The Board of Reinet Investments Manager S.A. announces the results of Reinet Investments S.C.A. for the six-month period ended 30 September 2023. 

Key financial data

• Reinet’s net asset value of € 5.6 billion reflects a compound growth rate of 8.5 per cent per annum in euro terms, since March 2009, including dividends paid
   
• The net asset value at 30 September 2023 reflects a decrease of € 104 million or 1.8 per cent from € 5 720 million at 31 March 2023
   
• Net asset value per share at 30 September 2023: € 30.89 (31 March 2023: € 31.46) 
   
• Commitments totalling € 39 million in respect of new and existing investments were made during the period, with total of € 51 million funded
   
• Dividends from British American Tobacco during the period amounted to € 65 million 
   
• Inaugural dividend of some € 57 million received from Pension Insurance Corporation Group Limited
   
• Reinet dividend of € 0.30 per share, amounting to some € 55 million (excluding treasury shares), paid during the period 
   

 

 

Reinet Investments S.C.A. (the ‘Company’) is a partnership limited by shares incorporated in the Grand Duchy of Luxembourg and having its registered office at 35, boulevard Prince Henri, L-1724 Luxembourg. It is governed by the Luxembourg law on securitisation and in this capacity allows its shareholders to participate indirectly in the portfolio of assets held by its wholly-owned subsidiary Reinet Fund S.C.A., F.I.S. (‘Reinet Fund’), a specialised investment fund also incorporated in Luxembourg. The Company’s ordinary shares are listed on the Luxembourg Stock Exchange, Euronext Amsterdam and the Johannesburg Stock Exchange; the listing on the Johannesburg Stock Exchange is a secondary listing. The Company’s ordinary shares are included in the ‘LuxX’ index of the principal shares traded on the Luxembourg Stock Exchange. The Company and Reinet Fund together with Reinet Fund’s subsidiaries are referred to as ‘Reinet’.

 

 

Cautionary statement regarding forward-looking statements

This document contains forward-looking statements which reflect the current views and beliefs of the Company, as well as assumptions made by the Company and information currently available. Words such as ‘may’, ‘should’, ‘estimate’, ‘project’, ‘plan’, ‘believe’, ‘expect’, ‘anticipate’, ‘intend’, ‘potential’, ‘goal’, ‘strategy’, ‘target’, ‘will’, ‘seek’ and similar expressions may identify forward-looking statements. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are outside Reinet’s control. The Company does not undertake to update, nor does it have any obligation to provide updates or to revise, any forward-looking statements. 

 

BUSINESS OVERVIEW

 

 

Net asset value  The net asset value (‘NAV’) at 30 September 2023 and 31 March 2023  comprised:
		30 September 2023								31 March 2023
		€ m		%					€ m								%
Listed investments
British American Tobacco p.l.c.		1 436			25.6						1 561									27.3
Other listed investments		88			1.5						83									1.4
Unlisted investments
Pension Insurance Corporation Group Limited		2 746			48.9						2 787									48.7
Private equity and related partnerships		1 182			21.0						1 138									19.9
Trilantic Capital Partners		513			9.1						472									8.2
Funds and related general partners
TruArc Partners		315			5.6						301									5.3
Funds, co-investment opportunities and management company
Coatue funds		48			0.9						50									0.9
Asian private equity companies and portfolio funds		191			3.4						219									3.8
Milestone China Opportunities fund and management company		31									44
Prescient China funds and management company		128									143
Asia Partners funds		32									32
Specialised investment funds		115			2.0						96									1.7
NanoDimension funds and co-investment opportunities		114									94
Other fund investments		1									2
United States land development and mortgages		21			0.4						26									0.5
Other investments		78			1.4						58									1.0
Total investments		5 551			98.8						5 653									98.8
Cash and liquid funds		301			5.4						288									5.1
Bank borrowings		(221)			(3.9)						(217)									(3.8)
Other liabilities
Minority interest, fees payable and other liabilities, net of other assets		(15)			(0.3)						(4)									(0.1)
Net asset value		5 616			100.0						5 720									100.0

 

All investments are held, either directly or indirectly, by Reinet Fund.

Information relating to current key investments AT 30 September 2023

1. Calculated using period-end foreign exchange rates.
2. Calculated using actual foreign exchange rates at transaction date.
3. Total of realised proceeds and current fair value.
4. The invested amount for Trilantic Capital Partners includes an initial payment of $ 10 million.

 

PERFORMANCE

NET ASSET VALUE

The NAV comprises total assets less total liabilities, and equates to total equity under International Financial Reporting Standards. The decrease in the NAV of € 104 million during the period reflects decreases in the estimated fair value of certain investments including British American Tobacco p.l.c. (‘BAT’), Pension Insurance Corporation Group Limited (‘Pension Corporation’) and Prescient China funds, together with the dividend paid by the Company. Offsetting these decreases are dividends received from BAT and Pension Corporation together with increases in the fair value of certain investments including other listed investments, Trilantic Capital Partners, TruArc Partners and NanoDimension funds. Details of the Company’s NAV and details of movements in key investments can be found on pages 2 and 3 of this report.

