CT PRIVATE EQUITY TRUST PLC

Quarterly Report • Nov 26, 2021

National Storage Mechanism | Additional information

RNS Number : 6474T

BMO Private Equity Trust PLC

26 November 2021

To: Stock Exchange	For immediate release:
	26 November 2021

BMO Private Equity Trust PLC

Quarterly results for the three months to 30 September 2021 (unaudited)

·    Net asset value of 588.06p per Ordinary Share reflecting a total return for the three months of 7.2 per cent for the Ordinary Shares

·    Share price total return for the three months of 14.3 per cent for the Ordinary Shares

·    Quarterly dividend of 5.27p per Ordinary Share to be paid on 28 January 2022

·    Dividend yield of 3.9 per cent based on the period end share price (1).

(1)   Calculated as dividends of 4.16p paid on 30 April 2021, 4.35p paid on 30 July 2021, 4.77p paid on 29 October 2021 and 5.27p payable on 28 January 2022 divided by the Company's share price of 473.00p as at 30 September 2021.

Manager's Review

Introduction

As at 30 September 2021, the net assets of the Company were £434.8 million, giving a Net Asset Value (NAV) per share of 588.06p. Taking into account the dividend of 4.35p paid on 30 July 2021 the NAV total return for the quarter is 7.2%, and 23.8% for the nine months to 30 September 2021.

With the discount narrowing significantly from 36.8% at 31 December 2020 to 19.6% at 30 September 2021 the share price total return for this nine-month period was 59.1%.

At 30 September 2021 the Company had net debt of £7.3 million and outstanding undrawn commitments of £135.5 million including £24.7 million to funds where the investment period has expired.

The next quarterly dividend of 5.27p per share will be paid on 28 January 2022 to shareholders on the register on 7 January 2022. The ex-dividend date is 6 January 2022.

Ownership of the Manager

On 12 April 2021 BMO announced that it had reached an agreement to sell its asset management business in Europe, the Middle East and Africa to Columbia Threadneedle Investments, the global asset management business of Ameriprise Financial, Inc. This acquisition completed on 8 November 2021 adding £97 billion of assets under management (AUM) to Columbia Threadneedle Investments increasing its AUM to £530 billion.

During this acquisition process the Company's Board sought and received confirmation from senior management at Columbia Threadneedle Investments of the importance of maintaining stability and continuity of the teams which presently support your Company. The Board welcomes these assurances and looks forward to deepening the Company's relationship with the new management company for the benefit of shareholders.

New Investments

The Company has seen strong dealflow this year and much of this came to fruition in the third quarter. Four new commitments have been made to funds, one secondary has been added to the portfolio and no fewer than four new co-investments have been added. Much of this was covered in the Q2 report but is worth recapping.

Of the fund investments all the commitments were to funds where we have an existing relationship.

In Europe we have committed €5 million to ArchiMed MED III, a €650 million France based mid cap healthcare buyout fund. ArchiMed invest into well established profitable companies across six core healthcare sectors internationally; Medtech, Biopharma, Healthcare IT, Diagnostics, Life Sciences and Consumer Health.

In the UK we have made a commitment of £7.5 million to FPE Fund III, a mid-market growth equity fund specialising in the B2B software and services sectors. Also in the growth equity area we have committed £10 million to SEP VI, the latest fund from one of our longest standing investment partners. We have backed another longstanding partner again through Inflexion Buyout Fund VI (£10 million). This fund continues Inflexion's focus on UK mid-market buyouts.

The co-investments made shortly after the quarter end are diverse by sector and geography.

£5 million has been invested in JT IoT, the Jersey based 'internet of things' infrastructure provider. The company, which is a spin out of the state-owned Jersey Telecom, provides SIMs to a wide range of devices together with a platform that allows connectivity and subscription management services as well as securely connecting IoT devices and controlling SIMs anywhere in the world. The deal is led by the specialist family office backed PE firm Perwyn.

