Partners Group Private Equity Limited (PEY) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Princess Private Equity Holding Q2 2022 Investor Conference Call and Live Webcast. I'm Ored, the Chorus Call operator. [Operator Instructions] And the conference has been recorded. The presentation will be followed by a Q&A session. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Felix Haldner. Please go ahead, sir.

Good morning, ladies and gentlemen. A warm welcome to today's webcast. As you know, I'm a partner with Partners Group and a Director with Princess Private Equity Holding. And I'd like to give you an update on what happened in the last quarter, the first half year and some of our views as to going forward. As a reminder, the company, Princess Private Equity Holding, provides shareholders with an exposure through the direct private equity transaction flow of the manager of Partners Group. And whilst Princess invests predominantly in transactions that are led by Partners Group, it has also the ability to make so-called co-investments alongside other managers/general partners. We have very much a kind of a thematic investment approach whereby we identify companies that enjoy the tailwinds, and then we lead them through a transformation. We built then companies through what we call platform building and business transformation. And whilst doing so, we fully integrate ESG factors in the investment process. And I'm happy that in the course of the presentation, we'll make a deep dive on what we are doing specifically. The company is managed by Partners Group, a leading global private markets firm, that has invested over EUR 94 billion in private equity across market cycles. And there are more than 170 direct private equity professionals, supported by a large network of industry experts and so-called operating directors with deep industry expertise. The objective of Princess is to generate long-term capital growth and an attractive dividend yield. So NAV total return stood at 9.9% per annum over the last 10 years. The share price total return stood at EUR 14.8 million. The dividend objective is, as you will remind, is roughly 5% per annum of the opening net asset value via semiannual payments. And you will have realized that in June, we made the first payment. This brings me directly to the NAV performance in the second quarter. It comes as no surprise given the extraordinary volatility in public markets and the way we value portfolio companies that there was a negative performance in the second quarter, particularly actually in June. So NAV total return in the second quarter was then, in total, minus 7.5%, whilst the first quarter was still flattish. And the share price total return in the second quarter, slightly positive, but year-to-date, negative with 13.5%. This compares then to the MSCI World in the second quarter of minus 10.8% and year-to-date minus 13.5%. As said, the first interim dividend of EUR 0.38 were paid in June. And for the whole year, a dividend of EUR 0.76 per share is expected to be distributed, in line with the company's objective to distribute 5% of the opening NAV. This then results in a fairly attractive dividend yield of sort of 6%. In terms of activity, the portfolio. Roughly 40% -- pardon, roughly EUR 40 million of investments were executed in the second quarter, including new investments in forefront dermatology, precisely Mimecast and Climeworks, which leads us to an investment volume of EUR 62.7 million for the whole first half year. And we have received a similar amount of realizations in the second quarter, of which, a good part stemmed from the partial redemption from senior loans. Year-to-date, we have seen realizations of over EUR 100 million. This brings me to the NAV and share price performance overview. And you will see that in the long run, we are still outperforming the MSCI World, whilst in the short run, we certainly will observe as to what the market volatility is doing. You have observed -- we've all observed, in public markets, there has been a strong rebound in July and actually also in August, which is not yet reflected in these figures. So we expect that we will see some of it also then in the NAVs as the monthly reports are published later this year. In terms of discount development. Since the long listing in November 2007, end of the quarter, there was a discount of 22.3%, which is certainly disappointing, however, considerably better than those of the peers, which I also attribute to the fact that investors have understood that the valuation -- the timely valuation of Princess versus some of the peers also provides kind of more accurate picture in the year. This brings me to the key figures. Not much to be said. Of course, in line with the declining NAV, the net asset value of the company has declined. NAV per share stood at EUR 13.76. Investment level, a bit more than 100%. The credit line was partially drawn, and there are unfunded commitments of EUR 103 million. However, as in previous calls, I emphasize -- I'd like to emphasize that only about EUR 60 million are viewed as being active, unfunded commitments that are anticipated to be called over the next couple of years. The balance is of -- is to mature funds and is not anticipated to be called in full. This brings me to the portfolio activities. They're partner to the portfolio review. And I'll start with a reminder of our valuation approach. Given the strong volatility also in the NAV, we have experienced in the second quarter, thus as principal valuations are performed in accordance to fair value principles, the technique maximizes the use of relevant observable