Electra Private Equity has announced its intention to move from a listed investment trust to a “corporate” structure as it completed the first phase of its strategic review.
The trust’s board also concluded “significant value can potentially be captured for shareholders” by internalising all management functions which would see all executive and investment functions returned to the board’s control.
It believes doing so will result in savings in excess of £25m per annum and the elimination of carried interest from June next year, which had totalled £80m in the past 12 months.
The board said the changes would increase transparency of underlying earnings and dividend paying capability.
Earlier this year the board of the trust served notice to Electra Partners, with which it has a management and investment agreement, which is due to terminate on May 31 2017.
Neil Johnson, chairman of Electra Private Equity, said: “I believe that by returning control of all functions to the board we will put in place a more effective, transparent corporate governance structure. A much lower-cost executive team, fully accountable to the board and shareholders, will then pursue a strategy of portfolio company improvement and value enhancement, creating maximum value for our shareholders.
“We believe that it is important that we move investment management responsibilities to the board, in line with the new strategic direction of the company, to adopt a corporate structure with more typical financial reporting and transparency.”
The second phase of the review will commence in June 2017, although this could be earlier if Electra Partners should agree to grant the company access to the portfolio companies' financial information and management teams.