In April, Partners Group Listed Investments SICAV – Listed Private Equity recovered sharply after one of the weakest quarters in over a decade. The positive performance was largely driven by large fiscal support programs announced by various governments, monetary stimulus by central banks, and the expectation of partial reopening of a few economies within Europe in May.
All sectors contributed to the positive development with alternative asset managers and business development companies (BDC) being the best performers. The largest increase in value was achieved by Solar Capital. The US business development company gained 39% during the reporting period. The company issued a letter to shareholders and assured investors, that the balance sheet is very robust with significant liquidity on hand to not only support existing portfolio companies but also to make new investments. Moreover, the portfolio is defensively positioned. It is exclusively invested in first lien senior secured loans and broadly diversified amongst over 200 issuers in 90 industries with a high share of asset-backed loans and low exposure to cyclical sectors. Another top performer was the US alternative asset manager Blackstone, which was the first manager to report Q1 2020 results. On the one hand, the performance of main flagship funds suffered as expected and net accrued carry declined by 50%. On the other hand, fund raising activities were so far not affected by COVID-19 and more importantly, dry powder stands at a record high of USD 152bn, which can now be invested at attractive terms. In addition, the company distributed over USD 700m through dividends and share repurchases to its investors during the first quarter.
In May, Partners Group Listed Investments SICAV – Listed Private Equity further increased in value, as larger countries in Europe began reopening their economies. In addition, many listed private equity companies reported solid Q1 results and confirmed robust liquidity.
All sectors of the portfolio contributed to the positive performance with business development companies (BDCs) being the top performer. The portfolio’s best performing company this month was the Swedish investment company AB Kinnevik, driven by its core investment Zalando. The leading German online retailer’s share price increased by 35% in May. The business model benefitted strongly from the economic shutdown as retail shops had to close and more customers shopped online. The company announced strong results for the first quarter and management remains positive for the full year, expecting revenue growth of 10-20%, EBIT margin expansion and an accelerated consumer shift from offline to online.
Another top performer was the Swiss-based direct investment company HBM Healthcare. The company published its annual report, showing strong results with a profit of CHF 183 million. Key contributors to the positive result were five successful IPOs of the underlying portfolio. In addition, the company’s balance sheet remained sound, and the board is proposing to increase the dividend by 2.7% to CHF 7.70 per share. Moreover, the share price was almost unaffected by the COVID-19 pandemic due to its defensive portfolio. Furthermore, the business development company Ares Capital contributed positively to the performance of the Fund. The share price reacted positively to the publication of the Q1 report. Management reassured investors with only a moderate mark down of the portfolio and resilient performance of its portfolio companies. The portfolio is positioned defensively with reduced exposure to industries, which are directly affected by the economic shutdown, such as restaurants or hotels. The balance sheet remains strong with ample available liquidity and management confirmed the dividends and announced a share repurchase program.
In June, Partners Group Listed Investments SICAV – Listed Private Equity recorded a positive performance. After two months of continuous recovery, the markets smoothed, led by concerns over a second wave of the COVID-19 and the possibility of further lockdowns.
In the reporting period, especially alternative asset managers developed favorably. For example, the Swedish alternative asset manager EQT was one of the top performers. Management announced the sale of its private debt business segment with around EUR 4bn in assets under management to Bridgepoint. Since inception, the business segment has raised over EUR 7bn of capital for the three complementary strategies, Special Situations, Direct Lending and Senior Debt and invested in over 180 companies. In addition, EQT has communicated the target size of its flagship fund, EQT Infrastructure V at EUR 12.5bn versus EUR 9bn for its predecessor. On the other hand, the Canadian direct investment company ONEX developed negatively in June. The performance was driven by the portfolio company, Emerald Holding, an operator of large business-to-business trade shows in the US. The company was hit hard by COVID-19 and required a capital injection of USD 400m to repay the outstanding debt under its credit facility, as well as to finance general corporate purposes including organic growth initiatives.
Finally, HarbourVest Global Private Equity (HVPE) increased in value as the company reported its monthly portfolio valuation, which for the first-time includes the impact of COVID-19. The published estimated NAV decreased by 6%, which was much better than expected. Furthermore, management assured investors that most portfolio companies are only moderately impacted by COVID-19.
Sources: Partners Group AG