CT PRIVATE EQUITY TRUST PLC

Quarterly Report • May 27, 2021

National Storage Mechanism | Additional information

RNS Number : 0609A

BMO Private Equity Trust PLC

27 May 2021

To: Stock Exchange	For immediate release:
	27 May 2021

BMO Private Equity Trust PLC

Quarterly results for the three months ended 31 March 2021 (unaudited)

·      Share price total return for the three-month period ended 31 March 2021 of 22.5%.

·      NAV total return per share for the three-month period of -0.3%.

·      NAV of 480.67p per share as at 31 March 2021.

·      Quarterly dividend of 4.35p per Ordinary Share.

Introduction

As at 31 March 2021, the net assets of the Company were £355.4m, giving a Net Asset Value ('NAV') per share of 480.67p, which taking into account the dividend of 3.99p paid on 29 January 2021, gives a decrease of 0.3% over the quarter. Exchange rate movements reduced the overall valuation by approximately 1.5% over the quarter. With the discount narrowing to 22.6% as at 31 March 2021 the share price total return for the period was an impressive 22.5%. The discount has continued to narrow and is currently 14.9%.

At 31 March 2021 the Company had net debt of £56.8m.  This reduced substantially early in the second quarter on the receipt of the proceeds of the Dotmatics exit. Outstanding undrawn commitments were £117 million including £19 million to funds where the investment period has expired.

The dividend to be paid on 30 July 2021 to shareholders on the register on 9 July 2021 with an ex-dividend date of 8 July 2021 will be 4.35p per share.

This valuation comes quite quickly after the full year valuation and many of the underlying funds had yet to report first quarter valuations by the preparation date of this valuation. There is therefore a lag where the great majority of the March valuations will not be reflected until the June valuation. 15% by value of the portfolio has been valued at 31 March with most of the remainder based on December 2020 valuations. This is a usual feature of the timing of first quarter results.

New Investments

There was only one new investment made during the first quarter. €5 million was committed to the Agilitas 2020 Private Equity Fund, a mid-market buyout fund specialising in North West Europe. We know the management group very well having backed their previous fund and co-invested with them twice: in both cases successfully. After the quarter end we have made a new commitment of £5 million to Apposite Healthcare Fund III, a European focussed lower mid-market healthcare and life sciences fund. Again, we have a strong relationship with the manager through their previous fund and through co-investing. The pipeline of new investment opportunities is very healthy, and we expect to make more fund commitments and co-investments as the year progresses.

The funds in our portfolio have been active in making new investments during the quarter with a total of £10.2 million invested. Although most major economies were in some form of lockdown for the whole of the first quarter many private equity houses have been able to execute new investments, often in sectors where companies have proved their resilience through the pandemic.

We have several holdings across the range of Inflexion funds and they have made a number of new investments. Inflexion Buyout Fund V and the Inflexion Supplemental Fund V together invested £1.9 million. This was mainly invested in BES (British Engineering Services), which was a partial reinvestment of a hugely successful exit from the Inflexion 2010 Fund (see below), and in Medik8, a premium skincare brand committed to ethical manufacturing and sustainability. Selling online and through professional channels such as dermatology clinics, spas and beauty salons, Medik8 produces science based anti-ageing products. Inflexion Enterprise Fund V called £0.4 million for a number of investments including DR&P Group (corporate insurance broker), Goat Solutions (social media and influencer marketing agency) and Systal (mission critical managed network IT services). Inflexion Partnership Capital II called £0.5 million for Phenna, a specialised business in the testing, inspection and certification and compliance services sector. SEP V invested £0.8 million in Glasgow based company AutoRek (financial and regulatory data management software). FPE II invested £0.6 million in Codestone (ERP and hosting services). MED II, the ArchiMed healthcare fund called £0.4 million for Ad-Tech, a niche US manufacturer of electrodes used in neurodiagnostic and neurosurgery applications. Also in the healthcare sector MVM V called £0.3 million for Paragon 28 (next generation implants and instruments for foot and ankle orthopaedic procedures) and GT Medical (innovative brain cancer treatments using bioreabsorbable tiles with embedded radioactive seeds). Sticking with a technological theme, ARX CEE IV invested £0.5 million in Instrumentation Technologies, a Slovenia based company making components for particle accelerators. Lastly in the US Blue Point Capital IV invested £0.6 million in Transtar, a distributor of automotive aftermarket products for the driveline and transmission repair market.

Realisations

During the quarter there were several full or partial realisations across the breadth of the portfolio. The total proceeds and associated income amounted to £16.1 million.

