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MULTIPLE OF COST OF REALISATIONS
Year ended 31 January 2020
Continued strong realisation activity at significant uplifts to carrying value and cost
Realisations continued at a healthy level during the year with £141m1 of cash being generated from the Portfolio. Although lower than the historical highs of the two previous years, at 20% of the opening Portfolio it is in line with our 10 year average.
The realisation of 48 companies completed at an average uplift of 37%2 to the previous carrying value, which is consistent with the long-term trend of significant uplifts being generated when companies are sold. The average return multiple of 2.4x cost was also strong, reflecting a number of highly successful investments realised in the year, with 40% by number being sold for at least 2.5x cost. Over the last five years exits have averaged 33% uplift to carrying value and a multiple of 2.3x cost.
The largest realisation in the year came from our co-investment in Froneri and its associated fund PAI V which together generated £18m of proceeds. This fund, which has performed extremely well, had two assets remaining with strong prospects but was coming to the end of its term. PAI therefore offered investors the opportunity to realise their holdings in these companies or reinvest into a new vehicle, PAI Strategic Partnerships, giving more time to maximise the potential from these companies. Given the continued strong performance of Froneri and its future prospects, we decided to re-invest the majority of the proceeds into the new transaction ensuring the company remains in our Top 30 Companies.
The public market listing of technology investments was a strong source of underlying valuation gains and proceeds with 15% of amounts received arising from sales of listed shareholdings. The partial sell down of human capital management software provider Ceridian by Thomas H Lee was the largest contributor with £11m being returned in the year, mainly from our co-investment. Permira’s successful listing of remote support software provider TeamViewer was also a significant contributor both in terms of proceeds (£2m) and gain in the year, with the investment being written up to 13.6x cost as at 31 January 2020, based on the closing share price at this date. Both of these companies are in our Top 30 Companies at the year-end.
In addition to sales by our underlying managers, we completed a secondary sale of one of our third party fund holdings at a premium to the GP’s valuation, which generated a further £8m of proceeds. We also completed the sale of two more holdings, at premiums to the most recent valuation, shortly after the year-end generating another £5m. These transactions highlight our active approach to managing the Portfolio and we will continue to pursue further sales opportunistically, taking advantage of our in-house secondary market expertise.
From our largest 30 underlying companies at the start of the year, two were fully realised: Atlas for Men from the third party funds portfolio and Abode Healthcare from the co-investment portfolio, both of which generated strong returns. In addition, our investment in Visma was partially realised, with our co-investment managed by Cinven realised, generating a 2.5x return. We still retain an interest in this company via an ICG fund holding and co-investment from a later transaction.
1 Refers to proceeds generated from underlying portfolio (excludes secondary sales)
2 Uplift figure excludes listed companies that were exited via multiple share sales