Patria Private Equity Trust plc (PPET) Earnings Call Transcript & Summary

For those who don't -- I'm Alan Gauld and Senior Investment Director in the abrdn Private Equity team and Lead Portfolio Manager of abrdn Private Equity Opportunities or APEO and I've been in the team for 13 years. A quick reminder about APEO, I think most, if not all of you know this, but just -- if you indulge me a moment. So APEO's providing investors with exposure to leading private equity funds and private equity, core investments as well. So a lot of people ask me, what differentiates the Trust. I would say there's 4 or 5 main things that I would highlight. Firstly, this is conviction-led focused strategy. So we partner with 12 core private equity manager relationships that we invest into their funds and do direct co-investments into private companies alongside them. So this isn't an index. It isn't broad. It doesn't do everything in private markets like some others do. This is about investing alongside a small cohort of the private equity industry into mid-market buyout. So that's the first thing I would call out. Secondly, it is European focused. Most private equity trust, particularly the diversified ones have a strong weighting to North America, which is completely understandable, given that it's the birth place of private equity and the largest private equity market. But we think Europe is interesting in a lot of ways, and I'll go into details on that. Thirdly, I would call out the dividend. So some of our peers don't pay a dividend. We pay a quarterly dividend. It increased 11% this year, and the Board is committed to maintaining the value of the dividend in real terms and increase to a yield of around 3.5%. And then the lastly, I would call it the flat fee structure here. So it's a flat 95 bps which is one of the lowest management fees of a trust -- of this strategy and in addition doesn't have a performance fee. So when you consider this is becoming more direct through co-investments the benefits of direct private equity, i.e., the stripping out of the layer of fee, those benefits flow directly to shareholders. So we think that's pretty interesting as well. Over the slide. This just illustrates what you probably already know, but partnering with these core relationships, these 12, the logos there on the top left-hand side of the slide. And then through their funds and co-investments alongside them investing to private companies, and we have over 650 underlying companies in the portfolio. The logos here relate to the co-investment portfolio, and we have some exposure to these companies through the funds as well. And this approach develops a diversified portfolio. So as mentioned, over 650 companies are well balanced by sector, as we've illustrated here, by geography, by maturity and by manager. So in terms of the performance over the 6 months to the 31st of March. So we're really pleased with performance during this period. So at a portfolio level, the portfolio grew 5.4%, which is pretty much in line with our long-term average. So our annualized NAV total return since inception is about 11.5%. So in these difficult markets, we feel happy with how the portfolio has grown. That said, there's been an FX headwind during the period. So the NAV total return was 3% in the 6 months to March. So still quite pleased with that given the backdrop, but, yes, obviously, some dampening of the growth in the portfolio. In terms of share price, that has also grown in the period, but from a low base of the share price total return of 2.3% in the 6 months. Now again, the sort of discount remains quite wide at 40% which we're not happy about. And we can talk a little bit more about that and some of the ways that might close later on in the presentation. And this compares to the FTSE All-Share, total return of 12.3% during the period. Obviously, listed equity markets fell quite considerably in 2022, but recovered in the back end of 2022 and into '23. So that's reflected in that return there. Over the longer term, the 3, 5, 10-year and since inception, we outperformed the FTSE All-Share comfortably. Net asset stands just shy of GBP 1.2 billion. And the expense ratio remains around 1.05%. It tends to be there come what may. We have that flat fee structure. And then there is obviously some sort of direct expenses on top of that. So it always tends to be between 1% and 1.1%. I'm putting this in context, if the presentation allows me to, there we go it is moving on. So this is building on the historical NAV growth that we've seen in the Trust since the world financial crisis. So we've seen year-on-year NAV growth since 2010. Admittedly, only just in 2012, we've also seen record performance in 2021 as well. Last year, the 14.1% was slightly aided by FX. So far this year, FX has moved the other way. But over the long term, as I said, we've got an annualized NAV total return of 11.5% since inception, and that's generally with some variation, generally, what this Trust delivers over long term. It's probably worth talking about valuations at this point as well because I know that's sort of the topic of the day. We feel pretty good, and we feel convinced to hit the valuations in our portfolio, and there's a number of reasons for that. But if you look at what APEO does, around 95% of its portfolio is in buyers. Around just slightly less of 5% is in growth equity and no venture capital. So that means the vast majority of the underlying companies in our book are valued every quarter bottom up based on earnings and cash flow, applying a valuation multiple onto those earnings. So we feel good about that. There's no valuation based on last funding round, which I know is an area of contention and certainly something I would agree with that there needs to be proper bottom-up valuations in all assets. But this strategy is very much buyer focused and that should provide some confidence in valuations. As should the governance around it. So every investment in APEO is audited