F&C Private Equity Trust has reported a net asset value total return for its ordinary shares of -4.8 per cent for 2008, which it says would have been considerably greater without th
F&C Private Equity Trust has reported a net asset value total return for its ordinary shares of -4.8 per cent for 2008, which it says would have been considerably greater without the benefit of currency gains which added approximately 22 per cent to the value of the company’s portfolio during the year.
Net assets stood at GBP165.6m at 31 December 2008. The net assets of the ordinary share pool stood at GBP159.9m, giving a fully diluted net asset value per share of 218.74p, a decline of 5.3 per cent over the year. The net assets of the restricted voting pool stood at GBP5.7m, giving a net asset value per share of 8.53p, which, after adjusting for the return of capital of 36.25p on 25 January 2008, represents a total return of 14.5 per cent over the year.
In total the portfolio has been reduced in value by GBP36m. The portfolio is valued with a weighted average enterprise value to Ebitda multiple of 6.3x and a net debt to Ebitda multiple of 2.9x.
There is no final dividend proposed for the ordinary shares. An interim dividend of 0.5p was paid on 22 October 2008 and an interim dividend of 0.5p per restricted voting share, together with a special dividend of 0.5p per restricted voting share, have been declared and are payable on 8 May 2009.
The board says the share price rating of the company does not reflect the strengths of the portfolio. The ordinary shares stood at a 65.5 per cent discount to net asset value at 31 December 2008, and the discount has now widened to 80.6 per cent. The company says uncertainties surrounding valuations, commitment levels, financing and potential remedies have been prevalent influences on the whole private equity fund-of-funds sector.
The company had outstanding undrawn commitments at 31 December 2008 of GBP158.4m. This figure increased over the final quarter as a result of exchange rate movements. The weighted average unexpired life of these commitments is three years five months. The company says that given current conditions in the international private equity market it expects that the rate of drawdown will be slower than of late and that a considerable proportion of these commitments will not be drawn before the investment periods of certain funds expire.
The company has a committed revolving credit facility of GBP40m, of which GBP33.8m was drawn at 31 December 2008. The company had cash balances of GBP4.4m as at 31 December. The firm says that while it does not expect to exceed the borrowing facility, it is exploring several options with a view to further ensuring that it can meet its commitments comfortably. These include raising additional funds, the disposal of certain non-core assets in a programme the first stage of which the directors have already authorised, and reduction of certain commitments.
F&C Private Equity Trust chairman David Simpson says: "The dislocation in the banking sector has posed significant challenges for the Company, but we are confident that the portfolio strength and diversification will enable the Company to trade through the current period and put the Company in a strong position to deliver growth in net asset value as the economic climate improves."
Fund manager Hamish Mair (pictured) adds: "The economic recession is creating challenges across the breadth of our portfolio. There remains a considerable degree of uncertainty over the economic outlook and this is making it difficult for company managements and their private equity partners to forecast profits. Tight cost controls and detailed attention to banking arrangements are common themes across the fund portfolios and in our co-investments. It is our objective to ensure that the company can trade through the current financial and economic difficulties and that it is well positioned to benefit from the longer term investment opportunities."
