TIDMPEY TIDMPEYS
RNS Number : 6285L
Princess Private Equity Holding Ltd
01 May 2020
News Release
Guernsey, 1 May 2020
Princess Private Equity Holding Limited - publication of March
NAV including impact of COVID-19 on valuations and updated dividend
guidance
Princess Private Equity ("Princess" or "the Company") today
announces its unaudited net asset value as at 31 March 2020 (the
March NAV). The Company has reported a March NAV of EUR 10.71 per
share, representing a NAV total return of -14.1% during the month
(-14.8% during Q1 2020). Further to the Company's announcement on
26 March 2020, the March NAV reflects the impact of the volatility
observed in financial markets during March and associated
mark-to-market adjustments. In addition to the monthly factsheet
which can be downloaded from the Company's website (link), this
statement provides additional commentary on the largest portfolio
exposures, the Company's liquidity position and guidance on the
FY2020 dividend.
The impact of COVID-19 remains unprecedented and the situation
continues to evolve rapidly. In order to slow the spread of the
virus, governments around the world have implemented sweeping
stay-at-home and social distancing measures. These protocols have
led to, not only a slowdown in economic activity, but a 'sudden
stop' in certain sectors. Government measures appear to be starting
to yield results, with signs that the number of new cases in
several countries may be peaking, and governments starting to
consider a staggered relaxation of restrictions. However, global
economic activity has already slowed sharply and is likely to take
an extended period to fully resume, with a higher rate of
unemployment and a more cautious corporate sector.
Despite the significant mark-to-market movements during March,
Partners Group ("the Investment Advisor") remains positive on the
long-term outlook for the portfolio, even in a lower growth
economic environment. As a consequence of its selective investment
approach, the Company has underweighted, or avoided, many of the
more cyclical sectors that have been hardest hit. Princess is
invested in a range of businesses operating in sub-sectors which
benefit from long-term growth drivers, such as demographics and
technology, and which provide a long-term value proposition to
their customers. The full resources of the Investment Advisor's
global investment platform, including dedicated in-house operating
and capital markets teams, remain focused on preserving value in
the Company's investments and ensuring that they emerge from this
challenging period in a position of relative strength.
Sector breakdown of the portfolio as at 31 March 2020:
Education Services 17.9%
Health Care 15.4%
Information Technology 14.9%
Retail* 13.7%
Financials 8.9%
Industrials 8.1%
Consumer Staples 7.5%
Consumer Discretionary 4.0%
Energy 3.7%
Materials 3.6%
Utilities 1.4%
Telecommunication Services 0.9%
*Includes Action which represented 11.0% of portfolio (12.0% of
NAV) as at 31 March 2020. An exit has been agreed and is expected
to close during the second quarter of 2020.
Valuations
In calculating the Company's March NAV, the Investment Advisor
conducted a rigorous bottom-up revaluation of the portfolio, taking
into account the impact of the decline in the multiples of
comparable companies, or other market data, used to value the
Company's direct investments. Additionally, the Investment Advisor
adjusted the valuations in the latest available reports from
Princess' legacy third party fund investments (mainly dated Q3/Q4
2019) to reflect the declines observed in financial markets during
March.
Commentary on largest exposures
Commentary on the Company's largest investment exposures,
excluding Action for which a sale has been agreed, is provided
below covering 37.0% of the Company's net asset value at 31 March
2020.
Permotio International Learning (trading as International
Schools Partnership)
Permotio is an investment vehicle formed to create a leading
international private schools group through a "buy and build"
strategy. The company owns and operates a diversified platform of
46 schools across the Americas, Europe, the Middle East and Asia.
Permotio has temporarily closed all 46 schools in response to
government social-distancing measures, and to ensure the health and
safety of students and employees. Despite school closures, the
financial impact to-date has been limited. Tuition fees are paid in
advance and the schools are able to meet their contractual
commitments through "distance learning" and, if necessary, changes
in holiday schedule. Over the medium term, a negative impact on
enrollments and ancillary fees is expected if schools are unable to
re-open for an extended period. Non-capex and other non-committed
expenditure have been restricted at the present time. Management is
preparing a detailed plan to re-open each school, subject to the
lifting of government restrictions. Permotio maintains a healthy
cash balance with no material risk to covenants at present.
