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 2021-12-31 (rebased)

No chart data available

Performance per 2021-12-31

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  Fund
1 month 3.5 %
3 months 2.5 %
This year 28.0 %
2018 -21.1 %
2019 27.6 %
2020 19.0 %
1 year (on annual basis) 28.0 %
3 years (on annual basis) i 24.8 %
5 years (on annual basis) i 16.9 %
Since inception (on annual basis) i 13.8 %
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

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Total fund size
EUR 1,239.33 M 2021-12-31
Share class size
EUR 1,239.33 M 2021-12-31
Number of shares
4,019,247 2021-12-31
Net Asset Value i
EUR 299.02 2022-01-20
Transaction price i
EUR 309.89 2022-01-03

Fund characteristics per 2021-12-31

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  Fund
Number of holdings 25
Dividend yield i 1.77 %
Weighted average market capitalization i EUR 1,439 M
P/E ratio i 20.10
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.

Developments per 2021-12-31

The following texts refer to the fourth quarter of 2021

Performance
In the fourth quarter of 2021, the Net Asset Value (NAV) of Kempen Oranje Participaties (KOP) increased from €300.85 to €308.35 per participation, bringing the return over the quarter to +2.5% and over 2021 as a whole to +28.0%. KOP has averaged a return of +24.8% per year over the past three years and +16.9% per year over the past five years, resulting in a performance well above our target of an average of 10% per year in the long term.

Trading
As of 3 January 2022, the trading price was €309.89, based on the NAV of that date plus a premium of 0.5% caused by net inflow into the fund. As of the start of the first quarter, the fund’s size is over €1.2 billion. For the next trading date of 1 April 2022, an instruction deadline of 4pm on 28 February 2022 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 Index climbed by 7.7% in the fourth quarter of 2021 and in doing so performed substantially better than the MSCI Europe small cap index, which was up by 4.6%. Momentum returned to the markets in the fourth quarter following the caution that was evident in September. The Omicron variant’s potential symptoms are milder than feared, inflation is high but under control and central banks therefore continue to pursue accommodating interest rate policies, although they are gradually tapering their bond-buying programmes. The monthly amount purchased under the EU’s Pandemic Emergency Purchase Programme has been cut and the programme will end in March 2022. In contrast to the US, as yet no interest rate hikes are anticipated in Europe for 2022. As a result, real interest rates remain negative and when combined with the sizeable financial buffers held by private investors, this will have an upward effect on the financial markets. Inflation-resistant investments such as equities and real estate continue to perform well. The markets got off to an optimistic start in 2022 in the expectation of the global Covid-19 pandemic slowly fizzling out, sustained corporate earnings growth (aided by stimulatory government policies) and low interest rates. In addition to the geopolitical tensions in Ukraine and Taiwan, the main risks for financial markets can be found in these three components. Rising (wage) inflation and central banks responding by introducing interest rate policies that are more aggressive than expected could cause market sentiment to undergo a rapid reversal.

Portfolio
Our companies’ third quarter results were generally in line with expectations. Most are experiencing an ongoing recovery in their revenues and in a position to absorb cost-push inflation by raising prices and cutting costs.

Lectra (+24%) reported solid results and is making clear progress on integrating Gerber. Revenue growth of 23% means that the company expects its results over 2021 to be at the upper end of earlier forecasts.

The third-quarter results of El.En (+10%) displayed persisting robust growth. Its medical division noted revenue growth of 24%, while revenue from its industrial laser activities grew by 25% despite the weakness in China. Its gross margins were also up and El.En repeated its forecasts for 2021 as a whole.

Coats (+6%) caused a positive surprise in the shape of an acceleration in growth in the third quarter versus the first half of the year, despite the lockdowns in its all-important Vietnam market. The company even succeeded in maintaining its profit margins in spite of the higher cost of raw materials.

The results published by Kendrion (-2%) showed a mixed picture, with on the one hand solid revenue growth in both its Automotive and Industrial divisions but on the other also pressure on margins due to the last-minute cancellation of orders caused by component-related production problems at its customers. Margins are expected to be under pressure in the first half of 2022 as well. The component shortages (especially semiconductors) should gradually be resolved over the course of 2022.

