The Lemon Fool

Hi , I was curious as to the meaning of the announcement last Friday from all the Albion VCTs that “it has , under advice , decided to delay the proposed date of the second allotment of shares ......in the light of recent developments in the Albion managed portfolio .”
I am reading too much into this in assuming that something must have happened to have significantly moved the NAV and therefore the price at which the new shares are to be issued . One scenario might be a material uplift or reduction in the carrying values of one or more of the 3 major investments that are held by 5 of the 6 VCTs . These are Quantexa ( by far the largest) , Proveca and Egress .
Hopefully some good news or is there another more innocent explanation ?

I wondered about that too.

Unless anyone on this forum has the inside track, guess we have to sit and wait to find out…

If anyone has inside information, how likely is it they can disclose it here without breaching confidentiality?

A significant event seems very plausible. But whether that's a big NAV event or merely a liquidity event, who knows? Or might it be no more than an administrative delay?

Thank you Sinterklass . Just wanted to sense check my gut feel . My instincts are that Quantexa have gone for more funding and that Albion have cashed out , hopefully at a profit

Thank you Uncle E . I incline to a significant change in NAV . Admin delays wouldn’t equate to “ recent developments in the Albion managed portfolio “ . Fingers crossed for a positive outcome .

Intriguing. I'm not taking for granted that this is positive.

I note Albion Enterprise stated the day before: "There have been no significant events or transactions between 1 January 2023 and 23 February 2023 that the Board is aware of which would have had a material impact on the financial position of the Company."

Clearly there must have been overnight synchronous curveballs. Conceivably the Quantexa acquisition of Aylien, but I don't think that would translate into a material uplift of an unquoted.

Today's 6pm RNS for all (but Albion Venture Capital Trust) of the Albion VCTs help clarify things a fair bit - 'pleased to report that a company within its portfolio is undergoing an external fundraising process'. Uplifts of 4-6% or so for all but one.

Looks like Quantexa is the Company, given that Albion Venture Capital Trust stated today that its NAV remained unchanged and it has no Quantexa holding, and based on the relative uplifts and Q portfolio weighting in the other VCTs.

Just got my Crown Place allotment certs 6 weeks after the 31 March allotment date (apparently their Computershare terms are 30 business days). They have become an outlier in the VCT world.

After some effort I can see that the offer prices has been calculated in accordance with the prospectus.

However I am sure I am not the only shareholder confused by the presentation in the 12 May allotment letter of offer costs being 2.5% without any further reference to the unusual rounding up to 0.1p; surely a hangover from pre computer times.

A quick review of all the Albion funds shown that actually costs were 2.66, 2.62, 2.64, 2.65, 2.69 and 2.80%. The round up bears most heavily on the funds with the lowest NAVs; Crown Place and Kings Arms Yard.

Albion have a reputation for straight dealing, but the marketing and reporting of the discount as 2.5% in disingenuous in my opinion.

I have written to the Manager to suggest that they might like to revisit this for future offers.

Encouraging news yesterday from Albion as regards a proposed sale of one of their investments which , if it goes ahead , gives rise to favourable increases in NAV in 5 of the 6 VCTs that hold this investment . Running the numbers , I suspect that the investment in question is Egress Software . Held in the books at circa £34m across the 5 VCTs , the likely selling price looks like being circa £47m . If the proceeds are received in their entirety in cash , then this begs the question as to whether there will be a special dividend announcement in due course . I would be a little surprised if they had plans to spend the monies in addition to the existing cash sat in their balance sheets and the £60m funds raise which is almost fully subscribed .

I got contacted by HL just now that Albion are doing a buyback next Tuesday for 3 of their VCTs. The prices they quoted seem worryingly low though. AAEV at a 2.61% discount to NAV is fine, but the other two are over 10%! How do I reconcile this with the claim on Albions website that 'The Albion VCTs, where possible, buy back shares in the market with a target discount to NAV of c. 5%, market and liquidity conditions permitting.'

Am I misunderstanding something? Hardly seems worth selling at a 15% discount to NAV, might be better to just hold them.

Ticker Buyback Price NAV Discount to NAV
AAEV 119.3 122.50 2.61%
AAVC 42.7 50.42 15.31%
CRWN 28.62 32.47 11.86%

Sorry for poor formatting, the table setting outsmarted me.

