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Investment trust insider on private equity again

Investment Trust Insider on Capital Gearing Trust

Investment trust insider on private equity again – James Carthew: Private equity trusts remain grossly mispriced

Just over a year ago, I wrote an article to highlight the unjustified discounts that trusts in the private equity sector were trading on. My pick of the bunch was Standard Life Private Equity (SLPE), which at that time was trading at a 41% discount. Today, the discount is closer to 15%.

If you bought some a year ago, you would be sitting on a 58% profit, because not only did the discount close but the trust also turned out some decent underlying growth in net asset value (NAV) too.

To be fair, I should point out that some of the other trusts that I mentioned in that article would have made you even more in share price terms – Oakley Capital Investments (OCI) is up over 70%. The best performing in NAV terms were HgCapital (HGT) and Apax Global Alpha (APAX), which both soared by more than 40%, helped by their bias to sectors such as technology.

Over 2020 global private equity funds backing management buyouts of established firms – as opposed to the start-ups backed by venture capital funds – beat developed market listed equities and high yield bonds by a large margin.

This is not a flash in the pan either. Many of these funds have turned out strong NAV returns fairly consistently for much longer periods. I caught up with Oliver Gardey, manager of ICG Enterprise (ICGT) recently and he…

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