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Profits growth and falling discount mean a good year for F&C Private Equity shareholders

Profits growth and falling discount mean a good year for F&C Private Equity shareholders – in its final report for the year to 31st December 2017, F&C Private Equity (FPEO), the chairman commented that the portfolio continued to make progress during the year.

Profits growth and falling discount

Over the year, the NAV returned 5.6% (on a total return basis). The share price rose by 19.2% on the same basis with the discount to NAV falling to 5.1% from 15.8% in 2016 . This compares to a total return from the FTSE All-Share Index for the year of 13.1%.  As 2017 progressed the share price moved to a premium to NAV at times. The chairman note that this hasn’t happened for many years.

The manager reported that the main contributors to performance were the overall positive tone in the private equity market internationally and the specific contributions from some of the company’s larger investments. The majority of its holdings increased in value over the year through fundamental growth in profits or through achieving good exits.

This was partially offset by a small number of investments underperforming towards the end of the report period, which had to be written down in the portfolio valuation that has been published.  The portfolio is diversified across a large number of investments and the managers clarified in the report that there are many positives in the Company’s portfolio and much of this is not yet fully reflected in the portfolio valuation.

During the year the Company made new investments either through funds or as co-investments, totalling £69.9 million. Realisations and associated income totalled £65.1 million. F&C Private Equity offers access to a diverse spread of private equity investments principally through exposure to specialist private equity funds and co-investments in individual companies.

The company has moved from paying dividends to one every six months, rather than quarterly; a move that is intended to make the flow of income to shareholders more regular.

Chairman’s outlook

In the outlook, the chairman commented that ” The private equity market internationally has raised record amounts of equity capital and is well supported by debt from diverse sources. Confidence levels amongst private equity professionals and company management are high and this makes for a healthy and active market in most geographies. The Company has many relationships with some of the most successful private equity investors and through partnership with them we have delivered good growth in shareholder value for many years. This is evidenced by the flow of exits which remains at impressive levels. We are also re-investing for the future with new commitments to funds and co-investments alongside experienced and motivated managers. The Company remains one of the few vehicles which gives investors exposure to predominantly European lower mid-market private equity with an emphasis on emerging private equity firms. This remains a broad and attractive sector in which to invest for the long term.”

FPEO : Profits growth and falling discount mean a good year for F&C Private Equity shareholders

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