEHN.S) | 71.93 | 79.48 | (9.5%) | 70.00 | 78.80 | (11.2%) |
1 Excl. distributions. | ||||||
01.04.23- | 01.04.22- | |||||
Net Profit for the Period | 31.03.24 | 31.03.23 | Change | |||
EUR 1,000 | EUR 1,000 | in % | ||||
Profit/(loss) for the period | 19,399 | (931) | n/m |
Selected Balance Sheet Items (Consolidated) 2
31.03.24 | 31.03.23 | Change |
EUR 1,000 | EUR 1,000 | in % |
Current assets | 2,034 | 1,067 | 91% |
Non-current assets | 405,916 | 396,180 | 2% |
Current liabilities | 13,651 | 17,147 | (20%) |
Non-current liabilities | - | - | n/a |
Total equity | 394,299 | 380,100 | 4% |
- Information herein is presented in addition to the IFRS Financial Statements.
Asset Allocation
Unfunded | Total | Total | |
Fair Value | Commitments | Exposure 3 | Exposure 3 |
31.03.24 | 31.03.24 | 31.03.24 | 31.03.24 |
EUR million | EUR million | EUR million | in % |
Buyout funds | 142.1 | 72.4 | 214.5 | 42% |
Venture funds | 112.2 | 21.6 | 133.8 | 26% |
Special situation funds | 64.8 | 15.2 | 80.0 | 15% |
Total fund investments | 319.1 | 109.2 | 428.3 | 83% |
Direct investments and loans | 86.8 | 1.4 | 88.2 | 17% |
Total direct investments and loans | 86.8 | 1.4 | 88.2 | 17% |
Total funds, direct investments and loans | 405.9 | 110.6 | 516.5 | 100% |
- Fair value plus unfunded commitments.
Commitments | Change | ||
31.03.24 | 31.03.23 | in % | |
Unfunded commitments (EUR million) | 110.6 | 129.3 | (14%) |
Overcommitment 4 | 30.1% | 36.7% | (18%) |
Net current assets / unfunded commitments | (10.5%) | (12.4%) | (16%) |
- Overcommitment = (unfunded commitments - net current assets) / (non-current assets - non-current liabilities).
Annual Report as of March 31, 2024 | 3
Chairman's Letter for the Financial Year 2023/2024
Dear Shareholders,
Private Equity Holding AG (PEH) reports a comprehensive income of EUR 19.4 million for the financial year 2023/2024 (2022/2023: EUR (0.9m)). As of March 31, 2024, the net asset value per share stood at EUR 159.75 (CHF 155.47), representing a NAV change of 6.0% in EUR* over the course of the financial year.
Portfolio Development
Despite the challenging environment for private markets during the reporting period, the PEH portfolio performance was 7.4% (including a 0.7% FX gain). Since the restart of investment activities in 2007, PEH generated an annualised performance of 10.4%, showing both strong and consistent NAV growth over the past 17 years.
Today, PEH's well-diversified portfolio comprises over 800 portfolio companies on a look-through basis, strategically spread across fund managers, industries, investment stages, and geographies.
During the reporting period, notable positive valuation adjustments were recorded for many portfolio funds including Abry ASF IV, Gyrus Co-Investment Fund, Investindustrial VII and Alpha CEE Opportunity IV.
Several direct co-investments also recorded positive valuation adjustments, i.a., Guala Closures, a market leader in the production of aluminium and "non-refillable" closures for bottles, Earnix, an AI-driven pricing and analytics platform for financial services, and dss+, a global health, safety and environmental consulting company.
During the 12-month period, PEH's portfolio was cash flow positive by EUR 18.4 million with EUR 51.1 million in distributions received versus EUR 32.7 million called for new investments and portfolio level expenses. This is remarkable given that the global private equity sector suffered from record-low distributions in 2023. In addition to proceeds from the very successful partial exit of dss+, noteworthy distributions came from Pollen Street III's sale of Aryza, a leading software solutions specialist, as well as from Pollen Street IV distributing proceeds from the sale of Markerstudy, one of the leading retail insurance platforms in the UK. Furthermore, Avista IV distributed proceeds from the sale of United BioSource, a bio-pharmaceutical services provider, and Clarus IV distributed proceeds from SFJ Pharmaceuticals and Talaris Therapeutics, both bio-pharmaceutical development companies.