at an underlying level, i.e., the private equity firm level, at least annually. In addition, our auditors at an APEO level also take some of the larger positions, typically the co-investment book and scrutinize the valuation methodology on a line-by-line basis as well. In addition to the scrutiny from our sales as manager, the Audit Committee of APEO as well. And I would say on top of that, that all the investments in the book or all the managers value in line with U.S. GAAP or IFRS. All of them are in line with International Private Equity and Venture Capital guidelines in terms of valuations. So we feel really good about the governance of the values as well. Maybe worth -- turning the slide to talk about the cash flows. And this links to this point around valuation. So maybe starting on the right-hand side to sort of link in with what I was saying. Even through this period, we've seen the exits from the portfolio, delivering an average 15% uplift upon exit compared to the unrealized value, 2 quarters prior. I think that's a reasonably good indicator of the valuations within our portfolio. Now that's a fair enough thing to say and retort with, well, maybe they're the higher quality businesses. And for sure, selling assets in this market is tough and it's generally the higher quality businesses that are being traded. But I would say that this sort of shows -- still shows that this uplift upon exit, which has persisted over the long term in private equity is still there. In terms of the cash flows, drawdowns and distributions were broadly in balance, but we have seen a slowdown in distributions in the sort of last few months. And that's really linked to the slowdown in private equity activity more broadly. We'd expect that drawdowns will fall eventually because of [indiscernible]. Obviously, the funds as well have underlying credit facilities that they use to bridge investments. So it will take another 6 months or so for all of those to run off as well. So we expect the second half of the year to see sort of drawdowns slightly outpaced distributions. That's what we're modeling for. But we expect a recovery in that as we move into 2024. And certain some of our larger positions in the book, particularly the co-investment book, there's a couple of assets there that could be quite sizable exits over the next 12 months. So -- and we're in a very strong cash flow or cash balance position. It's probably worth skipping to that slide given we're talking about it, and we'll come back to the data on the portfolio companies. But we feel like our balance sheet is in a pretty good position in APEO. We've got just over GBP 20 million of cash at the end of May. Just over GBP 220 million of undrawn revolving credit facility. The facility was increased by GBP 100 million back in October. And we've got outstanding commitments of just shy of GBP 700 million and that includes just over GBP 80 million that we expect to never be drawn. So just slightly less than GBP 600 million outstanding commitments and over sort of GBP 240 million of resources. And as we know, private equity funds are drawn over a long period of time, the majority being drawn between 3 and 5 years. So -- and that means our over commitment ratio is currently at the lower end of our long-term target range. So our target range is sort of 30% to 75%. We're at 37% right now. So we feel pretty comfortable with that. Often people ask about covenants, there's only one real covenant here, which is the drawings cannot exceed 30% of the portfolio value. We're currently at 7% in terms of the drawing. So really good headroom there. Going back to the portfolio. So we track the top 50 companies in detail. It's obviously a much larger portfolio of between 650 and 700 underlying companies, but we track the top 50 million because they are the value drivers. They equate to 41% of the portfolio. They are the ones that will really move the needle. So when we look at this cohort, we're really pleased with the growth in the portfolio right now. Admittedly, you're comparing it to sort of tail end of 2021, and there was definitely some impact from the global pandemic in that. But you're seeing average last 12 months revenue growth of 23% in the top 50 and almost 29% in terms of EBITDA. And I also get asked about what proportion of that is organic and what proportion is inorganic. So the real mix within the portfolio or the top 50 of strategies that are -- have grown solely organically and in strategies, which are strong buy and build sort of investment thesis. So we would guide people to -- it's roughly about 50-50, so the organic growth of the portfolio it's probably in that sort of 12%, 13% range and then organic EBITDA, probably kind of mid-teens, just shy of mid-teen, probably about 14%. There's still really strong growth on an organic basis. And in terms of the median valuation, I mean, I would say, important thing to note here is the top 50 companies. It's not the exact same top 50 companies period-on-period. It's pretty similar, but there are obviously exits and there are companies that fall out and some that are growing fast and come in. But what we have seen is that the median valuation multiple has been pretty steady when compared to the 30th of September 2022. So I think the median was 14.3% there -- it's 14.5% -- sorry, 14.3x, 14.5x now, so pretty flat. But comparing to 31st of March 2022, so 12 months prior, it's about a 1 turn reduction. So it has been pretty stable, but has decreased over the last 12 months. And then the leverage is pretty steady at that 4.2x leverage, and we feel pretty good about that. the average in private equity is above 5x. So we think something lower than the average. In terms of the largest positions, so you'll have the familiar name at the top, which you'll know very well from 3i. So we're really happy with how action is performing, and we continue to be long-term holders of action. However, 3i did always promise that 2 years into the co-investment