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Edited Transcript of APAX.L earnings conference call or presentation 14-Aug-19 8:30am GMT

Half Year 2019 Apax Global Alpha Ltd Earnings Call

ST PETER PORT Aug 15, 2019 (Thomson StreetEvents) -- Edited Transcript of Apax Global Alpha Ltd earnings conference call or presentation Wednesday, August 14, 2019 at 8:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Ralf Gruss

Apax Partners LLP - Partner & COO

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Conference Call Participants

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* Simon Moore

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to the Apax Global Alpha's 2019 Interim Results Webcast. My name is Charlotte, and I will be coordinating your call today. (Operator Instructions)

I will now hand over to your host, Ralf Gruss, to begin. Ralf, please go ahead.

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Ralf Gruss, Apax Partners LLP - Partner & COO [2]

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Thank you, and good morning, everyone, and also thanks for joining the 2019 interim results call of AGA. My name is Ralf Gruss, I'm the COO of Apax Partners and a member of AGA's Investment Committee. I will take you through the presentation and as usual I'll answer any questions you might have at the end of the call.

Let's start with the financial highlights. AGA performed very strongly over the last 6 months. The total NAV return was the strongest since IPO, at 13.4% for the 6 months' period. So effectively AGA has met its long-term target return range already within the first 6 months of the year. Over a 12-month period, returns have also been very good at 14.4%.

So what are the key items to highlight in this context? First of all, the Private Equity performance remains very strong, and the momentum we have seen for some time now continued into the first half of the year. And correspondingly, returns have been very strong, 20.5% on a 6-month basis and 23.3% over the last 12 months.

Now second, on Derived Debt. Derived Debt continues to deliver returns in line with expectations. The total return was 5.4% over the last 6 months and 9% over the last 12 months. And despite the fact that most of the Derived Debt investments are being held in U.S. dollars, the FX impact on these numbers has been quite small.

Now third, the performance of the Derived Equity portfolio has stabilized with a total return of 0.9%. The performance over the last 12 months is still weak, however, negative 14.6%. Effectively, there were some ups and downs in the portfolio, but as the share of investments in Derived Equity has decreased, their return impact on AGA as a whole has also been reduced.

Now before I go into the portfolio in more detail, I'd also like to highlight that the adjusted NAV of AGA has surpassed the EUR 1 billion mark for the first time. It's another milestone for AGA since its listing and it's pleasing to see how AGA has accreted in value over time. Now that means on a per share basis the adjusted NAV per share has grown to EUR 2.10 or GBP 1.88.

You won't see it on this page, but as per the announcement this morning, AGA will also pay the first dividend for 2019 at 4.86p per share on the 13th of September 2019 and that's again an increased dividend in line with the growth of AGA.

Let's go into more detail on the adjusted NAV movements and performance, and you can find this on Page 4 of the presentation. On this page, you can see movement in adjusted NAV at the top of the page and return contributions on the bottom half of the page.

Now let me start with the top chart on the slide. You see that adjusted NAV has increased by approximately EUR 100 million from EUR 930.8 million to EUR 1,031.9 million. The main drivers here really is the positive valuation movement in Private Equity and Derived Debt. The main negative movement is actually not a negative, but is the dividend payment made to shareholders in April of EUR 23.7 million.

In percentage contribution terms, and you can see that on the bottom half of the page, Private Equity was a key contributor, both given the level of performance but also the exposure to Private Equity in the portfolio. Now you'll also note in the chart at the bottom that FX played a minor role in the high returns for the first half year. Given AGA's diversified international exposure, currency movements can have a significant impact on reported returns. However, during the last 6 months, the contribution was only 0.5% of the overall portfolio level, so I won't specifically highlight currency as we go through the rest of the deck.

Now let me cover the portfolio composition on the following Page 5. Looking at the portfolio, the invested portfolio represented 91% of total NAV at the end of June. The reason for the slightly higher-than-usual cash position is the closing of the exits from Exact Software and AssuredPartners. You might remember that these 2 deals represented 15% of the investor portfolio at the end of March. Now both deals closed during Q2 and AGA received in excess of EUR 140 million in distributions from these 2 deals. In line with AGA's strategy, the excess liquidity will be deployed into the Private Equity portfolio and Derived Investments in the next couple of months.

