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Standard Life European Private Equity Trust NAV up 1.3 per cent in Q4 2012

Standard Life European Private Equity Trust’s net asset value (NAV) per ordinary share for the quarter ended 31 December 2012 increased by 1.3 per cent to 230.5p (diluted NAV – 227.7p), from 227.6p at 30 September 2012 (diluted NAV – 224.9p).

 
At 31 December 2012 the company’s net assets were GBP374.0m (30 September 2012 – GBP369.7m).
 
The quarter ended 31 December 2012 saw an increase in new investment and realisation activity in the European private equity market, notably for transactions with an enterprise value over EUR1bn. The value of all new private equity transactions in the European private equity market announced during the quarter was EUR24.6bn (quarter ended 30 September 2012 – EUR13.5bn), of which EUR22.8bn comprised buy-out transactions (quarter ended 30 September 2012 – EUR12.3bn).
 
Distributions received by the company during the quarter ended 31 December 2012 were GBP17.3m (quarter ended 30 September 2012 – GBP32.0m) and the company funded GBP15.4m of draw downs (quarter ended 30 September 2012 – GBP15.9m). The distributions received by the company generated net realised gains and income of GBP9.3m. In addition, the company incurred a book loss of GBP6.5m on the commencement of the liquidation process for two older funds, Alchemy Investment Plan and the Candover 1997 Fund, where all of the underlying investments have been realised. Importantly, the book loss had previously been provided for in the company’s valuation of the respective fund interests.
 
The closing value of the company’s portfolio of 39 private equity fund interests was GBP370.4m at 31 December 2012 (30 September 2012 – 37 fund interests and GBP365.9m). Total net unrealised gains on the portfolio for the quarter were GBP3.6m, of which GBP1.6m were net unrealised losses on a constant exchange rate basis and GBP5.2m were net unrealised foreign exchange gains. During the quarter ended 31 December 2012 sterling depreciated by 1.8 per cent against the euro and appreciated by 0.7 per cent against the US dollar.
 
In line with the company’s investment strategy, a new commitment of EUR20.0m was made to Advent Global Private Equity VII in November 2012 and one of EUR30.0m was made to IK VII in December 2012. The company has invested in prior funds of each of the respective managers. At 31 December 2012 the company had aggregate outstanding commitments of GBP154.7m (30 September 2012 – GBP129.0m).
 
At 31 December 2012 the company had a net cash balance of GBP3.1m (30 September 2012 – net cash balance of GBP3.5m).
 
On 31 December 2012 the company announced that it had entered into a new GBP80m revolving credit facility, led by The Royal Bank of Scotland plc, replacing the company’s existing debt facility. The new debt facility expires on 31 December 2016.
 
During January 2013 the company completed the purchase of an original commitment of EUR7.0m to Charterhouse Capital Partners IX, a fund the company was not able to commit to when it was raised in 2009. The fund interest was acquired at a five per cent discount to the 30 June 2012 valuation of the fund, adjusted for subsequent cashflows. The purchase price for the interest was GBP2.8m and the company assumed GBP2.8m of outstanding commitments.
 
As part of a portfolio rebalancing exercise, and given the significant exposure to the fund and its underlying investments, the company also completed the sale of 50 per cent of its original commitment to Charterhouse VIII in February 2013. The fund interest was sold at an 11 per cent discount to the 30 September 2012 valuation of the fund, adjusted for subsequent cashflows. The sale price for the interest was GBP16.3m and the company was released from GBP3.5m of outstanding commitments.
 
Excluding the above secondary transactions, during the period from 1 January to 18 March 2013 the company received GBP4.5m of distributions and funded GBP2.3m of draw downs. At 18 March 2013 the company had a net cash balance of GBP16.0m.
 
Finally, the company made a new commitment of USD35m to TowerBrook Investors IV in February 2013. Again the company has invested in prior funds of the manager. Accordingly, at 18 March 2013 the company had aggregate outstanding commitments of GBP182.9m.

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