Kempen Oranje Participaties NV

Profile

Kempen Oranje Participaties N.V. (KOP) offers the opportunity to invest in small-sized European companies. KOP invests in shares of undervalued companies and aims to hold 5% or more of the paid up nominal capital of each company. The environmental, social and governance (ESG) criteria are incorporated in the investment process.

KOP positions itself as an engaged shareholder and aims to generate a long term total return of 10% on an annual basis (on the basis of capital gains and dividends).

Management team

Michiel van Dijk, Erwin Dut, Sander van Oort, Ingmar Schaefer

Performance per 2019-12-31 (rebased)

No chart data available

Performance per 2019-12-31

Slide to see more
  Fund
1 month 3.4 %
3 months 15.6 %
This year 27.6 %
2016 32.8 %
2017 42.3 %
2018 -21.1 %
1 year (on annual basis) 27.6 %
3 years (on annual basis) i 12.7 %
5 years (on annual basis) i 19.0 %
Since inception (on annual basis) i 13.1 %
As of 1 July 2015 the investment policy of Kempen Oranje Participaties N.V. has changed. In addition to Dutch and Belgian companies it is now also allowed to invest in other European companies. Performance is shown after deduction of ongoing charges and including the reinvestment of dividend that has been paid out. The value of your investments may fluctuate. Past performance provides no guarantee for the future.
More information can be found on the documents page of this fund

Key figures

Slide to see more
Total fund size
EUR 758.40 M 2019-12-31
Share class size
EUR 758.40 M 2019-12-31
Number of shares
3,628,229 2019-12-31
Net Asset Value i
EUR 216.55 2020-01-17
Transaction price i
EUR 205.89 2020-01-02
Morningstar rating â„¢

Fund characteristics per 2019-12-31

Slide to see more
  Fund
Number of holdings 22
Dividend yield i 3.01 %
Weighted average market capitalization i EUR 1,113 M
P/E ratio i 22.15
Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch and English) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Market developments per 2019-12-31

The following texts refer to the fourth quarter of 2019.

Performance
In the fourth quarter of 2019, KOP’s Net Asset Value (NAV) increased from €180.81 to €209.03 per fund unit, translating into a return of 15.6%. This brings the return (incl. dividend) over 2019 as a whole to 27.6%. The fund has averaged a return of 12.7% per year over the past three years and 19.0% per year over the past five years, meaning that we continue to perform well above our target return of an average of 10% per year.

Trading
As of 2 January 2020, the trading price was €205.90, based on the NAV as of that date, minus a discount of 1.5% as a result of a small net outflow from KOP. The number of issued fund units in KOP decreased by 0.1%, bringing total net assets to about €760 million. For the next trading date of 1 April 2020, an instruction deadline of 4pm on 28 February 2020 applies for orders in KOP (via Euronext) and a few days before that for the holding companies (via the Van Lanschot Kempen transfer agent).

Market review
The MSCI Europe Small Cap Index rose by 11.6% in the fourth quarter. Equity markets rallied in the wake of a weak third quarter, assisted by diminishing fears of a global economic slowdown, the persisting positive effects of low interest rates and guidance from central banks that interest rates would not be raised in 2020. Optimism about the economic outlook was also boosted when the Conservative Party won the UK general election and the US and China reached a tentative agreement that looks set to de-escalate the trade war. In spite of the price rally among cyclical companies in the final months of the year, 2019 saw a clear sector rotation from cyclical to defensive sectors such as real estate and infrastructure.

