Last close As at 05/08/2026
GBP6.14
— 0.00 (0.00%)
Market capitalisation
GBP898m
Research: Investment Companies
Patria Private Equity Trust (PPET) has announced that it has completed a secondary sale of a portfolio of 14 older vintage and non-core investments for c €216m (c £180m or 13% of PPET’s end-August 2024 NAV). This represents a minor 5% discount to the carrying value of the sold assets at end-March 2024 (H124) and translates into a robust 1.9x multiple on invested capital and a 16% internal rate of return (IRR). We consider this good news for PPET for several reasons. The sale should allow the trust to repay part, or all, of the currently drawn portion of its credit facility within the next 12 months. It should also provide PPET with additional dry powder for new investments and dividends or buybacks and streamline its portfolio to increase its focus on the private equity (PE) mid-market.
Patria Private Equity Trust |
Completes a successful £180m secondary sale |
Investment trusts |
24 October 2024 |
Analyst
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Patria Private Equity Trust (PPET) has announced that it has completed a secondary sale of a portfolio of 14 older vintage and non-core investments for c €216m (c £180m or 13% of PPET’s end-August 2024 NAV). This represents a minor 5% discount to the carrying value of the sold assets at end-March 2024 (H124) and translates into a robust 1.9x multiple on invested capital and a 16% internal rate of return (IRR). We consider this good news for PPET for several reasons. The sale should allow the trust to repay part, or all, of the currently drawn portion of its credit facility within the next 12 months. It should also provide PPET with additional dry powder for new investments and dividends or buybacks and streamline its portfolio to increase its focus on the private equity (PE) mid-market.
Disposal price underpins PPET’s portfolio valuations
The small discount at which the secondary sale was agreed (which is already reflected in PPET’s end-August 2024 NAV, according to press reports) is well below the 31% discount to NAV at which PPET’s shares are now traded. This holds true even if we account for the fact that PPET will receive the consideration in two tranches: around 45% in December 2024 and 55% in September 2025. Notably, 10 of the 14 sold fund investments (making up c 50% of the deal value) are older vintages (2011–16), which are typically subject to wider discounts in the PE secondary markets. For example, buyout funds with 2011 and older vintages traded at a 31% discount to NAV in H124, according to the last Jefferies Global Secondary Market Review. The average discount to NAV across all limited partner-led secondary buyout deals (of which nearly 80% by volume were for 2017 or newer vintages) was 6%. Therefore, we believe that the price of PPET’s transaction reflects its prudent approach to valuing its assets.
Sharpened focus on the European PE mid-market
The other half of the deal value is attributable to fund investments with 2017–19 vintages, which were weighted to large-cap buyouts that have become non-core for PPET. This enables the trust to further shift its portfolio weighting to the PE mid-market, which we believe offers several potential advantages outlined in our March 2024 note. The IRR generated on the sold fund investments is broadly in line with the 15.44% 10-year horizon pooled net return for US private equity, as calculated by Cambridge Associates as of Q124.
Significantly improving its balance sheet headroom
The secondary transaction gives PPET more balance sheet flexibility as it now has £333m in short-term resources (cash, the undrawn part of the credit facility and the deferred consideration), comfortably covering 53% of PPET’s outstanding investment commitments. The deal consideration exceeds the entire drawn amount on PPET’s credit facility (£142.3m or c 47% of the facility’s total size at end-August 2024). This should allow the trust to partly or fully repay its credit facility and/or drive further investments, while supporting its shareholder returns policy. Alternatively, in a scenario of net capital calls from PPET’s fund investments due to a continued subdued PE exit environment, it will provide PPET with an additional cash runway.
|
|
Research: TMT
Datatec’s H125 results confirmed improved profitability in each division, resulting in a 56% y-o-y increase in underlying EPS to 11.4c. Group revenue declined 5.5% y-o-y, mainly reflecting a shift towards net revenue- reported software, but gross profit increased 3.5% due to a better product mix. Combined with good cost control, adjusted EBITDA increased by 18.5% y-o-y, resulting in a 0.9pp increase in the adjusted EBITDA margin to 4.1%. The group closed H125 with net debt of $108m, down from $123m at the end of FY24. Despite softer European markets, the company expects all divisions to report improved financial performance in FY25. We are reviewing our forecasts.