Literacy Capital (BOOK), the £227m UK private equity fund, will make its first capital distribution this month, returning £6m to shareholders under the shareholder-approved B-share scheme.
Plans for the distribution were announced in July when the investment company booked a 52% uplift in the valuation of its then second biggest holding Velociti Solutions and sold a stake in the software provider to bus and rail operators to Close Brothers.
The shares have fallen 15.6% over one year, the worst performance in the AIC Private Equity sector, having deflated from a small premium above asset value in the runup to the November 2024 budget, the first under the current Labour government.
Launched four years ago, Literacy Capital has generated a total underlying return of 35% over three years, more than double its sector’s 17% average. However, shareholders have been left with just a 2% total return with the 375p share price back to where it was in October 2022.
Our view
James Carthew, head of investment company research at QuotedData, said: “Literacy Capital’s plan to return £6m to shareholders via a B share scheme makes no sense while its shares are trading on a 27% discount to net asset value (NAV). The money should have been used for share buy backs, enhancing the NAV and perhaps helping to bring the discount in a little.”
