Schroder Real Estate Investment Trust Ltd · LSE:SREI
Schroder Real Estate Investment Trust — Schroder British Opportunities Trust — H1 2023 Earnings Presentation
47 slides from Schroder Real Estate Investment Trust's earnings presentation, December 2023
Slide 1: Schroder British Opportunities Trust plc
Marketing material Schroder British Opportunities Trust plc Rory Bateman Tim Creed December 2023 Uzo Ekwue Pav Sriharan Co-Portfolio Managers Co-Portfolio Managers Public Equity Private Equity
Slide 2: An exciting opportunity to invest in public and private UK growth companies
An exciting opportunity to invest in public and private UK growth companies We invest in both public and private equity, targeting small & mid-sized UK businesses, facilitating and driving growth Providing access to a larger universe of high quality, high growth companies Executed by an established
Slide 3: Powerful combination of public equity and private equity expertise
Powerful combination of public equity and private equity expertise Uzo Ekwue and Pav Sriharan added as co-managers Rory Bateman Tim Creed Co-Head of Investments and Head of Equities UK and European Head of Private Equity Member of Schroders’ General Management Selected as one of '50 Most Influential
Slide 4: Why Public Private?
Why Public Private? Private Equity offers access Ability to invest in to high quality companies, Enhanced universe: can attractive UK companies with strong valuation find the best stocks that are currently priced at creation potential, not whether public or private a substantial discount to accessib
Slide 5: Overview
Overview Financial performance Portfolio overview Outlook Resilient net asset value (NAV) Focus on quality, growing and mostly Opportunity in quoted UK companies performance since inception against profitable companies that have strong UK small and mid-caps have substantial re- challenging market ba
Slide 6: Long-term performance
Long-term performance Share price and net asset value since inception to 24 November 2023 120 Market downturn, shift from growth to value 110 100 90 80 70 60 Public equity allocation main contributor to NAV performance Private equity allocation main contributor to NAV performance 50 Dec 20 Mar 21 Ju
Slide 7: Fixed life of Company should act as catalyst to closing of discount
Fixed life1 of Company should act as catalyst to closing of discount Illustrative example assuming a recent total portfolio discount to NAV of 32% Implied annualised return From 30 November 2023 until 31 May 2028 (31 May 2028 = last date for Winding-Up Resolution) 20% 16% 16.6% 12% 12.0% 8.8% 8% 8.2
Slide 8: Portfolio performance (6 months to 30 September 2023)
Portfolio performance (6 months to 30 September 2023) Strong private equity allocation performance has acted as a buffer to public markets £m 79.3 77.3 (1.6) (0.4) Quoted (3.9) Unquoted +2.3 Past performance is not a guide to future performance and may not be repeated. The value of investments and t
Slide 9: Key positive and negative performers
Key positive and negative performers 6 months to 30 September 2023 Top 5 contributors Contribution % Bottom 5 contributors Contribution % EasyPark 2.2 Watches of Switzerland -0.9 Pirum 1.4 Rapyd -0.9 Cera 0.4 Learning Technologies -0.7 Bytes 0.4 Learning Curve -0.7 Mintec 0.3 OSB -0.6 Past performan
Slide 10: Calendar year performance – Schroder British Opportunities Trust plc
Calendar year performance – Schroder British Opportunities Trust plc Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from t hem may go down as well as up and investors may not get back the amounts originally invested. Exchange ra
Slide 11: Fund risk considerations
Fund risk considerations Conflict of Interest Risk: The AIFM, the Portfolio Managers and their affiliates will provide services to other clients, which could compete directly or indirectly with the activities of the Company and may be subject to conflicts of interest in respect of their activities o
Slide 12: Top 10 holdings (as at 30 September 2023)
Top 10 holdings (as at 30 September 2023) 31 March 2023 30 September 2023 Quoted/ % of total % of total Top 10 holdings Fair value (£’000) Fair value (£’000) unquoted investments investments Mintec Unquoted 8,614 11.6 8,865 12.4 Rapyd Unquoted 8,399 11.3 7,721 10.8 Cera Unquoted 6,986 9.5 7,316 10.2
Slide 13: Portfolio positioning
Portfolio positioning As at 30 September 2023 Total investments: Public/Private (%) Total investments: industry (%) Textiles, Apparel & Building Specialty Retail, 2.6 Luxury Goods, 1.5 Electrical Equipment, products, 2.3 2.5 Energy Equipment & Diversified Services, 0.1 Consumer Financial Services, 1
Slide 14: Private equity allocation development and valuation background
Private equity allocation development and valuation background
Slide 15: Strategy in action
Strategy in action Key drivers of growth for SBO’s private equity investments Robust organic revenue Multiple add-on Large transformational Company growth acquisitions acquisition/merger Yes Yes Yes Yes Yes Yes Yes Yes (not closed yet) Yes Yes Yes Yes Yes Yes (two) Yes Yes Yes n/a n/a Source: Schrod
