Foxtons Group — Deals’ benefits matched by tax rise

Foxtons Group (LSE: FOXT)

Last close As at 03/12/2024

GBP0.63

3.40 (5.67%)

Market capitalisation

GBP193m

More on this equity

Research: Real Estate

Foxtons Group — Deals’ benefits matched by tax rise

Foxtons Group’s recent acquisition of estate agents in two London commuter towns highlights the outer-London potential for low-risk, value-added expansion. Furthermore, it adds to the developing success of the company’s strategic vision and implies that medium-term targets are now coming into focus. We have updated our forecasts for the deals, but additional profit from the acquisitions is broadly matched by the increase in employer’s National Insurance costs, hence we retain our valuation of 134p/share and believe that falling interest rates and property market stability are contributing to a buoyant sales market.

Andy Murphy

Written by

Andy Murphy

Director, Financials & Industrials

Real Estate

Foxtons Group

Deals’ benefits matched by tax rise

M&A update

Real estate

28 November 2024

Price

58p

Market cap

£176m

Net debt at 30 June 2024

£11.3m

Shares in issue

303.5m

Free float

100%

Code

FOXT

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(4.0)

(10.8)

30.2

Rel (local)

(4.1)

(9.8)

17.2

52-week high/low

71.0p

42.7p

Business description

Foxtons Group is London’s leading and most widely recognised estate agency. It operates from a network of 64 interconnected branches offering a range of residential-related services, which break down into three separate revenue streams: lettings, sales and financial services.

Next events

FY24 trading update

End January 2025

Preliminary results

March 2025

Analyst

Andy Murphy

+44 (0)20 3077 5700

Foxtons Group is a research client of Edison Investment Research Limited

Foxtons Group’s recent acquisition of estate agents in two London commuter towns highlights the outer-London potential for low-risk, value-added expansion. Furthermore, it adds to the developing success of the company’s strategic vision and implies that medium-term targets are now coming into focus. We have updated our forecasts for the deals, but additional profit from the acquisitions is broadly matched by the increase in employer’s National Insurance costs, hence we retain our valuation of 134p/share and believe that falling interest rates and property market stability are contributing to a buoyant sales market.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/22

140.3

13.7

3.0

0.9

19.3

1.6

12/23

147.1

15.2

2.9

0.9

20.0

1.6

12/24e

160.2

19.5

3.7

1.3

15.7

2.2

12/25e

178.5

23.6

4.5

1.6

12.9

2.8

Note: *PBT is normalised, excluding amortisation of acquired intangibles, exceptional items, discontinued business and share-based payments. EPS is similar but after charging for share-based payments and excluding deferred tax re-measurement attributable to the corporate tax charge (ie diluted company definition).

Acquisitions in London commuter towns

At the end of October, Foxtons announced its latest acquisitions, in line with its strategy and followed a well-trodden path of enhancing deals over the last five years. Firstly, the purchase of Haslams Estate Agents for a total initial consideration of £7.6m, and secondly, the purchase of Imagine Property for £5.0m. Both deals reflect further progress against the group’s strategy to acquire high-quality, lettings-focused businesses that offer growth and synergy benefits. The company expects both revenue and cost synergies to boost the top and bottom lines of the acquired businesses, as well as further consolidation opportunities.

Strategic progress continues to be made

Foxtons’ strategy strives to return the company to its former position as London’s go-to estate agent. This includes growing non-cyclical and recurring revenues, which currently stand at approximately two-thirds of group revenue, targeting operating profit of £25–30m and achieving an operating margin of more than 15%. The company has made significant progress, with unprecedented investment in staff training and retention, as well as developing proprietary IT and data systems which aim to put Foxtons ahead of its competition. Market share is growing and, in sales in particular, is already ahead of target.

Valuation: Unchanged despite enhancing deals

Despite the addition of the two value-enhancing acquisitions, our adjusted operating profit forecast is unchanged because the deals coincided with the UK budget, which saw a significant increase in employers’ National Insurance contributions. This £2.0m tax rise neatly and completely offsets the benefits of the deals, hence we retain our operating profit forecasts as well as our 134p/share valuation. Earlier this year, Foxtons revised its dividend policy, which points to progression potential, with payments at least in line with FY23.