 

Reinet records its assets and liabilities in euro; the strengthening of sterling and the US dollar against the euro during the period has resulted in an overall increase in the value of certain assets and liabilities in euro terms. Applying current period-end exchange rates to the March 2023 assets and liabilities would have resulted in an increase in the March 2023 NAV of some € 98 million.

 

SHARE BUYBACK PROGRAMME

As at 30 September 2023, there was no share buyback programme in progress.

 

The Company repurchased 14 151 395 ordinary shares between November 2018 and May 2022 under five share buyback programmes. The cost of the ordinary shares repurchased amounted to € 222 million, plus transaction costs.

 

Details of each completed share buyback programme to date can be found in note 7 to the consolidated financial statements.

 

All ordinary shares repurchased are held as treasury shares.

 

 

NET ASSET VALUE PER SHARE

The NAV per share of the Company is calculated by dividing the NAV by the number of shares outstanding (excluding treasury shares) of 181 790 891 (31 March 2023: 181 790 891).

	30 September 2023	31 March 2023
Shares in issue	195 942 286	195 942 286
Treasury shares	(14 151 395)	(14 151 395)
Net shares	181 790 891	181 790 891
	€ m	€ m
NAV (see page 2)	5 616	5 720
	€ per share	€ per share
NAV per share	30.89	31.46

 

SHARE PRICE

The Company’s indicative share price as quoted on the Luxembourg Stock Exchange increased by 4.3 per cent in the period from € 18.80 at 31 March 2023 to € 19.60 at 30 September 2023. The total shareholder return since inception (taking into account the initial price of € 7.1945 and including dividends paid) is 7.8 per cent per annum. The growth in NAV, including dividends paid, reflects an 8.5 per cent compounded increase since March 2009. The Company’s ordinary shares are listed on the Luxembourg Stock Exchange, Euronext Amsterdam and the Johannesburg Stock Exchange; the listing on the Johannesburg Stock Exchange is a secondary listing.

 

Share prices as at 30 September 2023 and 31 March 2023 were as follows:

 

	30 September 2023		31 March 2023
	ZAR	EUR	ZAR	EUR
Luxembourg	-	19.60	-	18.80
Amsterdam	-	19.60	-	19.00
Johannesburg	415.73	-	365.06	-

 

GLOBAL MARKETS BACKDROP

Global markets continue to be impacted by the effects of the ongoing crises in Ukraine and recently also in the Middle East, increasing interest rates and rising inflation. Rising inflation continues to put significant pressure on households and consumers as many central banks continue to increase interest rates to mitigate the inflation concerns. The extent and impact of these factors remain uncertain.

 

Reinet has no direct exposure to Russia, Ukraine or the Middle East through its underlying investments or banking relationships and has not experienced any significant direct impacts in respect of interest rate increases or rising inflation. Reinet has various banking relationships with highly rated institutions, and a well-diversified approach to cash and liquidity management.

 

Reinet continues to value its investments in line with the International Private Equity and Venture Capital Valuation (‘IPEV’) guidelines and its approved valuation procedures and methodologies. All investment valuations have been prepared using latest available data, including exchange rates and listed share prices as at 30 September 2023. Discussions have taken place with fund managers and investee companies to determine any significant changes in value and any impacts related to the various geo-political areas of conflict, volatility in stock and currency markets, interest rates, inflation and exposure to certain financial institutions. Future valuations will take into account any new impacts of the above, which could affect the valuation of underlying investments.

 

INVESTMENTS

Reinet seeks, through a range of investment structures, to build partnerships with other investors, specialised fund managers and entrepreneurs to find and develop opportunities for long-term value creation for its shareholders.

 

Since its formation in 2008, Reinet has invested some € 3.6 billion, and at 30 September 2023 committed to provide further funding of € 630 million to its current investments. Details of the funding commitments outstanding are given in the table on page 13 of this report. New commitments during the period under review amounted to € 39 million, with a net total of € 51 million funded during the period.

 

Major items impacting the NAV, significant changes in carrying value and new investments during the period under review are described below.

 

LISTED INVESTMENTS

 

BRITISH AMERICAN TOBACCO P.L.C.

The investment in BAT remains one of Reinet’s largest investments and is kept under constant review, considering the company’s performance, the industry outlook, cash flows from dividends, stock market performance, volatility and liquidity.

 

During the period under review, dividend income recorded from BAT amounted to € 65 million (£ 56 million), being BAT’s second 2023 interim dividend of some € 33 million (£ 28 million) received in August 2023 together with the third interim dividend of some € 32 million (£ 28 million) with a record date of 29 September 2023. The third interim dividend will be paid on 3 November 2023 and has been included as a receivable in the NAV as at 30 September 2023.