In terms of portfolio mix, whilst the overall portfolio mix didn't really change since the beginning of the year, the share of Private Equity investments came down since the end of March because of the 2 exits I just mentioned. And at the end of June, 62% of the investment portfolio was invested in Private Equity and 38% in Derived Investments. Now notably, within Derived Investments, the share of Derived Equity went down. This is a function of listed equities having become less attractive in light of public market indices reaching new highs as well as uncertain and uncertainty of political outlook and indications of a slowdown, in particular in Europe. And as you know, we are also aiming to reduce the overall return volatility AGA has experienced from its Derived Investments over the past 12 to 18 months by bringing Derived Equity slightly down.

Now the realized returns within Derived Investments, they seem very strong. On a gross basis, returns in realized exits from the derived portfolio was 13.4% and the exits from the Derived Equity portfolio achieved returns of 35%.

Turning to Private Equity. Exposures to portfolio companies in the Apax VIII and Apax IX vintages are now almost of similar size. In total, on a look-through basis, there are now 55 portfolio companies. We had 4 new portfolio companies added or reentered in the portfolio during the first 6 months, and as I mentioned, the 2 exits from AssuredPartners and Exact Software closed and 2 additional exits, Acelity and Electro Stocks, signed, achieving a gross IRR of 24% and 2.8x money multiple.

Now and as the Apax IX fund reinvested into AssuredPartners, that company will remain in the portfolio through that fund, and is the company I reference as a reentry when I talk about the Private Equity portfolio.

Now before I go into the Private Equity portfolio in more detail, I'd like to comment on AGA's unfunded commitments and funding sources on the next page. The new development since AGA's last reporting is obviously the new commitment that AGA has made to the Apax X fund. As announced on the 15th of July, AGA made a commitment of $450 million, and the commitment into Apax X will be split equally 50/50 between the euro and U.S. dollar tranches of Apax X.

Now Apax X is the successor fund to Apax IX, to which AGA committed $350 million in 2016. And Apax X aims to continue the Apax established private equity strategy of investing in buyout investments globally across 4 core sectors: Tech & Telco, Services, Healthcare and Consumer. Apax X has not announced its final close yet.

Now what does this mean for commitments and funding? I mean first of all, at 30th of June, the unfunded commitments to the Apax Funds amounted to EUR 239.2 million, and with the commitments to Apax X these unfunded commitments increased to EUR 636.8 million. And that contrasts with a total balance sheet of EUR 1,034.5 million. Now of that balance sheet, EUR 451.6 million are held in Derived Investments and cash, and also more than 50% of the EUR 582.9 million which are invested in the Private Equity portfolios are invested in Apax VIII as well as the predecessor funds Apax Europe VI and Europe VII. Now these funds are in harvesting mode, and AGA has already seen a number of exits recently from these funds.

In addition to that, AGA has access to a EUR 140 million facility, which was undrawn on 30th of June. These numbers demonstrate that AGA has a very healthy balance sheet, and from the analysis performed in the context of sizing the Apax X commitment there is also a high level of confidence that AGA can meet its commitments even in more extreme scenarios.

Now another benefit that AGA has is that the Apax Funds operate capital call facilities that allow the funds to bridge capital calls. This not only simplifies administration, but also provides a lot of visibility on future calls. AGA actually expects about EUR 106 million of calls from the facilities over the next 12 months. Important to note that beyond the capital call facility to bridge capital calls, none of the Apax Funds employ structural gearing at the fund level.

Now with that, let me turn to the Private Equity portfolio in more detail. As I already mentioned, we've seen some very strong performance, which was primarily driven by operational performance of the portfolio companies.

Let's turn to Page 8 for this. Now the key points to take away from the Private Equity portfolio are: there was strong investment activity with 7 new investments during the period, 3 of which are yet to close; we've also seen some very good exit activity, with 4 exits signed or closed at an average money multiple of 2.8x and an IRR of 24%; and in terms of portfolio, their strong operational performance continued with double-digit revenue and EBITDA growth.

Let me take these points in turn. The Apax Funds signed or closed 7 new investments, which translates into approximately EUR 87.9 million of new invested or committed capital for AGA. 4 of these investments have already closed, including the 3 investments we've already highlighted in the 2018 annual report. These are: the leading advanced analytics player, Fractal Analytics; AssuredPartners, the large U.S. insurance broker, where Apax IX reinvested; and New Zealand's leading online marketplace and classifieds site, Trade Me. The fourth investment that closed is Huayue Education, a leading provider of Chinese language learning and teaching solutions with a national presence across China. And the 3 investments that we announced but have not closed during the period are: the Baltic Classifieds Group, which is a collection of leading online classified advertising platforms in Lithuania and Estonia; Inmarsat, [public to private] of the leading satellite communications provider; and the new investment in the Services sector, the details of which have not been announced yet.

