CT Private Equity (CTPE), a £356m Columbia Threadneedle managed trust, has sold a portfolio of mature fund investments for £24.7m, 16.1% below their valuation at the end of last year.
The disposal to institutional investors of 4.9% of the investment trust’s portfolio has reduced net asset value (NAV) at 31 March by 1.3%. The NAV per share at the end of the first quarter was 699.7p previously.
Fund manager Andrew Carnath justified the discounted sale saying the European fund positions dated from 2008 to 2019 and were considered to have less potential for growth. The 16.1% price cut is also smaller than the 29% discount to NAV at which CTPE stood at yesterday with a share price of 498p. The shares dropped nearly 14p, or 2.8%, to 484p today.
“This transaction crystallises value from several mature holdings with less scope for further value creation at a discount materially narrower than that at which the company’s shares currently trade,” said Carnath, who was promoted to lead manager after the retirement of Hamish Mair in May.
Proceeds from the funds sale will be added to the £18.3m ($24m) the trust made last month from seeing its stake in US drone-based inspection company Cyberhawk acquisition sold at a 71% premium to the 31 March valuation.
Carnath indicated the money from both transactions would be used mainly to reduce borrowing and to fund new investments, although he said supporting its quarterly dividend was a “key priority” and share buybacks would also be considered.
The fund manager said he was currently seeing attractive opportunities, particularly in direct co-investments in private companies that accounted for 39% of the portfolio at 31 December. The remainder was held in a range of management buyout, private equity, growth capital and venture capital funds in the UK, Europe, USA and elsewhere.
Over five years, CTPE ranks fifth out of 15 listed funds in the AIC Private Equity sector, with a 52.8% total return from its 5.7%-yielding shares.
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