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Private Equity - Possibilities
Mr Helpful
Posted: 02 February 2018 09:02:53(UTC)
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A number of investors are under the impression, that a higher proportion than ever of companies today are unlisted.
If this is true, then investors might compensate by having some exposure to Private Equity?

Presently for Private Equity we hold FPEO and III, both at modest weightings.
Interested by Bigboy's recent comments about OCI, duly added OCI to watch-list.

Anyone any thoughts on the Private Equity sector?
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c brown on 02/02/2018(UTC)
andy
Posted: 02 February 2018 09:17:58(UTC)
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I have mixed feelings about Private Equity but I will declare up front that I hold Deutsche Beteiligungs AG and RIT Capital (RIT has private equity in it).

As long as you are able and willing to hold for the long term then the impression is that it will do well. However, there maybe (likely) to be times when you are a forced holder as there may not be a market. You need to be able to stomach some very high volatility at points of market stress as everyone heads towards the exit at the same time. For that reason I topsliced my DBAG holding recently.
King Lodos
Posted: 02 February 2018 09:56:41(UTC)
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Institutional investors like Yale will typically hold dozens of PE funds .. with 30-50% in Venture Capital, most the rest in Buy-out .. Usually 50-70% US.

You get a very good analog of that with Harbourvest Private Equity (HVPE), not to mention a low fee, and Harbourvest are a real player in the PE space .. They're not a second-rate firm.


I sold my HVPE holding down to 1.5% after a strong run .. Valuations were high – PE firms are sitting on a lot of cash – Trump's tax also impacts buy-out firms .. So for me, about a year ago it started looking less attractive ... Another point is that tech firms like Tencent and Apple today are a lot like Venture firms ... I think Apple bought 12 companies in the past year, including Shazam – who knows how many Tencent bought .. No pump-and-dump, no 20% performance fees


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sarah b on 03/02/2018(UTC), Mike L on 19/02/2018(UTC)
Jim S
Posted: 02 February 2018 10:02:24(UTC)
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If you're interested, you could do worse than look into these 4:

SLPE (9% disc, europe focus)
PEYS (not sure the discount)
HVPE (-15% disc, around 65% in US)
PIN (-13% disc)

HVPE has had a good 5 year run, so its a decent choice.

I believe Caledonia CLDN has a fair bit of unlisted in its portfolio and is at 16% discount, also it holds a fair bit in cash if I recall. I think its a bit like RCP but cheaper (both discount and annual RIY) and with less hedging strategies.
3 users thanked Jim S for this post.
Bellabeck on 02/02/2018(UTC), Mr Helpful on 02/02/2018(UTC), Mike L on 19/02/2018(UTC)
Keith Cobby
Posted: 02 February 2018 11:00:34(UTC)
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The number of listed companies is reducing over time so i think some private equity exposure is necessary. Some funds like SMT hold unlisteds. It is difficult for the private investor to research private equity so i hold F & C Private Equity and ICG through my F & C ISA.
5 users thanked Keith Cobby for this post.
Mickey on 02/02/2018(UTC), Mr Helpful on 02/02/2018(UTC), sarah b on 03/02/2018(UTC), c brown on 16/02/2018(UTC), Mike L on 19/02/2018(UTC)
Big boy
Posted: 02 February 2018 11:11:40(UTC)
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Just bought a few more OCI on "choice price" of 165.5p. Well bid for 25/- shares. New NAV a few days ago of 243p so discount over 30%. Also if you want unquoteds I have 50% (buy to let) in BLDN,LAND,Hammerson and a small punt in INTU. The first 3 stand on average 30% discount. Most investors paying about par/premium to get into sector. at present.


Remember that PE NAVs are slow to react in bear markets and at the bottom they tend to stand on big discounts.
when they are unloved.......perfect time to Buy them.

I think WPC has unquoteds but they are unloved and have had a massive swing in discount/premium of 25%. I am still waiting to buy them on 25%+ discount......look back in history....it tends to happy frequently.
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Mickey on 02/02/2018(UTC)
Jim S
Posted: 02 February 2018 11:15:35(UTC)
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Issue 43 of Investment Trust insider has quite a bit on PE

APAX and Electra might also be worth a look
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Mickey on 02/02/2018(UTC), Mr Helpful on 02/02/2018(UTC)
King Lodos
Posted: 02 February 2018 20:00:58(UTC)
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I think it's something like as few as 0.3% of US companies that are listed – much lower than it was in the past.

But if competition watchdogs aren't going to break up companies like Google now, then I think what you've got is a pond where the largest fish are going to keep eating up the smaller ones, and you wind up with companies larger than many country's economies.

What companies like Google and Facebook also facilitate is individuals being able to launch businesses with fewer barriers to entry, which potentially threaten the tens of thousands of smaller businesses .. So I think you wind up with millions of micro-businesses, and a few giants eating up anything interesting
philip gosling
Posted: 02 February 2018 22:48:57(UTC)
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I have had Pantheon International Plc for a few years and it has done reasonably well.
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Mr Helpful on 05/02/2018(UTC)
Ark Welder
Posted: 05 February 2018 01:14:18(UTC)
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I've held several PE trusts over the years, but rationalisation of my holdings meant that I wanted to bring the number down to just one. My choice was between Pantheon and HgCapital, and in the end I chose the latter. Pantheon does have direct holdings as well as funds, but HGT's concentrated number of holdings was a major factor in the decision - I'm going for growth, so going for it is what I will do.

