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APQ Global: THE INVESTMENT CASE

APQ Global's emerging markets focus paying healthy dividends

The bulk of overall exposure is in credit and government bonds followed closely by equities.
Russia picture
INVESTMENT OVERVIEW: APQ The Big Picture
Russia is one of APQ's favoured areas

Emerging markets focused APQ Global Limited’s (LON::APQ) objective is very simple – pay a fully covered dividend yielding 6% while ensuring the book value grows by between 5%-10% each year.

The company invests globally – so that means Asia, Latin America, the former Soviet Union and Eastern Europe - and invests in equities, currencies, credit instruments and government bonds.

Occasionally it will take strategic stakes in businesses where it becomes a supportive shareholder in for a journey of three to five years.

Regionally, it is diversified. “That’s important in emerging markets,” says Bart Turtelboom, the fund’s veteran chief executive.

Its biggest exposures are Brazil, Russia and its experts like the financial services and natural resources sectors.

READ: APQ Global beefs-up its International Advisory Council

Turtelboom adds these are exceptional times for politics, economies and markets, but abundant financial liquidity is supporting the markets.

Among his investment themes are deregulation with healthcare sector set to gain. 

“The pace of innovation is snowballing and there is a drive to access a global market, including India, China and many other countries.

“There are many opportunities, not just for diagnostics and cures but also intervention.”

Technology is another important driver, says Turtelboom.

“Leaders in the technology industry say there is no such thing -just start-ups and disrupters that leap frog established businesses.

READ: APQ Global reveals maiden first half profit since listing despite dip in book value

“Valuations are still rising for technology companies. In the next 12-18 months, there will be an uptick in mergers and acquisitions and a rush to list through initial public offerings (IPOs).

“Artifical Intelligence (AI) will affect most businesses. Some businesses are already finding that the technology is mature enough to reduce their overheads substantially, and there is no sign of criticism from customers or their supply chains.”

APQ declared a dividend of 1.5p per share in respect of the quarter to 30 September 2017, while at the end of November unaudited book value per Ordinary Share was 93.96p.

At the end of latest quarter, the bulk of overall exposure was in credit and government bonds followed closely by equities.

Credit exposure is concentrated in government entities, banks and corporations in the energy sector with the largest position, Petroleos Mexicanos (PEMEX), accounting for 2.0% of book value.

A feature of APQ has been that it has consistently traded above net asset value since it listed on AIM in 2016.

At a price currently of 101.5p, the trust is worth just over £75.2mln.

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The bulk of overall exposure is in credit and government bonds followed closely by equities.

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