MONTHLY REPORT
JANUARY 2021
PARETURN BARWON
LISTED PRIVATE
EQUITY FUND
Performance Report at 31 January 2021
Class I - Euro 1 Month 3 Months 1 Year 3 years p.a. 5 years p.a. ITD p.a.* Net Return to Investors 0.9% 19.6% 6.3% 9.8% 12.1% 12.8%
Unit Price at 31 January 2021 400.06
* Inception date 30 November 2012
Class G - GBP 1 Month 3 Months 1 Year 3 years p.a. 5 years p.a. ITD p.a.* Net Return to Investors -0.6% 16.7% 10.1% 9.6% 14.8% 13.7%
Unit Price at 31 January 2021 342.96
* Inception date 04 December 2012
Class U - USD 1 Month 3 Months 1 Year 3 years p.a. 5 years p.a. ITD p.a.* Net Return to Investors -0.2% 22.9% 14.1% 8.6% 14.5% 9.6%
Unit Price at 31 January 2021 405.40
* Inception date 17 June 2013
Fund Size: €11 million.
The Pareturn Barwon Listed Private Equity Fund (Class I - Euro) returned 0.9% for the month of January 2021, and since inception the Fund has generated a net return of 12.8% p.a.
Market Commentary
Contributors over the month included ADT Inc (USD +15.0%%), PennantPark Investment Corp (USD +12.8%), SolarWinds Corp (USD +12.4%) and HgCapital Trust plc (GBP +5.9%). The largest detractors to performance in January were Onex Corp (CAD -7.2%), Brookfield Asset Management Inc (USD -5.9%) and KKR & Co (USD -3.8%).
Barwon has been managing strategies in the listed private equity sector since May 2007. Barwon Investment Partners is an investment management company specialising in private equity and real estate.
JANUARY 2021 2
Early reports of fourth quarter 2020 private equity NAVs have been very encouraging and confirm the continuation of positive valuation trends to round out the roller coaster year. PE NAVs are up between 5-15% in the fourth quarter, and delivered 10%-20% gains over the full year. In the most recent quarter, the biggest contributors to NAV returns were the most heavily Covid-19-impacted investments, some of which have been able to re-open for business, but most of which have had access to capital where needed and remain positioned to capitalise on the eventual re-opening for business.
The resumption of private equity transactions, which initially started in resilient healthcare and technology businesses, has moved into some of the hardest hit sectors. Examples include:
▪ Blackstone acquiring the largest UK caravan park operator, Bourne Leisure.
▪ The Apollo-led debt restructuring for global car hire company Hertz.
▪ The acquisition by Brookfield of American department store chain JCPenney out of bankruptcy, rescuing the 100-plus year-old group from liquidation.
Moreover, recent sales of PE investments or listings on public markets have been at valuations materially above their carrying value which suggests that managers continue to value PE investments conservatively and have not rushed to aggressively mark assets back up. Despite one of the weakest corporate earnings quarters on record in Q1 2020, default rates have remained lower than what one might have expected. The majority of corporate failure to date has been concentrated in the oil & gas and retail sectors. As the chart below shows, bankruptcies in the United States remain well below previous levels.
Bankruptcies in the United States
Data: 31/01/2005 to 31/01/2021
The abundance of liquidity in capital markets and aggressive government intervention has assisted in keeping rates of corporate failure low through the recent disruption. Given the magnitude of disruption in sectors such as retail, transportation and energy, we believe there will still be an upcoming pipeline of distressed opportunities for PE managers that will materialise over time rather appearing in a big wave.
The pandemic has led to extraordinary dispersion of returns across sectors. Despite the improving outlook, it remains to be seen how much of the lifestyle changes driven by the pandemic become permanent. We believe it will be a complex mixture and believe it is prudent to maintain a diversified exposure to sectors and businesses that have been resilient, and those still waiting for a rebound.
Other key investment themes of PE managers, now controlling record dry powder of US$888bn1 for buyouts globally, include:
▪ Carveouts from larger corporates looking to shed non-core businesses, build liquidity and position for a post-COVID operating environment;
▪ Acquiring complementary businesses to a larger ‘platform’ investment to grow market share and improve business resilience;
▪ Companies with the potential for operational improvement, particularly in the areas of digitisation of services and operations which require expertise and capital to implement; and,
Thematic investments backing longer term growth trends in industries and sectors such as logistics, life sciences, healthcare, industrial automation etc.
JANUARY 2021 4
Underlying Investment Exposures on a Look-Through Basis
5 Largest Holdings by Weight
Company Type
Blackstone Group Inc Alternative Asset Manager KKR & Co Inc Alternative Asset Manager Oakley Capital Investments LTd Buyouts
PennantPark Investment Corp Private Debt
Eurazeo Buyouts
Investment Classification
Buyouts 32%
PE Backed 6%
Alternative Asset Manager 31%
Private Debt 23% Liquidity 8% Total 100% Geographic Exposure North America 67% Europe 27% Other 6% Total 100% Vintage Year Pre 2015 22% 2015 10% 2016 19% 2017 17% 2018 20% 2019 11% 2020 1% Total 100% Currency Exposure USD 63% EUR 24% GBP 9% Other 4% Total 100%
DISCLAIMER While every care has been taken in the preparation of this document, Barwon Investment Partners Pty Limited ABN 19 116 012 009 AFSL 298445 makes no representation as to the accuracy or completeness of any statement in it, including
For More Information
Sam Armstrong (sam.armstrong@barwon.net.au) or Kate Hayward (kate.hayward@barwon.net.au)
Contact Us P +61 2 9216 9600
Barwon Investment Partners Level 10, 17 Castlereagh Street Sydney NSW 2000 Australia
Key Information
Strategy High conviction, value-orientated, bottom-up stock selection. Long-only, unlevered, benchmark unaware Structure Luxembourg-domiciled SICAV authorised as a UCITS
Management Company MDO Services SA
Delegate Investment Manager Barwon Investment Partners Pty Ltd
Share Classes, ISIN
Class I, Distribution, EUR - LU0856658553 Class G, Distribution, GBP - LU0856664106 Class U, Accumulation, USD - LU0940438756
Bloomberg Ticker
Class I, PARBLPI Class G, PARINDG Class U, PARUIUC
Pricing and Dealing Daily
Minimum Investment
Class I, €6,000 Class G, £5,000 Class U, $8,000
Income Distributions Annual for distributing classes
Entry / Exit Fees None
Management Fee 0.65%
Performance Fee Performance fee is 15% above the performance hurdle of 12% per annum over rolling 2.5-year period
Barwon Investment Partners is a Sydney based alternatives investment manager specialising in private equity and property. We have a successful track record of over 10 years of investing in listed private equity.
Other Information
Barwon also manages the Barwon Global High Income Fund, an Australian domiciled unit trust.
