CT Private Equity Trust PLC

Quarterly results for the three months ended 31 March 2024 (unaudited)

·      Net asset value of 685.46p per share as at 31 March 2024 reflecting a total return for the three-month period of -1.4%.

·      Quarterly dividend of 7.01p per Ordinary Share payable on 31 July 2024.

·      Dividend yield of 6.4% based on the period end share price. ∞

·      Strong realisations completed post quarter end.

∞ Calculated as dividends of 7.01p paid on 31 October 2023, 7.01p paid on 31 January 2024, 7.01p paid on 30 April 2024 and 7.01p payable on 31 July 2024 divided by the Company's share price of 440.00p as at 31 March 2024.

Manager's Review

Introduction

As at 31 March 2024 the net assets of the Company were £498.7 million giving a Net Asset Value ("NAV") per share of 685.46p, which taking into account the dividend of 7.01p paid on 31 January 2024 gives a total return of -1.4% for the first quarter. This valuation comes only a few weeks after the full year valuation and is largely composed of 31 December 2023 valuations with only approximately 6% of valuations struck at 31 March 2024. This is in line with the proportions in previous years. There has been minimal influence of currency on the valuation this quarter.

The share price total return over the quarter was -4.6%.

At 31 March 2024 the Company had net debt of £99.1 million. The outstanding undrawn commitments are £205 million of which £23 million is to funds where the investment period has expired.

A dividend of 7.01p was paid on 30 April 2024. In accordance with the Company's dividend policy the next dividend will be 7.01p which will be paid on 31 July 2024 to shareholders on the register on 5 July 2024 with an ex-dividend date of 4 July 2024.

New Investments

Four new fund commitments were made during the quarter.

£6 million has been committed to Corran Environmental II, a UK lower mid-market growth fund with a focus on clean energy and environmental companies. Corran is led by former SEP partner Gary Le Sueur and continues with a similar strategy to SEP's Environmental Energies Fund which he led. Indeed the initial asset for the fund, Vital Energi, has been acquired from the Environmental Energies Fund. Vital is a district heating and energy efficiency specialist which also owns and operates an energy-from-waste plant at Drakelow in Derbyshire. The initial drawdown covering Vital was £2.8 million.

€5.0 million has been committed to the Agilitas Human Investment Fund. We have invested with Agilitas both through funds and co-investments several times over the years. The Human Investment Fund has an explicit investment objective of helping people that are disadvantaged or in need. It is an article 9 fund under the Sustainable Finance Disclosure Regulation.

€4.0 million has been committed to ARCHIMED MED Rise. ARCHIMED is the leading France based healthcare specialist with whom we have invested several times. This fund targets buy-outs of small healthcare businesses operating within attractive niches.

Lastly, we have finalised our commitment to August Equity VI, the latest in a series of commitments to this accomplished lower mid-market UK buy-out specialist. We have committed £10 million to this fund.

There have been no new co-investments this quarter but there were three significant follow-on investments to existing investments.

£4.1 million has been added to Contained Air Solutions, the Manchester based manufacturer of microbiological safety cabinets. The new investment is to fund two complementary acquisitions. Amercare is a UK based designer and supplier of isolators for medical and pharmaceutical applications, including products which address higher growth subsectors including cell therapy and radiopharmacy. Biospherix is a US based niche provider of cleanroom grade containment solutions aimed at the cell therapy market. These products control the environmental conditions to optimise cell health and reproducibility.

£2.2 million has been called by deal leader Persistence Capital for Medspa, the Canada based chain of aesthetics clinics to finance three acquisitions.

£0.7 million has been added to Aurora Payments Solutions, the US based digital payments solution provider for over 20,000 merchants across the USA in sectors including hospitality, transport and hotel sectors. This additional amount is our share of a deferred consideration agreement and will be used to fund several add-on acquisitions that are well progressed.

The funds in the portfolio were active over the period with a number of interesting new investments initiated internationally.

