Ares makes offer for PE trust Apax at 17% discount
Shares in Apax Global Alpha (APAX ) have shot up after an offer was made on Monday afternoon to acquire the entire private equity (PE) investment trust.
A vehicle managed by Apax, with funds coming from US private equity giant Ares, has offered to acquire the trust for €1.90 (£1.65) per share in cash.
According to a source with knowledge of the deal, it is the first such ‘take private’ in the PE investment trust sector, where wide share price discounts to net asset value (NAV) have become entrenched.
The offer, which has been recommended by the board, represents an 18.8% premium to Apax Global Alpha’s closing share price of 138.6p on Friday.
More controversially, it represents a discount of approximately 17.1% to the latest portfolio value, which was only published today, of €2.29 per share at the end of June.
‘Like its peers in the listed PE trust sector, [Apax Global Alpha] has faced persistent challenges – a widening discount to NAV, persistent selling from investors, a lack of a forthcoming re-rating and a reduction in new buyers,’ said chair Karl Sternberg.
Sternberg said the move followed a comprehensive review that started last July.
‘This offer presents a full liquidity solution for AGA shareholders, simplicity, minimal execution risk and competitive pricing relative to other options available which the AGA board firmly believes is the best outcome for shareholders,’ he added.
The news sparked Apax Global Apha shares to jump 16.4% higher on Monday afternoon to 161.3p, slightly below the offer price.
Prior to the announcement, the trust’s shares were trading at a just over 30% discount to the latest NAV – a dynamic common in the sector which no one has really worked out how to address.
But how shareholders will react to the prospect of an exit for 17% less than the purported value of the portfolio of 11 PE funds remains to be seen.
Some professional investors will have an option to roll over some of their shareholding to a new vehicle.