 

The first 2023 interim dividend of some € 32 million (£ 28 million) was received in May 2023 and was recorded as a receivable in Reinet’s March 2023 results.

 

Reinet holds 48.3 million shares in BAT (31 March 2023: 48.3 million), representing some 2.16 per cent of BAT’s issued share capital.

 

The value of Reinet’s investment in BAT amounted to € 1 436 million at 30 September 2023 (31 March 2023: € 1 561 million), being some 25.6 per cent of Reinet’s NAV (31 March 2023: 27.3 per cent). The BAT share price on the London Stock Exchange decreased from £ 28.405 at 31 March 2023 to £ 25.765 at 30 September 2023; however, this was offset by the effect of sterling strengthening against the euro in the period, resulting in a net decrease in value of € 125 million.

 

In its 30 June 2023 half-year report, BAT’s newly appointed Chief Executive, Tadeu Marroco, reported that he was pleased with BAT’s resilient performance in the first half of 2023 and the renewed sense of energy across the organisation. High inflation and slower global growth are impacting consumers and businesses, yet revenue, profit from operations and earnings are all up. Despite global tobacco industry volume expected to be down some 3 per cent, partly due to the U.S., Pakistan and uncertainty over the Ukraine crisis, BAT is expecting constant currency revenue growth of 3 to 5 per cent, with continued strong progress towards £ 5 billion new category revenue in 2025 and mid-single figure constant currency adjusted earnings per share growth. BAT also remains committed to dividend growth in sterling terms and a 65 per cent long-term dividend pay-out ratio.

 

Further information on BAT is available at www.bat.com/annualreport.

 

OTHER LISTED INVESTMENTS

Other listed investments comprised:

 

		30 September 2023	31 March 2023
		€ m	€ m
Grab Holdings Limited		35	29
Selecta Biosciences, Inc.		2	2
Soho China Limited		5	7
SPDR Gold shares		37	39
Twist Bioscience Corporation		9	6
		88	83

 

GRAB HOLDINGS LIMITED

Grab Holdings Limited (‘Grab’) is a leading superapp platform in Southeast Asia, providing everyday services that matter to consumers, including food deliveries, mobility and the e-wallet segment of financial services. Grab offers a wide range of on-demand services across 480 cities in eight countries.

 

Reinet holds 10 573 666 shares in Grab with a market value of € 35 million (31 March 2023: € 29 million). The increase in value reflects the increase in the share price during the period, together with the strengthening of the US dollar against the euro during the period.

 

Further information on Grab is available at www.grab.com.

 

TWIST BIOSCIENCE CORPORATION

Twist Bioscience Corporation (‘Twist’) is involved in the fields of medicine, agriculture, industrial chemicals and data storage, by using synthetic DNA tools, and has created a revolutionary silicon-based DNA synthesis platform that offers precision at a scale otherwise unavailable.

 

Reinet holds 444 497 shares in Twist with a market value of € 9 million (31 March 2023: € 6 million). The increase in value reflects the increase in the share price during the period, together with the strengthening of the US dollar against the euro during the period.

 

Further information on Twist is available at www.twistbioscience.com.

 

UNLISTED INVESTMENTS

Unlisted investments are carried at their estimated fair value. In determining fair value, Reinet Fund Manager S.A. (the ‘Fund Manager’) relies on audited and unaudited financial statements of investee companies, management reports and valuations provided by third-party experts. Valuation methodologies applied include the NAV of investment funds, discounted cash flow models and comparable valuation multiples, as appropriate.

 

PENSION INSURANCE CORPORATION GROUP LIMITED

Pension Corporation wholly-owned subsidiary, Pension Insurance Corporation plc (‘Pension Insurance Corporation’), is a leading provider in the UK pension risk transfer market.

 

During the first half of 2023, Pension Insurance Corporation concluded new business with premiums of £ 6.5 billion (first half of 2022: £ 2.4 billion), which primarily includes the record buy-in of two schemes sponsored by RSA Group, the largest ever bulk annuity transaction. At 30 June 2023, assets held amounted to £ 44.9 billion (31 December 2022: £ 41.2 billion) and insurance liabilities stood at £ 38.7 billion (31 December 2022: £ 33.7 billion)

 

In March 2023, the shareholders of Pension Corporation approved an inaugural dividend of 7.50 pence per ordinary share. Reinet’s share of the dividend amounting to some € 57 million (£ 50 million) was received in May 2023.

 

In September 2023, Fitch affirmed Pension Insurance Corporation’s Insurer Financial Strength rating at A+ (Strong) and Long-Term Issuer Default rating at A.

 

Reinet’s shareholding in Pension Corporation remained at 49.5 per cent in the period under review.

 

Reinet’s investment in Pension Corporation is carried at an estimated fair value of € 2 746 million at 30 September 2023 (31 March 2023: € 2 787 million). This value takes into account Pension Corporation’s adjusted equity own funds value at 30 June 2023 of some £ 6.0 billion (31 December 2022: £ 5.9 billion), corresponding valuation multiples drawn from industry data for a selected UK insurance peer group as at 30 September 2023, and a discount of 10 per cent which takes into account the illiquid nature of Reinet’s investment.