inputs. And by that, we are, of course, in public markets, so public market comparables in terms of multiples. However, also our vast database of private companies that are under sample, and by that, are observable for us. So the valuation techniques are also applied very consistently. So you will see -- you can expect to see upward valuations when the public markets are strongly buoyant. And you will -- you can expect to see downward valuations as we have experienced in June. The valuations are bottom-up driven, using ultimately the widely recognized market and income valuation methodologies. And of course, they're very solid. They are tested. They're reviewed on a regular basis. So in a nutshell, for direct equity investments, which is the vast majority of Princess portfolio, we use last 12-month EBITDA, data, which we have readily available on file from management reporting, financial reporting, from advisory board packages, with an applied enterprise value to EBITDA, multiple of peer -- public peer companies and of -- multiple -- actually, multiple private transactions, we deduct the debt. And then we arrived to the net asset value. So -- and more specifically to determine the fair value multiple, this, of course, there's a quantitative assessment. And there's also a qualitative assessment, which include company-specific characteristics like liquidity, size, growth rate, risk and so on. Having said so, we can dive deeper into the portfolio. And I'd like to discuss in a bit more detail the revaluations for the 10 largest portfolio companies in the second quarter and year-to-date. You will see, as the largest company still in the company -- in the portfolio, it's SRS Distribution. This is this company that distributes roofing products. It provides residential and commercial roofing designs to actually end customers that are roofing and building contractors. So you can see that the value has been written down. And this is fully due to lowered valuation multiples applied. So as an example, the industry peers tanked about 25% in June in terms of multiple. At the same time, SRS remains highly acquisitive compared to its peers, has large white space potential. It's -- and also it's less cyclical due to lower exposure to commercial roofing. So SRS is growing. EBITDA and revenue figures are growing. That's why also the downward valuations has been balanced. By growing EBITDA numbers, SRS is still largely able to pass on inflationary pressure to end customers. That's to do with the continued strong demand. SRS is quarterly reviewing the pricing and adjusting it with a quarter announcement in advance. And they actually enjoy kind of a ready price inelastic demand due to a number of factors. I mean, they have a greater exposure to residential damages. And roofings are often supported by insurance coverage or just simply that the replacement needs are there within the stated framework. So nothing fundamentally wrong with this company. On the contrary, we expect this to grow further in the quarters to come. The second largest portfolio companies, KinderCare, we have discussed in quite some detail over the last couple of years as it was hit hard by the pandemic. It's the largest full profit provider of early childhood education on care services in the U.S. So in their second quarter, KinderCare was written up on the back of a very robust financial performance despite of multiple contraction in the peer group. So with the normalization of the COVID-19 virus, KinderCare's licensed capacity was raised from the previous year. And KinderCare's really healthy performance is reflected by year-on-year increase in revenue and adjusted EBITDA over the last 12-month period And it's attributed to strong enrollment rates as well as increasing occupancy rates. You remember that occupancy was the issue after the pandemic, whilst as we speak now, we enjoy similar numbers as pre-pandemic. The #3 on this list is PCI Pharma. That's a leading global provider of outsourced pharmaceutical services offering. They sort of say offer a full-service integrated platform throughout the pharmaceutical supply chain. So the valuation of PCI Pharma Services was written up on -- again, on the back of positive business performance. So PCI experienced robust organic growth across all of its business segments. And then PCI is also able now to enter the sterile fill and finish market through an acquisition that was discussed in one of the previous calls. Foncia, the France headquartered company that provides property management and real estate services. Now Foncia was written down to reflect the downward trend in market comparable. Nonetheless, the EBITDA for the last 12-month period increased year-on-year due to strong organic performance across all the company segments. Noteworthy is that the company benefit from strong acquisition activity. So some of you, particularly in the U.K., may have realized that Foncia agreed to acquire FirstPort, which is a leading provider of residential property management services in the U.K. The U.K. has been for long, a target market for Foncia because Foncia's goal is to be the #1 property manager in the 3 largest European markets, being France, where it is already there, Germany, where it's close, and now with the acquisition of FirstPort, had a good foundation to be there -- to get there in the U.K. And Foncia intends to continue expanding its geographical footprint in both the new and in existing markets via accretive bolt-on acquisitions at attractive multiples. Vishal, the franchisor and wholesale supplier for a network of over 500 stores across India, was written down to reflect the