Electra, the investment trust that invests in private equity ventures, cashed in on several winners in the first half of its financial year.
"Electra made good progress over the last six months with six realisations being made, at significant premiums to carrying values," said Colette Bowe, the trust's Chairman, as the company unveiled a 6.1% increase in its undiluted net asset value (NAV) per share to 2,360p in the half year to March 31st.
As at May 24th, the trust's NAV per share had grown further to 2,367p.
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However, the 6.1% increase in NAV in the half-year trails that of the FTSE All-Share index over the same period, as the benchmark index rose 13.1%; on the other hand, the share price of Electra shot up 26.3% over the same period so the market appears to have confidence in Electra's strategy.
The trust has net liquid resources of £254m, of which £16m is cash, £397m is liquidity funds while the rest is accounted for bank borrowings of £159m. The group also has £36m of undrawn borrowing capacity, giving it total investment firepower of £449m, although £91m of that is ear-marked for outstanding commitments to third party funds.
"At a time when debt remains scarce and expensive and there is evidence that raising funds is taking longer than usual, the board is pleased that Electra's war chest is already well stocked and ready to be deployed," Bowe said.
Hugh Mumford, Managing Partner of Electra Partners, the investment manager, chipped in: "Our existing portfolio remains well positioned to make further progress. We have an increasing pipeline of quality deals and our focus will remain on those opportunities that can deliver growth in difficult markets.
Dire warnings of the banks precipitating the demise of many private companies through their reluctance to lend have not yet proved correct, but Mumford believes that investment opportunities of this sort will increase over the next 12 to 18 months, as will chances to buy up non-core assets from banks as they seek to strengthen their balance sheets.
While the trust took the opportunity to cash in on high prices by selling bits and pieces of its portfolio, the corollary to this was that investment activity, although greater than in the preceding six months, was less than anticipated.
During the six month reporting period, £268m was received from the sale of investments, a significant increase from the £46m realised in the previous six months.
Electra invested a total of £92m in the period compared to £63m in the previous six months.
Unless required to do so to maintain Electra's investment trust status, it is the policy of the directors not to pay dividends.
JH
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