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BMO Private Equity Trust PLC

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 (EMEA) private equity business, known as BMO PE, manages BMO Private Equity Trust PLC through the Manager. BMO PE has been investing continuously in European 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 September 2018, the net assets of the company were £272.4m, giving a Net Asset Value ('NAV') per share of 368.45p, an increase over the quarter of 4.4%.

Hamish Mair, Investment Manager

Market commentary

Just under half of the portfolio by value is invested in the UK. This is the broadest and deepest private equity market in Europe and in most years it is the single largest national market by value and number of deals. The balance of our portfolio is invested largely in Continental Europe with the exception of an enduring and very useful proportion invested in North America and a smaller case by case involvement in selected global funds. As the UK negotiates its exit from the EU and while the precise terms of this are being finalised and ratified the companies in our portfolio are to differing degrees adopting strategies to adjust to the post Brexit world. Prudence requires that investment decisions should be based on a worst case scenario even if that is undesirable and unlikely. Apart from a brief hiatus immediately after the 2016 referendum there has been a 'business as usual' attitude prevailing amongst the private equity market participants in the UK and Europe. The most recent data on the price of private equity deals in Europe suggests that after a steady rise over a number of years there is some sign of flattening in the price of new deals. The relatively lower prices in the mid-market and the lesser use of debt in the capital structure of buyouts remain as distinctive and attractive features of this tier. There is no doubt that economic growth in the UK has been constrained in the run up to Brexit and Continental Europe after years of lagging behind the UK has recently seen slightly higher growth rates, although this varies by country and region. The use of Private Equity as a means of financing the growth of smaller and medium sized companies is increasing steadily across Europe and this coupled with a supportive economic background and the vast number of enterprises which could usefully adopt private equity underpins strong and diverse dealflow. The performance of our portfolio for the year to date provides confidence of further progress for shareholders in the remainder of the year.

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