Apax Global Alpha (APAX) CMD 2024 Presentation summary

Board update on capital allocation

• 76% of the invested portfolio is allocated to private equity, with 83 portfolio companies and 18% average LTM EBITDA growth as of 31 March 2024.

• NAV per share performance has been subdued since 2021, with an annualised total NAV return of -2.0% and shareholder return of -8.9% since 2021.

• A new capital allocation policy aims to grow value, achieve long-term NAV compounding, maintain attractive dividends, and create flexibility for buybacks if shares trade at a wide discount.

• A "Distribution Pool" is established, funded by 100% of excess cash flow until it reaches 5% of NAV, with €30m allocated immediately to take advantage of the current discount.

• Buybacks will be considered if shares trade at a discount greater than 23% to NAV, with a set dividend of 11p per share per annum, equivalent to a 7% yield at current prices.

Private equity strategy and portfolio update

• Apax is a sector-focused, global private equity advisor with over $77bn in commitments and 180 investment professionals, focusing on tech, healthcare, services, and internet/consumer sectors.

• Macro tail risks have moderated, but growth is expected to remain muted and interest rates elevated, impacting private equity returns and requiring more operational improvement for value creation.

• The "Hidden Gems" strategy targets high-quality sub-sectors, buying at a 24% average discount to peers and achieving 1,500bps higher EBITDA growth during ownership, with an 11% premium at exit.

• Value creation has recently been impacted by listed holdings, but the portfolio has returned more than 3x cost invested, with Apax IX and X showing strong EBITDA growth and MOICs of 2.0x and 1.3x, respectively.

• First investments in Apax XI are performing well, with notable deals in medical, software, fintech, and consumer brands, and a gross MOIC of 1.3x as of March 2024.

Capital management and liquidity

• The Distribution Pool is replenished annually from excess cash flow, defined as total private equity distributions and debt income minus calls, costs, RCF repayment, and dividends.

• If implemented at IPO, the Distribution Pool would have accumulated €79m since 2019, providing flexibility for buybacks during periods of wide discount.

• AGA's balance sheet is robust, with €601m available outside the private equity portfolio, covering 66% of unfunded commitments and 3.9x coverage for calls expected in the next 12 months.

• The Apax Funds have distributed significant capital to AGA, with uplifts at exit demonstrating the robustness of the valuation methodology.

• The maturing portfolio is providing a pipeline of exit-able opportunities, supporting future value creation and distributions.