CT Private Equity Trust PLC

Quarterly results for the three months ended 30 September 2022 (unaudited)

·    Net asset value of 711.75p per Ordinary Share reflecting a total return for the three months of 9.3 per cent for the Ordinary Shares

·    Quarterly dividend of 6.62p per Ordinary Share to be paid on 31 January 2023

·    Dividend yield of 6.3 per cent based on the period end share price (1).

·    As at 30 September 2022 net debt was £23.7 million equivalent to a gearing level of 4.4%.

·    Since the period end San Siro has been sold realising £34.9 million for the Company representing 8.9x cost and 90% IRR.

(1)      Calculated as dividends of 5.65p paid on 29 April 2022, 6.05p paid on 29 July 2022, 6.31p paid on 31 October 2022 and 6.62p payable on 31 January 2023, divided by the Company's share price of 390.00p as at 30 September 2022.

Manager's Review

Introduction

As at 30 September 2022 the net assets of the Company were £518.5 million giving a Net Asset Value ("NAV") per share of 711.75p, which taking into account the dividend of 6.05p paid on 29 July 2022, gives a total return of 9.3% for the quarter. The NAV total return over the nine-month period ended 30 September 2022 was 14.0%.

The share price total return for the quarter was -9.7% and -17.2% for the nine-month period ended 30 September 2022. The Company's shares have traded on a large discount to NAV which fails to reflect the underlying valuations.

At 30 September 2022 the Company had net debt of £23.7 million. The current net debt is around £32 million prior to the receipt of the proceeds from the sale of San Siro. The outstanding undrawn commitments are £192.8 million of which £25.7 million is to funds where the investment period has expired. The valuation has the usual time lag and is composed of approximately 20% September 2022 valuations and 80% June 2022 valuations.

A dividend of 6.31p was paid on 31 October 2022. In accordance with the Company's dividend policy the next dividend will be 6.62p which will be paid on 31 January 2023 to shareholders on the register on 6 January 2023, with an ex-dividend date of 5 January 2023.

New Investments

During the quarter two fund commitments, one secondary investment and three co-investments were made.

We have increased our commitment to healthcare specialist Apposite Healthcare III by £5 million bringing the total committed up to £10 million. The fund is half invested and progressing well. We have committed €8 million to Volpi III, which is the second of this Pan-European mid-market specialist's funds we have backed. £2.6 million was invested via a secondary purchase in Kurma Biofund, a life sciences fund managed from France. We have co-invested £7.9 million alongside The Rohatyn Group in Leader96, the Bulgaria based assembler of e-bikes. We have co-invested £5.1 million with Peloton in 123Dentist, a Canada based chain of dental practices. We have also co-invested £2.3 million with MVM in Neurolens, a US developer of an innovative prismatic lens technology to diagnose and treat digital vision syndrome. There were two follow-on investments in co-investments this quarter both of which were to fund add-on acquisitions. £0.8 million was added to complex care company Orbis and £0.7 million was added to payments company Aurora Payment Solutions.

There were a number of new investments made by the funds in quite an active quarter. In the UK, August Equity V has been active, drawing £1.8 million for veterinary chain Medivet, a follow-on for high acuity care provider Orbis and cyber security specialist Cyber 360. FPE Fund III called £0.9 million for Dynamic Planner a leading software provider to the UK wealth management sector. Apiary called £0.4 million for MediaSense (technology enabled adviser to global corporations) and £0.3 million for LearnPro (virtual reality e-learning solutions for emergency services such as police, fire and rescue, health services, etc.). In Germany, DBAG VIII and VIIIB have together called £0.7 million for Freiheit, a pioneer in agile software development and an additional £0.7 million for Dantherm (climate control solutions) which we previously had exposure to through Procuritas V. In France and Italy, Chequers Capital XVII has been active with £1.3 million called for three new investments and one partial reinvestment; My Mobility (transportation for disabled children and adults in France), Somacis (complex printed circuit boards in Italy), Selini (equipment rental in Italy) and reinvestment of part of the proceeds from Serma (electronics testing).

Med Platform II called £0.8 million for California based Natus Medical (screening and diagnostics for neurological conditions).

The total of new investment drawn for co-investments and funds in the quarter was £32.5 million. Total new investment for the first nine months of the year is £69.8 million.   This is well balanced by total realisations of £79.6 million for the same period.

Realisations

There were a number of significant realisations during the quarter from both the funds and co-investment elements of the portfolio.

The largest realisation was from European buyout fund Volpi where we received a distribution of £7.4 million which was the proceeds from the sale of Irish IT managed services provider Version 1. This represents an excellent 5.9x cost and an IRR of 39%.

GCP Europe II, managed by Kester Capital, achieved a strong exit of contract research organisation Avania Clinical which specialises in medical devices. £6.7 million was received representing 8.4x and an IRR of 46%. Our co-investment in RGI, the Italy based provider of software to the Insurance sector, was sold returning £3.6 million. This investment was led by Corsair Capital and achieved 1.6x and an IRR of 12%. There is scope for the return to improve through deferred consideration depending on the final exit proceeds when new owner CVC sells.

