ING PEAL takes loan to fund capital calls

The Australia-listed private equity fund of funds has stopped making new commitments and ceased dividends for now. The value of its portfolio declined 14.5 percent over the last six months of 2008.

ING Private Equity Access Limited (ING PEAL) will stop investing in new private equity funds. It will also use future cash profits to fund existing private commitments instead of paying dividends, according to the company. 

For the first time, the company also used an A$20 million ($13 million; €10 million) debt facility to help fund capital calls from external private equity funds.

These measures were taken in light of falling listed market valuations, weaker operating results in underlying companies, and a net dividend payment of A$2.37 million made in the six months up to December 2008.

ING PEAL’s private equity portfolio remained largely unchanged over the last six months from July 2008, except for a $10 million investment in the $101 million NBC Private Equity Fund III, a growth capital and buyout fund. 

The fund of funds also met capital calls in existing funds such as CM Capital 4, a venture capital fund; Direct Capital Partners III, a growth capital and buyout fund; and Pacific Equity Partners IV, a buyout fund.

In addition, 27 existing investments made by funds in its portfolio received follow-on funding. This upped its commitments to $127 million across 89 companies through 16 underlying funds.

The value of its portfolio declined 14.5 percent over the latter half of 2008 as majority of investments by funds in its portfolio were made in 2007, where valuations were significantly higher compared to now. Of the 89 investments, 31 were made in 2007, followed by 30 in 2006, and 10 in 2008.

ING PEAL’s net tangible assets have declined steadily from A$1.09 per share in June 2008 to A$0.90 per share in December 2008. At time of press, the company’s shares were trading at A$0.25 per share.