Ample dry powder for new investments

Standard Life Private Equity Trust 19 July 2021 Review
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Standard Life Private Equity Trust

Ample dry powder for new investments

Investment trusts
Private equity funds

19 July 2021

Price

465.5p

Market cap

£716m

AUM

£871m

NAV*

566.6p

Discount to NAV

17.8%

*Including income. As at 30 June 2021.

Yield

2.9%

Ordinary shares in issue

153.7m

Code/ISIN

SLPE/GB0030474687

Primary exchange

LSE

AIC sector

Private equity

52-week high/low

490.0p

296.5p

NAV* high/low

567.0p

421.4p

*Including income.

Gross gearing*

0.0%

Net cash*

8.1%

*As at 30 June 2021.

Fund objective

Standard Life Private Equity Trust’s (SLPET) investment objective is to achieve long-term total returns through holding a diversified portfolio of private equity funds and direct investments into private companies alongside private equity managers (‘co-investments’), a majority of which will have a European focus.

Bull points

Focus on top-performing European private equity managers.

Experienced investment team with strong private equity manager relationships.

Increasing share of direct co-investments should reduce costs on a look-through basis.

Bear points

Ample dry powder in the market translating into high competition for quality assets.

High valuations in most resilient sectors.

Changes to sector exposure take more time due to SLPET’s fund-of-fund structure.

Analyst

Milosz Papst

+44 (0)20 3681 2519

Standard Life Private Equity Trust is a research client of Edison Investment Research Limited

Standard Life Private Equity Trust (SLPET) reported a NAV total return of 14.9% in H121, on the back of a 22.9% increase in the underlying portfolio value at constant currency, partially offset by negative FX effects (in particular sterling appreciation vs euro). SLPET’s high realisation activity (including several successful IPOs and private transactions) continued in the period with £92.7m proceeds. These exits generated an average uplift to carrying value two quarters prior (to exit dates) at 63.1% and average multiple on invested capital (MOIC) at 2.6x.

Portfolio’s net asset value by vintage

Source: Standard Life Private Equity Trust, Edison Investment Research

Why invest in SLPET now?

The private equity sector has withstood the COVID-19 crisis well so far, with the pick-up in M&A and IPO activity, which started in H220, driving strong and profitable realisation activity in SLPET’s general partners (GPs) and cash distributions to SLPET. Consequently, best-performing GPs continue to deliver attractive long-term returns and SLPET benefits from its selection of high-conviction GPs with which it has longstanding relationships. Moreover, it has a well-balanced portfolio in terms of cyclical and non-cyclical sectors, with combined tech and healthcare exposure currently at 38%.

The analyst’s view

While private equity exit activity has been strong recently, the high level of dry powder results in fierce competition for quality assets. Consequently, SLPET’s investment level (defined by the overcommitment ratio) remains below the 30–75% target range (currently at c 28%). We believe that its recent high realisation activity may continue in the near term, given that 53% of its portfolio represents vintages of four years or older, with the five-year-plus bucket held at 2.3x cost on average, while the five-year and four-year buckets are held at 2.2x and 1.9x, respectively. At the same time, SLPET’s manager sees a good pipeline of primary fund and co-investment opportunities (with three primary commitments and three co-investments closed in H121), which will absorb some of the exit proceeds.

H121 driven by benign public markets and strong exits

SLPET reported a 14.9% NAV total return (TR) for the six-month period ended 31 March 2021 (H121), based on actual NAV figures, with c 99.6% of portfolio valued as at end-March. This sits slightly below the official benchmark – the FTSE All share Index, which posted an 18.5% total return over the same period. We note, however, that the analysed time frame started shortly before the emergency approvals of the COVID-19 vaccines, which triggered a strong rebound in the broader equity market. On the other hand, SLPET’s return in the period was visibly ahead of the LPX Europe NAV Index representing the broader European PE market (6.5% return). The fund’s robust performance was mainly driven by an increase in the value of underlying holdings of c 22.9% on aggregate over the period at constant currency (16.9% in sterling terms). In this context, we note that growth in the last-12-month revenue and EBITDA across SLPET’s underlying companies stood at 2.1% and 6.6% at end-March 2021, respectively.