Slide 16: Net increase in PE portfolio every quarter since launch
Net increase in PE portfolio every quarter since launch QoQ NAV % change (net of contributions and distributions) 50% 14% 12% 11% 10% 10% 10% 8% 8% 8% 6% 6% 5% 4% 3% 2% 1% 1% 0% Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Past performance is not a guide to
Slide 17: Private equity allocation attribution – 12 months to 31 March 2023
Private equity allocation attribution – 12 months to 31 March 2023 Transactional activity and trading gains have driven strong performance £ millions 47.9 Transactional activity at Company performance and valuation portfolio companies Q1 22 NAV New Company Trading Valuation Net debt FX/other Distrib
Slide 18: Private equity allocation attribution – 6 months to 30 September 2023
Private equity allocation attribution – 6 months to 30 September 2023 Transactional activity and trading gains have driven performance £ millions 50.4 Transactional activity at Company performance and valuation portfolio companies Past performance is not a guide to future performance and may not be
Slide 19: EBITDA development of private equity allocation: 12 months to 31 March 2023
EBITDA development of private equity allocation: 12 months to 31 March 2023 Strong organic and inorganic growth witnessed, while transformational add-on acquisitions have enhanced total EBITDA £ millions 43.4 58.2 52.2 775.3 93.3 307.5 97.7 166.4 Q1-22 New Transformative Organic Inorganic FX Q1-23 i
Slide 20: EBITDA development of private equity allocation: 6 months to 30 September 2023
EBITDA development of private equity allocation: 6 months to 30 September 2023 Continued robust organic and inorganic growth witnessed £ millions 43.4 816.5 Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from t hem may go down a
Slide 21: Strong profitability and continued growth in Company's PE portfolio
Strong profitability and continued growth in Company’s PE portfolio EBITDA-positive businesses valued at a significant discount to public markets Profitability significantly exceeds …while more effectively …and continuing to be valued at a public comparables… utilising capital… notable discount to p
Slide 22: Private equity strategy
Private equity strategy Growth Growth/Buyout Small/mid Buyout - Emerging companies - Mature companies - Established companies - Technology and/or market risk - Valuation and execution risk - Valuation and execution risk - Early revenue generating - Moderate growth - High growth - High growth - Profi
Slide 23: PE allocation demonstrating strong aggregate performance since launch
PE allocation demonstrating strong aggregate performance since launch Invested % of total Total Value TVPI* Investment Commentary Status capital investments 10.2 Ranked top UK Healthtech 2023 with over 45 million home visits to date 6.2 Continues to benefit from the cyber risk insurance tailwind 8.7
Slide 24: Contextualising our private equity allocation focus
Contextualising our private equity allocation focus Investment strategy by company lifecycle stage The Company’s target areas for private equity investments Venture Venture Small Mid Large/mega Growth Turnaround seed/early late/pre-IPO buyout buyout buyout Areas of heightened valuation risk* – areas
Slide 25: EasyPark's intended acquisition of Flowbird Group
EasyPark’s intended acquisition of Flowbird Group Creating a truly global leading urban mobility business Recent news EasyPark Group announced its intention to acquire Flowbird Group, a global mobility player providing integrated parking and transportation solutions EasyPark Group is one of the glob
Slide 26: Most deals sourced from families, entrepreneurs and corporates
Most deals sourced from families, entrepreneurs and corporates High transformation potential Small European buyout dominated by more than 60% of transactions with Significant majority of Schroders Capital investments into family/founder- families/founders 1 controlled businesses 2 100% 90% 80% 70% S
Slide 27: Public equity strategy, performance, and highlights
Public equity strategy, performance, and highlights
Slide 28: Public equity strategy
Public equity strategy 1 – Opportunity set We screen for growth companies in the UK1 that are listed on the FTSE AIM, FTSE Small Cap and FTSE 250 indices with a market cap range between £50m and £2bn. 2 – Identifying a Growth Gap What we look for Market inefficiencies often drive material difference
Slide 29: Public equity sleeve composition – December 2022
Public equity sleeve composition – 31 December 2022 Concentrated towards consumer discretionary, industrials and technology stocks Healthcare Energy 2.8% 0.5% 43% Consumer Discretionary Financials 8.0% • As we exited 2022, the standalone public equity sleeve had its largest allocation to this area o
Slide 30: Public equity sleeve performance
Public equity sleeve performance A volatile year amid market uncertainty…but we are well placed as equities recover Total return, at 31 March 23 Total return, at 30 September 23 Total return, at 23 November 23 4.0% 10.0% 10.0% 8.3% 6.7% 6.7% 2.0% 6.0% 4.7% 8.0% 2.3% 0.0% 6.0% 2.0% -2.0% 3.8% -4.0% 4
