F & C Investments

F&C Private Equity Trust

  • Tapping into to the exciting potential of private equity

  • How to Invest

    Open an F&C Savings Plan

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    The value of your investments can go down as well as up, and you may not get back what you originally invested.

  • Performance

    The Trust seeks to generate long term capital growth through investment in private equity assets. It also seeks to pay its shareholders a predictable and above average level of dividend.

  • F&C Private Equity Trust - market update

  • Fund manager commentary

    At 30 June 2017, the net asset value (‘NAV’) of the Company was £263.8m, giving a NAV per share of 356.81p, which including the final dividend of 6.48p per share, which was paid on 31 May gives a NAV total return over the quarter of 3.5% and over the first six months of 3.5%. At 30 June, the Company had net cash of £8.3m. Outstanding undrawn commitments stood at £126.7m of which approximately £17m is to funds where the investment period has expired and only a small proportion of this amount is expected to be drawn.

    During the quarter, we made three new commitments to funds and two new co-investments were completed. After the quarter end, a further two fund commitments have been made.

    The new fund commitments have all been in overseas markets. In the US we have committed $4m to Stellex Capital Partners, an investor in distressed situations and companies requiring significant operational improvements primarily in the US mid-market. As previously noted we have renewed our commitment to leading French mid-market investor Chequers through a €6m commitment to their Fund XVII. After a considerable period of review of the Central and Eastern European private equity markets we have committed €5m to ARX CEE IV, a Czech Republic based mid-market investor which was a spin out from DBAG.

    Two new co-investments were added during the quarter. £5m was invested in TWMA, an Aberdeen based oil services company involved in drilling waste management services. Our investment gives us 15.9% of the company. Buckthorn, which is an energy specialist, is the lead on the deal. The other new co-investment is in the clothing sector where we have partnered with Total Capital Partners to acquire, through an integrated finance structure, 62.7% of Weird Fish for £6.2m. Its main products are active lifestyle clothes such as T–shirts and ‘macaroni’ sweatshirts aimed at the stable and affluent 35–55 age demographic. The company is both a wholesaler and retailer with a limited estate of shops in outdoor holiday areas in the UK.

    After the quarter end, we made two related investments in a fund and a co-investment. We have committed £6m to Apposite Capital II, a healthcare-focused lower mid-market buyout fund, and have invested £3m in an Apposite led deal, Swanton, a specialist residential care and supported living provider. We have invested £3 million initially for 6.9%, (5.9% fully diluted), but as part of the investment thesis is to acquire additional businesses it is likely that our equity commitment will ultimately be up to double this amount. Another of our co-investments, superfoods company Nutrisure, has been refinanced with an additional £0.6m invested principally to allow the company to have additional working capital for its rapid growth.

    In addition to the co-investments noted above the funds have been active in establishing new holdings in a variety of sectors and geographies.

    In the UK, August Equity IV called £0.7m for Genesis Dental, its initial platform of 11 dental practices from which a rollup is planned. FPE II called £0.6m for the combined acquisition of Maastech and SGL which will create a platform in the digital media workflow automation, video asset management and archiving area. The main customers are broadcasters. In the venture capital area SEP V has called £0.7m for its first investment in Lovecrafts, an online retailer of crafting materials.

    In France Astorg VI has invested £0.8m in Autoform, a software company with applications in automotive design. In German speaking Europe, Capvis IV called £0.4m for Wer Liefert Was, a B2B trading platform. In the Nordic region, Procuritas V has called £0.4m for the acquisition of Danish design furniture companies Scandinavian Design International and Sofakompagniet ApS.

    During the quarter, our US exposure was augmented with the first drawdowns from Graycliff where £1.6m was invested in the fund’s first five companies and Stellex, where £0.8m was invested in its first three platforms.

    During the quarter, realisations totalled £6.8m including £0.2m of income. Our longstanding holding in the Candover 2005 Fund distributed £0.8m in cash and £0.4m in shares in Spanish water and amusement parks company Parques Reunidos. Capvis III made a further distribution of £0.7m as more of its residual holding in Swiss vacuum valves business VAT Holdings was sold down. DBAG V returned £0.5m through its sale of FDG, a supplier of non-food consumer goods to French supermarkets, to a French financial buyer. Portobello Fund III has exited most of its holding in Vitalia, its elderly care home company; £0.6m has been distributed to F&CPET.

    There were a number of noteworthy changes in valuation over the quarter. Our co-investment portfolio has contributed significantly. Avalon, the funeral plans business where Lonsdale Partners are the lead, has performed well and has been uplifted by £2.9m based upon a modest multiple of embedded value. Our co-investment in Ambio, the peptide oriented manufacturer of Active Pharmaceutical Ingredients for the generic and patented drug sector has traded strongly and is uplifted by £2.1m. There were also uplifts for our co-investments in 3Si (security products) and Collingwood Insurance of £0.8m and £0.2m respectively.

