TIDMSUPP
RNS Number : 7033N
Schroder UK Public Private Tst plc
06 June 2022
Schroder UK Public Private Trust plc
Announcement of Net Asset Value as of 31 March 2022
Schroder UK Public Private Trust plc (the "Company") today
announces its net asset value ("NAV") as of 31 March 2022.
Summary
-- NAV of 39.57p per share as of 31 March 2022, a decrease of
17.7% relative to the NAV as of 31 December 2021 (48.08p per
share).
-- The largest detractor from performance was Oxford Nanopore
which declined 43% in line with its broader market comparables,
despite good underlying progress and material upgrades to its
forward revenue guidance.
-- During the quarter, the Company completed the sale of Seedrs
receiving cash proceeds of GBP12.0 million.
-- Further progress was achieved in repositioning the portfolio
with the eighth and ninth new investments in leading private
businesses, Back Market and Epsilogen.
Introduction
Economic backdrop
Interest rate expectations accelerated at the start of the
quarter as a result of elevated price inflation caused by Russia's
invasion of Ukraine. In turn, the potential for recession in coming
quarters increased. Against this backdrop, the equity markets saw a
marked rotation into large cap defensive stocks, notably commodity
producers, and out of mid-cap and growth stocks - in particular
those not currently generating positive cashflow.
Portfolio composition and valuation reviews
As of 31 December 2021, the Company had 35 portfolio holdings(1)
including 11 quoted holdings and 24 unquoted holdings. During the
period, the number and composition of holdings was impacted by the
following events:
-- New investment in Back Market (incorporated as Jung S.A.S).
-- New investment in Epsilogen Ltd ("Epsilogen")
-- Sale of Seedrs Ltd ("Seedrs")
As of 31 March 2022, the Company ended the period with 36
holdings(1) including 11 quoted holdings and 25 unquoted holdings.
All the Company's quoted holdings were valued using unadjusted
quoted prices. For the unquoted holdings, the Alternative
Investment Fund Manager ("AIFM") considered any material
'triggering' events since the last valuation assessment as of 31
December 2021 and as such conducted four valuation reviews to
determine the fair value of the portfolio as of 31 March 2022.
(1 Excluding 9 holdings with no value.)
Recent developments
On 6 June 2022, the Company announced that the Board of
Directors of Rutherford Health plc ("Rutherford"), a private
oncology provider based in the UK and a portfolio company, has
resolved to take steps to wind-up the company and appoint the
official receiver as liquidator. The Company's holding in
Rutherford was valued at GBP22.8 million as at 31 March 2022. As it
is uncertain if the liquidation process will result in proceeds for
the Company, the Company's AIFM will write-off the book value of
the holding effective as at 6 June 2022, the date of the
announcement of the initiation of the winding-up of Rutherford
Health plc. The write-off will reduce the Company's NAV per share
by 2.5p.
Financial Performance
Attribution Analysis Quoted Unquoted Net (debt)/cash Other NAV
(GBPm)
Value at 31.12.21 243.3 197.6 (2.9) (1.1) 436.9
------- --------- ---------------- ------ -------
+ Investments - 13.1 (13.1) - -
------- --------- ---------------- ------ -------
- Realisations at value (11.6) (12.0) 23.6 - -
------- --------- ---------------- ------ -------
+/- Fair value gains/(losses) (83.5) 5.4 - - (78.1)
------- --------- ---------------- ------ -------
+/- FX gains/(losses) 1.1 1.7 - - 2.8
------- --------- ---------------- ------ -------
+/- Reclassified holdings (21.3) 21.3 - - -
------- --------- ---------------- ------ -------
+/- Costs and other movements - - (2.2) 0.2 (2.0)
------- --------- ---------------- ------ -------
Value at 31.03.22 128.0 227.1 5.4 (0.9) 359.6
------- --------- ---------------- ------ -------
Source: AIFM as of 31 March 2022.
The NAV as of 31 March 2022 was GBP359.6 million or 39.57p per
share reflecting a decrease of 17.7% compared with the NAV as of 31
December 2021.
The quarterly NAV return of -17.7% comprised:
-- Quoted holdings: -19.1%
-- Unquoted holdings: +1.2%
-- Foreign exchange: +0.6%
-- Costs and other movements: -0.4%
Portfolio
The Company's quoted holdings saw a decline in value of 34.3%
contributing -19.1% to the quarterly change in NAV. The most
significant detractor from performance in Q1 was Oxford Nanopore
which declined by 43% over the period, reducing NAV per share by
7.7p. Factors affecting the stock included a broader sectoral
rotation from growth to value stocks, and fears of a potential
stock overhang following the expiry of the post-IPO lockup period
at the end of March. From an operational perspective the company
continued to enhance its technology offering and expanded its
commercialisation capabilities, and at its full year results in
March it made material upgrades to its forward revenue
guidance.