downward trend in market comparable. Again, nevertheless, the company continues to recover from the effects of COVID-19 lockdowns, with both revenue and EBITDA for the last 12-month period increasing as also restrictions on store operations have been lifted. So the next is AMMEGA, similar story. Well, just to remind you, this is the parent company for the joint operations of Ammeraal Beltech and Megadyne, the global leader in mission-critical industrial power transmission and lightweight process conveyor belting. So the valuation was lowered in the second quarter following the decrease in trading levels of public and sector comparable. So the same story. Again, nothing fundamentally wrong. On the contrary, the company continues to perform strongly, with both revenue and trading levels -- of trading levels -- going up. So Techem. Techem also suffered from a marking down, so it was negatively revalued over the second quarter. And you will hear me again that nothing is fundamentally wrong. The company's financial performance remain very robust. Techem continues to deliver stable results, healthy year-on-year growth, as driven by high energy prices in Techem's energy efficiency services business segment and the solid contribution from M&A activities. EyeCare Partners, which I covered in more detail in the last call. Here, again, the valuation declined slightly over the second quarter to reflect the downward trend in market comparable. And Fermaca, the developer, constructor, owner, operator of midstream natural gas infrastructure in Mexico. So the valuation of Fermaca remained broadly stable. There's still some issues that we are actively monitoring, the delays in certain permits. However, we expect this to be solved over the next quarters. Finally, USIC, United States Infrastructure Corporation, that's a provider of infrastructure locating services. So whilst the USIC, as you can see, was slightly marked down in the second quarter, you may have seen the news we released or the company released on the 10th of August, so after quarter end, whereby we basically sold USIC, a part of it and reacquired at least part of it so that at the end, Partners Group and its clients will retain 50% of the company. And you will also have realized that the sales price was 23% higher than the last, well, the last observed data point. That is the data point you have here in the presentation. So this also kind of shows you that whilst valuation with all the technology we have, and this is accurate as it can be and reflecting as accurately public markets and other comparables. Finally, it's important at what price an asset is being sold. And I think those who have been longer with Princess have observed like me that there is a very typical pattern. That is that we typically sell companies at a higher price than the last observable market value. With this, I'll just give you the overview on the portfolio. Princess continues to be very diversified across investment sectors. You will see there are a number of very resilient sectors, including health care, the type of information technology we have. It's very service-driven -- services-driven. The investments by type, we have -- most investments are direct investments. There is some debt, particularly as we have some debt basically parked in the senior loans for liquidity management purposes. Actually, that was reduced during the quarter in view of the financing needs of announced transactions. And you also see the -- there was equation of vintage years. You -- we observed that there are a number of vintage years, like '14, '15, '16, that -- where there are a number of assets where you can expect activity in the quarters to come as these are typically fairly mature companies. This brings me to the portfolio metrics, where you can observe that actually, we are still in growth mode and continue to do so against the backdrop of general economic slowdown. You see a 20.3% revenue growth over the last 12 month, more or less unchanged. The EBITDA growth has slowed down to quarter 1. EBITDA margin have been stable. So top line performance remained stable. Margins in December have come down. However, we have also very sustainable capital structures comprising on average, more than 60% of the equity. This brings me to the overview on our approach. Just as a reminder, we are a trend setter -- we are a thematic investor. We are looking for kind of an investment that goes for transformation. That is basically the answer to opportunities and challenges ahead of us. So we are looking for companies where growth is underpinned by long-term transformative trends. We build our conviction way before we transact. We systematically develop investment hypothesis typically years ahead of transactions. And then we leverage our network of experts, advisers to develop them more. And we also -- once we own them, we compound long-term winners for longer for the benefit of our clients, as you have observed with -- in relation to International Schools Partnership or Foncia on now a very recently with United States Infrastructure Corporation. We then lead and guide these companies in a very entrepreneurial manner. We make the Board, the center of vision, strategy and accountability, a very active, or activist collaboration with the management teams. We then apply capabilities of our network and lead operating directors. And one of the examples I want to cover in a bit more detail at today's presentation is Guardian, Guardian Childcare & Education, an Australian company. And for this, I actually hand over to our new Head of Investor and Shareholder Relations, Sarah Page. Floor is yours.