 

The decrease in Reinet’s estimated fair value of Pension Corporation over the six-month period is mainly due to a decrease in comparable company multiples derived from public information of listed peer group companies in the UK insurance sector, offset by the strengthening of sterling against the euro in the period and an increase in Pension Corporation’s adjusted equity own funds.

 

The investment in Pension Corporation represented some 48.9 per cent of Reinet’s NAV at 30 September 2023, compared to 48.7 per cent at 31 March 2023.

 

In its 30 June 2023 half-year report, Pension Corporation reports that it continued to create social value by investing strongly in the UK’s infrastructure, including funding the UK’s first reservoir for more than 30 years, and maintained a robust balance sheet, allowing it to fulfil its purpose of paying the pensions of its current and future policyholders. The significant anticipated new business pipeline and market opportunity, accelerated by improved funding levels of pension schemes, remains a key focus for the business.

 

Pension Corporation also noted that its defensively positioned portfolio continued to perform in line with expectations, with no defaults recorded in the first half due to careful management of sector and key name exposures over the past few years; as a consequence it also avoided the contagion caused by the recent problems in the US regional banking sector.

 

Further information on Pension Corporation is available at www.pensioncorporation.com.

 

PRIVATE EQUITY AND RELATED PARTNERSHIPS

TRILANTIC CAPITAL PARTNERS

Trilantic Capital Partners (‘Trilantic’) is composed of Trilantic North America and Trilantic Europe, two separate and independent private equity investment advisors focused on making controlling and significant minority interest investments in companies in their respective geographies. Trilantic North America currently targets investments in the business services and consumer sectors, and currently manages five fund families. Trilantic Europe primarily targets investments in the industrials, consumer and leisure, telecommunication, media and technology, business services and healthcare sectors, and currently manages three fund families.

 

Reinet and its minority partner invest in certain of the Trilantic general partnerships (‘Trilantic Management’). Reinet and its minority partner, through Reinet TCP Holdings Limited, invest in two of the current funds under Trilantic’s management. Reinet also directly invests in four additional funds under Trilantic’s management. The terms of investment applicable to Reinet’s investment in the Trilantic funds provide that Reinet will not pay any management fees or carried interest. In addition, Reinet receives a share of the carried interest payable on the realisation of investments held in the funds, once a hurdle rate has been achieved.

 

Reinet TCP Holdings Limited invests in Trilantic Capital Partners IV L.P. (‘Fund IV’) and Trilantic Capital Partners IV (Europe) L.P.; these funds are in the process of realising the remaining underlying investments.

 

In 2012, Reinet invested in Trilantic Capital Partners V (North America) L.P. (‘Fund V’) and in 2014, in Trilantic Energy Partners (North America) L.P. (‘TEP I’). These US-based funds are focused on North American opportunities with TEP I being especially focused on the energy industry sector. Both funds are in the process of realising the remaining underlying investments.

 

In 2017, Reinet invested in Trilantic Capital Partners VI Parallel (North America) L.P. (collectively with its parallel vehicles, ‘Fund VI’) and Trilantic Energy Partners II Parallel (North America) L.P. (collectively with its parallel vehicles, ‘TEP II’). These US-based funds are focused on North American opportunities with TEP II being especially focused on the energy industry sector.

 

Reinet’s investment in Trilantic Management and the above funds is carried at the estimated fair value of € 513 million at 30 September 2023 (31 March 2023: € 472 million) of which € 3 million (31 March 2023: € 2 million) is attributable to the minority partner. The estimated fair value is based on unaudited valuation data provided by Trilantic Management at 30 June 2023, adjusted for movements in listed investments and cash movements up to 30 September 2023.

 

The increase in the estimated fair value is due to net capital calls of € 22 million, together with increases in the estimated fair values of underlying investments and the strengthening of the US dollar against the euro in the period, offset by distributions of € 2 million in the period.

 

During the period under review, gains of € 1 million (30 September 2022: € 10 million) and carried interest of € 0.1 million (30 September 2022: € 2 million) were realised.

 

Further information on Trilantic is available at www.trilantic.com.

 

TRUARC PARTNERS FUNDS, CO-INVESTMENT OPPORTUNITIES AND MANAGEMENT COMPANY

TruArc Partners LP (‘TruArc’) is a private equity firm focused on middle-market control investments. TruArc focuses on companies that operate in sub-sectors across Specialty Manufacturing and Business Services. The TruArc investment team collaborates with its operating partners and portfolio management teams to create value through a transformational growth strategy led by organic or acquisition-driven growth.

 

Reinet is invested in Snow Phipps II, Snow Phipps III, TruArc Fund IV, in two co-investment opportunities alongside Snow Phipps III, and in the management company.

