Page 52 - DIY Investor Magazine | Issue 32

Single manager, or directly investing LPE trusts have more concentrated portfolios, so the success or failure of individual companies has a material impact on the NAV; they are likely to attract investors comfortable with the potential risks, taking a long-term view.
HgCapital trust (HGT) is a specialist software investor; its specialism and track record mean that it has traded at a significant premium to both peers and NAV.
Similarly, OCI has a concentrated portfolio of growth companies in three sectors: technology, education and consumer; its total NAV return for 2021 was 35%.
OUTLOOK
2021 was a banner year for private equity; NAV growth has been impressive, which – alongside the general interest in private markets – should rightly draw attention to the LPE sector. Currently, with NAVs incorporating underlying valuations from many different dates, it is hard to definitively comment on the level of discounts.
Irrespective, for long term investors, prospective NAV growth should be the main area of focus.
In our view, the fact that private equity managers are forced to take the long-term view is a key factor in their historically having delivered so handsomely for investors. The future is always unclear, and perhaps never more so currently.
However, for long term investors we continue to believe they will be well rewarded in having a material exposure to private equity trusts.
The LPE sector has plenty to choose from.
Disclaimer
This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis.
This material should be considered as general market commentary.
Its focus and expertise in specific sectors, its ability to source investments through a proprietary network of entrepreneurs and its discipline in terms of pricing and valuations make OCI highly differentiated from its peers.
OCI trades on a discount to the published NAV of 22% (as at 27/01/2022), a big discount in absolute terms and likely relative to peers when they announce.
NBPT is unique in the LPE sector in offering pure exposure to co-investments (direct investments made alongside a range
of third party PE managers); it’s very strong performance with NAV total returns of 40.7% showed the benefits of its approach. Final Q4 2021 private company figures should put it firmly on the listed private equity podium.
In our view, the portfolio’s maturity should give grounds for confidence for the years ahead, not to mention the types of companies and sectors that NBPE is currently exposed to.
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DIY Investor Magazine · Feb 2022 52