The two other material detractors in the quoted portfolio were
IDEX Biometrics and Immunocore which declined by 40% and 13%
respectively. Both companies continued to deliver on their
commercial plans. IDEX announced the first commercial launch of
bank cards utilising its biosensor technology and expects at least
another 10 launches over the course of 2022. Immunocore received
FDA approval for its lead therapeutic, a landmark which also
provided evidence of effectiveness for Immunocore's wider platform.
However, neither company is currently profitable, and both were
impacted by the wider market rotation from growth to value. We made
a partial realisation of our position in Immunocore during the
quarter.
The Company's unquoted holdings saw an increase in value of 2.7%
contributing +1.2% to the quarterly change in NAV. The only
material change was an uplift in the valuation of BenevolentAI to
account for progress in its business combination with Odyssey
Acquisition S.A. ("Odyssey"), a Euronext Amsterdam-listed
investment company, which completed after the period end. The AIFM
increased the valuation of the holding by GBP7.2 million from
GBP28.5 million as of 31 December 2021 to GBP35.7 million as of 31
March 2022. After the first day of trading on 25(th) April 2022,
the value of the Company's holding was GBP39.6 million (EUR47.1
million) reflecting a further fair value increase of GBP3.9 million
from 31 March 2022. Assuming sufficient secondary market liquidity,
BenevolentAI will henceforth be valued using its unadjusted quoted
price which will be reflected in the Company's daily indicative
unaudited NAV per share.
Foreign Exchange
During the quarter, the fair value of investments denominated in
the United States Dollar (USD), Euro (EUR), Norwegian Krone (NOK),
Swiss Franc (CHF) and Australian Dollar (AUD) benefited from the
depreciation in the relative value of the British pound sterling
(GBP). Overall, changes in foreign exchange rates contributed +0.6%
to the quarterly decrease in NAV.
Cash, debt, and net current assets
As of 31 March 2022, the Company held GBP5.3 million in cash
with the bank overdraft undrawn.
Investment Activity
Realisations
During the quarter, the Company made one full realisation and
two partial realisations totalling GBP23.6 million.
In March 2022, the Company completed the sale of its holding in
Seedrs Limited ("Seedrs") to a global institutional investment
management firm receiving cash proceeds of GBP12.0 million. For
further information on the transaction, investors can refer to the
original announcement made by the Company on the 1st December
2021.
The Portfolio Manager also trimmed two of the Company's quoted
holdings to fund new investments in private companies and repayment
of the bank overdraft.
New Investments
During the quarter, the Company made two new private equity
investments totalling GBP11.5 million.
Back Market
In January 2022, the Company invested EUR12.0 million (GBP10.0
million) in leading renewed electronics marketplace, Back Market
(incorporated as Jung S.A.S.), as part of its $510 million Series E
funding round. The round was led by Sprints Capital, together with
Eurazeo Growth, Aglaé Ventures, General Atlantic, and Generation
Investment Management. The Company invested alongside its
co-investment partner, Sprints Capital, via a single asset fund,
Sprints Capital Ellison LP.
Launched in 2014, Back Market is the leading dedicated renewed
technology marketplace. The company brings high-quality
professionally refurbished electronic devices and appliances to
customers in 16 countries including the United Kingdom, the United
States, France, Germany, Italy, Spain, Belgium, Austria, the
Netherlands, and more recently, Portugal, Japan, Finland, Ireland,
Greece, Slovakia, and Sweden. The Series E round underpins Back
Market's ambitious vision and allows the company to build on its
position as the leading marketplace exclusively dedicated to the
sale of expertly refurbished electronics. Back Market is determined
to make circular technology mainstream by delivering an experience
even better than buying new.
Epsilogen
In March 2022, the Company committed GBP3.0 million to leading
immunoglobulin E ("IgE") antibodies developer, Epsilogen, as part
of its GBP30.75 million Series B funding round. The round was led
by a new investor, Novartis Venture Fund, and joined by new
investors 3B Future Health Fund, British Patient Capital, and
Caribou Property. The new syndicate joins founding Series A
investor Epidarex Capital and Series A investor ALSA Ventures both
of whom also committed further capital in the Series B
fundraising.
Epsilogen is a global leader in the development of
immunoglobulin E (IgE) antibodies to treat cancer. IgE's natural
function is to provide immunological defence against certain
parasites. This functionality makes it an ideal treatment of solid
tumours due to its strong potency, enhanced tumour access and long
tissue half-life. Epsilogen's lead product candidate, MOv18 IgE, is
the first therapeutic IgE antibody to enter the clinic and
encouraging data from a phase I trial demonstrated MOv18 IgE to be
safe and well tolerated with early signs of clinical activity also
seen. Epsilogen is also developing a proprietary IGEGTM antibody
platform combining elements from both IgE and IgG antibodies into
novel and proprietary antibody molecules with enhanced
functionality.