Market Environment and Investment Activity
While public markets have performed strongly and recovered the 2022 losses in 2023 and Q1 2024, private equity buyout funds recorded only muted gains in 2023, while venture funds continued their negative trend, having enjoyed a period of very strong gains that ended in Q4 2021. Notwithstanding, long-term returns for private equity are well above public market returns, and we do not expect this to change for a carefully selected portfolio of private equity and venture funds and co-investments with a focus on active managers, which are strongly engaged with their portfolio companies.
- Including the dividend payment of CHF 1.00/EUR 1.02 per share paid in July 2023.
- | Annual Report as of March 31, 2024
PEH is pursuing a selective investment strategy, prioritising managers with a proven track record across various market cycles and a "roll-up-the-sleeves" management style. New fund commitments were made to Evolution Technology III, a venture fund with a focus on cybersecurity and enterprise software companies, CIVC Partners Fund VII, a private equity fund investing in leading mid-market companies in the business services sector, as well as to Gyrus Capital Fund II, a fund targeting mid-sized companies in Europe. During the reporting period PEH also completed an add-on investment in Morgan Motors, a British motor car manufacturer, alongside Investindustrial.
Share Price Development
The share price disappointed in the financial year. It lagged not only the long-term NAV development but also public market indices. Discount levels remained above 50% for large parts of the reporting period, and - needless to say - we are not satisfied with this situation. As stated in the past, the share price does not reflect the quality nor the investment prospects of the portfolio at all. PEH reported a solid profit in 2023/2024 (after a small loss in the previous year), current assets increased by 91%, and consolidated liabilities decreased; as did unfunded commitments. PEH's balance sheet improved, and the outlook for private equity is better than 12 months ago. However, PEH's ability to actively manage the discount by repurchasing treasury shares was constrained in 2023/2024 by the available liquidity. Liquidity is largely dependent on the cash flow profile of the portfolio and the global M&A activity in general, which is still relatively low. That said, PEH's portfolio - as stated above - was cash flow positive in 2023/2024, which allowed the Company to purchase more than 37k shares. These transactions were highly accretive to the shareholders of PEH in 2023/2024.
Market Outlook
With recession fears fading and lower interest rates on the horizon, the stage seems set for a private equity rebound. We anticipate an increase in deal flow and exits and a more attractive investment environment going forward. The well-diversified array of portfolio holdings will enable PEH to capitalise on evolving market opportunities and to create material value for its investors in all economic conditions.
Annual General Meeting 2024
The Company's Annual General Meeting will take place on June 3, 2024. Considering and in favour of a prudent liquidity position, the Board of Directors proposes a conservative dividend payment of CHF
1.00 per share. At the time of writing, this represents a dividend yield of approximately 1.4% based on the current share price around CHF 70.
On behalf of the entire Board of Directors, I would like to thank you for your continued support and interest in PEH. Importantly, please rest assured that we are aware of the discount situation and are actively discussing this. Liquidity permitting, the Board aims to increase the annual dividend and PEH's market making activities in the future. We thank our shareholders for their active contribution to this discussion.
Yours sincerely
Dr. Hans Baumgartner
Chairman of the Board of Directors
May 7, 2024
Annual Report as of March 31, 2024 | 5
Development of Net Asset Value and Share Price
Share Price and NAV per Share
01.01.2007 - 31.03.2024 (in EUR incl. distributions)
EUR 190
EUR 180
EUR 170
EUR 160
EUR 150
EUR 140
EUR 130
EUR 120
EUR 110
EUR 100
EUR 90
EUR 80
EUR 70
EUR 60
EUR 50
EUR 40
EUR 30
EUR 20
EUR 10
EUR 0
Share Price (EUR) | NAV (EUR) |
Relative Performance of PEHN
01.01.2007 - 31.03.2024 (in EUR incl. distributions)
600%
500%
400%
300%
200%
100%
0%
MSCI World Index (TR) | LPX 50 (TR) | PEH (TR) |
6 | Annual Report as of March 31, 2024
Portfolio Overview
Allocation by
Investment Category 1
Venture Direct Investments
3%
Venture Funds
26%
Buyout Funds
Fair Value of the Portfolio
by Vintage Year
2022 2008 | 2011 | |||
2% | 2% | 5% | 2012 | |
2021 | ||||
4% | ||||
16% | 2014 | |||
5% |
2015
42%
2020
8%
9%
Special Situation Funds
15%
Buyout Direct Investments
14%
Allocation by
Geography 2
Rest of the World
6%
Europe
50%
USA 44%
Allocation by
Industry 2
MaterialsOther
Health Care 4% 1%
8%
Industrials | IT/Software |
10% | |
42% | |
Fi nancials
17%
Cons umer
18%
2016
201916%
14%
2017
20187%
12%
Unfunded Commitments of the Portfolio
by Vintage Year
2000-2016 | |||
2024 | 5% | 2018 | |
12% | 1% | 2019 | |
6% | |||
2020 | |||
6% | |||
2023 | 2021 | ||
32% | 18% |
2022
20%
10 Largest Exposures
by Managers
Abry Partners
10%
Investindustrial
Others9%
35%
Pollen Street | ||||
Capital | ||||
8% | ||||
Undisclosed | ||||
Manager | ||||
7% | ||||
Insight Venture | ||||
Management | Alpha Associates | |||
4% Mid Europa | 7% | |||
Partners | Evolution | EagleTree | Highland | |
4% | Equity Partners | 6% | ||
Partners | ||||
4% | 6% |
- Based on fair values plus unfunded commitments of portfolio holdings.