So overall, some very good new investment activity here. And there are also a number of good examples actually here within these new deals of our investment strategy to leverage our experience in specific subsectors to source and exploit more differentiated opportunities.

Fractal Analytics, for instance, represents the Apax Funds' 12th investment in the IT Services subsector. IT Services is an investment area we covered in a lot of detail during AGA's last Capital Markets Day, and for those of you who did not manage to attend the presentation, the webcast is available on AGA's website.

Now on the other side of things, we are also very pleased with pace of realizations from the portfolio. A total of 4 exits were announced, 2 of which have already closed. Now I won't go into detail on these again, but to reiterate the key metrics for these transactions that speak for themselves: a gross MOIC of 2.8x, a gross IRR of 24%, and an uplift of 19.2% over the last unaffected valuation.

Now on the third point, operational performance, the operational performance continues to show healthy revenue and EBITDA growth. Revenues were growing at 12.2% on average and EBITDA increased by 12.6% over the last 12 months.

So in summary, some very pleasing results for Private Equity. Let me double click on a couple of items before we go into the Derived Investments discussion now. I would in particular like to cover in more detail the NAV movements, the current shape of the portfolio, return drivers and uplifts realized starting on the next page.

Now let's start with the adjusted NAV movement on Page 9. Despite receiving distributions of EUR 148.5 million, the adjusted NAV and Private Equity actually remained quite stable, only going down from EUR 591.5 million to EUR 580.3 million. And you can see this in the bridge on the top of the page. The offsetting item was the unrealized gain in the portfolio of EUR 119.2 million.

Now calls were actually quite small during the first 6 months at EUR 19.5 million, and this is predominantly due to capital calls still being bridged at the level of the fund, as we just discussed.

Now turning to the bottom chart, you can see the total return of 20.5% for the first 6 months or 23.3% on a last 12 months basis. Again, the usual reminder here that the way the accounting for AGA works is that you will see in almost all cases the value gains of a portfolio company and unrealized gains even if the portfolio company was sold during the reporting period.

Now let me briefly cover [off] the biggest valuation movements. And then the 3 largest fair value gains in the period came from ThoughtWorks, Exact Software and Cole Haan. Now ThoughtWorks and Cole Haan remain unrealized whilst, as you know, Exact Software was sold. So to give you some context on the 2 that are unrealized, on ThoughtWorks, it's a global software development and digital transformation consulting company. It's an investment that was made in 2017 and has continued to perform very strongly. The top line is growing at roughly 20%, and we are also seeing attractive margin expansion in the business. Also there are some very positive developments in Cole Haan. We're seeing strong business momentum as a result of management's repositioning of the brand, product strategy, marketing strategy, distribution footprint, which is all supported by the shift towards more casual product in the workplace. The revenues and EBITDA are expanding very rapidly as these investments in product innovation, talent and infrastructure are paying off across categories, channels and geographies. Some very positive momentum there.

On the other end of the spectrum, the biggest markdowns in the portfolio were from One Call, GTJA and Ideal Protein. Let me also briefly touch upon each of those. GTJA is publicly listed. It's a Chinese financial services company that saw operational performance recover after a more difficult 2018, but there is some volatility in the share price due to the ongoing U.S.-China trade war, and its impact it has on share prices in China.

Its markdown is from movements in the share price during the year. On One Call and Ideal Protein, as we've highlighted before, One Call coordinates workers' compensation care management services in the U.S. It continued to perform below expectations because of pricing pressures, lower growth and continued internal IT investments. Now Ideal Protein is a weight loss solutions provider targeting the clinic market in the U.S. and Canada. The company is facing execution challenges in its go-to-market strategy. A new CEO was actually hired to address the issues and several initiatives are underway. But taking a step back here, these 3 underperformers have limited relevance to AGA's portfolio. Neither GTJA, One Call and Ideal Protein are amongst the top 30 in the Private Equity portfolio, and their combined value loss is EUR 5.4 million. And just to provide a benchmark here in putting this in context, the EUR 5.4 million value movement on those 4 investments is only about 25% of the value generated on ThoughtWorks alone.

It's actually a good lead into an overview on how the portfolio is performing, on Page 11. Now for those of you who follow our calls on a regular basis, you would be familiar with the chart by now. It shows you in some broad categories the overall operational performance of the top 30 Private Equity portfolio companies. Now the aim of the chart is to give you a sense of how we currently view the general performance from a more fundamental point of view. The logo positions within a bucket are not in comparison to each other and don't reflect performance between the companies within that category. And the 2018 and '19 is unallocated to any buckets yet as they are still new in the portfolio.