As of 31 March 2022, the Company had invested GBP1.5 million of
its total commitment of GBP3.0 million with the undrawn amount
(GBP1.5 million) expected to be called in two subsequent tranches
in the first quarter of 2023 and in the first quarter of 2024.
Follow-on Investments
During the quarter, the Company made follow-on commitments
totalling GBP1.6 million.
In the second quarter, the Company committed GBP1.5 million to
Rutherford as part of a GBP4.5 million fundraise to extend its
runway while in the process of securing long-term funding. The new
commitment was structured in two equal size tranches with the first
tranche drawn immediately and the second tranche, subject to
certain conditions and at the discretion of the Company,
potentially to be drawn in June 2022. As some of those conditions
were not met, the second tranche of GBP0.75 million was not drawn
and the Company will not make any further investments into
Rutherford. Since Schroders Investment Management plc assumed the
portfolio management of the Company in December 2019, a total of
GBP3.75 million of bridge funding has been invested into Rutherford
as part of a restructuring plan which included the recruitment of a
new leadership team in an effort to preserve some value of the
significant historical investment made by the Company into
Rutherford. While the new leadership team vigorously pursued
multiple options over the last months to save the business, it
could ultimately not correct the inherited severe underlying
challenges in the business.
Top 10
The Company's top 10 holdings as of 31 March 2022 compared with
the respective holding as of 31 December 2021.
Holding Fair value % of total Fair value % of total
as of 31 investments as of 31 investments
December March 2022
2021 (GBP'000) (GBP'000)
Oxford Nanopore 162,641 36.9% 92,754 26.1%
---------------- ------------- ------------ -------------
Atom Bank 46,209 10.5% 44,229 12.5%
---------------- ------------- ------------ -------------
BenevolentAI 28,484 6.5% 35,699 10.1%
---------------- ------------- ------------ -------------
Rutherford Health 21,312 4.8% 22,812 6.4%
---------------- ------------- ------------ -------------
Reaction Engines 12,500 2.8% 12,500 3.5%
---------------- ------------- ------------ -------------
AMO Pharma 11,668 2.6% 12,003 3.4%
---------------- ------------- ------------ -------------
HP Environmental
Technologies Fund 10,677 2.4% 10,677 3.0%
---------------- ------------- ------------ -------------
Revolut 10,115 2.3% 10,405 2.9%
---------------- ------------- ------------ -------------
Back Market - - 10,141 2.9%
---------------- ------------- ------------ -------------
Ada Health 9,905 2.2% 9,969 2.8%
---------------- ------------- ------------ -------------
Source: AIFM as of 31 March 2022.
Outlook
There remains considerable global uncertainty currently with a
variety of headwinds emerging since the start of the year. These
include the Ukraine war which has tragic consequences from a human
perspective but is also having a significant economic impact. There
are material secondary consequences from increases in the costs of
energy, labour and agricultural commodities . We are also seeing a
further lockdown in China because of the re-emergence of Covid and
this continues to exacerbate supply chain disruptions that have
plagued the global economy for the last two years. We continue to
envisage that public markets will be more volatile in the near term
as markets adjust to changing conditions, and this may also have an
impact on the pace of activity in private markets.
The Company continues to be well placed to capitalise on new
investment opportunities in both public and private equity markets,
and in keeping with our recent announcement to shareholders, the
proposed expansion of our investment remit to a global one will
enable the Company to invest into the best opportunities, when
viewed on a risk return basis, no matter where they are in the
world, which enhances and deepens our opportunity set and leverages
the global capabilities and access that Schroders benefits
from.
As indicated in the Chairman's Statement in the annual report,
the board has begun to purchase the Company's own shares for
cancellation. Since 9 May 2022, the Company has bought back a total
of 250,000 shares, all of which will be cancelled, and the board
will continue to utilise the buyback authorities given by
shareholders at the Annual General Meeting to purchase shares.
We are encouraged by the Portfolio's progress over the period
with two new investments in exciting Private Companies in addition
to one realisation and two partial realisations. However, we do not
downplay the macroeconomic challenges highlighted above, and there
are still several stock specific situations in the inherited
portfolio where we continue to focus our time to maximise return
potential. That said, the Company is now in a far more stable
position with capital available to continue to make investments as
we continue to rebalance the portfolio. We are excited about the
prospects for the future now that the hard work put in by the team
since taking over management of the Company is beginning to bear
fruit.
Past performance is not a guide to future performance and may
not be repeated. The value of investments and the income from them
may go down as well as up and investors may not get back the
amounts originally invested. The securities shown above are for
illustrative purposes only and are not to be considered a
recommendation to buy or sell.
Enquiries:
Schroder Investment Management Limited
John Spedding 0207 658 3206
Estelle Bibby (Press) 0207 658 3431
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END
NAVUVRARUSUNRUR
(END) Dow Jones Newswires
June 06, 2022 02:02 ET (06:02 GMT)
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