GlobalLogic
Global Logic is a global provider of outsourced software product
engineering services, with approximately 12'000 employees across
the globe. Business continuity measures have been implemented. Over
98% of employees globally are able to work remotely and procedures
have been put in place to ensure project teams can still
collaborate to meet client deliverables. Revenues are predominantly
linked to project-based, long-term contracts and consequently there
has been no immediate impact on profitability. An assessment of the
potential impact of an extended global economic slowdown on client
stability and new projects is being undertaken. A precautionary
drawdown of the company's revolving credit facility has been
implemented. The company maintains a healthy liquidity position
with low covenant risk.
Foncia
Foncia is a France-headquartered company that provides property
management and real estate services. It has a network of more than
600 branches located throughout France, Switzerland, Germany and
Belgium. Foncia operates in a resilient sector and to-date the
impact on operations and financials has been limited. Management
has rolled out business continuity plans and most of the employees
are working from home. The majority of revenues stem from
residential property management services and are recurring in
nature as they are based on the company's stock of dwellings under
management. As such the main impacts are expected to be on the
brokerage and rental activities. Cost reduction measures have been
implemented and employees have been put under temporary
unemployment schemes where applicable. The company maintains a
healthy liquidity position.
KinderCare Education
KinderCare is the largest for-profit provider of early childhood
education in the US and operates over 1'500 centers nationwide.
Currently, more than 400 KinderCare centers remain open to provide
child-care for essential workers. However, due to health advisories
from national, state and local health departments, as well as the
concerns of many employees and the families KinderCare serves, the
company has had to temporarily close many of its other centers to
protect its staff and the children for which it cares. The center
closures are expected to have a material impact on 2020 sales and
earnings and a cost reduction plan has been implemented. The
company maintains a positive cash position and has completed a
precautionary draw-down on its revolving credit facility.
Fermaca
Fermaca is an operator of gas infrastructure in Mexico. The
company is engaged in the development, construction, ownership and
operation of midstream natural gas infrastructure. The company
generates revenues primarily through the sale of pipeline capacity
under USD-denominated "take-or-pay" contracts with medium to
long-term tenors, fixed prices and no volume exposure. A business
continuity plan has been put in place and to-date there has been no
disruption to operations. There are currently no projected
liquidity or covenant issues.
PCI Pharma Services
PCI is a global provider of outsourced pharmaceutical services.
The business operates in a resilient sector and has suffered only a
marginal impact to-date. It is designated as providing essential
services and has therefore been able to remain open. There has been
no significant disruption to operations and the company's supply
chains continue to function. March was a record sales month and PCI
is raising inventory levels to meet increased customer demand. As
well as ensuring a supply of critical drugs for patients with
exiting conditions, PCI is supporting the supply of several drugs
used to treat conditions arising from COVID-19. Management
continues to monitor the company's liquidity position and a
precautionary revolving credit facility draw-down has been
completed. There are currently no projected liquidity or covenant
issues.
Liquidity position
The Investment Advisor continues to closely monitor the
Company's liquidity position and the potential capital requirements
of its portfolio companies. Detailed cash flow forecasts have been
prepared under both a base-case and a downside-case scenario. The
downside-case models an extended period of social-distancing
measures that suppress portfolio company revenues until the end of
the third quarter of 2020, followed by a gradual recovery. Based on
this analysis the Investment Advisor has identified those portfolio
companies which may require additional capital in the months and
quarters ahead. In the current environment, both realization and
investment activity are expected to slow materially. The Company
maintains a long-term investment horizon and is under no pressure
to realize investments in this environment.
As of 31 March 2020, the Company held liquidity of EUR 29.6
million, having drawn the remaining balance of its EUR 80 million
committed credit facility on a precautionary basis during March.