The fourth quarter again saw a number of takeover bids on listed European small caps, including Recipharm’s bid for Consort Medical and the bids for VolkerWessels and Oeneo by the respective families that hold controlling interests. The low and often negative interest rates mean that it is an appealing option for investors with substantial cash positions (including wealthy families and private equity funds) to buy out minority shareholders or delist companies from the stock market. It is important for investors in listed companies to realise that there are also investors who require a very low rate of return and are therefore willing to pay high valuations. Their low required returns are not just the result of the low interest rates, but are also discount the prospect of more direct control at non-listed companies. The desired influence (and sometimes control) of shareholders is sometimes sorely lacking in the boardrooms of European listed companies. One good example of this is the Bayer management that ignored a majority vote of no-confidence in it following its acquisition of Monsanto. Management accountability to the board that is in turn accountable to the shareholder(s) is often better regulated in a private equity environment, which enables better safeguarding of shareholder value. Many boards and management teams of listed companies feel little pressure from their fragmented group of shareholders (including on occasion automated index funds without an opinion on the companies in which they invest), which leads to a low level of external accountability, among other things on ever-higher levels of remuneration and the impact of poor acquisition decisions. For investors in listed companies, it is therefore essential that they are comfortable with the qualities exhibited by a company’s board and management team with respect to operational performance and – often poorly substantiated – capital allocation decisions. We unfortunately encounter few board members in the market who have the modesty to see themselves as ‘agents’ of the owners of the company that they have the privilege to run, naturally while taking into account the interests of other stakeholders. On the other hand, greater influence for investors in the boardroom demands a high degree of professionalism, business knowledge and a focus on the long term rather than on the opportunistic short-term share price development. We in fact aim to offer our participants the best of both worlds by on the one hand being a long-term engaged shareholder in our KOP participations and on the other by periodically offering our participants liquidity.

Portfolio developments per 2019-12-31

We reported a new participation in XP Power in the fourth quarter. This British company is a leading manufacturer of high-quality converters used in e.g. industrial and medical equipment and the semiconductor industry. A converter is an essential component of almost all electric appliances that converts the alternating current supplied by the electric grid into direct current (rectifier) and/or adjusts the energy level (voltage, wattage) in order for the appliance to function. XP Power has six manufacturing facilities worldwide and 32 sales offices for serving its 4,500 customers. In 2018, the company earned revenue of GBP195 million and operating profits of GBP42 million. About 61% of its revenue was earned in North America. XP Power is benefiting from the underlying, long-term growth in attractive end markets, such as semiconductors, healthcare and new technologies (incl. 3D printing, 5G), and has expanded its opportunities for growth via acquisitions in new market segments (higher voltage, power). We anticipate average annual earnings growth of 13% over the next three years, aided by the cyclical recovery in semiconductors, synergies created by acquisitions and an increase in margins in the wake of the recent headwind from US import tariffs on Chinese components. After the equity price was squeezed, we started to accrue a position in the second half of 2019. As of the end of the year, our participation in XP Power represented 5% of the KOP portfolio.

Another noteworthy event in the fourth quarter was the offer we received on our shares in Oeneo. The investment company of the family that holds a controlling interest of 63.1% in France’s Oeneo announced that it wished to acquire all the remaining shares and in doing so remove the cork and wine barrel producer from the market. The offer of €13.50 per Oeneo share represents a premium of nearly 12% on the closing price. KOP has held more than 5% of Oeneo shares since 2017 and this position represented slightly more than 6% of the portfolio as of the end of 2019. We are evaluating the bid sum and further steps relating to our interest in Oeneo.

In the fourth quarter Kendrion made an offer for Germany’s Intorq, a company that supplies so-called spring-applied braking systems to industrial customers, chiefly in robotics. The acquisition is a good strategic match for Kendrion from the perspective of customer groups, geographic markets and complementary technology. The acquisition price of €80 million was partly financed by a new share issue. As a long-term shareholder, participated more than proportionally and increased our holding in Kendrion marginally. Partly as a result of this attractive acquisition, Kendrion’s equity price climbed by 14% in the fourth quarter.

