By Anne Ashworth, Daily Mail, 25 October 2024:
The word ‘discount’ is one of the most enticing in the English language.
But in the case of private equity investment trusts, discounts are provoking more suspicion than excitement at present.
The share prices of many of these trusts – which back the unlisted businesses poised to become tomorrow’s stars – are at a yawning discount of as much as 40 per cent to their net asset value (NAV).
These trusts may provide useful exposure to burgeoning enterprises – in financial services, retail and technology in the UK, the US and Europe.
But such is the size of the discounts that many are concluding that private equity trusts are cheap for a reason, rather than one of the best buys of the autumn of 2024.
Such is the level of distrust that some are even looking askance at the one trust in the sector which stands at a huge 56pc premium to its share price – and has provided a 1070 per cent return over the past decade.
This is 3i Group, a FTSE 100 company founded in the post-war period as Investors in Industry.
Today the £32billion trust is best known for its 58 per cent stake in Action, the convenience store chain with 2,725 outlets in 12 European countries..
James Carthew of analytics group QuotedData points to figures from MSCI Burgiss showing that the profits of management buyout businesses have grown faster than those of the average listed company in nine of the last ten years.
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