€6 million (€5.0 million drawn initially) has been invested in Prollenium Medical Technologies, a Canadian aesthetic company that develops, produces and distributes injectable hyaluronic acid dermal fillers. This is a high growth sector internationally which has proved resilient through the pandemic. The deal is led by ArchiMed.

€3.5 million (€3.1 million drawn initially) has been invested into Habitus, a Denmark based leading private provider of complex social care services for high acuity citizens. The deal is led by healthcare specialist Apposite who have made similar investments in the UK.

£3.4 million has been invested in Contained Air Solutions, the UK market leading producer of clean air containment products for the healthcare, research and pharma sectors. Based in Manchester, it manufactures and services biological safety cabinets, fume cupboards, robotic enclosures and filter consumables. The deal is led by the new private equity manager Accord Investment Partners.

During the quarter we have also taken part in a so-called 'GP led secondary' where the managers of the Swiss based Capvis III fund gave investors the option of either cashing out at a discount to NAV equivalent to 10.1% to the March NAV or rolling their investment over into a new vehicle. There are three assets left in the fund each of which has reasonable prospects but the portfolio will require a few more years to be realised. In respect of our holding we have elected to rollover but we have also been able to acquire the positions held by two older Limited Partnership funds which are also under our management and to elect to roll these positions into the new vehicle.  This has the net effect of increasing our position in the Capvis III fund from €2 million to €5 million (an additional £2.5 million bringing exposure to £4.2 million) which is a worthwhile position and from which we expect to make a good return over the next two to three years.

The excellent dealflow has continued into the current quarter and a further two fund commitments and three co-investments have been made.

We have committed £7.5 million to Piper Private Equity VII, the latest fund from these consumer brands specialists with whom we have invested since the early 1990s. We have once again backed the Sweden based sustainability specialist private equity manager Summa through their fund III to the extent of €7 million.

The new co-investments are typically heterogeneous. £5 million has been invested in the Piper led investment in Omlet, the market leading direct to consumer chicken coop and pet accessories company. This company has grown substantially over the last 15 years entirely through its e-commerce offering within established international markets which are poised for further growth. We have invested CAD 3.5 million into Pathfactory, a Toronto headquartered SaaS-based marketing content automation platform, which allows B2B marketers to deliver personalised relevant content experiences to B2B buyers throughout their buying journey. This allows B2B sellers to accelerate campaigns and increase the number and effectiveness of these campaigns. Lastly, we have invested £5 million into the August Equity led co-investment Orbis, the Wales based leading provider of residential and education services for high acuity children and adults. August have been invested in the company since 2016 but believe that there is considerable further growth in prospect and so have transferred the investment into its current fund and a new SPV.

The funds in our portfolio were active in making new investments during the quarter and a total of £10.7 million was called. Of the underlying new investments made, the larger ones give an impression of the sectors that are attracting private equity interest internationally of late.

Apposite Healthcare III called £0.9 million for CrestOptics, a world leading manufacturer of advanced systems for fluorescence confocal microscopy used in biological and medical research. FPE called £0.5 million for Zest, an employee benefits software company. Also in the growth equity area, SEP V called £0.5 million for Tyk, a London based provider of API (Application Programming Interfaces) management software.

The total of new co-investments and drawdowns for funds for this quarter was £27.9 million.

Realisations

This quarter has seen a substantial inflow from realisations as the current phase of exits continues. Total realisations in the quarter amounted to £48.5 million. Together with £2.7 million of associated income the combined total is £51.2 million. For the first nine months of the year realisations and income have totalled £120.8 million which is more than three times the total for all of last year and is already an annual record for the Company.

Some of this quarter's larger contributors are noted below.

Our co-investments have led the way again with Inflexion exiting the builders' merchant chain Huws Gray and returning £18.4 million including £2.3 million of income (including the positions in Inflexion Supplemental IV and Inflexion Partnership I Huws Gray returned a total of £19.8 million). Pet Network, the Rohatyn Group led investment in a South Eastern Europe large format pet retailer was sold to PE firm AMCE returning £16.3 million which represents 4.2x cost and an IRR of 54% after a three year hold.

There were a large number of other exits during the quarter coming from a diverse range of funds. The larger ones illustrate the breadth of the realisation activity.