The Company continues to expect to receive EUR 80.9 million during
the second quarter from the previously announced sale of its stake
in Action (having received a EUR 7.8 million distribution from
Action during March).
The Investment Advisor remains confident that the Company has
access to sufficient liquidity to support its portfolio companies
during this challenging period.
Statement on dividend
The Company notes an increasing number of dividends cuts and
suspensions from companies seeking to preserve liquidity in the
current environment, or following the recommendations of
regulators. This statement provides guidance to shareholders on the
Company's FY2020 dividend.
The Company has a dividend objective to distribute 5-8% of
opening NAV via semi-annual payments. In FY2019 it paid a total
dividend of EUR 0.58 per share via interim dividends in June and
December. However, while the economic outlook remains uncertain,
the Company does not believe it would be prudent to maintain the
dividend at this level.
The Company expects to pay a total dividend of not less than EUR
0.29 per share for FY2020. The timing of dividend payments will
reflect the Investment Advisor's ongoing assessment of the
potential capital requirements to support the portfolio. The
Company may pay a partial first interim dividend, or the first
interim dividend may be suspended if visibility has not improved.
It remains the Company's intention to pay a second interim dividend
in December, in part or in full, such that the total dividend for
the year is not less than EUR 0.29 per share.
The Company recognizes the importance of the dividend for
shareholders. However, while material uncertainty remains over the
duration and impact of Covid-19 on the economy, the preservation of
liquidity is considered the most prudent course of action to enable
the Company to support its portfolio companies as required, and to
protect long-term value for shareholders. The Company intends to
resume a normal cycle of dividend payments when visibility has
improved. A further announcement will be made regarding the first
interim dividend in due course.
Investor conference call
The Company will hold its quarterly investor conference call on
12 May 2020 10:00 BST / 11:00 CET to present the Q1 2020 results
and to provide an update on the development of the portfolio.
Please find the dial-in details on the Company's webpage.
Ends.
About Princess
Princess is an investment holding company founded in 1999 and
domiciled in Guernsey. It invests, inter alia, in private equity
and private debt investments. Princess is advised in its investment
activities by Partners Group, a global private markets investment
management firm with USD 94 billion in investment programs under
management in private equity, private debt, private real estate and
private infrastructure. Princess aims to provide shareholders with
long-term capital growth and an attractive dividend yield. Princess
is traded on the Main Market of the London Stock Exchange (ticker:
PEY for the Euro Quote; PEYS for the Sterling Quote).
Contacts
Princess Private Equity Holding Limited:
princess@partnersgroup.com
www.princess-privateequity.net
Registered Number: 35241
LEI: 54930038LU8RDPFFVJ57
Investor relations contact
George Crowe
Phone: +44 (0)20 7575 2771
Email: george.crowe@partnersgroup.com
Media relations contact
Jenny Blinch
Phone: +44 207 575 2571
Email: jenny.blinch@partnersgroup.com
www.partnersgroup.com
This document does not constitute an offer to sell or a
solicitation of an offer to buy or subscribe for any securities and
neither is it intended to be an investment advertisement or sales
instrument of Princess. The distribution of this document may be
restricted by law in certain jurisdictions. Persons into whose
possession this document comes must inform themselves about and
observe any such restrictions on the distribution of this document.
In particular, this document and the information contained therein
are not for distribution or publication, neither directly nor
indirectly, in or into the United States of America, Canada,
Australia or Japan.
This document may have been prepared using financial information
contained in the books and records of the product described herein
as of the reporting date. This information is believed to be
accurate but has not been audited by any third party. This document
may describe past performance, which may not be indicative of
future results. No liability is accepted for any actions taken on
the basis of the information provided in this document. Neither the
contents of Princess' website nor the contents of any website
accessible from hyperlinks on Princess' website (or any other
website) is incorporated into, or forms part of, this
announcement.
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 rns@lseg.com or visit www.rns.com.
END
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