Electra Private Equity, a UK private equity firm listed on the London Stock Exchange, has increased its investment pace in the last half year, investing £204 million (€238 million, $310 million) during the period, compared to £92 million in the previous period.
The firm had been “a bit disappointed” with the amounts of investments it had made over the last couple of years, Electra’s deputy managing partner Tim Syder told Private Equity International, as deal flow was subdued and competition was high. “We don’t think the economic climate we are in is going to change any time soon,” he said, [but] “we think it’s going to be a very good period for investing,” he added.
As well as investing £160 million in a data services business, Electra invested in a number of secondaries for approximately £80 million during the period, as it sees secondaries deal flow pick up slightly.
There are still a lot of those [unintentional] assets on the balance sheets of banks. [Banks] haven’t sold them because they would be selling them at huge discounts and they cannot afford to dispose of these assets, [as] they could not take the write-down
“There are still a lot of those [unintentional] assets on the balance sheets of banks. [Banks] haven’t sold them because they would be selling them at huge discounts and they cannot afford to dispose of these assets, [as] they could not take the write-down,” he said.
Banks sold assets a lot quicker after the recession in the early 1990s, he added. “This time, banks are selling off [assets] gradually over a longer period of time. So we don’t expect a rush, but the banks are starting to sell and this is a process that will continue over the next two to three years,” he said.
On the exit front, Electra realised £112 million during the period, with the IPO of motor business Esure in March, which generated a 3x return and the sale of animal tag business Allflex Holdings to BC Partners, which netted Electra a 15x return. The annualised return on equity for the 10 years ending 31 March 2013 was 15 percent.
Additionally, Electra’s share price was up 34 percent in the period up to 31 March 2013. The share price of £23.65 at 31 March 2013 represented a discount of diluted net asset value of 12 percent.