Abrdn £1bn private equity fund APEO returns 6.8%

Alan Gauld

The £1 billion Abrdn Private Equity Opportunities Trust plc (APEO) has reported NAV total return of 6.8% for the six months to March 31, 2022, versus 4.7% for the FTSE All-Share Index over the same period.

APEO is a listed private equity fund-of-funds that partners with a select group of core managers via primary funds, secondaries and co-investments.

The fund’s core focus is the European mid-market.

“The valuation of the portfolio increased by 8.7% during the six months to 31 March 2022 on an unrealised constant currency basis,” said APEO.

“Net assets were £1,095.3m, up from £1,036.0m at 30 September 2021 …

“The company continued to selectively deploy capital into new investments.

“During the six months to 31 March 2022, the company made commitments totalling £239.7 million (31 March 2021: £88.4 million).

“Funds were committed to eight new primary investments, nine co-investments, one follow-on investment in an existing co-investment and one secondary investment …

The portfolio continued to generate strong realisations during the six month period and received distributions of £120.6 million (31 March 2021: £92.7 million) and made secondary sales equating to £15.7 million (31 March 2021: £nil).”

APEO lead portfolio manager Alan Gauld wrote: “The underlying portfolio continues to see numerous success stories across a range of sectors and the average earnings growth over the last twelve months to 31 March 2022 was 25.7%, helping to underpin valuation growth during the period.

“Furthermore, a number of exits at above prior carrying values helped drive an uplift in valuation during the six months to 31 March 2021.

“Notable exits include General Life (European fertility clinic group), Sbanken (Norwegian online bank) and Vizrt (global producer of software for live video production).

“Portfolio company realisations during the first six months of the financial year were at a 16.1% premium to the valuation two quarters prior.

“However, the part of the portfolio that has seen valuation pressure is the publicly listed company exposures.

“As a reminder, APEO is not a long-term holder of listed shares but has seen strong IPO activity in the portfolio in the last 18 months, with successful listings including Moonpig (UK-based online gifting business), Dr Martens (leading consumer footwear brand) and Inpost (self-service lockers for ecommerce consumers).

“Listed companies equated to 12.4% of the portfolio at the beginning of the financial year and this cohort of businesses declined in aggregate by 22.1% in the six months to 31 March 2022.

“Therefore, listed companies now equate to 8.5% of the portfolio and therefore will be a less meaningful part of the company’s portfolio in the second half of the financial year.”