Our UK based funds made a number of new investments with a technology or scientific theme.

SEP VI invested a combined £1.6 million in Braincube, the France based internet of industrial things software company which specialises in optimising manufacturing processes, and Cora, an Irish software company specialising in project management software for the aerospace, defence, healthcare and life sciences sectors.

Kester Capital III called £0.7 million mainly for GXP Exchange, a leading provider of good clinical/pharmacovigilance practice audit and related consulting services to the pharmaceutical and biotech sectors.

FPE called £0.5 million for Vanda a provider of research and data to hedge funds and investment banks.

MVM IV called £1.4 million for three healthcare companies with innovative products; Bioprotect (biodegradable products which help with the treatment of prostate cancer), Gynesonics (minimally invasive medical devices for the treatment of uterine fibroids) and Isotec (carbon composite implants for the treatment of cancer of the spine).

In Continental Europe and the USA there were also some interesting new investments.

Corsair VI, the financial services specialists called £1.1 million for MJM, a leading independent commercial insurance broker in Poland. Also in Poland Avallon III called £0.6 million for MPPK a dog and cat food company.

In Germany and Sweden Verdane Edda III called £0.6 million for two companies; Hornet Security (B2B cloud-based email security products) and Verified Global (B2B SaaS for digitising business processes around identification and authorisation).

In Italy Wisequity VI called £0.7 million for Serbios a leading Italian biocontrols company (providing biological alternatives to pesticides and agrochemicals). This is the first acquisition within Greenexta, a newly established buy-and-build platform for natural solutions for agriculture.

Lastly in the USA MidOcean VI called £0.5 million for two companies; MPearlRock (consumer products) and Re-Sourcing (staffing and consulting for the finance, compliance and IT sectors).

The total drawn for new investments by funds and co-investments in the quarter was £23.4 million.

Realisations

Despite the market having slowed down considerably there were a number of realisations and associated distributions. These came from a wide range of sectors and geographies.

August Equity IV returned £3.5 million through the sale of Agilio the healthcare compliance software company achieving an exceptional return of 9.2x cost and an IRR of 72%.

Graycliff IV returned £2.4 million through the sale of EMC, a switches and transformers manufacturer, achieving another exceptional outcome of 8.2x cost and an IRR of 146%. This was a relatively short hold of only two and a half years.

Bencis V returned £1.9 million with the sale of Kooi, the mobile security systems company. This also represented an exceptional return of 13.9x cost and 61% IRR.

Summa I returned £1.7 million through the sale of Pagero, a procure to pay software as a service company, to Thomson Reuters. This represented 5.6x cost.

Montefiore IV returned £2.5 million with the sale to a continuation vehicle of two of its holdings; EDG (digital services for French companies) and Groupe Premium (life and pension insurance broker).          

Avallon MBO II Fund made a final distribution of £1.4 million with the sale of ORE (consulting and IT solutions for purchasing managers) and escrows from Novotech (Polymer products).

The total for realisations and associated income in the quarter was £16.1 million.

Following the quarter end the proceeds from the sale of Jollyes, the large format pet retailer, which has been acquired by TDR Capital were received. These amounted to £18.3 million which represented an excellent 3.9x cost and an IRR of 27%. During the six year hold the deal lead, Kester Capital, worked with the company's management to transform the business with a doubling of EBITDA to £11 million and an increase in the store estate from 64 to 100, firmly establishing the company as the clear number 2 pet retailer in the UK.

Also following the quarter end we received the proceeds for the sale of well bore plug and abandonment business Coretrax which has been sold to listed energy services group Expro. The consideration for the company is a combination of shares in Expro and cash. The cash component is 24% (£3.4 million) of the £13.9 million exit value. Whilst there is further upside potential through the Expro shares, the current multiple of cost is 1.8x and the IRR is 12%. Given the turbulence in the Energy sector in recent years this is a fair outcome.