HGT does pay dividends along with the odd special - and they're paid out as interest too, which is something which might be a consideration if held in a taxable manner. Dividends were not a factor in the decision to hold, they're just a by-product.
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Mr Helpful on 05/02/2018(UTC), dlp6666 on 16/02/2018(UTC)
Antony A
Posted: 16 February 2018 12:42:18(UTC)
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I hold HVPE, SLPE and PIN totaling about 10% of my long-term portfolio, mainly for the exposure to unlisted companies. They have not been doing so well over the last year, at least compared to other sectors, but I did find that they barely budged during the recent correction, perhaps because they already sit on large discounts and are meant to be long-term holds. The returns tend to be "lumpy", in tune with successful assets being sold off, although I think HVPE in particular tries to smooth out performance by having a huge number of holdings which are at different stages of their investment cycle.

These PE trusts on big discounts also seem like a good way to invest in the US economy when the prices for quoted stocks are so high. My other routes into the US are through global trusts like EWI, MNKS and SMT, and through themes such as tech, biotech and healthcare (ATT, IBT and WWH).

I would have invested in Electra but it's currently being restructured as a regular company and its portfolio is being sold up, so given the uncertainty I decided to pass.

I didn't go for the direct-investor PE trusts like HG Capital discussed in Issue 43 of Investment Trust Insider because long-term results seemed to show that fund-of-fund trusts like HVPE tend to do better; I'll probably be proven wrong though!

And breaking my own "rule" about fund-of-funds, I do plan to invest in 3i when the premium - which has been falling since June 2017 - falls back to its medium-term average of 10-20%, or there are more signs that the SP is going to start rising again: it's been range-bound flat since last summer. 3i really does have consistently outstanding performance, at least over the last 5 years, but the hefty premium is very offputting.
8 users thanked Antony A for this post.
Jezzer on 16/02/2018(UTC), c brown on 16/02/2018(UTC), Mr Helpful on 16/02/2018(UTC), Jim S on 19/02/2018(UTC), Sara G on 19/02/2018(UTC), dyfed on 19/02/2018(UTC), Vince. on 30/04/2018(UTC), martin hargan on 30/04/2018(UTC)
Jezzer
Posted: 16 February 2018 13:32:13(UTC)
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I bought APAX (not much discussed here so far) about 6m ago and its down over 8% since. Interested in opinions on it. Trying to decide what to do, if anything. Thoughts?
Jim S
Posted: 19 February 2018 18:44:43(UTC)
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Jezzer;57291 wrote:
I bought APAX (not much discussed here so far) about 6m ago and its down over 8% since. Interested in opinions on it. Trying to decide what to do, if anything. Thoughts?


Apparently its well regarded, at least according to ITI issue 43
Discount has widened to 3.5 % above its 1 year average
Possibly the NAV is not calculated that frequently (Sept 2017 according to Morningstar)
2.4% annual charges according to KID doc, not bad for PE
Hasnt had a great year, but its still slightly above the average PE fund performance for 3 years
If it was me, I would probably hold & keep an eye on it
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Jezzer on 19/02/2018(UTC)
Julian W
Posted: 19 February 2018 19:20:03(UTC)
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I think having some private equity in a diversified global portfolio is good.

I am not sure it will give you out sized return in the future beyond the illiquidity premium.

Interesting article:

http://awealthofcommonse...anguard-endowment-model/
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Sara G on 19/02/2018(UTC), Jezzer on 19/02/2018(UTC)
dyfed
Posted: 19 February 2018 20:31:15(UTC)
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Jezzer;57291 wrote:
I bought APAX (not much discussed here so far) about 6m ago and its down over 8% since. Interested in opinions on it. Trying to decide what to do, if anything. Thoughts?

Have held for 2/3 years and like it. Top sliced when the discount dropped some months ago and now buying again (on the dips of course) as discount back to 11%. Pays 6% but holds no reserves..
Peter59
Posted: 19 February 2018 21:15:19(UTC)
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I bought APAX (not much discussed here so far) about 6m ago and its down over 8% since. Interested in opinions on it. Trying to decide what to do, if anything. Thoughts?

It`s a newbie in my portfolio too! PE discounts can widen alarmingly but this one seems to be offering an attractive dividend which should give support to the share price. I`m hopeful a cut in dividend won`t happen but looking realistically at the current PE sector, it`s hard to get excited about it with interest rates on the rise. APAX is less than 3 years old, has £780m assets and seems to be backed by an experienced team. In the Annual Accounts I can`t see evidence of significant ownership by Institutional Investors, so perhaps lower share price volatility. For me, a hold/buy.
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dyfed on 19/02/2018(UTC), Jezzer on 19/02/2018(UTC)
Mr Helpful
Posted: 30 April 2018 10:16:31(UTC)
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Something curious happened to our Private Equity holdings last week.
FPEO, SLPE, III; all leapt in price.
Now Private Equity is expected to have a Beta greater than 1.0, and the markets generally had a good week. But Beta on its' own seems an unlikely explanation?
Left wondering whether there has been some specific development(s) or recommendations, relating to the sector, to cause such price uplifts?
Any info appreciated.
laang lee
Posted: 30 April 2018 12:41:17(UTC)
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Sorry, this is no help, but look at what happened with Dunedin Enterprise, autumn 2017.
Ardeebee
Posted: 30 April 2018 13:17:08(UTC)
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Something curious happened to our Private Equity holdings last week.
FPEO, SLPE, III; all leapt in price.
Now Private Equity is expected to have a Beta greater than 1.0, and the markets generally had a good week. But Beta on its' own seems an unlikely explanation?
Left wondering whether there has been some specific development(s) or recommendations, relating to the sector, to cause such price uplifts?
Any info appreciated.


No idea but I sold FPEO last week due to the jump in premium
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Mr Helpful on 30/04/2018(UTC)
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