The Royal Bank of Scotland has recommended JP Morgan Private Equity in its weekly research publication covering alternative investment funds.
JP Morgan Private Equity announced its first quarter results this week, which showed its net asset value increased 4.7 per cent over the three months to 31 March.
Greg Getschow, JP Morgan Private Equity’s co-portfolio manager, says: “While M&A activity is increasing in the US and Europe, activity is more pronounced in Asia, which fits well with JPEL’s core strategy to seek out assets that have the potential for exits, or cash flow events, within an 18 to 24 month timeframe. Underlying portfolio companies in developing countries typically carry less leverage, and so secondary market discounts may be more meaningful. Over the past two quarters, JPEL’s exposure to Asian private equity assets has increased from ten per cent to 17 per cent, making this one of the most ‘global’ portfolios in our fund of funds peer group.”
JP Morgan Private Equity continues to take advantage of its strong balance sheet and cash reserves to acquire assets in the private equity secondaries market at prices below intrinsic value.
According to this week’s announcement, over 1Q10 JP Morgan Private Equity completed two acquisitions (one fund and one direct), investing USD12.6m of capital for approximately USD35.2m of NAV, representing an average discount of 64.4 per cent to NAV.
The two assets in question are both in emerging markets, which is an area of interest for JPEL at the moment. Beacon India Private Equity Fund is an India-focused growth capital private equity fund sponsored by Baer Capital Partners, and is diversified with company holdings in the energy, real estate and consumer retail industries. China Media Enterprises is an outdoor advertising company in Hong Kong and China, and according to JP Morgan Private Equity “generates significant cash flow.”
JP Morgan Private Equity recorded the smallest drawdown, and so stands apart from the peer group on a two-year basis, says RBS.
