Literacy Capital (BOOK) is under pressure to revive its flagging share price after the UK private equity fund experienced its worse year of performance since listing in 2021.
While net asset value (NAV) edged 0.3% higher to 484.3p in 2025, the share price slid 15.6% as economic uncertainty and a £41m write-down of its top holding in healthcare provider RCI and a smaller position graduate recruitment company Grayce knocked investor confidence.
Although a £6m return of capital through the distribution of B-shares reduced the shareholder loss to 13.4%, chair Paul Pindar said the performance had been “disappointing”.
The shares have fallen a further 15% this year and stand on a 30% discount below NAV.
Pindar said new chief executives had been appointed at both RCI and Grayce which were good businesses and expected to “swiftly return to an upward trajectory”.
“Success does not always travel in a straight line,” he said, pointing out the six-times cash return both companies had made for BOOK.
His son Richard, chief executive of BOOK’s investment manager, said new investments in Red Sky Food Group and Trinitatum, a provider of test automation software, had started well and showed “great promise” after adding £23.3m to NAV.
Last year BOOK made £42.5m from the sale of a majority stake in public transport software provider Voliciti, company refinancings and distributions from other funds.
It said the portfolio remained prudently valued with the 10 biggest holdings accounting for nearly 83% of assets measured at 9.4 times earnings, up from a multiple of 8.8 times a year ago. Leverage was modest too, it said, although net debt rose to 2.8 times portfolio earnings from 2.3 times in December 2024.
Richard Pindar said better news and stronger NAV performance, “which we continuously strive to achieve”, were needed to narrow the share price discount. “Alongside this, there are several other marketing initiatives underway to improve demand for BOOK’s shares and strengthen the share price, and we expect these actions to gather momentum through 2026.”
Our view
Matthew Read, senior analyst at QuotedData, said: “While Literacy Capital’s results look underwhelming on the surface – a flat NAV return and a double-digit share price decline – there is a bigger picture. Private equity is rarely a smooth ride and recent disposals, including the exit of Velociti, have been achieved at healthy premiums to carrying value. This suggests the underlying businesses are being built and realised successfully, and that the current results are perhaps more of a question of timing than a more fundamental issue.
“That said, parts of the portfolio have felt the impact of a tougher UK backdrop, with mid-market companies facing cost inflation, cautious hiring and subdued confidence. The manager’s response – slowing deployment, becoming more selective and focusing on hands-on portfolio management – looks pragmatic in that context. Importantly, there is also clear recognition that the discount is an issue, alongside steps to address it through improved communication, increased marketing efforts and, crucially, the delivery of tangible progress via exits and operational improvements.
“If Literacy can continue to deliver strong realisations – and particularly if the pace of these accelerates – it should support NAV growth and provide a catalyst for a narrowing of the discount.”
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