The Lemon Fool

I guess Private Equity fits better on ITs than anywhere else on lemonfool.

We've seen Scottish Mortgage's unlisted assets doing nicely. We've had some interesting recent upsides in the VCT world. Today it's Princess Private Equity's turn: Princess sells Global Logic to Hitachi for $129m, against $89m carrying value.

I think we may be in an environment for some more happy events in PE. Discuss!

UncleEbenezer wrote:I guess Private Equity fits better on ITs than anywhere else on lemonfool.

We've seen Scottish Mortgage's unlisted assets doing nicely. We've had some interesting recent upsides in the VCT world. Today it's Princess Private Equity's turn: Princess sells Global Logic to Hitachi for $129m, against $89m carrying value.

I think we may be in an environment for some more happy events in PE. Discuss!

PEY is an IT, so I think this is the right board.

You may be interested in the following:

https://www.edisongroup.com/publication ... 021/28898/

Specifically about SLPE, which I bought nearly 4 years ago, but makes some general points about PE.

77ss wrote:Specifically about SLPE, which I bought nearly 4 years ago, but makes some general points about PE.

Likewise, I’ve been a satisfied holder of Standard Life Private Equity (SLPE) stock for more or less the same time span. Being a fund-of-funds, I did initially baulk at the ongoing charge figure (OCF) of 1.1% which I still consider to be on the rich side. However, I can’t really begrudge such management deductions when the share price total return for past five years currently stands at 163.6%.

It’s been noticeable of late as to rerating that has been taking place amongst the small number of private equity ITs that make up the sector. The return of investor appetites for such risk assets has manifested itself in the shrinking of previously deep discounts. 12-month ago any one brave enough could have bought SLPE on a discount of some 42% whereas today it’s more like 12% subject to the accuracy of the NAV.

The Private Equity sector is on a bit of a roll. I made my last NBPE top-up yesterday @ 1160p; now at my MAX 10% allocation.

I still don't understand why NBPE is so cheap versus peers; but pleased to see Cazenoves agree - see excerpt below from MoneyWeek.

The average NAV discount of the 4 peers HVPE, PEY, PIN & SLPE is now a mere 11.6%. At today's 1185p NBPE is at 23.7%... The sp is a clear anomaly IMO; and should be 10% higher.

======================================

"NB Private Equity (LSE: NBPE) managed a 12-month return of 21% but still trades on a discount of 25% to estimated NAV, reckons analyst Chris Brown at JPM Cazenove, making it “excellent value”. He estimates the discount for Harbourvest (LSE: HVPE) to be 19%, which looks anomalous given its excellent record (a return of 100% over five years) and high exposure to the tech sector (29%). The record of Princess Private Equity (LSE: PEY) is even better, 106% over five years, but Brown rates it as only a “hold” as its discount of 16% is “fair relative to peers”. In absolute terms, it still looks attractive."

Incidentally, readers may find the PE thread on ADVFN quite useful; if only for the charts of most of the players

https://uk.advfn.com/cmn/fbb/thread.php3?id=26570589

A good article in the FT under the title: "Is private equity in for a rerating?"

It can be read in full over at ADVFN under the PE or JDT threads.

https://uk.advfn.com/cmn/fbb/thread.php3?id=47587903

PE Trust NEWS:

JPEL shoot the lights out with their Feb'21 NAV figure - 187c - a 7.5% increase on January's 174c.

At 117c the discount climbs to 37.4%.

They surely must have revalued Swania - can't think what else would have had such a large effect.

Limited marketability in JPEL; but with them being in voluntary liquidation mode, surely right to have a few if you can get them.

2 weeks later & NBPE are UP 18%. A really great move, boosted by a remarkable NAV increase.......with more to come.

The sp had been an anomaly; so provided a great profit as it played catch-up with its peers.

SKYSHIP wrote:2 weeks later & NBPE are UP 18%. A really great move, boosted by a remarkable NAV increase.......with more to come.

The sp had been an anomaly; so provided a great profit as it played catch-up with its peers.

Such comments further supported by this Citywire news release posted on the AIC site that reads ...

Private equity trusts deliver big but confusing vaccine bounce
22 April 2021
HarbourVest Global Private Equity, NB Private Equity and Standard Life Private Equity all capped off 2020 with strong bounces, if you can follow the thread of their announcements.
Three private equity investment companies have unveiled big increases in their portfolio valuations, reflecting strong recoveries in the final quarter of 2020.

However, concerns expressed about the continuing weak investor demand as discounts persist, as evidenced by the comment …
"Despite the strong underlying performance shining through in these latest NAVs, the sector’s difficulties in presenting underlying performance with more clarity seem partially reflected in naggingly wide discounts."

==============================================================================

In the spirit of disclosure, I own shares in the aforementioned Standard Life Private Equity Trust (SLPE).

On 8th April I recommended a purchase of Private Equity trust NBPE @ 1185p, at which level they traded at a 23.7% discount, anomalously and unaccountably higher than their peers. Happily just a fortnight later they announced a supercharged 8% increase in their March NAV; so the shares responded nicely with an 18% rise to 1400p.

Since then profit-taking has seen them drift back to 1310p; this in spite of a yet further 3.3% NAV increase for April.

At 1310p they are now trading at a 26.7% discount; so higher than when I posted on 8th April; and in spite of the fact that further gains are baked in! (see the NAV statement below).

I am confident that the sp will shortly re-challenge and break through that recent 1400p high.

https://uk.advfn.com/stock-market/londo ... i/85136459

RE: NBPE

NBPE are again beginning another run higher. In doing so they stand at an anomalous discount versus their peers.