I don't want to go through all the names, but again, you know, what are the key takeaways? Looking at it in terms of what changed, the main change since we last showed you the slide in the annual results is that in terms of companies that were falling behind our expectations, Attenti has moved back on track, and looking at the bucket of companies performing ahead of expectations, AssuredPartners and Exact have now exited, so they are no longer on the chart. And the exit from Acelity has been signed, and we expect this to come off the chart next time you see this slide.

But overall, in line with what we've just discussed when discussing valuations, most of the portfolio companies, we believe, are broadly on track to where we think they should be.

So we've covered NAV movement and valuations as well as an overview of the Private Equity portfolio. Let me now give you an overview on IRR drivers and uplifts realized. Let's start with uplift on Page 11 for this. Now on this -- sorry, we're first going to the IRR movement. On this page, you can see a -- okay, apologies. We're looking at the bridge of LTM performance movement. On this page, you can see the bridge breaking down the 23.3% LTM total return in Private Equity into its various return drivers. Now hopefully the bridge is pretty self-explanatory, but let me walk you through the main numbers. The growth in underlying earnings was the strongest contributor during the year with a 27.5% contribution to total return. Debt funded acquisitions had a negative impact on returns of 6.3% due to movement in absolute net debt. However, average levels of net debt in relation to EBITDA decreased slightly during the year because the EBITDA growth outpaced changes in absolute debt, resulting in an average of 3.9x compared to 4x at December 2018.

Now the impact of valuation multiples on total return of 9.4%. This increase mirrors the performance of public markets during the first 6 months as well as the exit uplifts generated on Exact and AssuredPartners, which is also captured in this number. In addition, the share of portfolio companies that are in higher growth Tech & Telco and Digital sectors has increased in the Apax Funds portfolio of the 6-month period.

Management fees and carried interest of the underlying Apax Funds decreased returns by 7.1%. As the valuation of the Private Equity portfolio goes up, carried interest accruals at the level of the Apax Funds naturally go up as well. And the last point to highlight here is that movements in the valuation of the carried interest held by AGA added another 2% to returns. Apax Europe VII is actually expected to commence carried interest payments following the completion of exits in Acelity and Electro Stocks, so we expect to see a start of the monetization of this investment soon. And all these factors taken together give you a total return of 23.3% on the Private Equity portfolio.

Now on to uplift, which is the final point on Private Equity, and let's go to Page 12 for this. Now we've updated the chart that was disclosed previously here on uplift. On the left-hand side you can see a summary of the average valuation uplift achieved from the full exits in the Apax Europe VI and Europe VII Funds as well as the Apax Euro VIII fund, which are the main buyout funds. And in addition, the chart shows the uplift achieved from the 2 fully closed exits and 2 fully signed exits in the period. Again, without going through all the numbers, 2 points to highlight. If you look at the left-hand side, the average uplift to unaffected valuations are consistently strong. They are in the 20% to 30% range across the last 3 generations of buyout funds. And then the second point is that this also remains true if you look on the right-hand side at the 4 deals exited or signed during the first half of 2019, also some very reasonable uplift here. The Acelity uplift is a bit smaller, but more importantly the deal is expected to deliver a 3.1x return when it closes.

Now that concludes the discussion of Private Equity. I'd now like to turn on to the Derived Investments portfolio. The main themes we will be discussing for the Derived Investments portfolio is one of good returns coming out of Derived Debt, a reduced exposure to Derived Equity and returns in Derived Equity that overall has stabilized during the last 6 months, but there is still a mix of highlights and lowlights in the portfolio.

Now let's go into the numbers. Let's look at Page 14. Page 14 summarizes the performance of the Derived Investments portfolio. Overall returns were positive 3.7% or positive 2.6% on a constant currency basis. And the picture for Derived Debt and Derived Equity, however, remained quite different. So let me first run through the Derived Debt performance.

Returns from Derived Debt has continued to be strong and in line with what AGA is trying to achieve with this portfolio. The investment focus has remained on loan instruments in high quality companies. And given where we are in the cycle, a more cautious approach to risk was taken for some of the transactions, with AGA investing in the first lien secured tranches rather than the junior tranches of the deal. Now in total, AGA invested EUR 65.5 million in 6 new debt positions across the Services, Digital [Software] and Healthcare space, and AGA also exited 2 debt positions. The gross IRR achieved was 13.4%, so very pleasing results on those

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Now more generally speaking, the debt portfolio overall remains healthy and operational performance of the underlying companies in which AGA has invested is also steady with an average 17.3% EBITDA growth. So all is well for Derived Debt.