 

Reinet’s investment is carried at an estimated fair value of € 315 million at 30 September 2023 (31 March 2023: € 301 million), based on the unaudited valuation data provided by TruArc at 30 June 2023 adjusted for cash movements up to 30 September 2023.

 

The increase in the estimated fair value reflects increases in the value of underlying investments together with the strengthening of the US dollar against the euro, offset by distributions of € 4 million in the period.

 

Further information on TruArc Partners is available at www.truarcpartners.com

 

COATUE FUNDS

Coatue Management L.L.C. (‘Coatue’) is a global investment firm focused on technology-related investment opportunities led by its founder, Mr Philippe Laffont. Coatue invests in public and private markets with an emphasis on technology, media, telecommunications, the consumer and healthcare sectors.

 

Reinet is invested in Coatue Structured Offshore Feeder Fund LP and Coatue Tactical Solutions CT Offshore Fund B LP (together the ‘Coatue Structured Funds’).

 

The Coatue Structured Funds will seek to invest in structured investments in both publicly listed and privately held technology companies, focusing on investments that offer downside protection, while retaining upside potential. The Coatue Structured Funds will focus on privately negotiated transactions leveraging Coatue’s sector experience and platform resources to source proprietary transactions. Coatue will seek to employ a strategy that will opportunistically fund both offensive and defensive transactions such as M&A, and establishing paths toward accelerating organic growth. Coatue believes there is a substantial universe of potential investment opportunities and that the market could produce significant structured capital opportunities.

 

Reinet’s investment is carried at an estimated fair value of € 48 million at 30 September 2023 (31 March 2023: € 50 million), based on unaudited valuation data provided by Coatue at 30 June 2023 adjusted for cash movements up to 30 September 2023.

 

The decrease in the estimated fair value reflects distributions of € 5 million, offset by  increases in the value of underlying investments and the strengthening of the US dollar against the euro in the period.

 

Further information on Coatue is available at www.coatue.com

 

ASIAN PRIVATE EQUITY COMPANIES AND PORTFOLIO FUNDS

Milestone China Opportunities fund and management company

Reinet has invested along with Milestone Capital in a management company based in Shanghai, and has also invested in a fund managed by Milestone Capital (together ‘Milestone’).

 

Milestone Capital has a strong track record in helping portfolio companies scale their operations and become listed on either domestic or foreign stock exchanges. Funds under management invest primarily in domestic Chinese high-growth companies seeking expansion or acquisition capital. Milestone funds seek to maximise medium to long-term capital appreciation by making direct investments to acquire minority or majority equity stakes in those companies identified by Milestone’s investment team.

 

The investment in Milestone is held at the estimated fair value of € 31 million (31 March 2023: € 44 million) based on unaudited financial information provided by Milestone Capital at 30 June 2023 adjusted for movements in listed investments and cash movements up to 30 September 2023.

 

The decrease in the estimated fair value reflects distributions of € 7 million together with decreases in the value of underlying investments, offset by the strengthening of the US dollar against the euro in the period.

 

Further information on Milestone is available at www.mcmchina.com.

 

Prescient China funds and management company

Reinet invests in the Prescient China Equity Fund, the Prescient China Balanced Fund, the Prescient China Growth Enhanced Absolute Return Fund and the management company.

 

The Prescient China Equity Fund uses a systematic, quantitative approach to seek long-term capital growth by investing primarily in China ‘A’ shares listed on the Shanghai and Shenzhen Stock Exchanges by virtue of Prescient’s Qualified Foreign Institutional Investor status granted by the China Securities Regulatory Commission.

 

Prescient China Balanced Fund invests in equities following a similar strategy to the Prescient China Equity Fund and also in bonds, cash and derivatives with the objective of generating inflation-beating returns at acceptable risk levels.

 

Prescient China Growth Enhanced Absolute Return Fund aims to achieve long-term capital growth at significantly lower return volatility than conventional multi-asset China investment strategies. The fund will predominantly invest in mainland Chinese equities, bonds, cash, money market instruments and derivatives.

 

All funds are managed by a subsidiary of Prescient Limited (‘Prescient’), a South African fund manager, with the team based in Shanghai.

 

Reinet’s total investment is carried at an estimated fair value of € 128 million based on unaudited financial information provided by Prescient at 30 September 2023 (31 March 2023: € 143 million).

 

The decrease in the estimated fair value reflects decreases in the value of underlying investments offset by the strengthening of the US dollar against the euro in the period.

 

Further information on Prescient is available at www.prescient.co.za.

 

Asia Partners funds

Reinet is invested in Asia Partners I LP and Asia Partners II LP.

 

Asia Partners I LP is the inaugural fund of Asia Partners Fund Management Pte. Ltd (‘Asia Partners’), a Singapore-based growth equity investment firm. Asia Partners II LP was launched in April 2022.

 

Asia Partners bases its investment strategy on the long-term growth potential of Southeast Asia, the rapid growth of innovative technology and technology-enabled businesses in the region, and target investments in the $ 20 million to $ 80 million range, often described as the ‘Series C/D Gap’ between early-stage venture capital and the public capital markets.