The largest inflow of £2.5 million came from our Silverfleet led co-investment in cleanroom consumables company STAXS where there has been a refinancing enabled by the very strong trading resulting from the huge demand for PPE created by the pandemic. This investment has now returned 90% of cost within two years. Inflexion have continued their impressive run of exits this quarter. BES (British Engineering Services), the engineering testing, inspection and certification services provider has been an exceptional performer and their 2010 Fund returned £2.1 million achieving 14.8x cost and an IRR of 60%. As noted above Inflexion have partially reinvested through their Supplemental Fund V. Inflexion have exited no fewer than three other holdings this quarter. Inflexion Fund IV returned £1.4 million principally from the sale of Bollington Wilson (insurance brokers) (5.1x, 50% IRR) and Kynetec (agricultural and animal data provider) (3.3x, 28% IRR). Inflexion Partnership Capital I and Inflexion Supplemental Fund IV returned £0.9 million mainly from the sale of investment consultancy LCP (3.4x, 34% IRR). FPE II had two exits with the sale of IWSR, the data provider for the drinks industry returning £1.0 million (3.6x, 56% IRR) and the exit of Masstech, the video storage management company for the media and broadcast sector, returning £0.6 million (2.7x including partial reinvestment in the stock of acquirer Telestream). A significant inflow of £1.2 million came from Pentech Fund II where there has been a partial realisation of sports betting company FanDuel. FanDuel has merged with the US operations of Flutter Entertainment to form a new entity FanDuel Group (FDG), which is listed in the US. Pentech have made over 10x cost so far with further upside possible as the remaining shares in FDG are sold down. Apposite Healthcare Fund II returned £1.7 million as part proceeds from its sale of social care company MC Care. This former division of Mitie was acquired for nominal consideration, very successfully turned around and sold to a trade acquirer. Horizon 2013 Fund exited Style Analytics, the provider of investment and ESG analytics software to institutional investors, returning £0.5 million (2.0x, 14% IRR). August Equity sold PCS (Pet Cremation Services) returning £0.4 million (3.1x cost, 22% IRR). Piper Private Equity achieved a partial exit of online flower company Bloom & Wild which has attracted additional private equity backers from the USA. £0.9 million was returned representing 2.0x cost, with the whole investment achieving 3.6x so far. Piper also achieved an exit for Proper Snacks (£0.1 million, 2.0x, 17% IRR). Nearly all of these exits are from UK based funds. In the Nordics Procuritas V achieved a notable exit with the partial sale of Pierce, the online retailer of spare parts and accessories for on and off-road vehicles. The company has had a successful IPO on the Nasdaq Stockholm. At IPO 3.3x cost was realised enabling a £0.3 million distribution. Procuritas still holds 60% of its investment so there is considerable scope for further upside from here.

As can be seen this was an active quarter for new investments and realisations with new investment clearly focusing on software, healthcare and other technology enabled businesses. Realisations have been from a broader range of companies but again these have included companies which have either benefitted from the pandemic or demonstrated a resilient business model through it.

Valuation Changes

There were comparatively few changes in valuation this quarter given that only a small minority of 31 March reports had been received in time, the uplift to sale value of many of the exits described above will therefore be realised next quarter. The largest factor in the valuation was currency movements with the relative weakness of the euro and some other European currency against sterling reducing the valuation considerably. We maintain a partial natural hedge against this exchange rate movement through borrowing largely in euros. The net effect was that the overall valuation was adversely impacted by around 1.5%.

Most of the valuation changes were upwards. Amongst the co-investment portfolio Coretrax was up by £0.5 million reflecting a strong finish to FY 2020. Rosa Mexicano, the US based Mexican restaurant chain has started its recovery and is up by £0.9 million. In Norway software company Safran has been uplifted by £0.4 million. In the funds portfolio notable increases include SEP V up by £0.6 million and SEP IV by £0.4 million. In Europe our portfolio of Italian assets was up by £0.7 million mainly due to a strong uplift for Georgetti, the high-end furniture company.

Financing

As reported with the full year results the Company has increased its multi-currency revolving credit facility from £75 million to £95 million. In addition to this there is a term loan of €25 million. At quarter end exchange rates this gives a total borrowing capacity of around £116 million. At the end of March, the Company was utilising 58% of this but also held some £10 million of cash. Since the quarter end the proceeds of the realisation of Dotmatics have been received and the current net debt position is much more modest at £30 million or 8.4% of NAV. The Company retains plenty of capacity to fund its ongoing investment programme even if realisations do not match new investment activity every quarter.

Outlook

The COVID-19 pandemic is by no means over with very few countries sufficiently well vaccinated yet to be able to have assumed normality. That said the recent lockdowns have been characterised by a far smaller reduction in economic activity than was the case a year ago. Many companies have found ways of operating fairly successfully despite the constraints that COVID places on business travel and the ability of many to attend work. As previously noted and illustrated by the portfolio activity in this quarter private equity investors have a clear appetite for companies in the technology and healthcare sectors. Their attributes of resilience and clear added value products and services have been thrown into relief by the pandemic. The private equity asset class as a whole has proved adaptable to the constraints of the pandemic and for the last two quarters deal making has reached approximately normal volumes, albeit that much more of the investment process has been done virtually. The exits in the latest quarter are not all yet reflected in the valuation of the funds. There are also a number of other investments making good progress towards exit. There are therefore excellent prospects for further gains for shareholders as the year progresses.