life, there would be a liquidity option amongst the existing shareholders in action. The ability for some people to top up and increase and the ability for some to take liquidity. We thought that was an opportune time to rightsize action a little bit to take roughly our original cost of the core investment off the table, and derisk the co-investment. And reduced our portfolio construction reason -- reduce the size of Action within the portfolio. So it says here, it's 5.6% of NAV and it was at the 31st of March, but at the moment, it's around 4.2%. So it's just making sure that action is not becoming too big a part of our portfolio. We feel that those -- the one specific exposure to Action will tend to go to 3i. So it's about just making sure that it's right in our portfolio. People who tend to invest with us and looking for a slightly more diversified strategy. So that's all. We continue to be long-term holders here. Without going through line by line, but we're really happy with the performance of the largest positions. NAMSA is another co-investment here that is performing very well, and that's a contract research organization for medical devices. It's ahead of investment case, and there could be an exit there within the next 12 months. So we'll wait and see on that front. ACT, #2 there, it provides climate-related services. And to mid and large corporates, obviously, that's a really hot topic, pardon the pun at the moment. And so that market has been growing very, very strongly. ACT has been a beneficiary of that, and so that's ahead of plan as well. So we're really pleased with that. But generally, across the piece, really strong growth. So we're happy with that. And you can see the co-investments are really starting to dominate the top end of the portfolio now. We've only got 3 assets that have been -- that are held through funds in the top 10. So -- and you expect that to be the case as we move forward. So a bit about the manager. I mean, you know us, but we have been the Manager of the trust since inception. We've been investing in private equity since the 1990s, managed over 1,000 fund commitments over that time, have over 300 European manager relationships, have an investment team that's very well resourced. And here are the sum of the mugshots. I'm the lead portfolio manager of APEO, of course, but it is very much a team effort and we pull upon all the resources and the team to source and so it's interesting opportunities for APEO. Approach to ESG is very important. We have really around 2015 really introduced ESG into our investment process. It is something we take very seriously, and it's part of every new investments, due diligence, whether that's a fund investment or a co-investment. And we feel like our capabilities are very much at the forefront in terms of LP investing in private equity, and that was recognized by the PRI, indeed, to give us the top rating in 2022 for indirect private equity. So really pleased with that accolade in terms of recognition of our cultural approach to ESG and how we've implemented it in our investment process. I should say though, of course, this isn't a sustainability trust. I don't want the regulators to wrap us over the knuckles -- is that it's very much a private equity focus. But we would expect that sort of more sustainability strategies, investment thesis will become apparent in the trust. And we've always seen the success of ACT. I'm really pleased with that. But also, we're seeing really -- particularly in places like the Nordics, interesting private equity opportunities around the green transition. So we might do a bit more in that space as we move forward. You know our strategy, but I just want to quickly canter through this. So at the fundamental level, it's about providing access to private equity for investors of all types and sizes. And it is about giving that access to managers that are best-in-class, identifying those that are best-in-class in accessing them. So there's over 3,000 private equity firms in Europe. There's over 15,000 globally. We provide access to the 12 best. That's what we think we bring to shareholders. And it has frozen, which is always fantastic. There we go, right? And it's [indiscernible] hold on -- so yes, the slide should be the consistency slide, which will hopefully appear, there we go. I always quite like this slide, it takes you on that journey in terms of NAV and share price. And you can see here the first 5 or 6 years of the Trust's life, in those times that I long for the NAV and the share price really worked in tandem around the same level. Global financial crisis hit a big discount to NAV -- fall in NAV. But since then, the discount has maintained saw the start of the global pandemic. At the right-hand side of the chart that the discount widened came in again. But right now, this kind of around 40%. I mean we scratch our head at this. I mean, the performance over a long period of time. The fact that this is focused on buyouts, cash-generative businesses, the fact that continues to churn out exits at an uplift, I think a 40% discount is really over Q2. Frankly, when the discount is 15%, 20%, we still scratch our heads of that. So we think it's a real opportunity right now for those that are long-term minded to capture some upside here, particularly when private equity tends to make a lot of its best investments during periods of uncertainty and volatility. We have the ability to buy back shares. The Board obviously take that decision, something that we need to balance in terms of our thinking around buybacks is the fact that we have a concentrated shareholder base relatively speaking, Phoenix Group at 53% of the shareholder register and buybacks would exacerbate that. And we get a lot from shareholders around liquidity of stock and how do we increase that. So that's more of a long-term consideration there, but also co-investment. We hear a lot of feedback around reducing the look-through costs in this trust. And we want to take this more direct and reduce those costs more and more. In order to do that, though, co-investment requires funding upfront as opposed to fund investment, which has drawn over, as I said earlier, sort of 3 to 5 years, typically. So there is a cash cost to that until the co-investment portfolio matures and starts generating exits. So yes, we keep that in mind, the Board keeps the buybacks front of mind. And certainly, if we were to see some particular adverse movements, particularly relative to our peer group, that's a tool that they have at their disposal. We talked about this at the outset, but we think this is a differentiator in our book, certainly compared to other diversified Trusts. We're very focused on a small subset of the private equity market. 