On the Derived Equity side, returns from Derived Equity were flat at 0.9% or slightly negative at 0.7% if you exclude the foreign exchange impact. Therefore, in comparison to 2018, the performance of the portfolio has clearly stabilized, but the returns have still fallen short of the market recovery that we've seen during the period. Now the portfolio has a number of deals that are doing well. This is also underlined by the returns generated on those deals that were exited during the period.

If you look at the 4 positions sold, they generated a gross IRR of 35% and a multiple of 1.3x. But there still remain a couple of positions in the portfolio that are either operationally behind plan or where we have seen some significant volatility in the share price. I'll talk about those in a moment.

Now in terms of new investments, AGA has only deployed EUR 14.8 million of capital in Derived Equity during the 6 months. The first investment is QAD. This was an add-on investment, a U.S.-based ERP software company, and the investment was to complete building a position where the first investment was already made at the back end of 2018. And the second investment is Airtel Africa, a pan-African mobile operator, which is a sector which is obviously very close to our core activities in Private Equity.

Let's look at the movement in Derived Investments adjusted NAV on the following pages. Page 15 shows you the movement in adjusted NAV for Derived Investments. The adjusted NAV increased to EUR 355.4 million and this is mainly because of the EUR 82 million of new investments which are outpacing divestments. I cover the performance bridges for debt and equity separately on the next slide. Just briefly on the largest value gains and losses in the Derived Investment portfolio, the 3 largest positive value gains were from DCB, Lonza and Paycor. Now DCB is an Indian retail bank. The share price suffered last year but has recovered during the first 6 months as the company continued to grow. Lonza is the world's leading contract development and manufacturing organization. It's serving pharma and biotech customers, and we believe it's a prime quality business which is underpinned by very favorable market dynamics. Paycor is a software-as-a-service provider of HR software in the U.S. It's a portfolio of companies of the Apax Funds, and because of the attractiveness of its terms, AGA participated in the preferred instruments when it was syndicated.

Now the 3 largest negative movements were from Answers, Just Group and Sinopharm. Answers is an equity position that AGA obtained as part of the restructuring of the debt position that AGA originally held in the business. AGA is a small shareholder in this business and the holdings of (inaudible) are quite immaterial in the portfolio. Just Group is a U.K. specialist retirement insurer. There was a lot going on at Just Group during the reporting period. We believe that fundamentally value remains in the business, but the share price has obviously suffered quite heavily. And last, Sinopharm is a Chinese pharmaceutical distribution company. It's the largest pharma distribution company in China. Its valuation suffered when the Chinese government introduced processes targeted at cutting generics prices at the end of last year.

As you can see, there's still a bit of a mixed bag between strong performance and weaker performance in the portfolio. We're obviously very focused on monitoring in particular those positions that are performing behind plan.

Now let's take a closer look at each of the sub-portfolios performance on Page 16. Now let me start with Derived Debt. You can see the performance bridge on the top half of the page. As I mentioned at the start, performance has been strong and in line with expectations. The interest income continues to generate an attractive running yield. It's come a little bit down compared to prior periods though. Despite the portfolio remaining mainly exposed to U.S. dollar, foreign exchange had a relatively small effect during the first 6 months of the year, which is another point to note here.

Now at the bottom of the page, you can see the performance bridge for Derived Equity. From our discussions just now, they are both highlights and lowlights in the portfolio. The realized gains of 2.5% includes the highlights or the 12 out of the 19 positions that had positive increases in their valuations during the 6 months. And on the negative side, 7 out of 19 positions showed unrealized losses of 3.6% negative. These were, however, mainly driven from the three positions that I just covered.

Now that I've covered derived returns over the past 6 months, I'd also like to give you a broader perspective by looking again at the longer-term performance of Derived Debt and Equity over the last couple of years, and you can see this on the next page. You can see information on Derived Debt at the top and Derived Equity on the bottom of the chart. And for reference, we've also given you the split by category or geography for both the Derived Debt and Equity, comparing where we are now versus how the portfolio looked like in June '15 when AGA IPO-ed.