Latest M&A augments management action

Foxtons’ most recent acquisitions follow a comfortable pattern set by the business over the last five years of one to two deals each year and investing c £12m pa, largely in businesses that are heavily focused on recurring lettings revenue. This time, the acquired operations are in London commuter towns, and open up new, low-risk geographies as springboards for future expansion. These deals are unlikely to be the last that Foxtons undertakes as it continues to expand and improve the quality of earnings in line with its strategy. Unfortunately, the increase in employers’ National Insurance contributions wipes out the financial benefit of the acquisitions and so we retain our 134p valuation.

M&A continues like clockwork

At the end of October, Foxtons announced its latest acquisitions, which were in line with its strategy and followed a well-trodden path of enhancing deals over the last five years. It completed the purchase of Haslams Estate Agents for a total consideration of £7.6m, plus £2.4m in contingent deferred consideration, and purchased Imagine Property for £5.0m in initial consideration, plus £1.0m in a deferred payment.

Exhibit 1: Foxtons M&A history, last five years

Target

Date

Initial consideration (£m)

12-month
revenue (£m)

Location

Sales multiple (x)

Tenancies acquired

Comment

London Stone

1/3/20

2.0

1.5

Woolwich

1.3

687

Lettings and property management

Pillars Estates

Oct 2020

0.2

-

-

-

224

Companies House micro company accounts

Aston Rowe

23/11/20

2.0

1.1

Acton and Brook Green

1.8

689

Branches and sales activities retained by Aston Rowe

2020 total

4.2

2.6

-

1,600

Douglas & Gordon

1/3/21

15.3

16.5

Central, South and West

0.9

2,900

Branches and sales activities retained by vendor

2021 total

15.3

16.5

-

2,900

Gordon & Co

May 2022

8.4

4.0

South London

2.1

2,000

70% of revenue from lettings and financial services

Stones Residential

May 2022

2.2

1.3

Stanmore

1.7

500

70% of revenue from lettings and financial services

2022 total

10.6

5.3

-

-

2,500

Atkinson McLeod

Mar 2023

7.4

3.1

East London

2.4

1,100

90% of revenue from lettings

Ludlow Thompson

Nov 2023

10.0

7.3

City, Docklands, South London

1.4

1,700

70% of revenue from lettings. Seven branches

2023 total

17.4

10.4

2,800

Haslams

29/10/24

7.6

6.5

Reading

1.2

1,700

Plus £2.4m deferred. Lettings is c 60% of revenue

Imagine Property Group

29/10/24

5.0

3.3

Watford

1.5

1,200

Plus £1.0m deferred. Lettings is c 60% of revenue

2024 total

12.6

9.8

-

2,900

Total since 1 Jan 2020

60.0

44.6

1.3

9,800

Source: Foxtons Group, Edison Investment Research

Both deals reflect further progress against the group’s strategy to acquire high-quality, lettings-focused businesses that offer growth and synergy benefits. Both acquired operations (Haslams in Reading and Imagine Property in Watford) open new markets for Foxtons and each generates approximately 60% of total revenues from recurring lettings activity. The deals build on Foxtons’ previous success in the London commuter towns of Guildford and Woking.

In addition, the two acquisitions are the largest lettings and sales agents in their core markets and each brings three branches to the portfolio, increasing the total number of Foxtons branches in London and the South East to 64. They also bring a total of c 2,900 tenancies (Haslams: c 1,700 and Imagine: 1,200) to Foxtons, increasing the total portfolio to more than 31,000 tenancies, up from approximately 19,800 at the start of 2020.

In the 12 months to December 2023, Haslams generated revenue of £6.5m with an operating profit of £0.8m, and was bought on a cash- and debt-free basis with the deferred consideration contingent on the delivery of performance targets. Imagine generated revenue of £3.3m with an operating profit of £0.5m and was bought on similar terms to Haslams. The deals represent trailing multiples of 1.2x and 1.5x revenue, respectively, which we believe is consistent with Foxtons’ previous deals.

