TIDMPEQ
RNS Number : 2022H
Private Equity Investor PLC
27 November 2015
PRIVATE EQUITY INVESTOR PLC
HALF-YEARLY REPORT 30 SEPTEMBER 2015
INVESTMENT OBJECTIVE AND POLICY
Investment Objective
The objective of the Company has been to provide shareholders
with long-term capital growth. The Company is not making
investments in new private equity funds but is managing its
existing investments with a view to making periodic returns of
capital to shareholders.
Investment Policy
Risk Diversification
The Company has invested in and maintains a broad portfolio of
US-based venture capital and buyout funds (the "Funds"), managed by
a number of different management groups, and focused on various
stages of growth so as to obtain exposure to a diversified
underlying portfolio of investments primarily in private companies
in the technology sector. Through the Funds, the Company has
exposure to a diverse portfolio of underlying companies.
No New Fund Investments
It is the policy of the Company not to make new fund
investments. However, the Company will continue to meet existing
capital commitments to the Funds and may on occasion support
follow-on commitments in existing Funds or affiliated annex
funds.
No Over-commitment; Ring-fenced Accounts
Over-commitment is the practice of making commitments to funds
which exceed the cash available for investment. The Company has a
policy not to be over-committed. All amounts required to fund
existing capital commitments to the Funds are held in ring-fenced
accounts.
Distributions Received from the Funds
The managers of the Funds invest principally in unlisted
technology companies based in the US. After the flotation or sale
of their investments, the Funds may distribute cash or securities
to the Company. As a result, the Company may from time to time hold
listed securities. It is the policy of the Company to sell listed
securities received as distributions from the Funds within a short
period of time unless the stock price has decreased meaningfully,
in which case the Company may hold these securities for a longer
period of time until favourable selling conditions exist. The
listed securities received as distributions from the Funds
typically do not represent a significant part of the Company's
overall investments.
Liquidity
The Company may hold substantial cash balances due to existing
capital commitments to the Funds, due to the receipt of cash
distributions from the Funds, or due to cash realised upon the sale
of listed securities received from the Funds as distributions.
These cash balances are principally in open-ended investment funds
pending capital call requests from the Funds, or used for corporate
purposes or for distribution to shareholders.
Return of Capital to Shareholders
The Company proposes to make periodic returns of capital to
shareholders from the proceeds of distributions received from the
Funds. As the timing and amount of distributions from the Funds
fluctuates and is not known, the Company cannot predict when a
return of capital to shareholders may be made, or the amount.
Gearing
In normal circumstances the Company does not expect to borrow.
The Company's Articles of Association limit borrowing to an amount
broadly equal to its capital and reserves. Some investments made by
the Funds may be geared but the Company does not review the level
of gearing of these underlying investments.
Derivatives
The Company does not make use of financial derivatives and does
not hedge against currency fluctuations.
Dividends
The Funds provide little income. Income may be generated from
liquid funds and the Company may be required to pay dividends to
continue to qualify as an Investment Trust. Such dividends are,
however, likely to be small and irregular.
SUMMARY OF RESULTS AND FINANCIAL HIGHLIGHTS
30 September 31 March
2015 2015 % change
Group Group
Net assets and shareholders'
funds GBP25,261,000* GBP35,339,000 (28.5)
Net assets per Ordinary Share 211.5p 238.7p (11.4)
Net assets and shareholders'
funds in US$ $38,264,000* $52,461,000 (27.1)
Net assets per Ordinary Share
in US$ 320.3c 354.4c ( 9.6)
Mid-market price per Ordinary
Share 185.0p 194.5p (4.9)
Discount to NAV 12.5% 18.5%
Net revenue loss after taxation GBP(252,000) GBP(532,000)
Net total (loss)/return GBP(3,331,000) GBP1,188,000
Total (loss)/return per Ordinary
Share (27.2)p 7.7p
Exchange rate at period end
- (US$/GBP) 1.51475 1.48450 (2.0)
Number of Ordinary Shares
in issue 11,945,519 14,805,508
Ongoing charges (Company only)** 1.7% 1.4%
Ongoing charges (Group)** 1.7% 1.6%
Cumulative cash returned to
shareholders through tender
offers GBP76,850,000 GBP70,150,000
* Following the tender offer completed in April 2015 when GBP6.7
million was returned to shareholders.
** The Company's ongoing charges are calculated in accordance
with the Association of Investment Companies ("AIC") guidance and
as such exclude subsidiary expenses. Group ongoing charges are
calculated on the same basis but include subsidiary expenses.
CHAIRMAN'S STATEMENT
I am pleased to present the unaudited interim results for
Private Equity Investor PLC ("PEI" or "the Company") for the six
months ended 30 September 2015.
Results
The Company's Net Asset Value ("NAV") at 30 September 2015 was
211.5p per share compared with 238.7p per share at 31 March 2015, a
fall of 11.4%. The NAV per share in dollars, the currency in which
the Company's investments are denominated, was 320.3c per share
compared with 354.4c per share at 31 March 2015, a decrease of
9.6%. This decrease primarily results from weakness in the private
equity market, Fund revaluations and foreign exchange movements.
During the period, the dollar weakened against sterling by 2.0%
from $1.48450 to $1.51475; the Company's share price decreased by
4.9% from 194.5p to 185.0p; and the discount narrowed from 18.5% to
12.5%.
An amount of GBP6.7 million was returned to shareholders on 27
April 2015 by way of a tender offer, increasing the cumulative
amount of cash returned to shareholders in this manner to GBP76.85
million.
No dividend is proposed for the period.
Distributions and Calls from Fund Investments
At 30 September 2015 the remaining commitments to the Funds were
$4.1 million (GBP2.7 million) compared with $4.2 million (GBP2.8
million) at 31 March 2015. In the six month period, net drawdowns
relating to the Company's capital commitments to the Funds were
$0.1 million (GBP0.1 million).
Distributions from the Funds amounted to $3.2 million compared
with $5.5 million in the previous six months. Cash distributions in
the period accounted for $2.6 million and stock distributions for
$0.6 million. The largest distribution came from Dawntreader Fund
II, L.P.
Campton Group, Inc.
Campton Group, Inc. ("Campton"), the Company's wholly-owned
subsidiary, has sold its non-cash assets and is in the process of
winding down its operations. The Company expects that Campton will
be liquidated by the end of the calendar year. Going forward, the
Company will be advised by external advisers on a limited, as
needed, basis.
Portfolio Review
At 30 September 2015, the Company held investments, through 20
Funds, in 223 private investments and 40 public investments which
were valued at $30.4 million (31 March 2015: $37.1 million), being
equivalent to GBP20.0 million (31 March 2015: GBP25.0 million).
PEI's cash and readily realisable assets totalled $7.9 million
(GBP5.2 million) compared with $15.6 million (GBP10.5 million) at
31 March 2015.
During the half-year under review there were no Initial Public
Offerings ("IPOs") of any underlying portfolio companies. Also, at
30 September 2015, only one underlying portfolio company had an IPO
registration statement on file with the US Securities and Exchange
commission.
US Venture Capital Industry Liquidity Update
The following is an update of the US IPO and M&A activity
relating to the venture capital backed companies for the first
three quarters of 2015.
US Venture M&A Transactions
Year Aggregate Transaction Number of M & A Transactions
Value
$B
2010 $18 545
2011 $24 502
2012 $23 492
2013 $17 394
2014 $48 483
Q1 - Q3 2014 $20 372
Q1 - Q3 2015 $11 258
Source: Thomson Reuters/NVCA Press Release for 3Q2015. Aggregate
value based on deals with disclosed values.
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