On the right-hand side, we show constant currency gross returns since the beginning of 2015 to provide for a longer-term perspective on the performance of the underlying investments since the year when AGA IPO-ed. So again, what are the key takeaways here? Let's start with the debt. Now the Derived Debt long-term performance has historically been handicapped by 3 investments that were made in the 2013 to 2015 time period. These investments were Answers, Rue 21 and FullBeauty, and we've talked about them a lot over time. As you may also remember, as an Investment Committee, we've taken our lessons from these 3 investments and changed our approach accordingly. And this has led to only 1 out of 32 investments since 2016 producing a small, actually immaterial negative gross IRR of 0.2%, whilst all the remaining debt investments have produced positive returns today. However, it's taking some time for those 3 investments from 2013 to '15, FullBeauty, Answers and Rue 21, that went wrong, to work through the system, and therefore returns remained impacted over time.

Now to illustrate this effect of these 3 investments but also to underline the performance of the remaining portfolio, which included 44 investments since the beginning of 2015, we've shown returns both including and excluding Answers, Rue 21 and FullBeauty on this page. You can see these returns on the top right of the chart.

Now important to note that returns have been stable over the years, in particular, they have always been positive other than time periods where we witnessed some significant market volatility, for instance, at the end of 2018. And if you exclude the 3 investments that were wrong, the returns of all would comfortably be in the double-digit range over that time period.

Now a similar view on the Derived Equity on the bottom right of the chart. The returns since the beginning of 2015 has been 8.3% or 9.7%, depending again whether you look at returns including or excluding the 3 investments we just talked about. Now whilst these returns are roughly in line with worldwide equity market indices, the chart demonstrates 2 issues which relate to how these returns have been achieved. The first is that the performance over the last 18 months has fallen short of expectations, and the second is that returns have been quite volatile. But as we've discussed previously, we are aiming to address both of these issues. And on the Derived Debt side, we're obviously aiming to continue the good performance we've seen over recent periods.

Now that takes me to the end of my presentation. To quickly recap again, overall, AGA returns were excellent. A total return of 13.4%, already achieving the annual return target within the first 6 months. The performance in the Private Equity portfolio remains very strong. The Derived Debt portfolio overall is healthy and the returns have been good. The Derived Equity portfolio has stabilized, but not held up with mark-to-market (inaudible) again. Now in line with AGA's dividend policy, the second interim dividend was paid at a level of 2.5% of NAV.

Now going forward, I guess the first thing to remember is that the Private Equity portfolio seems to be in good shape, it's well diversified by sector and geography, it's delivering double-digit revenue and EBITDA growth, and in terms of new investments in Private Equity, we continue to focus on transformational, good-to-great investment opportunities, which can be the more [quirky] deals in the subsectors that we know well. AGA is obviously now well positioned to benefit from this through commitment to Apax X. For Derived Investments, we remain conscious that we are likely looking at a late-cycle type of environment, plus there a number of geopolitical shadows out there. Focus will primarily be on Derived Debt, and within that on high-quality underlying credit exposures. And the recent realizations we've had from the Private Equity portfolio also put AGA in a good position to exploit more dislocations if volatility were to return.

Now with this, I'm happy to answer any questions. I would like to hand it back to the operator.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We currently have no questions. Ralf, I will hand back to you.

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Ralf Gruss, Apax Partners LLP - Partner & COO [2]

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Well, thanks to everybody for participating in today's call. I wish you a good day. Thank you, and goodbye, everybody.

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Operator [3]

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We do have one further question, and it's a question from Simon Moore from EQ Investors.

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Simon Moore, [4]

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It's just a question on the time scale you've got on your Derived Equity. I know you've hinted that that's actually going to have less focus going forward. Due to -- is it a 12 months, 18 months, 2 years? Or -- that's one of the things I'm hearing is holding back investment in Apax Global.

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Ralf Gruss, Apax Partners LLP - Partner & COO [5]

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Yes, Simon. I don't think we have a fixed timeline on the Derived Investments. I guess going forward, given where we are in the cycle, as I said, we want to put more focus on Derived Debt rather than Derived Equity. However, in terms of the existing portfolio, I don't think there is a fixed timeline. We're going to evaluate value creation potential for each of those positions individually, and exit them if and when we think the time is right for it.

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Operator [6]

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We now have no further questions.

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Ralf Gruss, Apax Partners LLP - Partner & COO [7]

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Okay, then. Thanks again, everybody, and thanks for the question. Thanks for participating in today's call. I wish you a good day. And thanks and good bye.

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Operator [8]

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Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines. Have a lovely day.