Good day. Thank you for standing by. Welcome to the PGPE Limited First Quarter 2026 Results Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you may submit your questions via the webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Andreea Mateescu. Please go ahead.
Good morning. Thank you for joining us today. I'm Andreea Mateescu, your Investor Relations responsible for PGPE Ltd, and I'm delighted to be here with my colleague, Federica Cazzaniga, Senior Portfolio Manager responsible for PGPE Ltd. Today, we will be sharing an update on the NAV development and portfolio highlights during the first quarter of 2026. Before we get started, just a quick note on housekeeping. If you have any questions during the webcast, please use the Q&A tool available on your screen. We will address questions at the end of the presentation. To ensure we cover as much as possible, we will group similar questions and respond to them in one go. If we run out of time, or if you have additional questions afterward, please feel free to reach out to us via email or through the contact form on our website.
Let's get started. Let's have a look at the key developments during the first quarter. NAV declined by 3.3% on a total return basis year-to-date, largely driven by the listed exposures. As of quarter end, listed assets represent around 6.5% of the portfolio, which is down from the roughly 11% at the year-end, and at the same time sits at the lowest it has been in the last couple of years. Value creation was also moderated by idiosyncratic challenges in select portfolio companies. Our younger vintages continue to perform well and support future growth. We continue to see strong distribution activity, with EUR 78 million received at the portfolio level, significantly exceeding the EUR 13 million invested. Federica Cazzaniga will provide further details on distributions later in the presentation.
From a balance sheet perspective, we remain very well-positioned, with EUR 33 million of cash and cash equivalents and a fully undrawn credit facility of EUR 150 million as of quarter end. In terms of capital allocation, the board has allocated EUR 18 million to the company share buyback program, this is in addition to the residual EUR 2 million remaining from the first pool announced in October 2025. The combined EUR 20 million buyback program was announced in April and will expire on 31st of July 2026. We will also pay a first interim dividend of EUR 0.325 per share in June, which is in line with the company policy to distribute 5% of the closing NAV in semiannual payments. At a current discount to NAV, this implies a prospective dividend yield of over 7%.
Finally, I would like to briefly draw your attention to the notice of Annual General Meeting, which was published on 30th of April. The AGM will take place on 18th of June, and full details, including the voting instructions, are available on the company website. To cast your vote, and unless you hold the shares directly in certified form or are a registered shareholder, please contact your client relationship manager at your custodian bank or nominee and provide your voting instructions. Your custodian or nominee will take care of forwarding your voting instructions. Before we go deeper into the portfolio, it's helpful to briefly step back and remind you how we approach investing at Partners Group. Partners Group is one of the largest global private markets firms with a differentiated heritage. We are rooted in Switzerland, and that distinct origin is reflected in our DNA.
What truly sets us apart is our client-centric mindset. Everything we do is anchored in long-term stewardship, helping our clients navigate not only favorable markets but also periods of uncertainty. That ability to stay aligned through cycles, it's a critical part of the value we deliver. At the same time, we complement this long-term orientation with what we describe as an industrial DNA. This translates into a highly hands-on approach grounded in deep sector expertise, where we invest significant time understanding industries, building conviction, and actively driving value creation within our portfolio. Underlying all of this is a strong culture of innovation and entrepreneurship. We foster an ownership mindset across the firm, constantly seeking new ways to create value and capture opportunities in evolving private markets. Today, we operate through a global platform spanning 25 offices and around 2,000 employees, combining local presence with global connectivity.
This footprint enables us to source opportunities worldwide, stay close to our investments, and maintain strong client relationships while ensuring that insights and expertise flow seamlessly across the platform. Building on that, what we aim to do as a firm is not just invest in companies, but to transform them. We focus on high-conviction thematic opportunities supported by deep industry expertise and a broad advisory network. In many cases, we spend one to two years developing our views before we even deploy capital. We enter investments with a very clear value creation plan. Once invested, our approach is fundamentally hands-on. We bring what we call an entrepreneurial ownership model, working closely with management teams through active boards and a global network of over 200 operating directors.
Across the portfolio, we run hundreds of value creation initiatives supported by a systematic governance framework that allows us to track progress and deliver outcomes consistently. When you bring this all together, it translates into what we call transformational investing. You can see a few examples of this on the slide. In platform building, we continue to scale businesses like The Pest Control Partnership, this is a European buy and build platform in pest control. The business is progressing well with acquisitions and integration, it's also rolling out core IT systems and functions. Similarly, Afileon is a platform built to create a leading provider of tax and accounting services for Germany's SME segment. The company now brings together around 30 firms, it's advancing on integration, including the rollout of a centralized digital platform to drive efficiency and scalability.
In platform enhancement, companies like Velvet CARE, which is a European hygiene paper producer. Here we continue to execute strategic initiatives, including the launch of a new paper machine that increased production capacity at the Hlučín site by more than 40%. Federica, I will hand over this to you for the portfolio update.