 

In April 2022, Reinet committed € 29 million ($ 31 million) to Asia Partners II LP as part of the first close. This amount increased to € 35 million ($ 37 million) by March 2023 and to € 39 million ($ 41 million) through September 2023 and is expected to increase further at subsequent fund closings.

 

The investment in Asia Partners funds is held at the estimated fair value of € 32 million (31 March 2023: € 32 million) based on unaudited financial information provided by Asia Partners at 30 June 2023 adjusted for cash movements up to 30 September 2023.

 

The estimated fair value reflects capital contributions of € 1 million together with the strengthening of the US dollar against the euro in the period, offset by decreases in the value of underlying investments in the period.

 

Further information on Asia Partners is available at www.asiapartners.com

 

SPECIALISED INVESTMENT FUNDS

NanoDimension funds and co-investment opportunities

ND Capital (‘NanoDimension’) is a venture capital firm founded in 2002 that invests in disruptive technologies in and at the intersection of the life and physical sciences, accelerated by data sciences. Their core belief is that scientific disciplines will continue to converge, and that some of the biggest breakthroughs will occur at the intersection of two or more disciplines. The focus of each fund is to invest in and support the establishment, technology development and scale up, growth and commercialisation of portfolio companies. They believe that these disruptive technologies address some of the biggest societal problems. Investments range from molecular diagnostics, cell and gene therapies, organs on chip, DNA synthesis and DNA editing, energy storage and electrical propulsion systems for aviation. They invest predominantly across the United States and Europe with additional investments in Canada, Denmark and the United Kingdom.

 

Reinet is a limited partner in NanoDimension L.P., NanoDimension II L.P., NanoDimension III L.P., NanoDimension IV L.P. and ND Capital Opportunity Fund I L.P., and is invested in one co-investment opportunity alongside NanoDimension II L.P.

 

At 30 September 2023, the estimated fair value of Reinet’s investment amounted to € 114 million (31 March 2023: € 94 million). The estimated fair value is based on unaudited valuation data provided by NanoDimension as at 30 June 2023 adjusted for movements in listed investments and cash movements up to 30 September 2023.

 

The increase in estimated fair value reflects contributions of € 16 million and increases in the value of underlying investments, together with the strengthening of the US dollar against the euro in the period.

 

Further information on NanoDimension is available at www.ndcapital.com.

 

Other investments

Other investments are carried at their estimated fair value of € 78 million at 30 September 2023 (31 March 2023: € 58 million).

 

The increase in the estimated fair value reflects contributions of € 21 million together with the strengthening of the US dollar against the euro in the period, offset by decreases in the value of underlying investments in the period.

 

Further information on Reinet’s investments may be found in the Reinet 2023 annual report which is available at www.reinet/investor-relations/reports.html.

 

TOTAL COMMITMENTS

Funding commitments are entered into in various currencies including sterling and US dollar and are converted into euro using 30 September 2023 exchange rates.

 

The table below summarises Reinet’s investment commitments as at 30 September 2023.

	31 March	Exchange rate	Committed  during the	Refunded/ (funded) during the	30 September	30 September
	2023(1)	effects(2)	period(3)	period(3)	2023(3)	2023
	€ m	€ m	€ m	€ m	€ m	%
Private equity and related partnerships
Trilantic Capital Partners	120	2	-	(22)	100	15.9
Funds and related general partners(4)
TruArc Partners	148	5	2	4	159	25.3
Funds, investment opportunities and the management company
Coatue funds	228	6	-	5	239	37.9
Asian private equity companies and portfolio funds
Asia Partners funds	32	1	4	(1)	36	5.7
Specialised investment funds
NanoDimension funds and
co‑investment opportunities	60	1	-	(16)	45	7.1
Other fund investments	32	-	(1)	-	31	4.9
United States land development	5	-	-	-		0.8
and mortgages					5
Other investments	2	-	34	(21)	15	2.4
	627	15	39	(51)	630	100.0

(1)Commitments calculated using 31 March 2023 exchange rates.

(2)Reflects exchange rate movements between 31 March 2023 and 30 September 2023.

(3)Amounts calculated using 30 September 2023 exchange rates, which may differ from actual exchange rates on the transaction date.

(4)Commitments noted represent only Reinet’s share of the investments at 30 September 2023, additional commitments payable by the minority partner amount to € 3 million in respect of Trilantic.

 

CASH AND LIQUID FUNDS

Reinet holds cash on deposit principally in European-based banks and in liquidity funds holding highly rated short-term instruments.

 

Reinet’s liquidity is measured by its ability to meet potential cash requirements, including unfunded commitments on investments and the repayment of borrowings, and at 30 September 2023 can be summarised as follows:

 

 

Cash and liquid funds Undrawn borrowing facilities Cash required for unfunded commitments (refer to table above) Cash required to meet GBP borrowing obligations

€ 301 m € 231 m (€ 630 m) (€ 231 m)

 

The undrawn borrowing facilities comprise a revolving facility with Bank of America, N.A. and with Citibank N.A. (see below).