12 managers, we believe are amongst the market leaders. And we're not doing everything. We are focused on buyout. Those are the 2 key points here. And I've already stressed why sort of buyout is quite relevant in this market from a valuation perspective. We think that leads to better returns. So if you look at the right-hand side of this chart, since inception, over 70% of our fund investments fall within the top or second quartile, both on a money multiple basis, a net money multiple basis, which is the TVPI and IRR. So we're really pleased about that performance back in a small subset of the market. This slide will be familiar to you. It's a busy slide with all the logos, but the top half are the logos of the primary fund managers that we back through their funds and then the bottom half being the co-investments and secondaries. As I said to you many times, our focus in terms of primaries hasn't changed. We're going more into the lower mid-market, more alongside specialists because we think being the smaller end of the market, the sort of lower mid-market between company sizes between enterprise values of GBP 100 million to GBP 500 million. There's a lot more value creation potential. And you can sell those businesses into the large cap B players into trade and then also IPO, if you grow enough. So there's a lot of optionality that the larger into the market -- that they don't really have and has been quite reliant on financial engineering relative to the lower end. And in specialists, it's a key thing. I think this will define the success of firms as we move forward. How specialist are you by sector? How many times have you invested in that subsector? Do you have the playbook to create value? That sort of thing that will differentiate you on the way in to an investment and allow you to win more deals. It will allow you to create value more easily, and it will allow you to identify the relevant trade buyers upon exit because you've sold to them before you know them, they're more likely to engage. So those are kind of our long-held I guess, values in terms of how we bank managers. And the important thing is we underwrite the manager every single time we look at the fund. We don't just continue to re-up. We've dropped a number of managers over the past few years as well. And then co-investments will come on to a bit more -- in a bit more detail, but really happy with the performance there. We haven't done a secondary in the period. I think secondary market has been quite -- I see a little, but it's been slightly muted over the last 6 months. I think the sort of banking crisis of the U.S. regional banking crisis, Credit Suisse hit a lot of confidence sort of the tail end of the period. And I think a lot of people have been waiting to see what December 2022 valuations would look like before coming out to buy or sell with any sort of conviction in the secondary market. But we're starting to see a little bit more momentum in 2023. So it might be in the second half of this year. You see a lot more secondary activity. Europe, I also get asked, why do you focus on Europe play? What's interesting about Europe in terms of private equity? And it's a good question. I mean, most diversified private equity trusts have a strong weighting to North America or probably majority in North America. And that makes sense because North America is the largest private equity market, is the birthplace of private equity. We've always been focused on Europe, where over 75% of the portfolio is -- underlying portfolio is headquartered in Europe, over 75% of our managers are European managers. So I don't expect that to change. We have a decent weighting to North America. We top up our North America exposure through a small group of mid-market managers out there that are sector specialized but we are European focused. And so why do we like it? So firstly, it's heterogeneous, and you've heard me say this before that the different languages and cultures, regulation and legislation often means it's less straightforward to do business in Europe relative to North America for a PE firm anyway. It's hard to fly in and out and do deals, and especially in places like France or Italy, Spain, markets like Germany, where the Mittelstand company founders tend to be quite wary of private equity. It's important to have feet on the ground and have presence here. And that means when you're backing managers and the leading managers in the region, they have good barriers around them, protecting them, whereas North America, because it's an open market, we've seen a lot of European managers successfully move into North America. And whilst in Europe, there's been a lot of North American managers coming in, we've seen a lot of failures as well. So we feel like that gives you a certain amount of comfort when you're backing those on the ground, that they know what they're doing, good network, but they're pretty well protected from the fly in and out model. I'd say as well, as sort of more private equity tends to back more traditional economy businesses, not to say that they aren't on a digitization journey. They aren't forward thinking, but they tend to be more niche market leaders in traditional economy areas. Obviously, that