Hamish Mair

Investment Manager

BMO Investment Business Limited

BMO PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

three months ended 31 March 2021 (unaudited)

	Revenue £'000	Capital £'000	Total £'000
##### Income
Losses on investments held at fair value	-	(3,537)	(3,537)
Exchange gains	-	3,568	3,568
Investment income	529	-	529
Other income	-	-	-
##### Total income	529	31	560
##### Expenditure
Investment management fee - basic fee	(84)	(757)	(841)
Investment management fee - performance fee	-	-	-
Other expenses	(224)	-	(224)
##### Total expenditure	(308)	(757)	(1,065)
Profit/(Loss) before finance costs and taxation	221	(726)	(505)
Finance costs	(61)	(551)	(612)
Profit/(Loss) before taxation	160	(1,277)	(1,117)
Taxation	-	-	-
Profit/(Loss) for period/ total comprehensive income	160	(1,277)	(1,117)
Return per Ordinary Share	0.22p	(1.73)p	(1.51)p

BMO PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

three months ended 31 March 2020 (unaudited)

	Revenue £'000		Capital £'000	Total £'000
##### Income
Gains on investments held at fair value	-		1,897	1,897
Exchange losses	-		(1,982)	(1,982)
Investment income	177		-	177
Other income	6		-	6
##### Total income	183		(85)	98
##### Expenditure
Investment management fee - basic fee	(72)		(649)	(721)
Investment management fee - performance fee	-		-	-
Other expenses	(222)		-	(222)
##### Total expenditure	(294)		(649)	(943)
Loss before finance costs and taxation	(111)		(734)	(845)
Finance costs	(64)		(578)	(642)
Loss before taxation	(175)		(1,312)	(1,487)
Taxation	-		-	-
Loss for period/total comprehensive income	(175)		(1,312)	(1,487)
Return per Ordinary Share	(0.24)p		(1.77)p	(2.01)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 31 March 2021	As at 31 March 2020	As at 31 December 2020
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss	417,444	352,588	426,249
Current assets
Other receivables	285	42	562
Cash and cash equivalents	10,679	5,673	8,344
	10,964	5,715	8,906
Current liabilities
Other payables	(5,543)	(4,130)	(4,492)
Interest-bearing bank loan	(47,267)	(33,173)	(49,666)
	(52,810)	(37,303)	(54,158)
Net current liabilities	(41,846)	(31,588)	(45,252)
Total assets less current liabilities	375,598	321,000	380,997
##### Non-current liabilities
Interest-bearing bank loan	(20,182)	(21,072)	(21,514)
Net assets	355,416	299,928	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	304,372	248,884	308,439
## Shareholders' funds	355,416	299,928	359,483
Net asset value per Ordinary Share	480.67p	405.63p	486.17p

BMO PRIVATE EQUITY TRUST PLC

Reconciliation of Movements in Shareholders' Funds

	### Three months ended ### 31 March ### 2021	### Three months ended ### 31 March ### 2020	### Year ### ended ### 31 December 2020
	### (unaudited)	### (unaudited)	### (audited)
	### £'000	### £'000	### £'000
### Opening shareholders' funds	### 359,483	### 304,277	### 304,277
### (Loss)/profit for the period/total ### comprehensive income	(1,117)	(1,487)	### 66,867
### Dividends paid	### (2,950)	### (2,862)	### (11,661)
### Closing shareholders' funds	### 355,416	### 299,928	### 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 three months to 31 March 2021 should not be taken as a guide to the results for the year to 31 December 2021.

2.     Investment management fee:

	### Three months ended ### 31 March 2021                               (unaudited)			### Three months ended ### 31 March 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	84	757	841	72	649	721	294	2,650	2,944
### Investment management       fee - performance fee	-	-	-	-	-	-	-	3,007	3,007
	84	757	841	72	649	721	294	5,657	5,951

3.     Finance costs:

	### Three months ended ### 31 March 2021                              (unaudited)			### Three months ended ###  31 March 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	### 61	### 551	### 612	### 64	### 578	### 642	### 260	### 2,337	### 2,597

4.     Returns and net asset values

	###        Three months ended ### 31 March 2021                         (unaudited)	###   Three months ended ###  31 March 2020                   (unaudited)	###                 Year ended ### 31 December 2020                       (audited)
### The returns and net asset values per share are based on the following figures:
### Revenue Return	### £160,000	### (£175,000)	### £3,490,000
### Capital Return	### (£1,277,000)	### (£1,312,000)	### £63,377,000
### Net assets attributable to shareholders	### £355,416,000	### £299,928,000	### £359,483,000
### Number of shares in issue at the period end	### 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 three months ended 31 March 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, will be lodged shortly with the Registrar of Companies.  The quarterly report will be available shortly 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
hamish.mair@bmogam.com  / scott.mcellen@bmogam.com

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