LONDON: Patria Private Equity Trust plc (PPET) has announced the completion of the sale of a portfolio of 14 fund investments for approximately £180 million.
This disposal resulted in a combined overall return of 1.9x Multiple on Invested Capital and a 16% Internal Rate of Return (IRR) for the divested funds.
The divested funds, which represented 13% of PPET’s portfolio as of August 31, 2024, were older vintage investments or had become misaligned with the Company’s strategy, focusing increasingly on the European mid-market buyout space.
The transaction, valued at €216 million (£180 million), involved a competitive sales process managed by a secondary intermediary with participation from several high-quality secondary players, delivering a strong outcome for PPET.
The disposal proceeds will be received in two tranches: 45% in December 2024 and the remaining 55% in September 2025.
Ten of the 14 divested funds, representing 50% of the transaction value, were from older vintage years between 2011 and 2016.
The other four funds were from vintages between 2017 and 2019 but were more aligned with the large-cap buyout space, becoming non-core to PPET’s strategy.
The £180 million proceeds from the transaction will enable PPET to reduce drawings on its revolving credit facility and strengthen its balance sheet.
As of August 31, 2024, the £300 million facility was £142.3 million drawn. Including the deferred proceeds, the Company will have short-term resources of £333 million available. Outstanding commitments were £634.1 million, with £93.3 million not expected to be drawn.
The funds will also provide additional resources for new investments and corporate initiatives while continuing to focus the portfolio towards the mid-market buyout space, including increasing the allocation to direct investments, which represented 23% of the portfolio as of August 31, 2024.
Alan Devine, Chair of Patria Private Equity Trust plc, commented: “This Transaction further underlines the quality and attractiveness of our broader portfolio. The price achieved by our Manager demonstrates PPET’s ability to extract value even from non-core assets and unlock capital for future growth initiatives. The Board is particularly pleased to have achieved this outcome given the share price discount to NAV.”
Alan Gauld, PPET’s Lead Investment Manager, commented: “As manager of PPET, we are continually monitoring both buy-side and sell-side opportunities in the secondary market. The investments we are selling in this transaction have performed well, but many were from older vintage years or focused outside of the mid-market buyout space. We were very pleased with the quality of buyer interest and the pricing achieved further illustrates the disconnect between the valuations of listed private equity investment trusts relative to the quality and attractions of their underlying portfolios.”