Thank you, Andreea, and good morning, everyone also on my side. As usual, I will take you through portfolio activity during the quarter and an update on overall portfolio developments and performance. In this section, you will really hear that the themes that have shaped the portfolio over the past quarter are a continuation of the trends that we presented in our full year 2025 results call. Starting on this page, we look at overall portfolio composition and top 10 holdings, and we can clearly see that these were largely unchanged during the first quarter of 2026, and our top 10 holdings continue to represent approximately 40% of the NAV. Now, I mentioned last time around that our top 10 would have seen some reshuffling on the back of ongoing realizations, and this has indeed been the case.
Looking at Vishal Mega Mart, for example, our leading Indian retailer, we executed a sell-down of a 14% stake in the company during the quarter. This is therefore no longer our largest holding, yet it remains solidly in our top three, while generating EUR 15 million proceeds for PGPE Ltd during the quarter. Despite listed market volatility weighing on stock price for Vishal during the month of March, the company remains amongst the top performers and distribution contributors on a last 12-month basis. Further, the company reported robust financial results for the fiscal third quarter, with high teens revenue and adjusted EBITDA growth year-on-year, respectively. Vishal's Quick Commerce initiative has now extended to over 485 cities in India and counts 12 million registered users as of December 2025, and the company remains focused on continued expansion, especially in the South and West India region.
With stock price having largely recovered Q1 losses until today, 25th of May, Vishal remains well-positioned to continue driving positive returns and liquidity within the PGPE Ltd portfolio. Looking at upcoming changes in the top 10, Clario, our global provider of digital clinical trial technologies, will leave the top 10 holdings at the next reporting period as the sale that we announced back in Q4 2025 was now closed in April 2026, and disposition fully realized. While overall private equity transaction activity has somewhat slowed during the first quarter of 2026 amid Middle East uncertainty and some AI disruption in society, we've still been able to realize significant liquidity within this portfolio, capitalizing on the momentum that we've seen in 2025. During Q1 2026, PGPE Ltd received just under EUR 80 million in proceeds from partial or full realization of its holdings, largely from more mature assets, so invested pre-2020.
With the sale of Clario, as I just mentioned, at a close fourth quarter end, distribution exceeded EUR 100 million year to date, showing how this positive momentum is actually continuing beyond the first quarter. Notably, the realized outcomes continue to take place at or above recent carrying values, validating our valuations. Also importantly, recently realized returns are well-aligned with our long-term historical level, with a weighted average realized PVPI that is close to three times money multiple over the last 12 months ending March 2026. Amongst the list here on the slide of Q1 realization, it is worth highlighting the one Galderma as during the month of March, we fully exited our stake in this globally recognized category here in dermatology and skincare.
It is our investment in 2019, Partners Group as supporting the scaling of Galderma's aesthetics franchise, its geographical and product expansion, alongside broader operational professionalization, revenue growth, and margin expansion of the company. The position has been gradually reduced through a series of share sales following IPO in early 2024, that culminated in the final block trade this quarter that realized a return in excess of 3.5 money multiple. The continued progress and realization in our mature cohort results in a repositioning of the portfolio towards more recent vintage assets, which we have defined as either inflection vintages or younger vintages for simplicity on this slide. The weighted average holding period in the portfolio also continues to decrease.
We were over five years, one year ago, down to 4.6 years back in December 25, and as you can see, this has further reduced to 4.4 years average holding period right now. This is more than two years lower than the average holding period that is observed in the broader buyout space. Now, looking at last 12-month portfolio result, as I mentioned, we see a continuation of the themes that we discussed on our latest call, with operating performance remaining under pressure, this time from fresh macro headwinds, most notably the war in the Middle East, and this continued impact on business environment. Last 12-month EBITDA growth declined slightly to just over 6% at the end of March, reflecting moderate slowdown across the broader portfolio.
On the other hand, the aggregate changes in EBITDA multiples and net debt to EBITDA reflect changes in broader portfolio composition rather than changes at the individual company levels with multiples and leverage metrics remain relatively unchanged for each portfolio company. All in all, idiosyncratic challenges at KinderCare, Pharmathen, and AMMEGA, our bottom three performers, continue to offset modest value creation of the rest of the portfolio, which was also largely adversely impacted by negative returns in listed holdings, as Andreea mentioned earlier on. This largely feeds through the mature cohort, as you can see in the bar chart. Continued dollar depreciation further detracting from returns, together with fees and expenses, and bringing the overall net return for the quarter to -3.3%, as again, Andreea already mentioned at the opening.