Thank you, Felix, and welcome, everyone. I'm delighted to speak to you today about Guardian because it's a great example of Partners Group transformational investing philosophy that Felix has just presented to you. Guardian is currently the second largest childcare and education provider and cares for over 10,000 children aged up to preschool age. The investment was made in June 2016 when revenues were AUD 162 million and was Partners Group's largest private equity investment in Australia in 2016. Under Partners Group ownership, as at June, its revenues have increased to $380 million. Next slide, please. As Felix mentioned earlier, transformational investing is underpinned by thematic investing and entrepreneurship at scale. So how does this look like in real life? In terms of thematic investing, on this slide are some industry factors to give you a feel for the potential that Princess shareholders are buying into from a macro perspective. The industry growth has a stable upward trajectory, which is expected to accelerate over the next 4 to 5 years in the region of 3.6%. And this is supported by factors such as stable births and migration forecasts as well as increased government spending. So the industry fundamentals are attractive. The way the investment team went about sourcing this opportunity was that they not only leverage their own deep knowledge, which they gained through prior investments in the U.S., U.K. and India, but they also leveraged experts and advisers to build the solid investment thesis. Now they did this over 3 years, which involved monitoring the macro factors I mentioned earlier as well as several on-site visits, getting to know the management team and the local market. Next slide, please. Now in terms of the second pillar of transformational investing, which is entrepreneurship at scale, this was applied to Guardian in the following way. Firstly, the Partners Group network was leveraged to support the Board with high-quality and experienced operating directors, including the hiring of a new CEO who came from a larger competitor at the time. In the early years of the investment, development was slower than anticipated, so this led to management changes being implemented. Secondly, the Board set the vision and strategy with a 3-year plan, focusing on organic growth, M&A and operational efficiencies. These strategic value creation plans have so far produced the following results. Guardian is outperforming its peers in terms of national quality standards of its centers. Also, customer satisfaction has improved, which you can see through the Net Promoter scale on the bottom right-hand side. And these best-in-class quality ratings are building a solid reputation for Guardian, which is helping to retain as well as attract more customer demand. In fact, Guardian has enjoyed the highest occupancy rates in the sector at over 74% despite the impact of 4 waves of COVID-19. And this in turn has fed into increases in revenue and EBITDA. A good reputation is also helping to retain employees, which has lowered labor costs. In terms of increasing the number of centers, organic expansion has been in attractive catchment areas, not only in local communities, but also with on or near site care for children of staff working for some of the country's largest corporations. Also, several potential M&A sites have been identified, exhibiting high margins and occupancy rates. To give you more color, there are roll-up opportunities in this highly fragmented industry, which has around 6,600 sites, mainly run by small private operators. The investment has been in the portfolio now for around 6 years. And by holding on to solid companies for longer, Partners Group is capturing more value for Princess shareholders through long-term commitment and conviction. Now I'll hand over back to Felix to take you through the rest of the presentation.