hasn't been as in favor over the last few years. And as the private equity market in the U.S. has been very technology-driven growth driven, particularly in the West Coast, and that has helped driven returns over there. Obviously, the sentiment around that -- those types of strategies, I think, has changed somewhat. So it's about backing niche market leaders and typically a lot of traditional sectors and also disruptive businesses in the future. And it's not to say there isn't attractive technology businesses in Europe, there is. But I think relative to the U.S., it's been less reliant on kind of technology and sort of growth-focused strategies. I think from a valuation perspective, we touched upon valuations, but I think European managers tend to be a little bit more conservative, I tend to use a sort of bottom-up revaluation based on earnings, rather than the last funding round or DCF. So we think in this environment, that's also advantageous and ESG as well, and we touched upon ESG. But European managers tend to be a lot more focused on ESG and climate sustainability diversity than in the U.S., and we think that's advantageous as well. In terms of buyouts, I mean, this is where we focus. So enterprise value is between GBP 100 million and GBP 1 billion. Nothing in venture capital, less than 5% of the book in growth equity, but we're really happy with the managers that we partner with in terms of growth and specifically here in Vitruvian and One Peak are mentioned, and they are very, very high-quality managers that have been doing -- they've been investing for a long time. We're doing increasingly less in large mega cap private equity for the reasons I set out before, I think there's a lot of competition, a lot of dry powder capital raised but not invested and a lot of reliance on IPO was an exit route. So we still back as in international, which has kind of grown through its own success into becoming a large cap that was originally mid-market. We just think that they are one-off, if not the leading private equity manager in the world. It's important to note though we track our managers for a long, long time. So you can see here the vast majority of core managers, we have known or invested with for over a decade, some 2 decades. It's really difficult to understand what's happening in a private equity firm, be able to track what they see and then whether they've delivered upon it over a long period of time is very important. So we think from a risk perspective, that's helpful. So that's another important point. On the underlying portfolio, I mean, we've touched upon sector briefly at the outset, but Technology and Health Care remain our largest sectors, Industrials closely and behind at 19%, and that includes B2B services businesses. So the likes of ACT, which I mentioned earlier, I mean, that would be classified as Industrials, but it's not at all manufacturing or that sort of thing. And then we've got a good amount of consumer through the discretionary businesses. But also through stable businesses like, we classify Action, our largest position as a consumer staple business. In terms of financials, there's a lot of fintech in there as well. Very little in energy. So that sits around 1%. But I would imagine that as we move forward, there'll be a few more strategies around the green transition. So we might see energy increases a portion of the portfolio. And importantly, on the right-hand side here, maturity is important. This is what you get from a diversified trust. We don't try and market time and I'll say it again and again, money flows out of private entity at the wrong time, it flows into private equity at the wrong time, i.e., at the height of the market, flows out as soon as the market turns. We feel that's suboptimal because a lot of the best investments in private equity are done at times of volatility and uncertainty. That's why we like to stay in the market and stay quite consistent. You can see here just over half of the portfolio has been held between 1 and 3 years. Around 47% has been held for 4 or more years, and private equity tends to hold assets for about 4 to 5 years. So you can see that, that will underpin good cash flow coming back and over the medium term. Co-investment we talked a little bit about, but we've talked about before. Obviously, we didn't have any co-investment in this -- in the trust at the start of 2019, and we've got 22% now, and that's across 25 co-investments. You should expect us to continue to grow as a proportion of the portfolio would imagine to -- around sort of 25%, 30% over the short to medium term, around 30 co-investments. The co-investment book is still relatively immature, around 2 years old on average. But as that matures, that we'll start to see realizations, we'll start to see money coming back in decent amounts given that it's a bit more concentrated in the co-investment portfolio. Advantages of co-investment, as you know, it strips out a layer of fees or at least reduces a layer fee, but it also gives us more ability around the portfolio to make adjustments, whether it's geography or sector, whether it's increasing exposure to a specific manager, it allows us to manage our cash better as well given the co-investments are funded out front. And then in terms of the portfolio, I don't intend to go through all 25 names, so you can breathe a sigh of relief, but obviously, very happy to answer any questions on any specific company. Continue to see really strong valuation growth in the portfolio. So a 13% uplift in constant currency across the period in the co-investment book. So young portfolio, starting to see a lot of these valuations that were valued for -- at around cost for the first year started to be revalued based on the strong earnings growth that they've seen, and it's coming through nicely. If we look at the top 5 which are the most mature investments. Mademoiselle Desserts was the first co-investment that the trust did. It was heavily impacted by