In addition we witnessed significant price gains in the fourth quarter in SUSS MicroTec (+44%), El.En (+38%) and Avon Rubber (+31%). The share price development of Coats (+5%) and ForFarmers (-1%) lagged behind the generally positive market climate. The difference between the frontrunners and laggards can partly be explained by the expected earnings growth. As we have mentioned in previous quarterly reports, in the current market climate (uncertain economic growth, low interest rates, rising valuations) investors are mainly paying for predictability and growth. SUSS MicroTec announced that its order book had grown by 26% in the first nine months of 2019, while El.En reported earnings growth of 11% in the same period. Avon Rubber is growing on the back of non-cyclical, predictable defence expenditure and an attractive acquisition (helmets and bulletproof vests) that will lead to further opportunities for growth in the future. At a very well attended KOP event in October, Non-Executive Director Pim Vervaat guided us through Avon Rubber’s impressive strategy and opportunities for growth.

In contrast, Coats continues to struggle due to the low level of growth in the clothing and automotive industries as a result of the trade war between China and the US. Closer to home, the debate on nitrogen emissions in the Netherlands has severely squeezed growth (forecasts) at animal feed manufacturer ForFarmers. We met with the ForFarmers Supervisory Board in the fourth quarter of 2019. This type of meeting is an example of how we conduct our abovementioned engaged shareholdership for the long term. During the meeting, we made it clear that we believe the interests of shareholders should be central to the strategy for the period 2020-2025 that is to be presented in the spring of 2020. In addition to the fact that the company has tightened its procedures on raw materials procurement and acquisitions, rationalisation of the Dutch agricultural sector will probably lead to further consolidation among animal feed manufacturers, which could be positive in the long term for a leading player such as ForFarmers.

We are pleased with the fundamental trends at almost all our companies. Our portfolio contains companies that should be able to demonstrate an attractive level of cyclical growth (BESI, XP Power, Lectra, Kendrion), that enjoy an appealing defensive growth profile (Interroll, Avon Rubber, El.En) and that are solid but grow at a slower pace (Coats, Acomo, LaDoria). We are currently focusing our attention and efforts mainly on SAF Holland (balance sheet management), ForFarmers (growth profile under pressure) and SUSS MicroTec (substandard profitability).

The return of 27.6% that KOP earned over 2019 conceals a high level of volatility in individual equity prices, whereby almost all of them noted double-digit price swings (BESI and El.En even saw increases of over 100%). Higher valuations and restricted liquidity are expected to continue causing volatility in micro caps. It is therefore important that we as portfolio managers as well as participants in KOP continue to focus on the long-term development of our companies rather than falling into the emotional traps caused by volatile prices.

Valuations
On balance the valuation of the KOP portfolio increased in the fourth quarter. The portfolio’s cash-adjusted price/earnings ratio (EV/EBIT 2020E) stands at 13. We believe that the portfolio continues to offer interesting long-term price potential.
Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch and English) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Performance per 2019-12-31 (rebased)

No chart data available

Performance per 2019-12-31

Slide to see more
  Fund
1 month 3.4 %
3 months 15.6 %
This year 27.6 %
2016 32.8 %
2017 42.3 %
2018 -21.1 %
1 year (on annual basis) 27.6 %
3 years (on annual basis) i 12.7 %
5 years (on annual basis) i 19.0 %
Since inception (on annual basis) i 13.1 %
As of 1 July 2015 the investment policy of Kempen Oranje Participaties N.V. has changed. In addition to Dutch and Belgian companies it is now also allowed to invest in other European companies. Performance is shown after deduction of ongoing charges and including the reinvestment of dividend that has been paid out. The value of your investments may fluctuate. Past performance provides no guarantee for the future.