The stock market rebounded during the month of April, fully recovering March losses in our listed positions, and that's notably Vishal and KinderCare. We expect this to be offset by negative operational developments at select holdings, namely Pharmathen and USIC, as they continue to navigate some company-specific challenges we've touched on. We've spent some time now last quarter on the individual portfolio companies that are facing idiosyncratic challenges. This time around, I want to broaden a bit the lens to the other assets in the portfolio, and we have over 70 of them. They've largely continued to perform positively, albeit at a slower than expected pace, ultimately resulting in below targets returns as we just saw.
In particular, the inflection asset cohort, sorry, so the 2021 to 2023 vintage assets were significantly affected by pandemic-related industry shifts, carrying a similar exposure to vintage dynamics as well as economic drivers. As you can see here, a select number of assets really failed to the rapid disruption brought about by online and e-commerce. This is the case of companies like Schleich, Careismatic, and Ecom Express. These consumer businesses operating in different segments and geographies eventually suffered from the same rapid and unprecedented changes brought about by the pandemic. Important to note that these assets, however, represent less than 4% of the capital invested in these vintages. Now, a second larger group suffered from post-pandemic economic influence like surge in inflation and limited ability to pass on prices, or retain talent amidst labor shortages.
Most of these companies are doing okay, marked on average at 1.4x multiples at the moment, and 20% of them are even performing above our underwriting cases. What we see in this part of the portfolio is a slower value creation versus the original underwriting plan. To a degree, some unrealized potential for these assets. We acknowledge that these vintages have seen fewer out-performers, and an overweight to delayed value creation assets, which is ultimately feeding through the portfolio performance, and still today, which remains, as I mentioned, positive, yet below target. Importantly, we continue to work on hands-on value creation across these assets, expecting to realize an average multiple close to 2x, which is below our ambition, yet overall aligned with what we have observed in previous similar cycles, like the 2009 crisis cohort.
Having invested through multiple cycles, this puts really the current portfolio into perspective and has shaped our way to build our companies and our portfolios, and this time is no different. We've taken action. We've strengthened our approach. While operational value creation has always been at the core of our private equity investment strategy, we've recognized that earlier and deeper operational engagement could have mitigated some of this delayed value creation. This time around, Wolf-Henning Scheider, head of our private equity business, walked you through how Partners Group has expanded and institutionalized its operational capabilities, accelerating its ability to drive value recovery and transformation. I've recapped some of his points here on the left-hand side of the slide. We have already seen this renewed focus already delivering tangible results across various portfolio companies, resulting in operational recovery and valuation uplift in several assets affected by COVID-related macro headwinds.
I've included here on the right side some examples of portfolio companies which saw their valuations negatively affected by one or more of the headwinds through 2020 and 2022. Yet these assets have significantly recovered since recording EBITDA, a CAGR of 15%-25% each from the lows. Looking at Blue River, for example, our operator of veterinary hospitals based in the U.S. Here, the existing clinic base increase supported margins throughout the inflationary period in 2022 and 2023, keeping the business stable while many multi-site healthcare peers have come under pressure. Our operating discipline across recruiting, pricing, and clinic performance has driven organic EBITDA growth and early traction in facility uptake at the company. PremiStar is our provider of HVAC maintenance, repair, and replacement services to the U.S. market, and the company faced material challenges in 2022 from supply chain constraints as well as labor market constraints.
Margin pressure from integration and inflation cost was however offset by cost discipline and efficiency initiatives. With the company able to maintain steady margins since our investment, its market-leading position, and also to grow EBITDA in excess of 20% each year since its trough. Finally, Confluent Health. This is our U.S.-based healthcare company that's focused on physical and occupational therapy. Confluent Health really suffered from labor market shortages that directly affected revenues and EBITDA in 2022, 2023. The focus on professionalization of the HR function and the hire of a new Chief HR Officer, our emphasis on a physician-led culture, and targeted reduction in administrative load resulted in a direct decrease in workforce turnover rate in 2025, which directly drives revenue and EBITDA growth at the company.
We're pleased to see results from our operational engagement materializing and maintain confidence in the ability of our inflection assets to realize more of their upside potential going forward. At the same time, we also look at our younger asset cohort, where we have applied the same playbook of earlier and deeper engagement. ROSEN Group, illustrated here, is a perfect example of such approach. You may recall, ROSEN Group is a global market and technology leader in mission-critical inspection services for energy infrastructure assets, mainly pipelines. Partners Group acquired the company via a primary buyout in early 2024. Since taking ownership, we've completed a C-suite upgrade, pricing gains, and also significantly focused on digital transformation at the company, improving quality of reporting, creating new insights on data analytics, and also launching new back-office AI use cases to improve efficiency overall.