Valuation Changes

There was minimal impact from currency movements during the quarter with the negative influence at the portfolio level from weaker European currencies relative to Sterling substantially offset by the largely Euro denominated debt reducing in value.

Several of the positive influences associated with the exits noted above were already in the previous valuation. In addition there were healthy positives based on strong trading from our co-investments in Utimaco (secure tokens and cybersecurity) +£1.4 million and Cyberhawk (+£0.7 million). On the negative side the larger downgrades were related to co-investments. Notably Rosa Mexicano was down by £1.4 million with weaker trading necessitating a refinancing, which has now been completed. Tier I CRM (now known as Alessa) the provider of cloud-based software for KYC and AML compliance has struggled with a substantial change in business model and market conditions since we invested and is down by £1.3 million. There were a number of other minor downgrades but as noted above many of the valuations remain based on 31 December marks.

Financing

At the quarter end net debt was £99.1 million.  This is a perfectly manageable level and leaves us with over £45 million of headroom on our recently renewed banking facility. Following receipt of the Jollyes proceeds and payment of dividends, performance fee, share buy-backs and completion of drawdowns and further realisations the net debt at the time of writing is around £95 million.

Following the quarter end the Company has bought back shares in two stages totalling 1.25 million shares at 460p per share. This is 1.7% of the shares in issue and cost £5.75 million. Based on the current NAV (31 March 2024) this equates to a discount of 33% which means that there is an enhancement to NAV for continuing shareholders of £2.8 million or 0.56% of NAV.

The combination of the dividends paid and these buybacks mean that shareholders have received substantial benefits in terms of cash and NAV enhancement which should eventually be reflected in a stronger share price. The Company regularly reviews its capital allocation balancing the immediate enhancement of buybacks against the longer term returns possible from new investments with a paramount objective of maintaining and growing the dividend. All of this must be done mindful of the need to maintain an efficient balance sheet and to meet any drawdowns from funds comfortably.

 Your Company has great experience in its 25-year history of managing such parameters successfully.

Outlook

At this stage in the year it is only possible to form a preliminary view of how the Company's portfolio will progress through the year. As noted before the flow of realisations slowed notably in the second half last year. So far this year exits have been healthy as exemplified by the Jollyes and Coretrax sales. There are several other portfolio companies which are at different stages of planning exits and where a realisation is expected this year. Usually exits average over 30% above latest carrying value and so contribute considerably to NAV growth. The other key driver of NAV is the fundamental progress of the investee companies with advancing revenues and profits driving long term gains.

2024 is an election year in both the USA and UK and in several other countries. Historically changes in government on either side of the Atlantic have not impeded the increased adoption of private equity but it is a factor that will attract increasing focus.

The international business environment in recent months has shown some signs of improvement and this has been reflected in the increased confidence shown by our investment partners. It is therefore logical to expect an uptick in deal activity as we progress through the year. Our portfolio is highly diversified and it contains considerable exposure to sectors which have long term growth characteristics.

Deal flow for new investment in funds and co-investments remains excellent and we intend to judiciously deploy capital in the best of these opportunities building the foundations for continuing growth in shareholder value.

Hamish Mair

Investment Manager

Columbia Threadneedle Investment Business Limited

Portfolio Summary

*Sold following the period end

Portfolio Holdings

CT PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

three months ended 31 March 2024 (unaudited)

CT PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

three months ended 31 March 2023 (unaudited)

CT PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

year ended 31 December 2023 (audited)

CT PRIVATE EQUITY TRUST PLC

Balance Sheet

CT PRIVATE EQUITY TRUST PLC

Reconciliation of Movements in Shareholders' Funds

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 2023.  Earnings for the three months to 31 March 2024 should not be taken as a guide to the results for the year to 31 December 2024.

2.     Investment management fee:

3.     Finance costs:

4.     Returns and net asset values

5.     The financial information for the three months ended 31 March 2024, 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 2023, 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.ctprivateequitytrust.com

Legal Entity Identifier: 2138009FW98WZFCGRN66

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