Thank you, Sarah. This brings me to the investment and realization activity in the second quarter. You will see that we acquired Forefront Dermatology. I'll come to that in a minute, precisely, a global leader in data integrity software. Mimecast, a leading U.K.-based e-mail security and cyber resilience company. And finally, we have -- we invested in a company called Climeworks, a leading Switzerland-based designer, developer operator of direct air capture plants. In terms of realizations, there was this partial redemption from senior loans and that there were some legacy fund and debt investments. The new investment, the largest one, Forefront Dermatology, which was announced actually in February, as the name would suggest, it's a dermatology platform. It's actually the largest of its kind in the U.S. It's based -- headquartered in Manitowoc in Wisconsin. It owns that 20 clinics in 18 states and has over 400 board-certified dermatologists, physicians, assistants and nurse practitioners. So the company's mission is ultimately to offer patients kind of superior access to world class care within the communities. And now Forefront is basically in support of this. So it provides the dermatologists with a wide range of central support services to reduce administrative burdens and allow them to focus on their patients. You will see a very similar business model as Princess has already in its portfolio with the physical therapists, with the optometrists, ophthalmologists and other practitioners. So it's a clear market leader. We have favorable market dynamics. We -- it has a consistent record of organic and inorganic value creation. And what we want to do is certainly continue to increase the pace of acquisitions in core add-on acquisitions program, but also expand ancillary services. invest in technology to improve business operations and maintain our reputation as a best-in-class clinical quality. This brings me to the near-term pipeline on this page, where you see that we have -- we work on very specific transactions in all of our verticals, goods products, technology services, health and life. Actually, in the services sector, you will see the top -- on top line, financial service provider. You may have seen a press release that Partners Group issued recently. So we acquired the company Foundation Risk Partners, specialist insurance broker with -- in the U.S. That is present in 18 U.S. states. But there's more to come. Yes, the activity has slowed down in comparison with last year. There's no doubt. However, there's a lot of work done behind the scenes, and you can expect more announcements in the quarters to come. This brings me actually to a topic many of the investors are very interested in as this is a topic that is in everybody's mouth, where investors are very interested in. That's what we are specifically doing in terms of the ESG factors and the portfolio. And I'm very happy that we are actually in private markets and can achieve true impact as opposed to rely on public market figures on ratings and other stories. So by that, I hand over to Adrien Paul, a team member of our ESG team, please.

Thank you very much, Felix. It's a pleasure to be part of this call. I have already covered a few ESG concepts and our philosophy last time. And I'll give a brief refresher and recap and share the most recent updates. So as Felix has mentioned, ESG is a hot topic in our industry since it's become a trend over the past 2 to 3 years. But for Partners Group, it is nothing new. It's something we have been doing for over 15 years. We've been among the first signatories of the UN PRI and have consistently earned high ratings in their assessment. And we are also since last year the, only global private markets then to be included in the Dow Jones Sustainability Indices, which reflects our sustainability leadership within our industry. If we turn to the next slide. It's important for us to highlight that part of our philosophy is that ESG at Partners Group starts with the G. We believe even though it's maybe the letter that is often limited or that one cannot really rely to, it's the backbone for us. It's what drives the improvements on the environmental and the social side. So setting up a clear ESG governance within our firm and our portfolio companies is crucial. So ESG lies with the most senior levels of our firm. It's -- our Board of Directors are responsible for the sustainability strategy. Our executive team are then responsible for the implementation. And our sustainability team, which I'm part of, then drives and realize sustainability at scale by defining the processes and the control frameworks. So we really focus on having ESG responsibilities at every level of decision-making. And this will be crucial in the next slide I will present as well. So if we turn to the next slide, just putting our philosophy into perspective with what we know also from the public market space. So in the public market space, there is a traditional ESG approach, often referred to as stewardship, where basically, we want to integrate ESG criteria or ratings or ESG avoidance lists pre investment or in the portfolio construction. We do this as well. Of course, we also have avoidance list, public markets engaged with companies. They have management meetings. They can write a letter to CEOs. But at Partners Group, we believe we are in a unique position where we can go beyond this. And we want to go beyond this public markets approach by following a strategic approach to ESG, which is based on our active ownership philosophy that Felix has also spoken about. And our aim is really to enhance companies, which means to raise their ESG standards across our portfolio and to transform them. So really make them impact leaders in specific topics. What do we mean when we speak about raising ESG standards and imposing minimum ESG standards? Well, that's what we have defined in May in our newly launched sustainability strategy, which you see on Slide 27. So this is the update as -- compared to what I discussed in the last call, we have designed 12 portfolio level targets that we expect our portfolio companies to achieve during our ownership. So these are 4 targets per dimension, E, S and G. And I'll not have the time to cover all of these 12 targets within this call, but let me dive deeper into some select targets. And as mentioned before, if we turn to Slide 28, ESG starts with the G at Partners Group. So the first target