Princess Private Equity (LON:PEY) reported an 8.6% decline in net asset value on a total-return basis for the first half of 2026, as a small group of portfolio holdings weighed on performance amid geopolitical uncertainty, market volatility and shifting expectations for growth, inflation and interest rates.
Andreea Mateescu, Head of Investor Relations at Partners Group Private Equity, said the NAV decline was primarily driven by portfolio developments, partly offset by favorable currency movements. USIC, Emeria and Pharmathen were the largest detractors in the period, while approximately two-thirds of the portfolio’s decline over the past 12 months was attributable to four assets: Pharmathen, USIC, Emeria and Ammega.
Capital Returns and Realizations
The company returned almost €36 million to shareholders in the first half, consisting of a €22 million first interim dividend paid in June and more than €13 million in share buybacks. Since the period ended, it has deployed a further €5 million under its buyback program, with repurchased shares held in treasury.
Federica Cazzaniga, Senior Portfolio Manager, said Clario was the largest contributor to distributions after Princess Private Equity completed its sale of the U.S. healthcare technology business to Thermo Fisher Scientific. The transaction valued Clario at more than $9 billion in enterprise value and generated approximately €23 million for Princess Private Equity.
Cazzaniga said the portfolio’s exits over the past 12 months had achieved a multiple on invested capital close to three times. The company also fully exited its listed Galderma position during the first half, realizing a money multiple exceeding 3.5 times, and further reduced its holding in Indian value retailer Vishal Mega Mart, monetizing more than €15 million while retaining exposure.
Vishal Mega Mart experienced share-price volatility in the first quarter but subsequently recovered, according to Cazzaniga. The investment was marked at more than 8.5 times money multiple, while its distributions to paid-in capital were close to five times.
Looking forward, Cazzaniga said she expected distribution activity to remain strong, potentially trending toward the “high teens” as a percentage of NAV over the next six to 12 months. Listed holdings represented 9% of the portfolio at the end of the period, down from the mid-teens, and the company expects them to remain a source of liquidity. She said listed assets could remain within a 5% to 10% range of the portfolio.
Pressure Concentrated in Four Holdings
USIC, a U.S. underground utility locating-services provider, was the largest performance detractor in the first half. Cazzaniga said the company faced customer insourcing trends and operational headwinds, prompting a lower valuation. Partners Group is pursuing cost actions, productivity improvements, a shift toward higher-growth segments and expanded digital and AI-enabled operations.
Emeria, a European residential real estate services provider, faced lower real estate transaction volumes and higher financing costs that limited its M&A and platform-expansion plans. The company is focusing on accelerating organic growth and implementing AI initiatives across customer service, property management, accounting, legal and administration functions.
Ammega, a provider of conveyor and power-transmission belting, was affected by an industrial downturn, cost inflation and competitive pressures. Its valuation was reduced in the second quarter to reflect peer-group derating and weaker market sentiment, though management said the company maintained steady EBITDA and margins. The focus is on commercial acceleration, operational efficiency and customer engagement.
Pharmathen faced regulatory and operational difficulties after an FDA import alert in the first quarter restricted its access to the U.S. market. Partners Group fully wrote down its equity investment in April, leaving the holding at 0% of portfolio NAV. The firm has stopped further funding and is working with Pharmathen and lenders on stabilization, remediation and an orderly change of ownership.
Christopher Mauss, Managing Director and Co-head of Portfolio Solutions, said 64% of the diversified portfolio was performing in line with or above plan. He said several holdings are expected to generate double-digit earnings growth over the coming 18 months, while acknowledging that the portfolio’s 4.5% EBITDA growth was a low point compared with the company’s historical growth rates of more than 13% to 15%.
Newer Investments and AI Programs
The company said its younger investments from 2024 and 2025, representing just over 20% of NAV, continued to perform in line with or above underwriting expectations, with a blended internal rate of return close to 20% and many posting double-digit EBITDA growth.
Mauss highlighted infrastructure inspection business ROSEN and hygiene paper-products company Velvet CARE, both of which are approaching roughly two times return on capital after less than two and a half years of ownership. ROSEN has paid two dividends following earnings growth and cash generation, he said. Premium cat-food company MPM and Pest Control Partnership were also cited as early performers.
Several earlier investments showed improving momentum. Commercial HVAC service provider PremiStar and HVAC parts manufacturer and distributor DiversiTech, which had at one point fallen below cost, were each marked above 1.5 times initial capital. Forterro, a software business, continues to post double-digit earnings growth and could be an exit candidate within six to 18 months, Mauss said.
The firm also identified AI initiatives as a potential contributor to future earnings. It said approximately 90% of the portfolio has adopted its AI program, with around €170 million of EBITDA opportunities identified for 2027. At U.S. insurance brokerage Foundation Risk Partners, AI projects developed with portfolio company Version 1 have contributed €10 million of EBITDA and increased margins by 120 basis points, according to Mauss.
Pipeline Includes Grid Services and Clean Beauty
While investment activity was limited in the first half, management said its pipeline remained diversified. The company is in the final stages of pursuing a U.K. electricity-grid services provider and has signed a small initial investment intended to form the nucleus of a European sports agency buy-and-build platform.
It has also announced exclusivity to acquire Aroma-Zone, a French beauty and wellness products business. Mauss said Aroma-Zone has tripled revenue since 2021, expanded its store count sevenfold and serves about 5 million customers. The transaction remains subject to regulatory approvals and is targeted to close by year-end.
About Princess Private Equity (LON:PEY)
Princess Private Equity Holding Limited specializes in private equity and debt investments in non-public companies or assets through privately negotiated transactions. The fund invests in primary and secondary fund investments, direct investments, and listed private equity. It makes private equity investments in buyout, venture capital, and special situation and private debt investments in mezzanine, second lien, or senior debt investments. The fund makes investments without limitations as to geographic regions, financing stage, vintage year, and industry.
