The trust, launched in December 2007, is a fund of private equity funds that offers its shareholders capital appreciation over the long term, without taking unnecessary risks.
“After 30 years in business, the team and investment committee have seen enough market cycles to know what to look for. The one sure way to destroy NAV for investors is to pick bad managers and we think that performance and the NAV of this vehicle, which has been one of the best in the past five years, is down to that manager selection,” Mr Howard says.
Most recently, the trust bought the assets of the Conversus Capital portfolio, one of two significant deals made in the past year-and-a-half. “In the past 12-18 months, we have continued our policy of trying to seek opportunities in the listed sector. In the Autumn of 2011, we bought Absolute Private Equity – a Swiss-listed private equity firm – and in December 12, we took on the assets of Conversus. We think there is still opportunity in that sector.”
Mr Howard and his investment committee, with a combined experience of more than 30 years in the private equity sector, work closely with managers to understand their investment processes.
“We look at their track records and motivations because if we pick good managers that have good asset selections then that will grow the NAV,” Mr Howard says. “There is nothing magic and there are no set biases. We will go where good investments are to be made.”
In the first half of this year, the net asset value of the trust has growth by 4-5 per cent, according to the manager, which he suggests have been a result of the three initiatives put forward in the annual report published in May 2013. As well as stating the intention to review its corporate governance structure, currently only being listed on Euronexxt and specialist fund markets which Mr Howard claims are “illiquid” and committing to making more investments to grow the net asset value of the trust in the long term, the annual statement set out changes to the trust’s distribution.
Mr Howard explains: “Because of the two deals, we are going to allow a distribution of $20m in 2013 and $20m 2014 which is equivalent of about 2.5 per cent yield on the share or 24 cents per share. We hope that people and shareholders will see the value. We have listened to the market that said it would like to see cash at NAV and this is a way to do that.”
The $500m credit facility on the trust was recently renegotiated and will remain in place until December 2014 at which point it will be reduced to $300m. Mr Howard says that the facility has been used “opportunistically with two separate deals which has enabled the two share redemptions at NAV”.