we expect our portfolio companies to achieve is to appoint ESG responsible at every level of decision-making within the first 100 days and then develop a meaningful ESG journey. So if you turn to the next slide, you see an example of a portfolio company, Schleich, which is a German toy manufacturer, where we have basically replicated our ESG governance just as we have it within our firm. We've replicated this within Schleich, and we do this across all portfolio companies. So it's really defining a Board member, an executive team member and on the management or operational level a head of sustainability, so really helping our portfolio companies to hire someone who is our daily counterpart and driving ESG projects on a daily basis and who interact with a member of our ESG team or the investment team, which you see on the right. And together with this ESG governance, we developed an ESG journey, which you see on the next page, an example of what we defined as the key focus areas for Schleich. So it's a plastic toy manufacturer. So for us, it was key to address the use of plastics of this company, be it in the packaging, so reducing the plastics use in the packaging, but also the plastic figurines themselves. So we are collaborating with a plastic specialist, an external consultant to use recycled plastic and also toys that can be recycled again. So really implementing the concept of circular economy within the business model. And this is really a great example of transforming businesses to make them more sustainable as one example of the key initiatives within Schleich. Besides, also another target that we've mentioned in the sustainability strategies, stakeholder benefits program that we have launched at Schleich. So we have given all Schleich employees the possibility to invest in the company. So we have launched an employee incentive program or participation program. And we have doubled their investments so that they can really participate in the value we create with the firm and the upside that is being generated. Turning to the next slide. That's the slide -- the part that most investors currently focus on is, of course, what do we do on the environmental side? And our sustainability strategy and on the targets we have on the environmental side are really about leading assets on their path to net 0. So we -- of course, due to the nature of our business, we will not hold our assets until 2050, which is the target that the COP 21 has set and that we have set for our portfolio of achieving net 0. But what we want to do is to lead the -- to do the best efforts we can to develop a strategy and lead our assets on the path to net 0. So concretely, what does this mean? If we turn to Slide 32, you see basically the targets broken down in the timeline. So we are -- given the nature and the focus of our investment activity, we invest in the mid-market space. So these are companies that have -- often when we invest in them, not reflected on environmental or ESG issues more generally. GHG emissions is often a black box for them. So for us, it's really important to lead them by the hand. And in the first year, measured their GHG footprint together with them, received within the second year, an external insurance. But we know that the data and the measurement that we have is reliable and that we can work with this, during the third year then, develop a tailored GHG reduction strategy, so really tailored to every individual portfolio company. And the aim, of course, of this strategy is to be net 0 by 2050. But we believe that 2050 is too far away for the business leaders for our portfolio company CEOs and Board members and for us as a firm as well. So that's why we have -- we've defined a first intermediate target of reduction by 50% by 2035. And our aim is to achieve 20% GHG emission reduction during our ownership to really launch and initiate this reduction already during our ownership. So one example from the portfolio, Felix has also mentioned it before in terms of valuation, is Techem, so our leading sub-metering service provider in Germany. And Techem is a brilliant example of the company that, from a thematic perspective, we liked a lot. We like a lot. It's an energy efficiency company. If we turn to the next slide, you see one -- main reason we invested or we liked it also from a sustainability perspective is the services that Techem offer makes their clients avoid almost 9 million tonnes of CO2 per year. This is a figure that the company is very proud of and was very proud of when we acquired it. But then as I mentioned, in the space, we invest in most companies don't look at their own operations. And that was a key focus of our sustainability efforts, is to really look at what are the emissions that this company actually produces which they were not aware of at the time of acquisition. So we did -- as you see the path on Slide 35, we assessed their emissions, which are still significantly high due to the nature of their business. We measured their GHG footprint globally. They're about to receiving assurance. And we are developing their GHG reduction strategy as we speak. And then the company has published their first CSR report last year, which is also something we encourage our portfolio companies to do because it's part of ESG journey of the reflection process. And they have published their GHG emission data there. And they will receive assurance on this year's report on this data and announce their decarbonization road map in this process. So I think this illustrates very well the process that we face in the private markets industry, but, which is, as Felix mentioned, focused on the actual impact, and it's very operational. But we also want to measure the progress we achieved across our portfolio, and that's what you see on the next slide, is we publish what we call our ESG dashboard, and it's part of the reporting also in our corporate sustainability report. So we do not want to have an aggregate ESG rating as it is done in the private -- in the public market space. But we really want to look at KPIs that we believe are the most material for each company. So in the Dashboard, we published the 12 most material ESG KPIs across all industries. And you see the coloring then identifies or tells us what are the focus areas, where have we improved, or where do we still need to invest more time, more resources to really drive ESG progress within these companies. So handing back to Felix.