Part of our holding in energy services company Ashtead Technology, which is now listed on AIM, was sold down during the quarter returning £2.8 million.

Inflexion has had another active period for exits. From the various funds we have received £2.3 million from the sale of wealth management company Succession (3.4x, 20% IRR), £1.2 million from IT recruitment specialist K2 (5.0x, 36% IRR) and £0.9 million from Virgin Experience Days (23.7x, 64% IRR).

In the Nordics, Verdane Edda has returned £1.7 million from the sale of vitamin K2 producer Kappa Bioscience (4.3x, 80% IRR). Summa II also sold chemicals management software company EcoOnline returning £0.5 million. In France, Chequers Capital XVII exited electronics testing company Serma returning £0.8 million (2.4x, 32% IRR). Chequers rolled over some of the proceeds into the new Ardian led deal as noted above.

Lastly in Poland, Avalon MBO Fund II exited engineering and technical building services company Stangl Technik through a sale to Astorg returning £0.5 million (5.8x, 50% IRR).

This has been a strong quarter for realisations with a total of £31.9 million of proceeds, including associated income, received. This brings the total for the first nine months of the year to £79.6 million.

There have been further realisations following the quarter end most notably the exit of Italian funeral homes company San Siro which was sold by Augens Capital to French Infrastructure fund Antin on 10 November 2022. This exit was at a value of £34.9 million for the Company, 75% of this will be received in cash and 25% rolled into the new deal. This represents an uplift of £23.3 million on the previous carrying value and a return of 8.9x cost and an IRR of circa. 90%. The investment thesis of building a chain of funeral homes and adding other facilities such as crematoria has been followed very well and this has resulted in this exceptional outcome.

Valuation Changes

There have been numerous valuation changes over the quarter. These are mostly positive but there has been a sizeable minority of downgrades reflecting a range of pressures on the businesses internationally.

The largest uplift as noted above was the £23.3 million uplift for San Siro. There was a £3.9 million uplift for the holding in F&C European Capital Partners LP, which reflects the removal of the discount on purchase earlier in the year. The Company as the sole remaining LP will hold the assets until realisation and hence a discount to reflect an immediate liquidation value is no longer appropriate. August Equity Partners IV (+£2.7 million) is up reflecting an imminent realisation of ISO compliance services company AMTIVO at an excellent 8.0x cost. GCP Europe II (+£3.1 million) records a gain reflecting the sale of Avania Clinical. Other good uplifts have been recorded by Coretrax (+£0.9 million), Rosa Mexicano (+£0.9 million) and Corpfin IV (+£0.8 million).

Downgrades include Ambio Holdings (-£1.8 million) where despite an exit being widely anticipated in the press, MVM have used a lower valuation. Alessa (formerly known as Tier I CRM) has been reduced by £1.4 million as the company has had a major change of focus with the exit of the original CRM business. Amethyst Radiotherapy is down by £0.6 million with the manager using a lower valuation multiple. Other downgrades include Agilitas 2015 (-£0.9 million), Procuritas IV (-£0.8 million) and DBAG VII (-£0.5 million).

Financing

The Company is currently modestly geared and this will reduce significantly on receipt of the San Siro proceeds. Most of the borrowing facility remains available and the facility is in place until June 2024. The cost of borrowing is increasing but moderate gearing should still enhance shareholder returns over the medium and longer term. The total of outstanding commitments remains within a manageable band. Realisations are likely to come in below the record-breaking total for 2021 but given the continuing strong run of exits the total will be very healthy.

Outlook

Reports from the funds and co-investments are increasingly reflecting the pressures which many investee companies are facing. These include general inflation, energy price rises and supply chain issues to name a few. Demand in most areas, outside certain consumer facing sectors, remains robust and many companies are continuing to benefit from some post Covid catch up. Confidence levels within the private equity sector and most of their underlying companies remains good and this is manifested in strong deal pipelines. In the tech-enabled area, which has proved very popular with private equity in recent years, there has been a shift in buying interest towards fast growing companies which are already profitable in preference to those with revenue growth but without current profitability. In this regard our portfolio is well positioned. The high degree of diversification across the portfolio, which spans the mid-market sector across Europe and further afield, also continues to be a distinct strength. As we approach the end of 2022, we have confidence that the Company will continue to build value for shareholders over the medium and longer term.

Hamish Mair

Investment Manager

Columbia Threadneedle Investment Business Limited

Portfolio Summary

Portfolio Holdings

Total Private Equity Funds - USA

CT PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

nine months ended 30 September 2022 (unaudited)

CT PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

nine months ended 30 September 2021 (unaudited)

CT PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

year ended 31 December 2021 (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 2021.  Earnings for the nine months to 30 September 2022 should not be taken as a guide to the results for the year to 31 December 2022.

2.     Investment management fee:

3.     Finance costs:

4.     Returns and net asset values

5.     The financial information for the nine months ended 30 September 2022, 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 2021, 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.ctprivateequitytrust.com

Legal Entity Identifier: 2138009FW98WZFCGRN66

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