The sale of a €34.6m stake in European supermarket group Action has freed up funds that abrdn Private Equity Opportunities now intends to use to fund a share buyback.
[The trust’s discount is – in our view – ridiculously and unjustifiably wide. Currently it trades on a 38.4% discount to an NAV that is likely conservative – implying a greater than 50% upside were the trust to trade at asset value. That is coupled with a 10-year track record of NAV growth of an average of 14.6% per year, which is well ahead of most listed equity funds and puts it amongst the best-performing of all funds over that period.]
The board has concluded that the trust’s own shares represent an exceptional investment opportunity. It feels that the ability to recycle a significant portion of the Action proceeds, realised at 100% of its 30 June 2023 valuation, into buying APEO shares at a significant discount to NAV, is a compelling use of its capital at this time and provides immediate NAV accretion to APEO’s shareholders. It also highlights in the clearest terms the disconnect between APEO’s current share price and the valuation of its underlying portfolio.
Going forward, the board will continue to monitor the evolution of the share price and, in the event of further sizeable distributions from the portfolio, may look to extend the programme. The board also notes that, since 2016, the company has paid shareholders an enhanced dividend on a quarterly basis, which is effectively a regular return of capital to shareholders at NAV. For the avoidance of doubt, the board intends to continue this policy going forward, with the aim of maintaining the value of the dividend in line with inflation.
APEO : abrdn Private Equity Opportunities launching buyback programme