Dividends

Slide to see more
Distributing
Yes
Last dividend
EUR 3.80
Ex-date last dividend
2019-05-20
Number of distributions per year
1
Dividend calendar

Risk analysis (ex post) per 2019-12-31

Slide to see more
  3 years Since inception
Maximum drawdown i -21.14 % -63.64 %
Tracking error i 8.83 % 9.37 %
Information ratio i -0.08 0.25
Beta i 0.92 0.85
Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch and English) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Geographic allocation (2019-12-31)

33.6 %
Netherlands
17.4 %
United Kingdom
11.9 %
France
8.1 %
Germany
7.3 %
Italy
5.1 %
Switzerland
4.7 %
Singapore
4.0 %
Ireland
2.8 %
Luxembourg
1.7 %
Norway
3.5 %
Cash
Total
100 %

Top 5 holdings (2019-12-31)

18.4 %
BE Semiconductor Industries
9.1 %
Coats
6.5 %
Oeneo
5.8 %
Washtec
5.5 %
Lectra
Total
45.2 %

Sector allocation (2019-12-31)

45.3 %
Industrial Goods & Services
23.9 %
Technology
18.6 %
Food & Beverage
4.0 %
Money Market Funds
2.8 %
Automobiles & Parts
1.3 %
Media
0.7 %
Retail
3.5 %
Other
Total
100 %
Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch and English) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Ongoing charges

Slide to see more
Management fee i
0.75 %
Service fee i
0.20 %
Expected ongoing charges i
0.95%
Ongoing charges last financial year i
0.95 %
The Ongoing Charges Figure of the last financial year relates to 2016.

Other costs

Slide to see more
Upward swing factor i
0.50 %
Downward swing factor i
1.50 %
Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch and English) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Share class details

Slide to see more
Investor type
Institutional & Private
Distributing
Yes
Objective
To generate a long term return of 10% a year (on the basis of capital gains and dividends)
Investment category
Small-caps
Universum
European small-caps
Inception date
1985-08-29
Domicile
The Netherlands
May be offered to all investors in
The Netherlands
May be offered to professional investors only in
United Kingdom
UCITS status i
No
Status
Open-end i
Base currency
EUR
Share class currency
EUR
Management company
Kempen Capital Management N.V.
Depositary and custodian
BNP Paribas Securities Services S.C.A.
Morningstar rating â„¢

Tradability

Slide to see more
Listed
yes, listed on the NAV Trading Facility of Euronext
Subscription/Redemption Frequency
Quarterly, on the first business day of January, April, July en October
ISIN i
NL0000440675
Entry period purchase order
Approximately 32 calendar days before the start of each quarter
Entry period sell order
Approximately 32 calendar days before the start of each quarter
Details
Orders must be sent by the bank or broker to the NYSE Euronext Trading Facility on the last business day of November, February, May and August, no later than 04.00 PM Amsterdam time in order to be executed on the next dealing day.
Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch and English) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.
Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch and English) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Kempen's vision & mission

Kempen Capital Management is an asset manager that believes in stewardship and investment focusing on the long-term for the benefit of all stakeholders. Value creation is at the heart of the services we provide to our clients. We believe that being an engaged shareholder on environmental, social and governance (ESG) issues and retaining a long-term focus, is critical to helping our clients to preserve and create sustainable wealth that has positive real world impact and economic returns.

Â

Kempen wide approach to responsible investment

We are committed to create sustainable alpha. The four pillars of our ESG-policy are:

  • ESG integration: Ensuring sustainability risks and opportunities are adequately considered in our investment analysis and processes.

  • Exclusion & avoidance: Not investing in companies involved in controversial activities or conduct.

  • Active ownership: Being responsible stewards of our clients’ capital and using our influence through engagement and voting to improve corporate behaviour on specific ESG issues and achieve positive change

  • Positive impact: Investing with an objective to achieve positive real world outcomes and impact, such as contributing to the UN Sustainable Development Goals.

Â

To put our mission and vision into practice we engage with our investee companies on a wide array of strategic, financial, and ESG topics. As an active owner we use our influence to improve our investee companies’ ESG performance.  This helps us address some of the most pressing and important sustainability issues facing business and the world. Our focus themes for engagement are: human rights, labour rights, climate change and governance.