Where did you get your NAV figures? On HL the estimated NAV for AAVC is 45.79 and for Crown is 30.49.

whatafool wrote:I got contacted by HL just now that Albion are doing a buyback next Tuesday for 3 of their VCTs. The prices they quoted seem worryingly low though. AAEV at a 2.61% discount to NAV is fine, but the other two are over 10%! How do I reconcile this with the claim on Albions website that 'The Albion VCTs, where possible, buy back shares in the market with a target discount to NAV of c. 5%, market and liquidity conditions permitting.'

Am I misunderstanding something? Hardly seems worth selling at a 15% discount to NAV, might be better to just hold them.

Ticker Buyback Price NAV Discount to NAV
AAEV 119.3 122.50 2.61%
AAVC 42.7 50.42 15.31%
CRWN 28.62 32.47 11.86%

Sorry for poor formatting, the table setting outsmarted me.

Where is that NAV data from?

From what I can see:

• CRWN's NAV was 31.03p on 31st Dec (as per the half-yearly report published on 28th Feb). A dividend of 0.78p went XD on 7th Mar, so the effective NAV for a seller now is 30.25p. The buyback price of 28.62p is a 5.4% discount to that.
  
• AAVC's NAV was 46.59p on 31st Dec (per the interim management statement on 27th Feb). A dividend of 1.19p has since been paid, which would take the NAV to 45.40p. A buyback price of 42.7p is a 5.9% discount to that.

Bloomberg. But that would certainly explain the difference. I'll follow up with Bloomberg, see why their NAV's are stale. Thanks a lot!

Hmm. On 12 Mar Albion Enterprise announced that they were selling Egress and this would increase the NAV to 126.12p. The deal hasn’t gone through but they would be basing their new issue which actually announced today, at 126.12p. This is what they claim to be the current NAV. Sadly investors need to have their wits about them as you Albion don’t appear to keep their website at real time and don’t link or flag RNSs on it.
If Egress doesn’t go through then they will have gamed the new issue NAV so it better had.
If I find other holdings are down valued between 31 Dec and 22 Mar the new issue date then I will be having words.
Be careful out there.

Mainwaring
Your point about revaluing to sale price without the deal actually going through is very well made, unfortunately I am in that group of applicants which will pay top dollar nav when our shares are actually issued.
This contrasts with Seneca who announced their finals very recently and in the accounts they give the nav as at 31 Dec and now, and the up to date nav is markedly lower due to aim holdings lower prices which should impact their final allocation for FY 23/24.
Having followed Albion over some considerable time I was always left with the impression that they could be just a little bit too clever for their own good, although I can not really grumble about their performance, sometimes one just has to suck it up...

With reference to my post of 12 March 2024 , the annual accounts for Albion Development have just been published and on page 88 , under Post Balance Sheet Events is included the following :

“ on 12 March 2024, a NAV update was announced with a 2.84p per share uplift , representing a 3.2% increase on the 31 December 2023 NAV . This uplift is a result of terms being agreed for the sale of a company within the portfolio , however there is no certainty that this deal will complete .This was not known at 31 December 2023 and therefore this is a non adjusting post balance sheet event “

The accounts were signed off on 19 April 2024 , so what can be concluded is that the deal is still not done , is still on the table and is not dead .

Update - 1 hour later RNS issued for the 5 Albion companies affected:

“ We are pleased to report that KnowBe4 has entered into a definite agreement to acquire Egress Software Technologies. The transaction is expected to close in the coming months subject to customary closing conditions and regulatory approvals” .

So not quite a done deal but more “done” than “undone” it would seem .

Cheers, I think Enterprise had a large % holding in Egress and am hopeful of a large special dividend across the range as there’s quite a return multiple here.
Tediously slow in sending out Income Tax and Share Certs from March allocation, apparent due by 4 May if anyone else wanted to know.

Mainwaring wrote:Cheers, I think Enterprise had a large % holding in Egress and am hopeful of a large special dividend across the range as there’s quite a return multiple here.
Tediously slow in sending out Income Tax and Share Certs from March allocation, apparent due by 4 May if anyone else wanted to know.

Thank you for sharing that date. I have been rather frustrated at the slow processing and communication of this latest allocation.