CT Private Equity Trust (formerly BMO Private Equity Trust) announced preliminary annual results for the year-end December 31 2022. NAV increased 14.8% for the period, while shares fell 8.9%. The trust contrasts that with a 0.4% return on the All-Share Index. The dividend yield was 6.1% based on the year-end share price. As we have seen across a number of private equity vehicles, discounts have widened despite headline NAV numbers remaining resilient, with CTPE currently trading on a discount of slightly over 40%.
During the year the company made new investments, either through funds or as co-investments, totalling £88.7m. Realisations and associated income totalled £125.1m. Outstanding undrawn commitments at the year-end were £178.9m of which £25.8m was to funds where the investment period had expired [and so that money probably won’t be callled upon].
Approximately 85% of the valuation by value is based on 31 December 2022 valuations and 15% on September 2022 valuations.
Total dividends paid for the year amounted to 25.77p, equivalent to a dividend yield of 6.1% at the year-end.
The manager gets its maximum performance fee for the year of £5.4m. To earn a fee, the manager needs to generate NAV returns of at least 8% a year over three years. By the end of 2022, the compound return over that period was 24.6% per year.
More coinvestments
The trust’s exposure to coinvestments is capped at 50% but the track record here is good and the manager would like to do more. To avoid inadvertantly breaching the 50% limit – through good performance – the board is upping the limit to 65%.
Chairman, Richard Grey, commented;
“Conditions within the private equity market have changed during 2022. An initially surprisingly benign reaction to the Russian invasion of Ukraine and its concomitant effects dissipated towards the end of the year as the challenges of inflation, higher interest rates and supply chain problems made their presence felt. That said the large element of the portfolio involved in tech enabled and healthcare related companies continued to make fundamental progress and to attract buyers at attractive prices keeping the realisations not far below historically high levels. The positive momentum exceeded the drag factors in 2022 delivering another good overall return. We expect that it will be harder to achieve exits this year and it also looks as though fund raising for private equity funds is becoming considerably more arduous. Whilst a cautionary note is justified this does not mean that the underlying growth characteristics of so many of our investee companies and the skill of our investment partners will not continue to deliver positive returns for shareholders. There are also other supportive factors. In particular there is a well-financed tier of larger private equity funds in the size bracket above us with the capital and the will to invest and many of our investee companies will prove attractive to them. Lastly there remains a steady increase in investors’ appetite for private equity globally. This all adds up to the prospect of a healthy two-way market with continuing opportunity and strong demand for high quality and resilient investments.”
CTPE : CT Private Equity wraps up tough year