Partners Group Private Equity (PEY) looks set to enter a managed wind-down after nearly three quarters of shareholders chose to sell their holdings in the company’s proposed reconstruction.
Chair Peter McKellar said holders of 74.12% of the company’s shares had chosen to take the new realisation share class offered by his board in the summer after shareholder pressure over poor performance.
As this exceeded the revised maximum 40% threshold the company set last month, the reorganisation resolution creating the realisation class would be cancelled at the extraordinary general meeting on Wednesday. Instead, shareholders at the EGM would be asked to vote on a wind-down resolution which if passed would see the £457m company begin an orderly realisation of its entire investment portfolio.
“The election results demonstrate that a significant majority of our shareholders are seeking a clear path to liquidity. As we set out in the circular, where demand exceeds the 40% threshold, the board, having consulted with the investment manager, believes that an orderly realisation of the entire portfolio represents the most equitable outcome for shareholders as a whole,” McKellar said.
PEY shares rose 1.4% to €7.04 slightly narrowing their 40% discount to net asset value. Managed by Partners Group in Switzerland, PEY has delivered a total shareholder return of 49% in the past 10 years, well below the 298% average of the 14 listed funds in the AIC Private Equity sector. Half-year results in August showed the investment company had delivered a negative annualised investment return of -1% over five years.
Our view
Richard Williams, senior analyst at QuotedData, said: “This is an emphatic verdict from PEY’s shareholders. When the realisation share class was first proposed, we warned that offering a one-off route to liquidity risked prompting a rush for the exit, and the fact that 74% of shares elected for realisation shows just how strong that demand was. The board had already increased the maximum realisation pool from 30% to 40%, but even that has proved nowhere near enough. Given PEY’s poor investment performance and persistent discount, shareholders have clearly decided that the prospect of eventually receiving something closer to NAV through an orderly realisation is preferable to continuing with the existing strategy. Assuming Wednesday’s vote passes, the focus now shifts to how much value can ultimately be recovered, and how long shareholders will have to wait for it.”
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