Thank you, Adrien Paul. So hope you'll find this insightful. And certainly, we're interested in feedback as to whether we shall deep dive over time, again, in other examples, which we would be happy to do. This brings me to the summary before I then hand over back to the audience for Q&A. Princess long the managers strategy to follows a thematic investment approach. We identified companies benefiting from transformative trends, investing into attractive companies with a clear development potential. We then built the companies through platform building, business transformation. And as you've heard, we'll fully integrate ESG factors. The company is managed by an experienced manager, with vast resources, correct private equity professionals, industry experts, supported by about 1,000 other professionals at the firm. And we've got a very attractive portfolio, very diversified. You will have seen the full list, let's say, of the 50 largest investments in the semiannual report we published last Friday. We have a very balanced portfolio across investments in value creation mode, in mature investments where we may seek to crystallize the value. And there is a very attractive near-term investment pipeline across regions and sectors. We just recently announced a number of these transactions. I also believe, as in June, we -- as the -- we fully -- with the downward valuations, we fully reflected the market losses in June. There is a clear upward potential again in terms of NAV, partly because of public markets in July and to August has increased considerably. But also, on the -- importantly, the example of USIC, where you have -- where we have basically marked down the value end of June because of comparables. And only 1.5 months later, we can announce a third-party transaction whereby the company was valued 23% higher than the last observable value. So I personally believe there's a lot of value in this portfolio. With that, I hand back to the operator and to the audience to ask questions. [Operator Instructions]

[Operator Instructions]

We already started to receive a number of questions. Actually, Felix, the first one would be for you. Princess PE NAV valuations are done on a monthly base. For portfolio companies, this can include considerable adjustments if markets show high volatility as we have seen in July. MSCI World, TR is year-to-date just minus 1.4% versus minus 13.5% up to end of June. This will also apply to Princess NAV of end of July, whereby we know that PEY portfolio is not a reflection of the MSCI.

Okay. I can keep this short as I expanded on that quite a bit. Yes, you can -- I mean, I expect and you can expect a major correction again as a consequence of public market comparables. And that's the -- and it's rightly observed, we are not a mirroring of -- we are not a mirror of MSCI. I think we've got companies that are on average that are growing quicker, have more EBITDA growth, more revenue growth, as demonstrated when I covered the portfolio metrics.

Yet another one. Credit facility has been up from EUR 80 million to EUR 110 million. Is this increase done against a background of softer exit opportunities versus more attractive purchase opportunities?

Again, a short answer. The increase has to do with the increase of the gross assets of Princess. So we just wanted to adjust.

What is your projected performance based on the current rebound of public markets? Do you expect a negative performance in 2022?

I think for the whole year, that's a crystal ball. I think short-term, I mean you can expect upward adjustments as a result of comparables that have adjusted significantly in upwards way in -- for example, in July.