London, UK, 11 August 2023
Edison issues update on Tetragon Financial Group (TFG)
Tetragon Financial Group (Tetragon) reported a 1.7% ROE in H123 and its NAV increased by 1.7% in total return terms. The portfolio gained 3.0% on the back of TFG Asset Management (which remains Tetragon's largest asset, representing 50% of its NAV), private equity assets and its direct listed equity investments, while the remaining asset classes had a limited impact on NAV. Tetragon targets returns uncorrelated with broader equity markets and a 10-15% ROE (9.9% on average over the last five financial years, and 11.4% pa since IPO). In H123 Tetragon was a net investor and increased its credit facility utilisation to 75% (US$300m), deploying capital predominantly into private equity assets and hedge funds, and further supporting the growth of TFG Asset Management.
As at end H123 Tetragon had US$300m of its US$400m credit facility drawn, translating into net gearing of 9.5% (FY22: 6.1%, FY21: net cash of 0.3%). This compares to US$113m of undrawn commitments as at end-June (likely to be drawn gradually in the coming years), of which roughly half was made to fully controlled managers. In H123 Tetragon distributed US$43.5m in dividends and share repurchases to its shareholders (in line with its four-year semi-annual average of US$43.2m). Tetragon's cash position in H123 was supported by US$119.4m in disposals and distributions, of which US$32.3m came from CLOs and US$9.1m from a dividend paid by Equitix.
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