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F&C Private Equity Trust plc

Overview

F&C Private Equity Trust plc is a fund of funds, investing in private equity through making primary commitments, secondary commitments and direct investments. Investments are well-diversified by industry, size of company, geography, stage of development, transaction type and management style.

F&C Private Equity Trust's objective is to achieve long-term capital growth through investment in specialist private equity funds, on a primary and secondary basis, as well as selective co-investments in private companies. The Trust can invest globally across the private equity spectrum but has a bias towards the European mid-market buyout niche.

F&C Private Equity Trust pays an annual dividend equivalent to not less than 4% of Net Asset Value. The dividend is paid in quarterly payments* in January, April, July and October, funded from a combination of the Trust's revenue and realised capital profits.

*Prior to January 2018, the Trust paid semi-annual dividends.

  • Fund-of-funds, London-listed
  • Investment focus: global with European bias
  • Deal focus: LBO/MEZZ/VC
  • Dividend: yes

Key financials

Manager Overview

The Board has appointed F&C Investment Business Limited (‘the Manager’), a wholly owned subsidiary of F&C Asset Management plc (‘F&C’), as the Company’s investment manager. F&C is a wholly owned subsidiary of Bank of Montreal (‘BMO’) and is part of BMO Global Asset Management.

The BMO Global Asset Management (EMEA) private equity business, known as BMO PE, manages F&C Private Equity Trust through the Manager. BMO PE has been investing continuously in European private equity for more than 20 years and is a highly experienced specialist private equity business with a team that has a proven ability to identify and access strong performing prime/emerging managers across a range of strategies. Over the years BMO PE has developed a wide network of contacts in the private equity sector. Members of the team hold a number of seats on advisory boards or committees of funds and direct investments. Together they have a broad experience covering direct private equity, smaller companies, international equities and management of performance driven investment vehicles.

As at 30 June the net assets of the Company were £263.4m, giving a Net Asset Value (NAV) per share of 356.17p, which, taking into account the dividend of 3.57p per share paid on 30 April, gives an NAV total return for the quarter of +3.0%.

Hamish Mair, Investment Manager

Market commentary

From our level of portfolio activity, it is clear that the private equity market is very active across Europe and further afield. The recurrent topic of comment is whether pricing levels, which appear to be high historically, will be sustained and whether this poses a longer-term threat to private equity returns. Price rises of this type are usually self-correcting with the first indicator being a reduction in the volume of deals. There is some evidence that this first stage is happening as deal volumes appear to have peaked last year. The headline price at which deals are done is only part of the picture as increasingly managers make add-on acquisitions to their initial 'platform' investments usually at lower prices bringing their 'in price' down significantly. As we have a portfolio that is well diversified by vintage, a buoyant market with plenty of exits usually provides many opportunities for the value created by our investment partners to be crystallised. This is obviously helpful immediately from a financial point of view but also helps us to assess our investment partners implementation of their various investment theses in a very concrete way. The track record of our investment partners is the key determinant of whether we will back them in the first place and will continue to back them. Active market phases provide plenty of reference points for this  assessment.

Taking into account the recent and developing exits in our portfolio, as well as the fundamental progress of our investments, we expect that the second half of the year will see further growth in NAV.

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