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Overview

BMO Private Equity Trust PLC is a fund of funds, investing in private equity through making primary commitments, secondary commitments and direct investments. Investments are well-diversified by industry, size of company, geography, stage of development, transaction type and management style.

BMO Private Equity Trust's objective is to achieve long-term capital growth through investment in specialist private equity funds, on a primary and secondary basis, as well as selective co-investments in private companies. The Trust can invest globally across the private equity spectrum but has a bias towards the European mid-market buyout niche.

BMO Private Equity Trust  pays an annual dividend equivalent to not less than 4% of Net Asset Value. The dividend is paid in quarterly payments* in January, April, July and October, funded from a combination of the Trust's revenue and realised capital profits.

*Prior to January 2018, the Trust paid semi-annual dividends.

  • Fund-of-funds, London-listed
  • Investment focus: global with European bias
  • Deal focus: LBO/MEZZ/VC
  • Dividend: yes

Key financials

Manager Overview

The Board has appointed BMO Investment Business Limited (‘the Manager’), a wholly owned subsidiary of BMO Asset Management (Holdings) PLC (‘BMO AM’), as the Company’s investment manager. BMO AM is a wholly owned subsidiary of Bank of Montreal (‘BMO’) and is part of BMO Global Asset Management.

The BMO Global Asset Management private equity business, known as BMO PE, manages BMO Private Equity Trust PLC through the Manager. BMO PE has been investing continuously in private equity for more than 20 years and is a highly experienced specialist private equity business with a team that has a proven ability to identify and access strong performing prime/emerging managers across a range of strategies. Over the years BMO PE has developed a wide network of contacts in the private equity sector. Members of the team hold a number of seats on advisory boards or committees of funds and direct investments. Together they have a broad experience covering direct private equity, smaller companies, international equities and management of performance driven investment vehicles.

As at 30 June 2020, the net assets of the Company were £284.3 million, giving a Net Asset Value (NAV) per share of 384.44p. This takes into account the dividend of 3.92p per share paid on 30 April 2020 and gives a decrease of 4.3% over the quarter. The decrease over the first half of the year is 4.7%.

Hamish Mair, Investment Manager

Market commentary

The second half of the year should provide a stronger economic background as easing of lockdown measures internationally allows economies to pick up. Whilst the trend is one of improvement there remain huge challenges and uncertainties. All but a handful of portfolio companies are adversely affected but the degree of disruption varies considerably across the sectors. Some sectors are adapting much more easily to working from home than others, for example software companies. It is also the case that demand is proving resilient in essentials such as food and healthcare. Companies which rely on experiences such as much of retailing, performing arts and travel are greatly disrupted and face an ongoing crisis. The private equity lead managers have worked very closely with company managements to mitigate as many of the problems as possible and aided by the multiple state support schemes have so far avoided many company failures. The UK accounts for approximately half of our portfolio and the US around 15%. Both countries have seen a relatively high number of cases and have suffered a relatively deep contraction in their economies. The bulk of the balance of the portfolio is invested in Continental Europe, where the progress out of lockdown varies considerably with, for example, the Nordics and Germany so far some way ahead of France, Spain and Italy. It follows that investment activity is quite variable across the Continent. There are undoubtedly likely to be some value opportunities and after careful assessment we expect that towards the end of the year new deal investment will start to recover. Realisations are well down already and, whilst there will be exceptions, we should expect this trend to continue for several months. 

Our portfolio has proved resilient during the first phase of the crisis, principally due to its diversification. Our initial analysis of the requirements for re-financings have so far proved accurate and we remain confident that the Company is well placed to come through the crisis with its portfolio largely intact. It is too early to speculate with any conviction on the timing and size of a recovery in portfolio valuations. Your managers remain focused on preserving value in the short term and on recovery and value building in the long term.

August 2020

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