 

Reinet may sell further BAT shares or use such shares to secure additional financing facilities from time to time.

 

BANK BORROWINGS

BORROWINGS

Reinet has a fixed-rate £ 100 million margin loan due to Citibank N.A., which is repayable in August 2024. At 30 September 2023, the estimated fair value of the loan amounted to € 111 million (31 March 2023: € 108 million).

 

In addition, Reinet has a fixed-rate £ 100 million margin loan due to Bank of America, N.A., which is repayable in March 2025. At 30 September 2023, the estimated fair value of the loan amounted to € 110 million (31 March 2023: € 109 million).

 

The increase in the estimated fair value of both loans reflects the strengthening of sterling against the euro in the period, offset by the increase in the discount rates used (due to increases in market interest rates) during the period.

 

Some 15 million BAT shares have been pledged to collateralise these two loans.

 

In addition, Reinet has a facility agreement in place with Citibank N.A. up to August 2024 and with Bank of America, N.A. up to March 2025. These facilities allow Reinet to drawdown the equivalent of up to € 231 million (£ 200 million) in a combination of currencies to fund further investment commitments. As at 30 September 2023 and 31 March 2023 no funds have been drawn under these facilities.

 

Refer to page 56 of the Reinet 2023 annual report for a description of Reinet’s policy on foreign exchange exposure.

OTHER LIABILITIES

Minority interest, fees payable and other liabilities, net of other assets comprise:

		30 September 2023	31 March 2023
		€ m	€ m
Minority interest		(4)	(4)
Management fee		(18)	(19)
Performance fee		(12)	-
Tax provisions		(4)	(5)
Accruals and other payables, net of other receivables		(9)	(8)
BAT dividend receivable		32	32
Total other liabilities		(15)	(4)

 

The minority interest liability is in respect of a minority partner’s share in the gains and losses not yet distributed arising from the estimated fair value movement of investments in which they have interests.

 

Tax provisions relate to realised and unrealised gains arising from the investments in Trilantic Capital Partners and TruArc Partners, together with withholding and corporate taxes relating to the investment in United States land development and mortgages.

 

The BAT dividend receivable had a record date of 29 September 2023 and a payment date of 3 November 2023.

 

A provision of € 12 million has been made for the six-month period in respect of a potential performance fee as at 30 September 2023 (31 March 2023: € nil), based on the indicative closing price of Reinet shares of € 19.60. In order for a performance fee to be payable at 31 March 2024, the volume weighted average market price of the Company’s share determined by taking into account volume and price information on the Luxembourg Stock Exchange, Euronext Amsterdam and the Johannesburg Stock Exchange over the last 20 trading days of the current financial year needs to exceed € 18.33.

 

The performance fee (if applicable) and management fee are payable to Reinet Investment Advisors Limited.

 

INCOME STATEMENT

	Six-month period ended		Six-month period ended
	30 September 2023		30 September 2022
	€ m	€ m	€ m		€ m
Income
BAT dividends	65		61
Pension Corporation dividend	57		-
Interest and other investment income	11		10
Realised (loss)/gain on sale of other investments	(15)		1
Carried interest earned on investments	-		2
Total income		118			74
Expenses
Management fee	(24)		(26)
Performance fee	(12)		-
Operating expenses, foreign exchange and transaction-related costs	(4)		(3)
Interest and related financing expenses	(3)		(3)
Total expenses		(43)			(32)
Realised investment income, net of expenses		75			42
Fair value adjustments
BAT	(125)		(56)
Pension Corporation	(41)		(551)
Other investments	40		129
Derivative instruments	-		(1)
Borrowings	(4)		19
Total fair value adjustments		(130)			(460)
		(55)			(418)
Effect of exchange rate changes on cash balances		6			19
Net loss		(49)			(399)
Minority interest		-			-
Loss attributable to the shareholders of the Company		(49)			(399)

 

INCOME

Dividend income from BAT recorded during the period amounted to € 65 million (£ 56 million) (30 September 2022: € 61 million (£ 52 million)). Dividend income recorded for the six months to September 2023 was in respect of BAT’s second and third 2023 interim dividends, each amounting to £ 0.577 per share (2022: £ 0.545 per share), with the third 2023 interim dividend having a record date of 29 September 2023.

 

Dividend income from Pension Corporation amounting to some € 57 million (£ 50 million) was received in May 2023. This is an inaugural dividend of 7.50 pence per ordinary share.

 

Interest income is earned on bank deposits, investments and loans made to underlying investments.

 

Realised losses on other investments were in respect of investments in Milestone funds, offset by realised gains in respect of investments in other fund investments.