Avon Protection (-40%) reported the disappointing findings that one of the 800 tested bulletproof vests failed to meet its customer’s requirements. This came as a surprise to both the company and shareholders and its share price subsequently plummeted. Until shortly before this news the management had expressed confidence that the new generation of bulletproof vests would be accepted by the customer and lead to new orders.

The faulty test prompted Avon’s management to evaluate its vest activities; technical redevelopment of the vests would take a great deal of time and money. The upshot of this detailed evaluation is that the board has decided to spend the next two years winding down the vest activities and concentrate fully on the core activities of masks and helmets instead. In doing so it is keeping the option of selling the vest business in its entirety open but we believe there is little chance of this happening. The bulletproof vest activities came from the 2020 Ceradyne acquisition that was mainly motivated by the company’s helmet activities. The vest activities represented 15% of Avon’s forecast group revenue for 2021/22.

On publication of its annual results in December, Avon gave analysts and investors insight into the financial situation of its core activities as well as the now non-strategic vest activities. From this, we can conclude that Avon’s core activities have been unaffected by the problems with the vests and moreover enjoy an excellent outlook. Avon has launched a new mid-range helmet for use primarily by the police and fire brigade and on top of this the European mask programme is being expanded to include more NATO members.

It will take Avon some time to regain the trust of investors but we believe that Avon’s stocks are currently trading at an extremely attractive price. We therefore took advantage of the lower price to increase our position in the fourth quarter.

Other news came from BESI (+9%) after torrential rain caused flooding at its Malaysian manufacturing facility. The company anticipates one-off costs of €4-6 million and the delivery of about 60 machines (involving revenue of €25 million) has shifted from 2021 to 2022. BESI will make a strong start to the new year thanks to a record order intake worth €180-190 million in the fourth quarter.

In preparation for splitting the company in March 2022, in December Momentum Group AB (-5%) changed its name to Alligo AB. The commercial trading activities (75% of the current group) will continue under this name and listing. The component activities (25% of the current group) will be split off and listed separately under the name Momentum AB. When the split takes place existing shareholders in Alligo AB will receive one Momentum AB share, pro rata, for each Alligo AB share in their possession as of that date. KOP will therefore have an additional participation in the portfolio in the course of the first half of 2022. Alligo will focus on revenue growth and cost-cutting following its acquisition of Swedol, while Momentum will concentrate primarily on conducting takeovers in fragmented markets.

We further reduced our position in ForFarmers (-7%) in the fourth quarter. The company again reported poor quarterly results due to rising raw materials prices and operating costs. In November it was announced that CEO Yoram Knoop’s contract would not be renewed and that he will step down after the 2022 shareholder meeting. ForFarmers launched a share buyback programme in the fourth quarter, which was one of the items on our wish list. However, talks with the management and supervisory boards have failed to give us sufficient confidence that the company’s high-risk international growth strategy will finally be completely abandoned and the value contained in ForFarmers’ current foreign operations released and paid out to the owners of the company. The speed with which the company is adjusting to changing market conditions is also a disappointment. KOP now holds less than 5% of the share capital of ForFarmers.

Our survey of the European Value Added Reseller market brought Dustin (+13%) onto our radar. Following wide-ranging discussions with the management as well as a visit to the company’s Swedish operations, over the course of 2021 we accrued an interest in this company that culminated in us announcing this new participation in December. Dustin is a leading online IT partner in Scandinavia and the Benelux. The company helps about 500,000 customers to find the right IT solutions in the form of 280,000 different hardware and software products. Dustin has a 2,400-strong workforce and revenue of SEK21.6 billion.

Alongside selling the hardware and software of third parties, Dustin is large enough to develop and sell its own brands. When combined with a distinctive business model based on plentiful stock levels and mainly online sales this gives the company a clear competitive edge. Dustin also occupies a leading position on sustainability, with clear reporting and big ambitions that we view as a boost to its financial goals.