The above translated into a one-year NAV TR to end-March 2021 of c 36.4%, but we note that this reflects the end-March 2020 NAV, which was affected by the pandemic outbreak (NAV TR in Q120 amounted to -12.5%). However, over the five-year and 10-year periods, SLPET reported an annualised NAV TR of 16.1% and 13.7%, respectively, confirming its successful long-term track-record, as the LPX Europe NAV Index reported 9.4% and 9.7% returns, respectively, in the periods.

Exhibit 1: Price, NAV and index TR performance, one year rebased, to end-March 2021

Exhibit 2: Price, NAV and benchmark TR performance (%), to end-March 2021

Source: Refinitiv, Edison Investment Research. Note: SLPET NAV data stream consists of actual figures for quarter-ends and NAV estimates for the remaining months.

Source: Refinitiv, Edison Investment Research. Note: Three-, five- and 10-year performance figures annualised.

Exhibit 1: Price, NAV and index TR performance, one year rebased, to end-March 2021

Source: Refinitiv, Edison Investment Research. Note: SLPET NAV data stream consists of actual figures for quarter-ends and NAV estimates for the remaining months.

Exhibit 2: Price, NAV and benchmark TR performance (%), to end-March 2021

Source: Refinitiv, Edison Investment Research. Note: Three-, five- and 10-year performance figures annualised.

Between end-September 2020 and end-March 2021, SLPET’s NAV per share increased from 501.0p to 568.4p due to unrealised upward revaluations of portfolio holdings, which added 70.4p per share, as well as strong realisations, contributing a further 37.3p per share. This was partially offset by net unrealised FX losses (-28.2p per share), mainly due to appreciation of sterling against the euro and US dollar. Over the period, SLPET incurred management fees, admin and financial costs totalling c 3.6p per share. The last-reported estimated NAV per share as at end-June 2021 amounted to 566.6p, which represents an 0.3% decrease against the end-March 2021 figures. The decline resulted from the first interim dividend payment of 3.4p per share on 23 April, partially offset by positive FX changes over the period.

Exhibit 3: NAV per share development in H121 and to end-June 2021

Source: Standard Life Private Equity Trust

In H121, SLPET reported a 38.8% share price total return, from 320p as at 30 September 2020 to 437p at end-March 2021. Consequently, the share price discount to NAV narrowed from 36.1% to 23.1%, which is broadly on par with the SLPET’s 10-year average of 23.2%. The share price rally continued in the following months, rising to 465.5p as at 16 July 2021 close, which translates into a 17.8% discount to the end-June NAV estimate.

Steady increase in dividend per share

The relatively limited impact of COVID-19, coupled with strong realisation activity and a solid liquidity position, enabled SLPET’s management to sustain its dividend policy, including preservation of the real value of the annual distribution. After making four payments of 3.3p per share in FY20, SLPET increased the quarterly dividends in FY21 to 3.4p per share (up c 3%), which is in line with historical dividend growth. The company has already made one interim payment (with an ex-dividend date on 18 March) and announced the second payment with an ex-dividend date on 24 June 2021, which puts SLPET on track to distribute 13.6p per share in FY21. The total distribution announced over the past twelve months (13.4p) constitutes a 2.9% dividend yield.

Peer group comparison

While comparing SLPET’s performance figures with a private equity fund-of-funds peer group, we continue to focus on mid- to long-term performance, which aligns better with a private equity investment approach and limits the impact of different asset valuation dates and, consequently, the FX changes. Performance figures are based on the latest available ex-par NAV, which is end-June for SLPET, end-May 2021 for Pantheon and HarbourVest, end-April for ICG Enterprise, and end-March for BMO. Having said that, we note that SLPET’s portfolio has been largely revalued as at end-March 2021, while that is not the case for all of its peers. HarbourVest’s last-reported NAV is based on data as at end-May (15%), end-March (46%) and end-December 2020 (39%). ICG revalued c 82% of its portfolio as at 31 March 2021, while for BMO this figure sits at just 15%, with most holdings reflecting end-December-2020 valuations. Finally, 93% of valuations in the last-reported data by Pantheon are dated as at 31 March 2021 or later. Given the continued upward trend in the public equity markets in Q121 (assisting private equity valuations), the valuation lag could explain at least some part of the underperformance of selected peers vs SLPET over one year.

