Christina McComb, chair of Standard
Life Private Equity Trust

The NAV total return (NAV TR) for the year was 10.5% versus 2.7% for the FTSE All-Share index and in line with the company’s annualised NAV TR since inception of 10.2%.

The Trust’s portfolio continues to generate strong realisations, with distributions and income generated in the year of £138.1m. Exits were realised at an average premium of over 20% to the last relevant valuation. The underlying portfolio exhibited strong average revenue and EBITDA growth in the year of over 10%.

The Trust has labelled 2019 as an active year for new commitments, with a number of the company’s core private equity managers returning to the fundraising market. In total, eight primary fund commitments, three secondary fund commitments and one co-investment were completed amounting to £188m.

In January 2019, the investment objective for the Trust was broadened to include the ability to invest in co-investments. The company’s first co-investment was made in Mademoiselle Desserts, a leading European manufacturer of premium frozen pastries.

Interests in 17 mature secondary and buyout funds were sold where there was deemed to be limited upside for a total consideration of £29.9m.

The results also show the company’s total outstanding commitments of £450.3m (2018: £369.3m). The over-commitment ratio has also increased to 42.6%.

Christina McComb, chair of Standard Life Private Equity Trust, said: “Against a backdrop of political and macroeconomic uncertainty, it is notable that global equity markets remain relatively steady during 2019. However macroeconomic risks, such as US-China tensions and Brexit, continue to have the potential to impact returns.

“The ongoing success of private equity has attracted more capital to the asset class. The board recognises that the current market is very competitive, with uninvested capital or ‘dry powder’ reaching record levels. This clearly has implications for pricing and average private equity returns in the future.

“Despite this backdrop, it is worth remembering that the private equity industry has consistently outperformed the listed markets throughout economic cycles. The number of private companies continues to grow, in stark contrast to the decline in publicly listed businesses.

“Your board believes that the company’s investment strategy, with its focus on the mid-market (where relatively less dry powder is accumulating compared to the larger end of the market) and its broad diversification (by underlying sector, geography and maturity) continues to provide an attractive opportunity for shareholders. The company’s focus on private equity managers with differentiated investment sourcing and value creation capabilities should also help to mitigate pricing pressures.

“As always, the board will monitor the market closely and maintain a close dialogue with the Manager on the topics of portfolio construction and management.”