While UK shares have largely been on the rise in 2025, there are still plenty of lucrative dividend yields to snap up today. This is especially true when venturing beyond the world of large-caps. For example, Apax Global Alpha (LSE:APAX) now offers a near-double-digit shareholder payout at 9.6%.
A glance at its share price chart quickly reveals why. With the stock taking a 25% tumble over the last 12 months and dividends actually getting cut, this high yield is seemingly being driven entirely by downward momentum. Usually, that’s a sign to stay away even more, considering the firm’s cash flows have been seesawing.
However, some of the best bargains are often found in places most investors aren’t willing to look. With that in mind, let’s take a deeper dive into this enterprise and try to uncover whether an opportunity might exist here.
Why’s the Apax share price falling?
To understand what’s going on with this stock, it’s important to know what this business actually does. In oversimplified terms, it’s essentially an investment fund that provides retail investors indirect access to the private equity market. The business manages a portfolio of public and private investments seeking to deliver robust returns and a steady stream of dividends.
Sadly, despite the underlying companies within its portfolio growing earnings, weaker investor sentiment has crushed multiples. Consequently, the Apax net asset value’s (NAV) been getting hit. This has only been exacerbated by the continued payout of dividends, which further drag down NAV. And since the group’s historical dividend policy was to pay 5% of NAV each year, the income for shareholders has been shrinking since 2022.
Needless to say, this isn’t a great position to be in. And it’s understandable why some investors have decided to jump ship, even more so now that currency headwinds from a strengthening euro have thrown another spanner in the works.
However, despite the pessimism, an interesting opportunity may exist here.
A potential inflection point?
A handful of institutional analysts like Edison Group and Hardman & Co have highlighted 2025 as potentially the start of a comeback story. Management’s begun refocusing its portfolios towards technology, services, and internet investments while exiting underperforming healthcare positions.
The firm has also cut back its public market holdings, reducing exposure to volatile valuation fluctuations. At the same time, the dividend policy has been revised to a flat 11p rather than a percentage of NAV, translating into a more disciplined approach to capital allocation.
Combined, these analyst teams have concluded that management’s hit the reset button, restoring balance sheet strength and readying itself for a NAV recovery. Execution risk is definitely something investors need to consider here. But with the stock trading at a 40% discount to its NAV paired with a 9.6% dividend yield, I think it seems silly not to take a closer look.