The average discount for HVPE, PEY, PIN & SLPE now stands at 16.35%. NBPE is trading at 1360p on a discount of 23.9%!

With further asset gains locked in, NBPE would need to make new highs up to 1500p to rank pari-passu with their peers.

A bit bold for the very short-term; but IMO they will shortly be breaking through the 1400p level...

SKYSHIP wrote:RE: NBPE

NBPE are again beginning another run higher. In doing so they stand at an anomalous discount versus their peers.

The average discount for HVPE, PEY, PIN & SLPE now stands at 16.35%. NBPE is trading at 1360p on a discount of 23.9%!

With further asset gains locked in, NBPE would need to make new highs up to 1500p to rank pari-passu with their peers.

A bit bold for the very short-term; but IMO they will shortly be breaking through the 1400p level...

NBPE seem to sport two different ZDP classes, one of whose wind-up dates is next year, the other a couple of years on. That's additional gearing (risk). And it appears indicative of a level of financial engineering known to bear risk.

AIC shows a discount of 25%, which is in a similar ballpark to much of the PE sector (e.g Dunedin Enterprise, which has done very nicely for me over several years, is on 18.4%, and some are much higher). You may be right about an upside, but to my eye it doesn't particularly stand out.

I run a portfolio of income producing ITs to support our retirement. In capital terms the two outright winners are Princess Private Equity and Apax Global Equity. Both produce excellent income although Princess did cut the dividend last summer, before restoring it this year.

As for the property ITs in the portfolio, least said the better!

UncleEbenezer - only just seen your reply of June 14th on NBPE.

ZDPs used to be a pretty standard gearing method; though have fallen out of fashion. The gearing element was not in addition to declared debt, it was part of it, so no greater risk. The ZDP debt is covered 12x by capital value; and drops out of the equation in 09/22 & 10/24.

I believe you under-rate what a shift in discount can do. You mention DNE on 18%. Well, if NBPE moved from a 22% discount to an 18% discount the sp would rise 5.16%. As my earlier posts showed, a move from an anomalous discount to a rate alongside peers, can be very profitable.

NBPE have advanced again, touching 1400 this past week. I suspect (hope) that next week they will break through the 1400p ceiling and bear down on my 1500p target.

HVPE is another good one for a short-term re-rating back to its usual 16% discount. Great NAV stats last week took the discount up to 22%; so look for further gains there too.

Today's happy event is from Dunedin. My SIPP says thank you!

https://www.investegate.co.uk/article.aspx?id=202107071313525037E wrote:The investment in UPOL was valued at £10.5m in the Preliminary Unaudited Net Asset Value at 31/3/21 published on 4 May 2021. Proceeds from the sale, including redemptions of loan stock since 31/3/21, are expected to amount to £21.8m (an uplift of £11.3m, or 62.4p per share), consisting of capital of £19.5m and income of £2.3m.

On past performance, we might get a return of capital from that. I don't think those returns are always reflected in the AIC performance history.

UncleEbenezer wrote:Today's happy event is from Dunedin. My SIPP says thank you!

https://www.investegate.co.uk/article.aspx?id=202107071313525037E wrote:The investment in UPOL was valued at £10.5m in the Preliminary Unaudited Net Asset Value at 31/3/21 published on 4 May 2021. Proceeds from the sale, including redemptions of loan stock since 31/3/21, are expected to amount to £21.8m (an uplift of £11.3m, or 62.4p per share), consisting of capital of £19.5m and income of £2.3m.

On past performance, we might get a return of capital from that. I don't think those returns are always reflected in the AIC performance history.

Indeed, they state this is their intention and it is in line with their continuing policy of portfolio realisation.

Investegate

"Following regulatory approval being received the Board intends to announce a distribution to shareholders."

So NBPE shoots the lights out - AGAIN! June NAV up 6.5%!

Yet the Market still parsimonious, as at the higher 1440p the discount has risen yet again - now at 26.6%. This compares with the 16.5% average of its 4 peers: HVPE, PEY, PIN & SLPE.

1500p very much on the cards in the short-term. Even at 1600p the discount would still be 18.5%.

Massively under-rated and still a strong BUY IMO...

(I do of course hold the stock - my largest holding - and growing larger)

Re NBPE - great minds think alike:

https://citywire.co.uk/investment-trust ... h/a1530394

NBPE - Strong NAV Growth Drives 32% Growth in Dividend

15 July 2021

Highlights:

-- Semi-annual dividend of $0.41 per share, an increase of 32% to February
2021 dividend

-- The significant increase is driven by the Company's 22% growth in NAV1
year to date

-- Increase brings the annualised dividend yield on NAV to 3.0%, in line
with the Company's stated dividend policy; annualised share price yield
is 4.2% based on the closing share price of GBP14.25 on 14 July 2021.

Great - NBPE hits £15.....now for the run to £16...

Elsewhere PIN starting to breakout from recent consolidation. Target £30 versus current £27.40

SKYSHIP wrote:Great - NBPE hits £15.....now for the run to £16...

Elsewhere PIN starting to breakout from recent consolidation. Target £30 versus current £27.40

I Note NBPE has a 2.33% charge, KID risk factor 5, and a wide spread between buying and selling prices.

I also note that it is in the top ten holdings of BMPI (BMO Managed Portfolio Income).

Ex dividend: 22/7/21. Discount currently: 24.15% per HL webpage:

https://www.hl.co.uk/shares/shares-sear ... rd-usd0.01