Dustin aims to achieve an average of 10% revenue growth per year over the next few years, 8% of which organically and 2-3% via acquisitions. As this growth is not capital intensive, the company will also be in a position to pay attractive dividends. Our participation in Dustin represents about 5% of the KOP portfolio.

We currently have a number of new participations under accrual and hope to be able to announce a new participation in 2022 as well.

Valuations
The value of the KOP portfolio increased across the quarter. The portfolio’s cash-adjusted price/earnings ratio (EV/EBIT 2022E) stands at 17. This is high from a historic perspective but given the low interest rates we continue to believe that our portfolio enjoys 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 2021-12-31 (rebased)

No chart data available

Performance per 2021-12-31

Slide to see more
  Fund
1 month 3.5 %
3 months 2.5 %
This year 28.0 %
2018 -21.1 %
2019 27.6 %
2020 19.0 %
1 year (on annual basis) 28.0 %
3 years (on annual basis) i 24.8 %
5 years (on annual basis) i 16.9 %
Since inception (on annual basis) i 13.8 %
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

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Risk analysis (ex post) per 2021-12-31

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  3 years Since inception
Maximum drawdown i -23.08 % -63.64 %
Tracking error i 11.51 % 9.54 %
Information ratio i -0.18 0.25
Beta i 0.73 0.83
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 (2021-12-31)

26.7 %
United Kingdom
17.8 %
Netherlands
9.5 %
Sweden
9.2 %
Germany
9.0 %
Switzerland
7.6 %
Italy
7.0 %
France
4.8 %
Singapore
3.7 %
Cash
3.3 %
Ireland
1.3 %
Finland
Total
100 %

Sector allocation (2021-12-31)

34.5 %
Industrials
19.9 %
Technology
18.3 %
Consumer Discretionary
12.3 %
Consumer Staples
11.1 %
Health Care
3.9 %
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.

 

SWING FACTORS

An overview of the current swing factors are available here.

Ongoing charges

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Management fee i
0.750 %
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 2020.

Other costs

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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

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Investor type
Institutional & Private
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
Administrator
BNP Paribas Securities Services S.C.A., Amsterdam branch
Management company
Kempen Capital Management N.V.
Depositary and custodian
BNP Paribas Securities Services S.C.A., Amsterdam branch

Tradability

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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.

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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.

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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.

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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.

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Our full voting records are available here.

Climate change

As a long-term investor, we believe climate change represents a systemic risk facing the economy, society and environment. We want to consider the risks and opportunities this presents to our investments in the coming decades. We have therefore set a long-term commitment (2050), a mid-term ambition (2030) and short-term objectives (2025).

  •     2050 commitment: Net-zero investor.
  •     2030 ambition: To align with a Paris Agreement pathway (listed and non-listed investments) and Dutch Klimaatakkoord.
  •     2025 objectives: To align with a pathway towards achieving the Paris Agreement (listed investments) and Dutch Klimaatakkoord goals.[1]

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The Kempen climate change policy can be found here (under climate change policy).

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[1]We use carbon intensity as a metric to come to the pathway of net-zero emissions. As we care about the direction of travel and reduction of carbon emissions in the economy, it might be that the actual reducing trend may deviate from the suggested average trend line. The pathway is derived from the pathway of the EU Benchmarks.

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.

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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.

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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.

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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. In addition, we exclude pure coal players and pure players involved in tar sands, as these activities have an adverse impact on climate change. We use MSCI ESG Research data to automatically screen and remove companies from our universe.

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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.

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2. ESG integration

In the fundamental analysis phase, we dive deeper into the ESG characteristics of a company. During the process, we focus on each company on a case-by-case basis, looking at the material risks and opportunities in that specific industry, the firm’s exposure, as well as practices and disclosure. In this phase we use various data sources, including MSCI ESG Research and Sustainalytics. Based on the above analysis, we form an opinion on the quality of a company’s ESG profile and give each company a score (1-5). The scores are linked to our investment cases, where a lower score would require a higher upside potential.

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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.

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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.

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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:

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* 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 ESG Research
Screening MSCI ESG Research
UN global impact
ESG integration in the investment process
ESG integration in the investment process
Bron en
disclaimer en
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.