We view longer-term returns as better indicators of the performance within the PE space, as they are less reliant on the timing of new investments and exits. SLPET’s three-year NAV TR to end-June 2021 of 56.4% sits on a par with the peer group average and ranks it second to HarbourVest (65.2%). The company’s five-year NAV TR of 100.9% is somewhat below the peer average of 106.6%, whereas in the 10-year horizon SLPET’s NAV TR exceeds the group average by c 29pp. SLPET’s one-year NAV TR of 34.1% is the highest among peers and above their average of 25.6%.

Exhibit 4: Selected peer group as at 16 July 2021*

% unless stated otherwise

Market cap £m

NAV TR
1 year

NAV TR
3 year

NAV TR
5 year

NAV TR
10 year

Ongoing
charge

Perf.
fee

Discount
(cum-fair)

Net
gearing

Dividend
yield

Standard Life Private Equity Trust

715.7

34.1

56.4

100.9

260.3

1.14

No

(17.8)

92

2.9

BMO Private Equity Trust

308.3

22.9

54.0

93.1

190.1

1.23

Yes

(13.2)

117

4.0

HarbourVest Global Private Equity

1,760.0

30.2

65.2

126.1

309.4

2.50

Yes

(21.2)

97

0.0

ICG Enterprise Trust

717.9

29.8

53.1

108.7

199.9

1.42

Yes

(25.5)

88

2.3

Pantheon International

1,460.0

19.6

42.8

98.5

227.6

1.23

Yes

(21.8)

88

0.0

Peer average

1,061.6

25.6

53.8

106.6

231.7

1.59

-

(20.5)

97

1.6

Rank in peer group

4

1

2

3

2

5

-

2

3

2

Source: Morningstar, Edison Investment Research. Note: TR = total return. Net gearing is total assets less cash and equivalents as a percentage of net assets (100 = ungeared). *12-month performance based on latest available ex-par NAV: SLPET – end-June; Pantheon and HarbourVest – end-May; ICG Enterprise Trust – end-April; BMO Private Equity Trust – endMarch. **No performance fee is charged at the HVPE level, but it is charged on the HarbourVest secondary and direct funds.

Record-high realisations at favourable prices

The first three months of 2021 mark a record-high exit volume in the European private equity market, as total transaction volumes reached €115.5bn after a 150.4% y-o-y increase, according to PitchBook data. The increase was mainly driven by robust PE-backed IPO activity, which amounted to €30.1bn across 31 completed flotations, representing 20x and 7.5x improvements against Q120, respectively.

After reporting £140m from realisations in FY20 (12 months to 30 September 2020), SLPET received £92.7m in H121 to end-March 2021, which constitutes c 12% of its opening NAV (vs fiveyear average annual realisations at c 23% of NAV). Exits in H121 were completed at an average uplift to the prior two quarters at a strong 63.1% (and 2.6x MOIC), which is well above the long-term historical average of over 20% since 2010. The fund benefited from healthy demand for private-equity-backed assets, which also led to the successful IPOs of several underlying companies, such as the UK-based online gifting-card business, Moonpig, listed on the London Stock Exchange (LSE) on 19 January 2021 (c 1.2% of portfolio’s NAV as at 30 September 2020), and the consumer footwear company, Dr Martens (1.1% of NAV as at 30 September 2020), floated on the LSE on 3 February 2021. Both companies were heavily oversubscribed and consequently priced their debuts at the top of their respective ranges, posting a c 20% share price increase on their first day of trading. We note that the Swedish payments business, Trustly (0.8% of NAV at end-December 2020), another portfolio company planning a listing in 2021, has postponed its IPO without providing an updated timeline, as the Swedish Financial Supervisory Authority recommended that the company carried out a customer due diligence.

