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Trust Watch: ‘Cheap’ biotech & a 6%-yielding property play

Investment Trust Insider on Perpetual Income and Growth

Lots in this week’s review with strong updates from private equity trusts 3i and NBPE, biotech funds showing value and Waverton lining up a launch.

By Gavin Lumsden, Investment Trust Insider, 23 Jul, 2021

3i and NBPE impress

Fifth-placed 3i Group (III) rallied over 8% in the week to Thursday, half of it coming yesterday after the UK private equity giant posted a strong first quarter trading update. Net asset value jumped 12% to £10.63 in the three months to 30 June after a 21% increase in the value of its biggest holding, Dutch discount retailer Action, whose stores have all reopened after lockdown. That leaves 3i shares on a 19% premium, which JPMorgan Cazenove analyst Christopher Brown said ‘remains very good value given the evident progress across the whole portfolio’.

3i is not alone. We’ve reported the surprisingly robust progress of private equity trusts many times since the coronavirus crash and the anomaly of the wide discounts at which many of them trade. In seventh place, NB Private Equity (NBPE) sterling shares gained nearly 6% this week to £15.30, but remain on a wide 22% discount. Last week the fund impressed investors with a 22% portfolio gain in the first half and a 32% rise in the semi-annual dividend.

Other risers

In fourth place, GCP Student Living (DIGS) jumped 11% to 213p in line with the finalised cash bid from US private equity giant Blackstone, a rise that also pushed it into second place of our ‘expensive’ list (see last slide) on a 19% premium over net asset value.

Recognition of the value in the sector lifted recovery play Empiric Student Living (ESP) 5.6%, which will no doubt please shareholder James Carthew who wrote about it last week.

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