Edison issues update on Princess Private Equity Holding (PEY)

London, UK, 7 September 2023

Edison issues update on Princess Private Equity Holding (PEY)

Princess Private Equity Holding (PEY) posted a 3.5% NAV TR in H123, bringing its 12-month return to c 10%. Its portfolio maintains strong last 12-month (LTM) revenue and EBITDA momentum of 17% and 15%, respectively, at end-June 2023 and some of its holdings also benefited from peer multiple expansion (eg KinderCare). PEY’s holding-level balance sheet remains solid, with cash and the undrawn part of its credit line covering all of its outstanding investment commitments. PEY reiterated its dividend policy of paying 5% of opening NAV, which implies a c 6.7% yield.

We believe that PEY’s maturing portfolio could provide attractive exit opportunities once activity in the global M&A markets rebounds. This is underpinned by more than 30 of its investments (47% of NAV) being held for more than four years (vs PEY’s target holding period of five to six years). Over the five years to end-June 2023, PEY achieved a 50% average uplift to fair value one year previously for its 11 fully realised direct holdings, where it invested more than €5m in each. While a potential lengthening of holding periods (due to muted PE exits) and higher interest rates could somewhat limit uplifts for realised investments, we believe a pick-up in exit activity across the PE markets could prove supportive to PEY’s NAV TR.

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