Electra Private Equity, a London-listed investment trust, accelerated its deal activity in the 12 months to September, with both investments and exits up year-on-year.
Electra invested £337 million in the year ending September 30, more than double than the £150 million it invested in the year to 30 September 2012. It made five investments during the period, including holiday parks operator South Lakeland Parks, which it acquired for £47 million.
Realisations, which totalled £459 million, were also up on last year’s £301 million total. This included the exit from animal tag business Allflex, which Electra sold to BC Partners in May, netting the firm a 15x return and 28 percent IRR.
Electra delivered a total return of £222 million on its portfolio, an increase of 26 percent for the year. The annualised return on equity for the 10 years ended on 30 September 2013 was 14 percent.
Electra’s net asset value was up 12 percent, which was in line with its annual target of 10 to 15 percent, and its annualised performance over the last 10 years of 14 percent growth, Electra said.
“It has been another strong year,” Alex Fortescue, Electra’s chief investment officer, told Private Equity International.
“The macro view has improved very significantly over the last six months. Economic activity in both the UK and Europe is improving … and it’s good news for us to see that happening,” Alex Cooper Evans, Electra’s head of investor relations, added. “Clearly there’s more optimism around generally: we have seen stock markets rebound, and an uplift in M&A activity overall. As a result, we have a strong pipeline of potential new deals. As we look forward to the next year, we expect to continue to invest at a reasonably high rate,” he said.
The “considerable loosening” in credit markets over the summer led by the US market has been felt in the UK’s mid-market, he said. “It’s a terrific thing if you are selling assets. Looser credits fuels higher prices and Electra has been able to take advantage of that in realising a couple of its largest investments.”
There is a downside, however, he said. “It’s not universally good if you are a buyer of assets, because you are competing with other people who are also debt-fuelled. Prices are very high and are definitely moving up somewhat… But we have focused very hard [on] finding opportunities that are slightly off the beaten track.”
Electra’s share price was up 26 percent over the year against a 19 percent increase for the FTSE All-share. At 30 September 2013, Electra’s diluted net asset value was £27.64 compared to £24.73 at 30 September 2012. At 10.00am GMT, Electra shares were trading at £23.55, up 2.87 percent.