Â

Through collaboration with other investors and industry think tanks we contribute to the development of principles and standards of corporate responsibility both at sector levels, as well as investee company level.

Â

Our full voting records are available here.

Our fund approach to responsible investment

Kempen’s ESG policy is fully implemented in our fund’s investment process across the three relevant pillars of: Exclusion, ESG integration and Active ownership.

Â

Kempen Oranje Participaties N.V. (KOP) offers the opportunity to invest in small-sized European companies. KOP invests in shares of undervalued companies and aims to hold 5% or more of the paid up nominal capital of each company. KOP positions itself as a long-term engaged shareholder. We typically engage with our investee companies on a regular basis. The close relationships with investee companies in combination with our ownership level in each company enable us to influence the agenda of the annual meetings. Furthermore, we always vote and comment on annual meetings.

Â

The figure 'ESG-integration in the investment process' is a step-by-step representation of how Kempen’s ESG policy is integrated into the investment process.

Â

1.Exclusion

KOP excludes investment in entities involved in the production tobacco and of controversial weapons, such as cluster munitions, anti-personnel mines, nuclear warheads, chemical and biological weapons. We use MSCI ESG Research data to automatically screen and remove companies from our universe.

Â

The next step in our process, the ‘Quick Scan’ phase, helps us to avoid companies that do not meet our sustainability screening criteria based on their activities and conduct. We apply a checklist to screen each company using MSCI ESG Research and Sustainalytics data.

Â

2. ESG integration

In the fundamental analysis phase of the process, we dive deeper into the ESG characteristics of a company. During the process we look at each company on a case by case basis identifying the material risks in that industry and their exposure, practices and disclosure. In this phase we use various data sources, including MSCI ESG Research and Sustainalytics. If our opinion deviates from the external ESG research providers we explain why. Furthermore we look into the company’s exposure to controversies and opportunities which could reduce or increase the ESG score.Based on the above analysis we form an opinion on the quality of a company’s ESG profile and give each firm a score (1-5). A lower score would require a higher upside potential to be included in the portfolio.

Â

3. Active ownership

As active long-term investors we perform comprehensive engagements with our portfolio companies. We strongly believe that our level of engagement with our portfolio companies is much deeper than that of our competitors. We frequently speak with the management teams of our portfolio companies. Each controversial item, as well as every individual engagement, is well-documented. We monitor the progress the company is making and continue to use our influence to create positive change.

Â

Exercising our voting rights is also an essential part of our responsible investment philosophy. We are actively engaging with our portfolio companies and make remarks on the agendas of annual and extraordinary meetings. The fund’s close relationships with investee companies in combination with our ownership level in each company enable us to influence the agenda of the annual meetings. We always vote the shares of investee companies and if necessary attend annual meetings to stress our discussion points to management, potentially in collaboration with other stakeholders.

Â

Kempen’s ESG Team also performs a quarterly screen on our portfolio and may propose engagement with low ESG performers. The results of this screening are discussed in a separate meeting and an action list is created based on the outcomes of this meeting.

Risks

For more information about the mid and long term risks associated with the investments:

Â

*

Although Kempen Capital Management N.V.’s information providers, including without limitation, MSCI ESG Research LLC and its affiliates (the “ESG Parties”), obtain information from sources they consider reliable, none of the ESG Parties warrants or guarantees the originality, accuracy and/or completeness of any data herein. None of the ESG Parties makes any express or implied warranties of any kind, and the ESG Parties hereby expressly disclaim all warranties of merchantability and fitness for a particular purpose, with respect to any data herein. None of the ESG Parties shall have any liability for any errors or omissions in connection with any data herein. Further, without limiting any of the foregoing, in no event shall any of the ESG Parties have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

ESG Report
Screening MSCI research
Screening MSCI research
UN
Carbon intenity
ESG integration in the investment process
ESG integration in the investment process
Source
disclaimer
Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch and English) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.