In addition to the robust exit activity through public markets, several portfolio companies were sold to other private equity funds. In November 2020, a 100% stake in Questel, a global intellectual property solutions provider, was acquired by Eurazeo, Capital IK Investment Partners’ IX Fund, RAISE Investissement and the existing management team. Both Eurazeo and IK IX Fund (which is also SLPET’s fund investment) invested €200m each, giving them a combined majority stake. This marks a considerable uplift from the c €200m valuation of the whole company, based on the significant minority stake acquisition by IK VIII Fund, back in 2018. Similarly, IK VIII Fund divested Colisée Group (provider of nursing homes and homecare services for the elderly in France, Belgium, Italy and Spain) to EQT Infrastructure V Fund in 2020 after acquiring its stake in 2017. Finally, Astorg VI Fund sold its majority stake in Surfaces Group to TA Associates, after a holding period of around three years. We note that the holding period for each of these investments was visibly shorter than the market average, which extended to a record-high of 5.4 years in 2020, according to eFront data.

New primaries, secondaries and co-investments

Selected primary commitments to well-known GPs

Global private equity fund-raising activity in 2020 was strong with investors committing c US$628bn on aggregate (just 13% below the previous year’s healthy figure, according to S&P Global Market Intelligence). Meanwhile, SLPET took a c six-month pause in primary commitments in 2020 due to pandemic-related uncertainty and expects 2021 to be stronger in terms of primary deployment than 2020. So far it has been able to selectively deploy capital in H121 into three new primary commitments (c €25m each) to mid-market focused GPs with which it has established long-term relationships. First, SLPET made a commitment to Triton Smaller Mid-Cap Fund II (November 2020), targeting entities from industrials, business services, consumer and health sectors in the German-speaking countries, Benelux and the Nordics. The second commitment was done in February 2021 to PAI Mid-Market Fund, which has a broader European focus and has already confirmed its strong pipeline, as prior to closing the fund-raising in March 2021 (€920m raised during eight months) it made three investments in Amplitude Surgical (lower limb orthopedics manufacturer), Angulas Aguinaga (seafood producer) and MyFlower (flower and gift digital platform). The third primary investment was in IK Small Cap Fund III (March 2021), investing in northern European, lower-mid-market companies, which overall raised €1.2bn over just three months (more than doubling the size of the previous IK Small Cap Fund II of €550m). It is worth noting that this fund accepted commitments from the IK platform only, narrowing the investor group to the already established partnerships. Its core investment sectors are business services, healthcare, consumer and industrials.

Limited availability of quality secondary assets at discounted prices

During the pandemic, limited partners holding high-quality private equity assets were reluctant to sell these at a discount to last carrying value in anticipation of an economic recovery. This has been partially offset by GP-led secondary deals, including single-asset carve-outs, but still translating into a 9% y-o-y decline in private equity secondaries market activity in the second half of 2020, according to GreenHill. As a result, based on our discussion with SLPET’s investment manager, we understand that he is willing to selectively invest in high-quality secondaries at a price close to par or a slight premium to last carrying value (which is normally based on the last-12-month earnings of portfolio companies). While SLPET did not close any secondary deals in H121, it completed the acquisition of €3.0m commitments in Capiton IV and €8.0m in Capiton V in April 2021.These funds are focused on investing in SMEs from the pharmaceuticals, medical and industrial technology segments in the DACH region.

Three new co-investments in H121, bringing SLPET’s exposure to 6.7% of NAV

Meanwhile, SLPET continues to expand its co-investment portfolio towards its mid-term target of 20% of NAV. As a result, its co-investments represented 6.7% of its NAV at end-March 2021 and may possibly reach 8–10% by the end of the financial year (September 2021), according to the investment manager. In 2021, the company completed three transactions, with the largest being the €9.9m investment into North American Science Associates (NAMSA), a medical-device-focused contract research organisation. The co-investment was made together with ArchiMed, NAMSA’s lead investor. In February 2021, SLPET closed a €9.0m co-investment alongside Latour Capital into Funecap, a French funeral services and crematoria provider. According to Unquote Data, this transaction, with overall volume estimated at c €330m, was one of the 10 largest European private-equity-backed growth capital deals in the first three months of 2021. The last co-investment, made in March 2021 through the Nordic Capital WH1 Beta vehicle, concerned an undisclosed company from the technology segment (subject to confidentiality restrictions).