The company expects revenue and cost synergies that will boost both the top and bottom lines of the acquired businesses, as well as further opportunities to consolidate the surrounding markets.

M&A benefits wiped out by UK budget tax increase

The deals will be financed from Foxtons’ existing facilities, which will see net debt increase from c £5.0m at the end of December 2024 to c £14.3m, well within existing facilities and covenant constraints. We estimate that net debt will decline to c £4.7m by the end of FY25, compared to our previous forecast of a net cash position.

The deals will only have a limited impact on FY24 revenue and adjusted operating profit, given the seasonality of estate agency and the fact that it is towards the end of the year. However, we estimate that the deals will add c 5.7% to revenue in FY25. Unfortunately, the well-publicised increase in employers’ National Insurance contributions wipes out all of the anticipated benefit of the acquisitions to our FY25 adjusted operating profit estimate, which remains at £20.8m. This implies that Foxtons remains on track to achieve its medium-term target of £25–30m in adjusted operating profit, but unfortunately it is not as close as it would have hoped when the deals were struck.

Exhibit 2: Revised forecasts

FY23

FY24e

FY25e

£m

Old

New

Change (%)

Old

New

Change (%)

Revenue

147.1

159.7

160.2

0.3%

168.9

178.5

5.7%

y-o-y growth (%)

4.9%

-

8.9%

-

11.4%

-

Adjusted operating profit

14.3

17.9

17.9

-0.1%

20.8

20.8

0.0%

y-o-y growth (%)

1.1%

-

25.4%

-

16.1%

-

Reported PBT

7.9

15.2

15.2

-0.7%

18.5

18.3

-1.2%

y-o-y growth (%)

-37.9%

-

92.0%

-

20.8%

-

EPS (p) – company definition

2.9

3.7

3.7

-0.7%

4.5

4.5

-1.2%

y-o-y growth (%)

-0.9%

-

28.6%

-

20.8%

-

DPS (p)

0.9

1.3

1.3

-0.7%

1.6

1.6

-1.2%

y-o-y growth (%)

0.0%

-

44.1%

-

20.8%

-

Net (debt)/cash (pre-IFRS 16, ie ex-lease liabilities)

(6.8)

(5.0)

(14.3)

-185.1%

7.5

(4.7)

-162.5%

y-o-y growth (%)

-155.9%

-

110.8%

-

-67.2%

-

Source: Foxtons Group, Edison Investment Research


Exhibit 3: Financial summary

£m

2019

2020

2021

2022

2023

2024e

2025e

2026e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

106.9

93.6

126.5

140.3

147.1

160.2

178.5

185.7

EBITDA

 

 

13.5

15.7

25.1

27.8

30.0

35.2

39.0

43.7

Normalised operating profit

 

 

0.6

3.8

12.1

15.6

17.1

22.2

26.0

30.7

Amortisation of acquired intangibles

(0.6)

(0.8)

(1.7)

(1.6)

(1.8)

(2.4)

(3.3)

(3.0)

Share-based payments

(0.7)

(1.0)

(1.5)

(0.2)

(1.0)

(2.0)

(2.0)

(2.0)

Total adjusted operating profit

(0.7)

1.9

8.9

13.9

14.3

17.9

20.8

25.8

Exceptionals

(5.7)

(1.1)

(1.4)

(0.1)

(4.5)

0.0

0.0

0.0

Reported operating profit

(6.3)

0.8

7.6

13.8

9.8

17.9

20.8

25.8

Net Interest

(2.4)

(2.2)

(2.0)

(1.9)

(1.9)

(2.7)

(2.4)

(2.2)

Exceptionals

(0.1)

(0.0)

(0.0)

(0.0)

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

(1.9)

1.6

10.0

13.7

15.2

19.5

23.6

28.6

Profit Before Tax (reported)

 

 

(8.8)

(1.4)

5.6

11.9

7.9

15.2

18.3

23.6

Reported tax

1.0

(1.8)