COVID. It produces a premium frozen pastry for supermarkets for hotels, restaurants, cafes and obviously, the pandemic and lockdown has impacted it greatly. On the flip side, it's provided really strongly and a lot of its competitors have struggled. So we feel like it's back on track in terms of money multiple. But obviously, IRR has been slightly diminished by the holding period. But we feel like that one is in a good place and may look to -- it may come out as an exit in the next sort of 12 to 24 months. You know Action and Visma very well. We're really pleased with Action. And as mentioned, we've sort of reduced our holding slightly on that given the liquidity window, but we're still long-term holders there and it remains the largest portfolio company in the book. Visma through HG, again, that's really embedded cloud-based software across over 1 million SMEs in the Nordics and Benelux, typically 2 of the more stable economies in Western Europe. So we feel really confident about that, slightly ahead of plan and where we assumed it would be. And then NAMSA, contract research organization that basically tests new medical devices on behalf of medical device OEMs. That's well ahead of plan, and it could be an exit over the short term. Funecap has undertaken a large transformative acquisition. It's a funeral services business in France, but it both appear in Italy and will continue to roll up inorganically as well as growing organically. So those -- 4 of those 5 most mature investments are ahead of plan, with Mademoiselle Desserts rebounding very strongly after COVID. So feel good about that. And then on the other half of the portfolio, which is a bit more immature, I called out ACT already, which is fifth from bottom, so very -- in a very growing market. European Camping Group, we've got a case study on but again ahead of plan. No real worries across the portfolio as yet. I'm sure something will come. There's a couple that are slower at the moment, just keeping an eye on. But all in all, very pleased how the portfolio is developing. On case studies. First one is Altor Fund VI. So Altor is very much middle of the fairway of what APEO does. It's truly a mid-market private equity firm. It's focused in the Nordics, founded by gentleman called, Harald Mix, who's behind things like Northvolt and H2 Green Steel in the region in Sweden. So a very successful investor over a long period of time. abrdn Private Equity invested in their first fund. APEO came in, in 2014, in their IV fund and is committed to -- now Fund IV or V and now VI. We really like this because they partner with founders, they work alongside them. I think that derisks a lot of investments because interests are aligned their network is very strong. Their presence is long-standing. And they've got a really nice -- well, they've got the ability to make both minority and majority positions. So it allows them to approach companies in a different way to some other private firms that have to do majorities. But we also like their focus on the green transition. As I mentioned, Harald Mix is behind Northvolt and other notable sustainability-focused business in Sweden and the Nordics. So we expect to see a reasonable amount of investment strategies around the green transition. So that's Altor. And then European Camping Group as promised. So it is in an investment, a co-investment that we made initially back in 2021. And at that time, it was our way of playing the recovery in travel and leisure post-COVID. So it is a campsite operator, over 300 campsites across France, Italy, Spain and Croatia. We feel like we came in here at a good entry price between 8x and 9x EBITDA. Now campsites and that industry is consolidating, but still pretty fragmented across Europe. So it's an opportunity to increasingly professionalize the business, make it more efficient, but also buy and build. A lot of these campsites are run reasonably and efficiently as you would imagine. But the opportunity came to -- for ECG to acquire one of largest and most relevant peers Vacanceselect, which was owned by another private equity firm. And so it acquired it in the period, and we followed on with an additional EUR 3 million to help fund that acquisition. And we're really excited about that one because in line with -- well, in addition to the strong organic growth we've seen at the European Camping Group, this acquisition really increases the scale of the business now. It's well over GBP 1 billion enterprise value with the 2 businesses combined, and there's a ton of synergies between the 2 businesses. They're pretty complementary. They tend to have campsites very different places. So it's just -- but there's some overlap as well. And obviously, there's things like sort of general overheads, head office, that sort of thing. And we really like this because, again, we are investing alongside one of our core private equity managers that has had success in this sector in the past. So PAI partners is really strong in travel and leisure and particularly around campsites they've backed a business called Roompot, in the Netherlands before, very successfully, over 3x money for them. And adjacent businesses like B&B Hotels, which again was a similar return close to 3x money. So backing a really quality core private equity manager or investing alongside them. So that's European Camping Group. So yes, to summarize, really pleased with the resilient performance during the period. In terms of strategy, not an awful lot has changed. We're pretty consistent in terms of what we do, but the co-investment proportion has increased again to 22% NAV, to 25 direct co-investments and you'd expect that to continue to increase and the trust to continue on its journey to be more direct. But yes, it's still conviction led. It's still about Europe, it's still about the mid-market. And hopefully, it's still about consistent NAV growth throughout the cycle. So with that, I'll stop talking and Helen, I don't know if there's any questions.

