Princess Private Equity Holding - Portfolio resilient, holding-level liquidity strained

Princess Private Equity Holding’s (PEY’s) portfolio has fared quite well in 2022, with the +3.7% NAV total return (TR) in Q322 bringing the 9M22 TR decline to a moderate 4.0%. This was likely assisted by PEY’s sector mix and the temporary allocation of excess funds into senior loans in H221 (gradually redeemed throughout 2022). However, this was overshadowed by PEY’s decision to suspend its second interim dividend amid holding-level liquidity concerns due to high cash outflows for foreign exchange (fx) hedges and subdued M&A markets. This allowed PEY to build a liquidity buffer (c €88m at 18 November) to cushion against potential further headwinds due to a strong US dollar and muted portfolio realisations.