Importantly here, we have been working from day one on the professionalization of the business, enhancing go-to-market approach and focusing on operational excellence. It has not been a smooth ride, with significant USD weaknesses and tariffs impacting the business over the past 12 months. Yes. Over the same period to 28th of February 2026, the company recorded robust above-budget growth in both revenue and adjusted EBITDA, with pro forma EBITDA more than doubling over the period. As we look forward and we continue to replenish the portfolio with new assets, we remain selective and focused on the type of business we want to own, prioritizing what we see as future-proof investments in the era of AI transformation. Our thematic approach remains grounded in deep research, with an average due diligence process that exceeds over 15 months.
That's really the case of ROSEN Group as well, where we identified the testing, inspection, and certification theme almost three years before selecting ROSEN as the company we wanted to own in that space. This is important and really matters because as transaction volumes may see periods of volatility and also slowdowns, we remain focused on building conviction over time, ready to execute when opportunities arise. In Q1 2026, for example, we've seen sponsor-led transaction activity slowing, reflecting near-term uncertainty and higher financing costs. Our thematic searching engine has not stopped, and our investment teams continue to identify compelling themes and sub-themes we want to invest in. We target spaces where AI accelerates change the most, and where we can build the next category leaders. We've highlighted some of these spaces here on the slide in red.
We're looking, for example, at the future of modern industry with electrification and grid services, as well as AI diagnostics, where the number of FDA-approved AI-enabled medical devices has more than tripled in the last five years. We also continue looking at physical and digital security and at real-world experiences where, for example, sports leagues platform and talent management platform are well-positioned to capture accelerating media rights growth, streaming-driven monetization, as well as sponsorship and advertising upside. Within each of these themes and sub-themes, we've lined up companies across geographies, stages, and also thematic verticals. All we believe set to benefit from accelerating business formation as well as AI-driven business transformation opportunities. As the environment continues to change at an accelerated pace, our playbook remains the same, grounded in transformational ownership.
As you can see here, we continue to look for companies where we can deploy systematic and repeatable value creation across growing organic growth, as well as building up strategy structures from the ground or more on a platform-building approach. Once at different stages of due diligence, our teams continue to build conviction in these assets to identify the companies we want to own, build, and transform next. I hope to be able to present some of these new companies at the next update call. For the time being, I hand it over back to Andreea.
Thank you, Federica. Let me briefly summarize the key takeaways from today. PGPE combines a long-standing track record with a highly diversified portfolio of over 70 direct investments, and this means we provide access to opportunities that are not available in public markets. Now, while performance in the first quarter was impacted by listed exposures and select company-specific challenges, it is important to highlight that younger vintages are already showing strong early performance, while mature assets are well positioned to support realizations and capital recycling going forward. In terms of shareholder returns, our 5% dividend policy continues to be a defining feature. At today's share price, this translates into a prospective dividend yield above 7% and makes PGPE one of the most attractive income propositions in the European listed private equity space.
On the capital allocation side, we deployed EUR 7 million into buybacks during the first quarter. In April, we announced an additional EUR 80 million to the existing pool. This brings the updated buyback pool to around EUR 20 million as of April. Meanwhile, our balance sheet remains healthy, with EUR 33 million in cash and cash equivalents and a fully undrawn revolving credit facility. Looking ahead, we believe PGPE is well positioned to benefit from a gradual recovery in transaction activity and continued value creation across the portfolio. With that, we are happy to take your questions. We have received quite a number of questions on the webcast. Thank you very much for being so active.
As mentioned in the beginning, in the interest of time, we will take your questions, and in case we did not manage to answer them, rest assured we will come back to you and address them. Of course, the main question sitting on everyone's minds, right, and I see it repeated during the webcast, is of course if we can provide more information on the structural solutions and where are we with it. This of course, as stated in the chairman's statement, the board will provide an update on 18th of June, please bear with us and wait for the update, which will be released then. At the moment, we cannot provide additional information on this. Also, maybe one question for you, Federica, also mindful of the time. How do you see the level of distributions in 2026 and redeployment into new investments?
Yeah, I mentioned how we received just shy of EUR 80 million during the first quarter. That was a significant amount of capital in one single quarter, and we're now standing just over EUR 100 million received year to date. I would expect the positive trend to continue achieving similar levels to the ones we've seen in 2025, looking probably to the high teens, 17%-20% NAV in terms of distributions. That will allow us to support the level of investments that are needed to maintain our standard target investment level across the portfolio. I've also seen that we received a couple of questions around allocation and how assets held in PGPE Ltd are or not representative of the wider private equity platform at Partners Group.
I want to reassure investors that there is a full overlap within private PGPE Ltd and our broader platform when it comes to majority-owned investments. All private equity buyout transactions where Partners Group is a majority owner are included in this portfolio. There's full overlap there. No cherry-picking as someone asked. Andreea, are there any other?
Yes. As mentioned, we are actually running out of time. Based on this, we really want to thank you for attending today's webcast, and we're looking forward to present and to meet with you the next time. We wish you a wonderful rest of the day. Thank you for joining us.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.