Our longstanding investment with TDR Capital in their Fund II, Annex Fund and holding in Algeco/Scotsman distributed £2.1 million. This is part of the realisation of the modular buildings group of companies that they have successfully built up.

FPE II continued their strong run of exits returning £1.8 million primarily from the sale of software company TNP (5.6x cost, 76% IRR). Dunedin Capital Partners II exited automotive refinish products company U-Pol returning £1.5 million (4.4x cost, 16% IRR). Other exits came from diverse geographies and sectors. A further milestone payment of £0.8 million was received by US fund Healthpoint Capital III related to a previous sale in 2019 of dental technology company OrthoSpace. Blue Point III returned £1.0 million from the sale of Perimeter Brands, a refrigerated foods producer. In Italy Aliante 3 exited sparkling wine company Contri Spumanti returning £0.7 million (2.0x cost, c.20% IRR). In the UK Horizon 2013 Fund sold specialist care company Sequence Care returning £0.7 million (2.0x cost, 11% IRR).

Valuations Movements

There were many upgrades during the quarter. These reflected actual or pending exits as well as improvements in trading which have accompanied the recovery from the pandemic. All areas of the portfolio have benefitted. Our co-investments have done well with STAXS (+£4.0 million), TWMA (+£2.1 million), Accuvein (+£1.3 million) and Ashtead Technology (+£1.1 million) all benefitting from good trading. Pet Network (+£1.7 million) was exited as noted above. A number of the fund holdings were up notably. These included DBAG VII Series (+£1.3 million), Bencis V (+£1.1 million), Procuritas V (+£1.0 million), Astorg VI (+£1.0 million), Chequers XVI (+£0.9 million) and Inflexion Partnership Capital I (+£0.8 million).

There were a much smaller number of downgrades. San Siro our co-investment in the Italian funeral homes sector was down by £0.9 million reflecting a slightly lower trailing profits figure as a strong comparative period dropped out.

Financing

The Company was very modestly geared at 30 September with just £7.3 million of net debt. This has gone up slightly to c.£14 million with new investments since. There is plenty of capacity for new investments and the recently made fund commitments together with the continuing flow of co-investment opportunity will act to increase gearing somewhat. The exceptional flow of realisations has meant that the Company has much lower gearing than forecast at the start of the year. This provides very useful flexibility, especially for making secondary investments and co-investments which require immediate commitments of capital.

Outlook

The private equity sector internationally is currently the recipient of substantial inflows of capital. This is partly due to the increased recognition of the benefits of this style of equity investment management with the active involvement of private equity managers and their long term investment horizons having been highlighted during the recent crisis. This has boosted the exit environment considerably and led to some upward pressure on pricing of new investments. Our dealflow is strong and diverse and this coupled with our continuing focus on emerging managers, primarily in the European mid-market, means that we find no shortage of opportunities to redeploy realisation proceeds. The pandemic is by no means over and it is likely that some restrictions will remain in place for some time yet. The process of adjustment to these conditions for all but the most exposed companies is largely complete and this bodes well for the private equity sector in general and this Company's shareholders in particular as the end of 2021 approaches.

Hamish Mair

Investment Manager

BMO Investment Business Limited

BMO PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

nine months ended 30 September 2021 (unaudited)

	Revenue £'000	Capital £'000	Total £'000
##### Income
Gains on investments held at fair value	-	87,235	87,235
Exchange gains	-	2,790	2,790
Investment income	4,488	-	4,488
Other income	1	-	1
##### Total income	4,489	90,025	94,514
##### Expenditure
Investment management fee - basic fee	(283)	(2,550)	(2,833)
Investment management fee - performance fee	-	(4,427)	(4,427)
Other expenses	(744)	-	(744)
##### Total expenditure	(1,027)	(6,977)	(8,004)
Profit before finance costs and taxation	3,462	83,048	86,510
Finance costs	(193)	(1,738)	(1,931)
Profit before taxation	3,269	81,310	84,579
Taxation	-	-	-
Profit for period/total comprehensive income	3,269	81,310	84,579
Return per Ordinary Share	4.42p	109.97p	114.39p

