Standard Life buyout portfolio holds up well

Half-year results of the publicly quoted Standard Life European Private Equity Trust reveal an improvement of net asset value over the six months to 31 March.

Interim figures published today by Standard Life European Private Equity Trust Plc show a 3.1 per cent increase of net asset value (NAV) per ordinary share, at 93.1 pence as at 31 March 2003, against 90.3 pence six months prior. Net assets were £148.2m, up from £143.8m.

The group’s closing mid-market share price on 31 March was 76.5, down 5.5 pence since 30 September.

Jonny Maxwell, the Edinburgh-based chief executive of Standard Life Investments (Private Equity), commented that although the share price could be better, the group was pleased with the trust’s performance. “Realisations are still slow, but the underlying portfolio is pretty robust. We’ve seen some write-ups and some write-downs from the funds we’re in, but overall the performance has been encouraging. It’s a difficult environment, but the outlook for buyout funds in particular remains strong.”

On 31 March 2003, the trust was invested in 31 European buyout funds valued at £106.1m, while holding $42.1m in cash and other assets.

The trust listed in the spring of 2001 with a view to offering institutional and retail investors access to European buyout investments via a publicly quoted vehicle. At launch, its assets comprised 19 existing fund investments made by Standard Life.

Since going public, the trust’s NAV has lost 5.7 per cent, compared to falls of 39.2 per cent of the FTSE All-Share index and 41.9 per cent of the MSCI Europe index.

The trust has outstanding commitments to its 31 private equity funds of £175.3m, which are expected to be drawn down over the next 3-4 years. The commitments will be funded primarily by Standard Life's cash and money market holdings. It has also put into place a five-year revolving credit facility from Royal Bank of Scotland to cover short-term cash flow requirements.

Over the six-month reporting period, £24.6m was drawn down. “Most fund managers are reporting an active deal flow for new investments, driven in many cases by corporate vendors wishing to degear or focus on increasing shareholder value”, the group said in a statement. Distributions received totalled £5m.

Standard Life also said the results benefited from a 9 per cent appreciation of the euro against sterling. 

Standard Life Investments (Private Equity) is currently raising a E1bn European private equity fund of funds. The fund, anchored by Standard Life Group which has pledged E500m, held a first closing on E140m of external commitments last September. A second closing is expected this summer.

Last month the group named Dan Cahill as managing director for North America, continuing its expansion into the US market. Cahill is based in Standard Life’s Boston office and will formulate and manage the firm’s US private equity strategy.