Drawdowns somewhat slower, but with an increase in GPs’ drawn credit facilities

Drawdowns of SLPET’s fund commitments in H121 amounted to £53.7m (down from £87m in H120). This constitutes c 11.4% of the outstanding commitments level at the start of the period, suggesting that the drawdown pace was somewhat below the average level (with primary commitments normally being deployed within c 2–3 years from the launch of a private equity fund). Having said that, we note that this should be viewed together with the increase in the drawn part of underlying credit facilities of private equity funds that SLPET invested in, which increased to £66.2m as at end-March 2021, compared to £46.9m at end-September 2020 (attributable to SLPET). These are good indications of near-term drawdowns (and should be drawn within the next six to 12 months, according to SLPET), as GPs use their credit facilities to bridge the gap between larger drawdowns.

Overcommitment ratio remains below targeted range

Healthy realisation activity, coupled with relatively modest drawdowns led to an increase in available cash to £62.5m as at end-March 2021 vs £33.2m at end-September 2020. Together with the fully undrawn £200m credit facility, it brings SLPET’s coverage ratio (calculated as available resources to total outstanding commitments) to 57%. The uncovered commitments as at end-March 2021 amounted to £201.4m, which translates into an overcommitment ratio of c 25%, which is below SLPET’s targeted range at 30–75%. Based on the last available data as at end-June 2021, outstanding commitments increased to £516.5m (including £52.2m unlikely to be drawn) which, together with available cash amounting to £70.2m and fully undrawn £200m credit facility, translated into an overcommitment ratio of 28%. Here, we note that one of the key reasons why SLPET’s overcommitment ratio moved below the target range is the upsizing of its credit facility completed last year. The manager expects the overcommitment ratio to continue increasing in the coming months as new investment activity gathers pace.

Mature portfolio provides further exit opportunities

SLPET expanded its portfolio from 58 to 64 holdings in H121, with 496 underlying investments (representing 486 individual private companies, given some overlap between funds), including six co-investments. The portfolio is well diversified both geographically and by sector, as none of the exposures exceeds a 20% share in the portfolio.

Since September 2010, SLPET’s exposure to tech and healthcare companies has been steadily increasing from 7% to 19% at end-March 2021 for each of these sectors. Over the six months to end-March 2021, their combined share in SLPET’s portfolio remained broadly stable (38% at end-March 2021 vs 39% at end-September 2020), which we understand is largely a function of successful exit activity in these segments, including selling down listed companies, offsetting new investments. Meanwhile, its exposure to the financial sector increased from 11% to 13%, even though the STOXX Europe 600 Financial Services index was up just 8.3% in the period (gross return in euro terms).

Exhibit 5: Geographical structure of the portfolio at 31 March 2021

Exhibit 6: Industry structure of the portfolio at 31 March 2021

Source: Standard Life Private Equity Trust

Source: Standard Life Private Equity Trust

Exhibit 5: Geographical structure of the portfolio at 31 March 2021

Source: Standard Life Private Equity Trust

Exhibit 6: Industry structure of the portfolio at 31 March 2021

Source: Standard Life Private Equity Trust

While SLPET’s portfolio is well diversified across vintages, a significant part already seems ripe for an exit at valuations in line with SLPET’s track record. The five-year-plus bucket constitutes c 24% of the NAV and is held at an average multiple of 2.3x cost, while the five-year and four-year buckets make up 16% and 13%, respectively, and are held at 2.2x and 1.9x cost, respectively.

General disclaimer and copyright

This report has been commissioned by Standard Life Private Equity Trust and prepared and issued by Edison, in consideration of a fee payable by Standard Life Private Equity Trust. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

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London +44 (0)20 3077 5700

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New York +1 646 653 7026

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United States of America

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Level 4, Office 1205

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NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Standard Life Private Equity Trust and prepared and issued by Edison, in consideration of a fee payable by Standard Life Private Equity Trust. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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