BMO PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

nine months ended 30 September 2020 (unaudited)

	Revenue £'000	Capital £'000	Total £'000
##### Income
Losses on investments held at fair value	-	(1,786)	(1,786)
Exchange losses	-	(3,590)	(3,590)
Investment income	1,789	-	1,789
Other income	7	-	7
##### Total income	1,796	(5,376)	(3,580)
##### Expenditure
Investment management fee - basic fee	(209)	(1,884)	(2,093)
Investment management fee - performance fee	-	-	-
Other expenses	(725)	-	(725)
##### Total expenditure	(934)	(1,884)	(2,818)
Profit/(loss) before finance costs and taxation	862	(7,260)	(6,398)
Finance costs	(178)	(1,597)	(1,775)
Profit/(loss) before taxation	684	(8,857)	(8,173)
Taxation	-	-	-
Profit/(loss) for period/total comprehensive income	684	(8,857)	(8,173)
Return per Ordinary Share	0.92p	(11.98)p	(11.06)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 30 September 2021	As at 30 September 2020	As at 31 December 2020
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss	448,007	357,290	426,249
Current assets
Other receivables	1,074	17	562
Cash and cash equivalents	37,098	4,169	8,344
	38,172	4,186	8,906
Current liabilities
Other payables	(6,988)	(2,002)	(4,492)
Interest-bearing bank loan	(23,758)	(50,330)	(49,666)
	(30,746)	(52,332)	(54,158)
Net current assets/(liabilities)	7,426	(48,146)	(45,252)
Total assets less current liabilities	455,433	309,144	380,997
##### Non-current liabilities
Interest-bearing bank loan	(20,613)	(21,751)	(21,514)
Net assets	434,820	287,393	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	383,776	236,349	308,439
## Shareholders' funds	434,820	287,393	359,483
Net asset value per Ordinary Share	588.06p	388.68p	486.17p

BMO PRIVATE EQUITY TRUST PLC

Reconciliation of Movements in Shareholders' Funds

	### Nine months ended ### 30 September ### 2021	### Nine months ended ### 30 September 2020	### Year ### ended ### 31 December 2020
	### (unaudited)	### (unaudited)	### (audited)
	### £'000	### £'000	### £'000
### Opening shareholders' funds	### 359,483	### 304,277	### 304,277
### Profit/(loss) for the period/total ### comprehensive income	84,579	(8,173)	### 66,867
### Dividends paid	### (9,242)	### (8,711)	### (11,661)
### Closing shareholders' funds	434,820	### 287,393	### 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 nine months to 30 September 2021 should not be taken as a guide to the results for the year to 31 December 2021.

2.     Investment management fee:

	### Nine months ended ### 30 September 2021                               (unaudited)			### Nine months ended ### 30 September 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	283	2,550	2,833	209	1,884	2,093	294	2,650	2,944
### Investment management       fee - performance fee	-	4,427	4,427	-	-	-	-	3,007	3,007
	283	6,977	7,260	209	1,884	2,093	294	5,657	5,951

3.     Finance costs:

	### Nine months ended ### 30 September 2021                              (unaudited)			### Nine months ended ###  30 September 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	### 193	### 1,738	### 1,931	### 178	### 1,597	### 1,775	### 260	### 2,337	### 2,597

4.     Returns and net asset values

	###              Nine months ended ### 30 September 2021                         (unaudited)	###         Nine months ended ###  30 September 2020                   (unaudited)	###                 Year ended ### 31 December 2020                       (audited)
### The returns and net asset values per share are based on the following figures:
### Revenue Return	### £3,269,000	### £684,000	### £3,490,000
### Capital Return	### £81,310,000	### £(8,857,000)	### £63,377,000
### Net assets attributable to shareholders	### £434,820,000	### £287,393,000	### £359,483,000
### Number of shares in issue at end of period	### 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 nine months ended 30 September 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, have been lodged with the Registrar of Companies.  The quarterly report is available 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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