Castle Private Equity, the SIX Swiss Exchange listed fund of private equity funds, has approved a new distribution policy. The policy will enable the company to share realised gains with shareholders and has been initiated due to the strong recovery of the portfolio in the past two years and the company’s success in reducing its over-commitment levels.
The company is expecting to allocate up to half of its annual distributable gains to shareholders, to be distributed via share buybacks or capital repayments on an ongoing basis. Distributions of such gains are expected to occur over a one to three year period to counteract the cyclical effects of the portfolio on the share price.
As stated in the 2010 annual report, it is the board’s policy that uncalled commitments should be less than 50% of net asset value (NAV).
Under this new distribution policy and subject to legal, tax and regulatory approval a share buyback programme will commence in late August 2011. Shares up to a maximum value of USD 15 million (currently corresponding to approximately 3.4% of issued share capital) will be repurchased. The programme will run no later than up to the company’s next AGM on 16 May 2012, at which the board expects to seek approval for the cancellation of the shares repurchased as well as the 521,885 shares currently held in treasury.
To ensure tax efficiency, the buyback programme will be executed via a second trading line on the SIX Swiss Exchange and the board expects to announce full details in the second half of August 2011.
In NAV terms (USD) Castle PE has returned 7.76% year to date* and returned 20.73% in 2010. It has assets of approximately USD 677 million*. Castle Private Equity was listed on the SIX Swiss Exchange in September 1998. The portfolio comprises private equity funds and direct investments diversified by vintage year, geography and stage focus.
Hans Markvoort (pictured), general manager, Castle PE, says: “Castle PE has delivered very strong returns in the past two years and we expect that performance and cash flows will continue to be supported by a combination of a healthy number of realisations, and an uplift in their value. The new distribution policy aims to return cash to shareholders and reduce the discount to net asset value at which Castle PE shares trade in the secondary market. It is part of the board’s ongoing drive to maximise shareholder value.”