- Based on fair values of the underlying companies.
Annual Report as of March 31, 2024 | 7
Five Largest Exposures by Fair Value
representing 17.8% of the total fair value of PEH's investment portfolio
Alpha CEE Opportunity IV | Earnix | ||
Fund Size: | EUR 144 million | Type: | Direct Co-Investment |
Type | Special Situation | Industries: | IT/Software |
Industries | Various | Region: | Israel |
Region | Central & Eastern Europe | Fair Value: | EUR 14.4 million |
Fair Value: | EUR 19.4 million | 3.5% of PEH Portfolio | |
4.8% of PEH Portfolio
Pollen Street III | Renaissance Learning | ||
Fund Size: | GBP 332 million | Type: | Direct Co-Investment |
Type: | Buyout | Industries: | Software |
Industries: | Financials | Region: | North America |
Region: | Europe | Fair Value: | EUR 12.8 million |
Fair Value: | EUR 13.1 million | 3.2% of PEH Portfolio | |
3.2% of PEH Portfolio
Alpha CEE Opportunity IV, 5% | ||
Earnix, 4% | ||
Pollen Street III, 3% | ||
Shawbrook Bank | Renaissance Learning, 3% | |
Shawbrook, 3% | ||
Eagletree IV, 3% | ||
Type: | Direct Co-Investment | Evolution Technology, 3% |
Industries: | Financials | Growth Fund II, 3% |
ABRY IX, 2% | ||
Region: | UK | |
Sycamore III, 2% | ||
Fair Value: | EUR 12.4 million | Others, 69% |
3.1% of PEH Portfolio | ||
- | Annual Report as of March 31, 2024
Five Largest Exposures by Unfunded Commitment
representing 32.5% of the total unfunded commitments of PEH's investment portfolio
Francisco VII | Procuritas VII | ||
Fund Size: | USD 13.5 billion | Fund Size: | EUR 407 million |
Type: | Buyout | Type: | Buyout |
Industries: | Technology | Industries: | Various |
Region: | North America | Region: | Europe |
Unfunded Commitment: | EUR 9.2 million | Unfunded Commitment: | EUR 7.1 million |
8.3% of PEH Portfolio | 6.4% of PEH Portfolio |
Abry Heritage II | CIVC VII | ||
Fund Size: | USD 651 million | Fund Size: | USD 870 million |
Type: | Buyout | Type: | Buyout |
Industries: | IT/Software | Industries: | Business Services |
Region: | North America | Region: | North America |
Unfunded Commitment: | EUR 6.6 million | Unfunded Commitment: | EUR 6.5 million |
6.0% of PEH Portfolio | 5.9% of PEH Portfolio |
Francisco VII, 8%
Procuritas VII, 6%
TA Associates XV | Abry Heritage II, 6% | ||
Fund Size: | USD 16.5 billion | Others, 45% | CIVC VII, 6% |
Type:Buyout
Industries:Various
Region:Global
Unfunded Commitment: EUR 6.5 million 5.9% of PEH Portfolio
TA Associates XV, 6%
Cinven VIII, 6%
Investindustrial Growth III, 5%
Francisco Agility III, 4%
Highland Europe V, 4% HIG Middle Market LBO IV, 4%
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Private Equity Holding AG published this content on 07 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 May 2024 05:02:07 UTC.