(6.9)

(2.4)

(2.4)

(3.8)

(4.6)

(5.9)

Discontinued operations

0.0

0.0

(4.8)

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

(0.9)

(0.2)

(1.7)

11.4

12.8

15.7

19.0

22.7

Net income (reported)

(7.8)

(3.2)

(6.2)

9.6

5.5

11.4

13.7

17.7

Basic average number of shares outstanding (m)

275

314

324

308

302

302

302

302

EPS - basic normalised (p)

 

 

(0.32)

(0.08)

(0.52)

3.69

4.23

5.20

6.29

7.50

EPS - basic reported (p)

 

 

(2.83)

(1.02)

(1.90)

3.11

1.82

3.76

4.55

5.86

EPS - continuing, diluted, and adjusted. Company def. (p)

 

 

(1.06)

(0.16)

1.98

3.00

2.88

3.71

4.48

5.77

Dividend (p)

0.00

0.00

0.45

0.90

0.90

1.30

1.57

2.02

Revenue growth (%)

(4.1)

(12.5)

35.2

10.9

4.9

8.9

11.4

4.0

EBITDA Margin (%)

12.6

16.8

19.9

19.8

20.4

22.0

21.8

23.6

Normalised Operating Margin (%)

0.5

4.1

9.5

11.1

11.6

13.9

14.6

16.6

BALANCE SHEET

Fixed Assets

 

 

178.7

173.4

184.4

191.7

214.2

215.6

209.7

200.6

Intangible Assets

101.0

103.5

107.3

109.3

114.9

116.0

117.1

118.2

Goodwill

9.3

11.4

17.7

26.1

40.7

40.7

40.7

40.7

Tangible Assets

13.0

10.5

9.7

10.7

9.5

22.8

28.9

31.7

Right of use assets

51.4

44.4

43.8

42.6

42.5

29.5

16.5

3.5

Contract assets

0.6

0.4

0.9

1.7

4.7

4.7

4.7

4.7

Investments & other

3.3

3.1

5.1

1.4

1.9

1.9

1.8

1.8

Current Assets

 

 

30.2

52.6

39.3

34.5

37.1

33.0

45.0

63.0

Contract assets

1.0

1.7

3.7

5.7

14.3

14.3

14.3

14.3

Debtors

13.4

13.9

16.0

16.0

17.4

20.8

23.2

24.1

Cash & cash equivalents

15.5

37.0

19.4

12.0

5.0

(2.5)

7.1

24.2

Other

0.3

0.1

0.3

0.7

0.5

0.5

0.5

0.5

Current Liabilities

 

 

(27.9)

(29.2)

(31.9)

(38.7)

(57.1)

(51.6)

(53.2)

(53.7)

Creditors

(10.5)

(10.3)

(14.5)

(16.7)

(21.3)

(16.0)

(17.9)

(18.6)

Lease liabilities

(9.7)

(10.8)

(8.8)

(10.7)

(10.7)

(10.7)

(10.7)

(10.7)

Short term borrowings

0.0

0.0

0.0

0.0

(11.7)

(11.7)

(11.7)

(11.7)

Contract liabilities

(6.3)

(7.7)

(8.2)

(9.7)

(11.8)

(11.8)

(11.8)

(11.8)

Other

(1.4)

(0.4)

(0.3)

(1.5)

(1.6)

(1.4)

(1.1)

(0.9)

Long Term Liabilities

 

 

(65.2)

(62.4)

(68.4)

(64.9)

(68.6)

(59.4)

(49.8)

(40.3)

Lease liabilities

(46.2)

(40.7)

(39.3)

(35.8)

(36.9)

(27.7)

(18.1)

(8.6)

Contract liabilities

(1.3)

(1.1)

(1.1)

(0.3)

(0.4)

(0.4)

(0.4)

(0.4)

Other long term liabilities

(17.8)

(20.6)

(28.0)

(28.8)

(31.3)

(31.3)

(31.3)

(31.3)

Shareholders' equity

 

 