Slide 31: Public equity sleeve performance
Public equity sleeve performance Sharp rebound in largest positions since half-year report and accounts Total return (%) of top 5 holdings as at 30 September 2023, rebased to zero 60 50 40 30 20 10 0 -10 -20 Sep 23 Oct 23 Nov 23 CITY PUB GROUP ASCENTIAL MAXCYTE INCORP. TRUSTPILOT GROUP WATCHES OF SW
Slide 32: City Pub Group Takeout
City Pub Group Takeout Transaction demonstrates the undervalued nature of our portfolio & UK equities Investment thesis 140 ▪ We first invested in City Pub Group on 23 March 2021 when COVID-19 was more of a concern for businesses that had been forced into lockdown to manage the spread of the disease
Slide 33: City Pub Group: anatomy of an investment
City Pub Group: anatomy of an investment Taking advantage of mispricings to improve our investment return 160 Full investment is exited 140 120 De-minimis reduction Initial purchase Addition 100 80 Takeover announced 60 40 Mar21 Sep21 Mar22 Sep22 Mar23 Sep23 Source: Schroders. For illustrative purpo
Slide 34: 6 of our public companies have been taken over since launch
6 of our public companies have been taken over since launch* Private equity and corporates recognising strong growth profiles in the portfolio Bid: December 2020 Bid: September 2021 Bid: May 2022 Total return: 30.4% Total return: -18.2% Total return: 53.2% Calisen is a leading owner and manager of e
Slide 35: Ascential Break-Up
Ascential Break-Up Proposed sale of Digital Commerce and WGSN for a combined £1.4 billion Sale of Digital Commerce 290 ▪ Compelling offer received from Ominicom, a leading global marketing and corporate communications company 280 ▪ Estimated completion: Q1 2024 ▪ Proceeds expected to be $775 million
Slide 36: Portfolio activity
Portfolio activity 6 months to 30 September 2023 We exited the position after reassessing the potential downside We modestly trimmed the position to capitalise on recent share price appreciation Source: Schroders, December 2023. Stocks shown are for illustrative purposes only and should not be viewe
Slide 37: The opportunity in UK SMID cap public equities
The opportunity in UK SMID cap public equities
Slide 38: Non-US markets continue to look cheaper
Non-US markets continue to look cheaper Valuation vs 15-year median (% above or below) Equity m arket CAPE Forward P/ E Trailing P/ E P/ B Dividend yield 27 18 22 4.0 1.6 US (12%) (7%) (8%) (39%) (23%) 13 10 11 1.7 3.9 UK (2%) (-20%) (-22%) (-6%) (-1%) 18 12 14 1.9 3.3 Europe ex. UK (8%) (-12%) (-19
Slide 39: Cheap (and getting cheaper)
Cheap (and getting cheaper) UK equities trade at a historically cheap 30% discount to global equities The valuation of UK equities in the context of 10 broad asset classes dating back over the last 20 years Gold MSCI US US Real Yields Copper MSCI ACWI Brent Oil MSCI Emerging Markets MSCI Japan MSCI
Slide 40: Why are we optimistic on small & mid cap returns from here?
Why are we optimistic on small & mid cap returns from here? Buying on weakness has given the best long-term returns UK small Cap performance vs. FTSE 100 index % … subsequent 3 year 30 27.9% performance 22.0% 20.1% 20 16.2% 16.9% 12.5% 10 8.2% … subsequent 5 year 1.1% performance 0 -10 Small Cap -20
Slide 41: UK is attractively valued
UK is attractively valued Cheap versus other regions and history ▪ 12m forward Price to Earnings (P/E) multiple ▪ MSCI Regions ▪ Data for last 20 years Past performance is not a guide to future performance and may not be repeated. Source: FactSet, Goldman Sachs Global Investment Research, 20 years t
Slide 42: Long term Mid 250 outperformance
Long term Mid 250 outperformance …of most developed market indices over the last 25 years FTSE 250 ex Investment Trusts vs Large developed markets, Total Return, % 1000 800 600 400 200 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 202
Slide 43: Outlook
Schroders Outlook SSeS SS
Slide 44: Looking to the future
Looking to the future Private equity allocation Access to larger universe of Well placed to invest has performed well since high quality, high growth further on the public side of launch and excited for companies means we have the portfolio as the UK future progress and no shortage of investment mar
Slide 45: Appendix
Schroders Appendix RSs \ SS \ IMs XX Ye
Slide 46: Important information
Important information Marketing material. Not for release, distribution or publication, directly or indirectly, to US persons or in or into the United States, Canada, Australia, the Republic of South Africa or Japan or any other jurisdiction where it is unlawful to distribute this document. This doc
Slide 47: Important information
Important information The material is not intended to provide, and should not be relied on for accounting, legal or tax advice. Reliance should not be placed on any views or information in the material when taking individual investment and/or strategic decisions. Any references to securities, sector
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