abrdn Diversified Income and Growth (ADIG) has announced the commencement of a secondary sales process to accelerate the realisation of its remaining private markets portfolio. The company has appointed Campbell Lutyens as an independent broker to lead the process, which the board believes will optimise value and support the trust’s managed wind-down.
The decision follows a review of strategic options, including a potential full portfolio sale to a third party. While ADIG’s board judged that offer to be credible, it ultimately decided not to proceed, citing concerns over pricing and the composition of the consideration – which included a listed share element and was deemed less attractive than potential outcomes from open-market secondary sales.
The portfolio includes a diversified mix of private equity, private credit and infrastructure assets, and the board notes that sales are likely to be made to multiple buyers rather than a single acquirer. While the board expects pricing to be at a material discount to NAV, it says that recent improvements in secondary market conditions and strong demand are seen as supportive.
Campbell Lutyens brings extensive experience, having advised on over $135bn of secondaries transactions. The aim is to begin marketing the assets immediately, with indicative pricing expected in the coming months. The board emphasises that while there is no certainty around the timeline or size of proceeds, the process should allow more control and flexibility compared to a passive wind-down. ADIG remains committed to returning capital to shareholders as efficiently as possible, supported by the recent cancellation of its capital redemption reserve, which facilitates further distributions via its B share scheme.
[QD comment MR: That pricing is expected to be at a material discount to NAV has to be an additional sting in the tail for ADIG shareholders, who have already suffered from lacklustre performance. It also raises questions about the NAV calculation, although it also has to be acknowledged that the market backdrop has shifted relatively quickly – an environment of potentially higher inflation and therefore interest rates will likely have impacted the value of some of its assets – particularly longer duration ones – although ADIG’s less correlated holdings may see renewed interest with markets less certain and more volatile as a result. Regardless, it suggests the market was right to price ADIG at a substantial discount to NAV – c35% before the latest news broke.
Ironically, the sort of portfolio ADIG was set up to hold – one with a number of uncorrelated assets – is one that should be increasingly appealing in an environment of higher uncertainty. It is often difficult to time markets, but, with the benefit of hindsight, perhaps ADIG’s plug was pulled a bit too quickly.]