Thanks, Alan. We've not had any questions coming through the chat or via e-mail. [Operator Instructions] Deafening silence you must have answered everyone's queries, Alan.

Well, I know these sort of group formats are useful in some ways, but if people want to e-mail me directly afterwards, then...

With me I think, Emma has just asked, how do you feel about the Action realization at a 0% uplift?

I think it underlines that the valuations in broadly the right place. So that's -- I feel good about that. Look, I know the valuation increased in the quarter after, and we thought it would. But for us, it's important to manage Action at a reasonable level. There won't be an opportunity to come out of Action for some time now. So that was in our consideration as well. So yes, I think that Action slightly different case that the valuation is very, very scrutinized through the public markets, whereas other private equity valuations in our portfolio aren't as much, and they tend to bake in a little bit of buffer, and that's why you see this uplift upon exit, frankly. And you have seen that for many, many years. So 15% during the period that probably around 25% over the last 10 years. So yes, I mean, we still have massive conviction in Action, and it's just about rightsizing it, frankly. And yes, I think underlines the valuations about right.

There have been no further questions whilst you're answering that. And I'll give the -- say that again. Emma has another question. So you still expect uplift on exits of other investments going forward?

I do because I think it's become part of the private equity market and I think managers will always err on the side of being conservative in the buyout space anyway, because there's no reason for them to overvalue. I mean their fees are based on commitments and then cost of investment, not on NAV. So and people like to see uplifts. And pretty much everything I've seen so far, and we've seen some exits come in, actually post the period end are still coming in at big, big uplifts. I do think, though, if we look at the last 10 years, the uplift was, on average, around 25%. The way that we measure it anyway, which is simply taking the time that it was exited, the exit we signed and then comparing it to the valuation 2 quarters prior. So I do think there's a potential that, that 25% over a period of time may reduce maybe more like what we've seen in the period to around 15%. But I think fundamentally, the way the private equity buyout managers anyway we value with that conservatism without baking in the discount to the basket of listed comparables that they use to help derive the valuation multiple. I think when you get to the point of exit, there isn't really a reason why there should be a discount. They just put that discount in there for -- because it's an illiquid asset class. So that kind of unwind upon exit. So I still think that there's a potential for an uplift upon exit, but is it going to be 25% over the next 10 years as it was in the last 10? It might be slightly narrower. But yes, time will tell. You're on mute, Helen.

