In January, Partners Group Listed Investments SICAV – Listed Private Equity continued its strong performance from last year and outperformed broader equity markets. Despite emerging weaknesses in global economic growth and concerns of the spread of Coronavirus, market sentiment was positive, backed by investor optimism lifted on good US data and the signing of the “Phase 1” trade deal between the US and China. In the reporting period, all sectors contributed positively, with asset managers once again being the best performer.

EQT, the Swedish alternative asset manager, has been the best performer this month. The company presented their Q4 report showing strong results for the quarter and the full year. Fee-paying AuM have grown to EUR 40bn and management is currently in the market raising its private equity flagship fund with a target size of EUR 14.75bn. In addition, EQT announced strong deployment and exit activity for 2019. The company invested EUR 11.9bn, reflecting an increase of 38% versus last year, while realizations are up by 58% to EUR 8bn.

The British private equity company 3i published a quarterly performance update, showing robust growth. The largest holding, Action, drove the performance of the private equity portfolio. The company generated 21% revenue growth and opened 230 new stores in 2019, increasing the total number of stores to 1’552 across seven countries. In addition, 3i agreed to exit Aspen Pumps, a designer, manufacturer and distributor of specialized mini pumps generating an IRR of 34% and a money multiple of 4.1x.

Another positive contributor to this month’s performance was Sofina. The Belgian direct investment company published results for the last six months and generated NAV growth of 17% year over year. The company reported strong deployment activity with four new long-term investments, including Drylock, a Belgium based manufacturer of personal hygiene products.

In February, Partners Group Listed Investments SICAV – Listed Private Equity lost in value but remained more stable than broader equity markets and increased its outperformance year- to-date. After a good start into 2020, investor sentiment turned negative in the last week of the month due to concerns about the spread of the coronavirus and its impact on the global economic growth outlook.

During the reporting period, the alternative asset manager Ares Management was one of the best performing company in the portfolio and convinced investors with the publication of the quarterly report. The company increased fee-paying assets by 18% compared to the same period last year to USD 97bn. In addition, management confirmed its positive outlook and announced to increase the dividend by 25% in 2020.

Another good performer was HBM Healthcare. The Swiss based direct investment company profited from the successful IPO of Arcutis Biotherapeutics, a late stage biopharmaceutical company focused on developing drugs to treat various skin diseases. The stock was placed at the upper end of the price range and, on the first trading day, increased by 28% due to high demand from investors.

On the other hand, Kinnevik, the Swedish direct investment company, suffered from weak performance of its two largest portfolio holdings. Zalando, the German online fashion retailer, lost in value despite reporting positive results as investors became increasingly concerned about a negative impact from the corona virus on revenues and the supply chain. In addition, Tele2, the Swedish mobile services provider, suffered from increasing pricing pressure in its home market.

In March, equity markets turned very volatile and reported one of the weakest months in over a decade. As the Coronavirus spread to other European nations and to the US, it led to mass lockdowns and harsh restrictions on air travel. In this volatile environment, Partners Group Listed Investments SICAV – Listed Private Equity, posted in line with the broader equity markets a negative performance. All sectors contributed negatively. Alternative asset managers performed best, down around 19.6%, followed by fund-of-funds and direct investment companies, which declined by approximately 29% each.

The South African direct investment company Brait was hit hard by the outbreak of the Coronavirus and amongst the weakest performers. The company is focusing on investments in the consumer sector, which are directly impacted by the virus. The health club operator Virgin Active is the largest portfolio holding with 240 clubs serving 1.26m customers but had to close all locations in Italy, the UK, Australia, Thailand and South Africa as part of those government’s initiatives to limit the spread of the virus. Similarly, New Look, the fashion retailer, had to close more than 500 stores.

The Swedish direct investment company Investor AB performed best on a relative basis. The company reported strong 2019 annual results with the listed and unlisted portfolios generating a return of 30% and 23%, respectively. In addition, the company invested in funds managed by EQT as well as directly in EQT. Those investments increased in 2019 by 103%, mainly driven by the successfully listening of EQT on the Nasdaq Stockholm. Overall, the share price of Investor AB benefitted in March from the rather defensive portfolio and exposure to healthcare.

Sources: Partners Group AG