115.8

134.5

123.5

122.7

125.6

137.6

151.7

169.6

CASH FLOW

Op Cash Flow before WC and tax

(2.6)

4.3

6.6

15.0

11.6

20.2

24.0

28.7

Depreciation - Right of use assets

9.8

9.4

10.6

12.2

12.9

13.0

13.0

13.0

Branch asset impairment and goodwill

4.3

1.7

4.3

(0.3)

3.4

0.0

0.0

0.0

Gain on disposal of PPE etc

(0.4)

(0.5)

(1.4)

(0.3)

0.2

(0.5)

(0.5)

0.5

Working capital

(2.6)

(0.6)

1.7

(1.2)

(10.8)

(8.7)

(0.5)

(0.2)

Decrease in provisions

0.8

(0.8)

0.2

1.1

(0.5)

(1.0)

(1.0)

(1.0)

Share based payment charges

0.7

1.0

1.5

0.2

1.0

2.0

2.0

2.0

Cash settlement of share incentive plan

(0.4)

0.0

0.0

(0.0)

0.0

(0.5)

(0.5)

(0.5)

Tax

0.2

0.2

(0.2)

(2.7)

(2.2)

(3.8)

(4.6)

(5.9)

Net operating cash flow

 

 

9.8

14.7

23.5

23.9

15.7

20.8

31.9

36.6

Capex

(0.3)

(0.4)

(1.7)

(2.9)

(2.1)

(1.9)

(2.0)

(2.1)

Acquisitions/disposals

(0.2)

(3.9)

(14.5)

(9.6)

(15.5)

(11.5)

(4.2)

(0.8)

Net interest

0.0

0.0

(0.0)

0.1

0.1

(0.2)

(0.2)

0.1

Dividends

0.0

0.0

(0.6)

(1.5)

(2.7)

(2.7)

(3.9)

(4.7)

Repayment of lease liabilities

(12.0)

(10.0)

(15.2)

(12.7)

(12.5)

(12.0)

(12.0)

(12.0)

Purchase of own shares

(0.1)

(0.3)

(5.7)

(4.9)

(1.1)

(0.3)

(0.3)

(0.3)

Net proceeds from issue of ord. Shares

0.0

21.1

0.0

0.0

0.0

0.0

0.0

0.0

Other

0.3

0.3

0.3

(3.4)

0.2

0.3

0.3

0.3

Net Cash Flow

(2.4)

21.5

(13.9)

(11.1)

(17.9)

(7.5)

9.6

17.1

Opening net debt/(cash) (ex-lease liabilities)

 

 

(17.9)

(15.5)

(37.0)

(23.1)

(12.0)

6.8

14.3

4.7

Closing net debt/(cash) (ex-lease liabilities)

 

(15.5)

(37.0)

(23.1)

(12.0)

6.8

14.3

4.7

(12.4)

Source: Foxtons Group, Edison Investment Research

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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

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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.

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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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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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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Partners Group Private Equity — Seeing good demand for several of its assets

Partners Group Private Equity’s (PGPE’s) recent portfolio realisation efforts (supported by the gradual pick-up in M&A activity and an opening IPO window) included, most notably, the sale of SRS Distribution earlier this year (see our September 2024 note for details) and more recently Techem (3.8% of end-Q324 NAV, sold to a trade buyer in October 2024), as well as the successful IPO pricing of Galderma in March and KinderCare in October. The positive valuation effects from these activities (21% weighted average uplift to latest published NAV) were coupled with a 5.1pp contribution to portfolio performance in 9M24 from earnings growth (average 11% increase in last 12-month EBITDA across top 20 holdings) and a slight 1.2pp tailwind from peer multiples. This was partly offset by an increase in portfolio net debt amid several debt package refinancings at a lower spread to strengthen capital structures and in turn support growth. Moreover, the Q324 return was affected by a weakening US dollar, which makes up c 40% of the portfolio’s exposure by currency (although these FX headwinds have more than reversed so far in Q424). As a result, the company posted a moderate 3.1% NAV total return (TR) in 9M24.

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