Oh Sorry. So I had another question. When do you envisage the best investment is to escalate the buy-in and treasury usage at this ludicrous discount? This in itself coming [indiscernible] trust profitability to...

Sorry, what was the question?

When do you envisage the best investment is to escalate the buy-in and treasury usage at this discount?

To escalate the buy-in and treasury usage, Sorry I'm not...

Philip, would you have to clarify and come off mute? The question.

No problem. Sorry to be vague. Basically, the company buying in its own shares because obviously, at a discount of 40%, that's probably the best new investment the Trust could find. And obviously, the usage of treasury and that in itself then increases the profitability of the trust overall.

Yes. I mean it's a very live debate and something we're debating with the Board. That's their call in terms of pulling a trigger on this. I would agree, in theory, you aren't going to get a better opportunity. I mean, you take the secondary market, for example, the high-quality private equity positions right now are trading at a roughly 10% discount whereas the trust is on 40%. So the question that could be here is should we be doing any secondaries at the 10% discount? Or should we not just be buying back? So it's live and it's certainly something that is being considered right now. As I mentioned earlier, we've got to weigh that up with the fact that the buybacks don't help with 2 other longer-term considerations, which are -- and this is all based on feedback from shareholders, increasing the liquidity of stock. We've got a shareholder in Phoenix Group, which is over 50% of the shares. And we got a lot of complaints a lot of the time about not being able to find enough stock. So we have to consider that. And we also have to consider people have been telling us like we don't like fund-to-fund so much or pure fund-to-funds, and that's why we introduced co-investment. We want the trust to be more direct, bring through the look through -- bring down the look through cost, increase the returns. But co-investment requires -- every time we do a co-investment, it requires somewhere between GBP 5 million and GBP 12 million of cash upfront, whereas fund commitments have drawn over a period of time. So in order for us to take it more direct, it has quite a cash cost until the co-investment portfolio matures and starts generating realizations. So I think the Board's take on this is totally agree with the statement there, Philip. But their view is we have to consider those longer-term impacts as well. And then if the -- the trust has been slightly narrower than some others in the peer group or most others. And if it were to become an outlier in any way, I think that, that would be the trigger for them doing something has the ability to buy back, and we have the cash should we need it or we have the liquid resources should we need it. So it's a very live debate and something that we're considering, but it's ultimately not in my control.

Thanks, Alan. I think we've got time for one more question, which is, hypothetically, if you were launching the Trust today, would secondary and co-investment be a higher percentage of the fund?

I would say, yes, I think it would. And we're working towards that. I think longer term, probably looking at sort of 60-40 primary plus -- primary to opportunistic investments shall we say, which should be secondary in co-investment or 50-50. That's probably where we'll get to the next 5 years or so. It's important to -- the people always think about primaries about, I think, all fees. But the important thing about primaries is that it allows you to stay in the market. Co-investments in secondaries are cyclical. When the market is buoyant, you see more of them. But when market slows down, you don't see as much. Well, it tends to work in different ways. But the primaries help generate deal flow in co-investments in secondaries as well. So that's the key thing. If you back a manager, a quality manager in terms of their fund, you're going to see quality co-investment. If you don't, you're likely to see any co-investment with them at all. So you need to have that as a way to access flow from the best managers. So I think we would still have a primary component if we were launching today. But yes, we probably would be more like that 50% primary, 50% secondaries and co-investments. But that's where we'll be in the next, I don't know, in the medium term.

I think with that, we'll wrap up. So I guess all that's left to say is thanks, and we'll talk to you at the next kind of meetings. If there are any more questions, please do reach out to me or Alan directly, and we'll get back to you ASAP.

Thank you all.