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VALUE OF THE PORTFOLIO
INVESTMENT PORTFOLIO RETURN (LOCAL CURRENCY)
INVESTMENT PORTFOLIO RETURN (STERLING)
Year ended 31 January 2020
The potential for COVID-19 to cause widespread disruption was not evident at our year end date. The valuation of the Portfolio at 31 January 2020 was therefore not negatively impacted by COVID-19 and does not reflect the subsequent stock market falls in late February and early March.
Profit growth and realisations drive 11th consecutive year of double-digit underlying growth
Continued strong operating performance and realisations at significant uplifts to carrying value generated a return of 16.6% in local currencies, or 14.6% in sterling. These results represent the 11th consecutive year of double-digit underlying portfolio growth, over which time period the Portfolio return has averaged 16% p.a. in local currencies.
All parts of the Portfolio performed well and contributed to growth in the year, with particularly strong performance from our US, co-investment and ICG portfolios, with growth driven by a combination of strong trading performance, realisations, IPOs and movements in quoted share prices.
Within our high conviction portfolio, notable contributors include three US co-investments: PetSmart (a leading US pet retailer), which successfully listed its online business, Chewy; Abode Healthcare (a provider of at-home hospice care), which was sold during the year at 2.0x cost and a gross IRR of 69%; and Ceridian (a human capital management software provider), which was listed in 2018 and whose share price increased by almost 80% in the year taking the return to 4.6x cost. In addition, three of our recent co-investments alongside ICG’s flagship European strategy (Domus, Minimax and Visma) all outperformed the wider portfolio following strong underlying growth.
Outside of our high conviction portfolio, Gridiron III, a US mid-market fund which is currently our second largest fund holding by value, reported significant gains in the year, with one of its portfolio companies, Leaf Home Solutions, driving a significant proportion of the gain. This follows exceptionally strong trading performance. The business, which provides gutter protection solutions that reduce the requirement for homeowners to clear gutters, is considered one of the fastest growing home maintenance companies in the US.