    DBAG V is up by £2.0m reflecting not only the completed exit of FDG noted above but also the agreed sales of three other holdings. Formel D (documentation and services for the automotive sector) was sold to 3i achieving 5.5x cost. ProXES (process machinery) was sold to CapVis also achieving 5.5x cost. Romaco (packaging machinery for the Pharmaceutical industry) has agreed a staged exit to Chinese listed company Truking which will result in a return of 2.4x cost. DBAG VI is up by £0.5 million continuing an extraordinary run of successes for this manager with the agreed sale of school tutoring company Schulerhilfe as the main contributor.

    Our new investment in US fund Graycliff comes with an immediate uplift of £0.6m reflecting the strong trading of its initial portfolio. Blue Point Capital II and III are up by £0.5m and £0.6m respectively reflecting strong trading of various holdings.

    There were some downgrades this quarter. The most serious is of £1.7m for Burgess Marine, the south coast based Marine Engineering business where the deal is led by RJD Partners. The company’s core market of commercial ship repairs has proved difficult, in part, due to competition from east coast yards. A major restructuring facilitated by a refinancing is now underway with the aim of recovering our investment. There was a downgrade of £0.6m for Argan Capital, mainly due to a weaker share price of its now listed holding in Swedish assisted living business Humana.

    The first half of the year has been encouraging in that the fundamental performance of companies in the portfolio has been good generally and there remain healthy levels of activity across all our main markets. There is no doubt that experienced private equity managers with mature portfolios are selling everything they can at present and many of the recently raised private equity funds, aided by a liquid banking sector, are obliging, as are trade buyers. It is pertinent to question whether in these circumstances it remains possible for private equity managers to find new deals at attractive prices. The perils of buying through a highly competitive auction process are well known to our investment partners and increasingly mid-market players source deals outside auctions through networks which are to varying degrees proprietary. In many of the European markets there is a broad and deep market and most of the new deals entering our portfolio appear to be at historically reasonable prices, as are our new co-investments. Notwithstanding some unpredicted events in the political arena, confidence levels amongst investors and business people remain high. On this basis we expect that the portfolio will deliver more value for shareholders in the second half of the year, although this is not guaranteed.

    As at 30 June 2017

  •  Private Equity Trust - performance chart(1)

    Source: Lipper. Basis: share price, percentage growth, bid to bid, net income reinvested.

    Performance (%) as at 30.06.17

    Cumulative performance 1 month Year to date 1 Year 3 Years 5 Years
    NAV

    N/A          

    3.5 17.7 51.6 69.8
    Share price -5.3 18.2 48.7 77.8 179.6
    Standardised annual performance 2017 2016 2015 2014 2013
    NAV 17.7 16.5 10.6 4.3 7.3
    Share price 48.7 16.5 2.7 14.4 37.4

    Source: Datastream & Lipper. Basis: share price, percentage growth, bid to bid, net income reinvested. Basis in accordance to the regulations of the FSA.
    Past performance is not a guide to future performance. Stock market movements may cause the value of investments and the income from them to fall as well as rise and investors may not get back the amount originally invested.

  • The value of shares and the income from them is not guaranteed and can fall as well as rise due to stock market movements. Past performance is not a guide to future performance. When you sell your shares, you might get back less than you originally invested. If markets fall, gearing can magnify the negative impact on performance. Changes in rates of exchange may have an adverse effect on the value, price or income of investments. Emerging Markets, Unquoted Companies and Smaller companies carry a higher degree of risk and their value can be more sensitive to market movement; their shares may be less liquid and performance may be more volatile.

  • Hamish Mair BSc, MBA, ASIP

    Hamish Mair BSc, MBA, ASIP

    Director and Head of Private Equity


  • Related Video

    F&C Private Equity Trust Fund Manager Video

    Citywire Wealth Manager interviews Hamish Mair, Fund Manager, F&C Private Equity Trust (12 Sep 2016). For the full interview, visit the Citywire Wealth Manager website

Past performance is not a guide to future results. The value of investments can go down as well as up.

The shares of the Company are listed on the London Stock Exchange. Information in this section of the website concerning the Company is directed solely at persons who are located in the UK. Nothing on this website is, or is intended to be, an offer, advice, or an invitation, to buy or sell any investments. Potential investors must read our full terms and conditions before proceeding further with any investment product referred to on this website. The information on this website may not be suitable for everyone, and retail investors unsure whether an investment product referenced on this website will meet their individual needs should seek advice before proceeding further with such product.

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