 

EXPENSES

The management fee for the period ended 30 September 2023 amounts to € 24 million and is based on Reinet Fund’s NAV of € 5 721 million at 31 March 2023 (30 September 2022: € 26 million, based on Reinet Fund’s NAV of € 5 932 million at 31 March 2022).

 

A performance fee may be payable for the year ended 31 March 2024 if certain conditions are met. The performance fee is calculated as 10 per cent of the Cumulative Total Shareholder Return as defined in the Company’s prospectus, published on 10 October 2008 as last amended on 25 August 2020, including dividends paid, over the period since completion of the rights issue in December 2008 up to 31 March 2024, less the sum of all performance fees paid in respect of previous periods. A provision for the potential performance fee of € 12 million was accrued in respect of the six-month period ended 30 September 2023 (30 September 2022: € nil).

 

Operating expenses of € 4 million include € 1 million in respect of charges from Reinet Investments Manager S.A. (the ‘General Partner’) and other expenses, including legal and other fees, which amounted to € 3 million.

 

FAIR VALUE ADJUSTMENTS

The investment in 48.3 million BAT shares decreased in value by € 125 million during the period under review. Of this, € 148 million was attributable to the decrease in value of the underlying BAT shares in sterling terms, offset by an increase of € 23 million due to the strengthening of sterling against the euro during the period under review.

 

The investment in Pension Corporation decreased in value by € 41 million which includes a decrease of € 152 million in respect of the decrease in market multiples, offset by an increase of € 72 million due to the movement on Pension Corporation’s adjusted equity own funds value and € 39 million due to the strengthening of sterling against the euro in the period under review (refer to page 7 for more detail).

 

The unrealised fair value adjustment of € 40 million in respect of other investments includes an increase in the estimated fair value of Trilantic Capital Partners and TruArc Partners (refer to note 4 on page 24 for more details). The above amounts include the effect of changes in foreign exchange rates in the period under review.

 

Borrowings are carried at estimated fair value reflecting the discounted cash flow value of future principal and interest payments taking into account prevailing interest rates. An unrealised loss of € 4 million arose during the period in respect of the Citibank N.A. and Bank of America, N.A. loans as a result of increased market interest rates together with the strengthening of sterling in the period.

 

MINORITY INTEREST

The minority interest expense arises in respect of the minority partner's share in the earnings of Reinet TCP Holdings Limited.

 

DIVIDEND

A cash dividend of some € 54.5 million or € 0.30 per share (excluding treasury shares held) was paid in September 2023, following approval at the annual general meeting on 29 August 2023. The Company only declares an annual dividend.

 

In 2013 the Company sought clarification from the South African Revenue Service (‘SARS’) as to the treatment of any dividends to be declared by the Company and paid to holders of depository receipts issued by Reinet Securities SA in respect of Reinet ordinary shares. This ruling from SARS was renewed in 2018 and again in October 2023 for a further 5 years in respect of any dividends to be declared by the Company and paid to South African resident beneficial holders of the Company’s ordinary shares listed on the Johannesburg Stock Exchange. SARS confirmed to the Company that any such dividends would be treated as ‘foreign dividends’ as defined in the Income Tax Act No. 58 of 1962.

 

CAPITAL STRUCTURE

As at 30 September 2023 and 31 March 2023 there were 195 941 286 ordinary shares and 1 000 management shares in issue.

 

As at 30 September 2023, the Company held 14 151 395 ordinary shares as treasury shares (31 March 2023: 14 151 395). The voting and dividend rights attached to the treasury shares are suspended. Therefore the total number of voting rights at 30 September 2023 was 181 790 891 (31 March 2023: 181 790 891).

 

FINANCIAL STATEMENTS

The consolidated unaudited financial statements at 30 September 2023, on which this announcement is based, have been approved by the Board of the General Partner on 13 November 2023.

 

SHARE INFORMATION

Reinet Investments S.C.A. (the ‘Company’) ordinary shares are listed and traded on the Luxembourg Stock Exchange (symbol ‘REINI’, Refinitiv code REIT.LU), on Euronext Amsterdam (symbol ‘REINA’, Refinitiv code REIT.AS) and on the Johannesburg Stock Exchange (symbol ‘RNI’, Refinitiv code RNIJ.J) with the ISIN number LU0383812293; the listing on the Johannesburg Stock Exchange is a secondary listing. The Company’s ordinary shares are included in the ‘LuxX’ index of the principal shares traded on the Luxembourg Stock Exchange.

 

DATA PROTECTION

The Data Protection Information Notice is available on the Company’s website (www.reinet.com/investor-relations/data-protection.html), which is intended to provide investors with detailed information regarding the processing of their personal data, as well as the Privacy Policy available on its website (www.reinet.com/privacy-policy.html), which is intended to provide users of the Company’s website with information regarding the processing of their personal data resulting from the use of the Company’s website and/or from requests made via the Company’s website.

 

 

Reinet Investments Manager S.A.

General Partner

For and on behalf of Reinet Investments S.C.A.

 

Website: www.reinet.com