Electra investing at a record rate

Despite the “frothy” market, the listed group has put £250m to work in the last six months.   

Electra Private Equity, a London-listed investment trust, reported a 5 percent increase in net asset value for the six months to March 2014, helped by a strong operating performance from some of the new companies in its portfolio.

Electra said that it had put new capital to work at a record rate during the period, investing or committing a total of £250 million. Its largest deal was the acquisition of Hotter Shoes from Gresham Private Equity, where it invested £84 million in a deal that valued the business at about £200 million.

Electra also committed a total of £116 million to buyout deals for packaging business Innovia Group, which completed in April after the end of the period, and fund administration business Ogier Fiduciary Services, which is due to complete in the next two months. It has also invested extra capital in Treetops Nurseries since the end of the period.

This follows a record investment total of £337 million during its previous financial year, and means that it has now invested £645 million in the last two years, according to the firm.

“The market is quite frothy at the moment, but we’re [still] finding opportunities to buy well,” Alex Fortescue, Electra’s chief investment partner, told Private Equity International. The firm’s average entry multiple has been 7.8x during the period, well below the 10.8x average for its segment, he added. This was largely due to Electra’s flexible mandate – the trust can invest in equity, debt and secondaries – and to the fact that many of the new deals had been bolt-ons to existing portfolio companies where competition tended to be less fierce, Fortescue said.

Realisations totaled £152 million during the period. The biggest single contribution came from the sale of feminine hygiene brand Lil-lets, which was sold to a trade buyer in November and delivered proceeds to the trust of £37 million.

All told, Electra said the portfolio delivered a total return of 9 percent during the six month period. Partner Alex Cooper-Evans said that improved performance by some of the younger assets in the portfolio had driven much of this uplift. The two largest gains were a £36.6 million (35 percent) uplift in value of AXIO Data Group, which it bought last April and was marked up by 35 percent during the period, and a £10 million (11.5 percent) uplift for holiday operator Park Resorts, which it took control of last year after originally buying into the company’s debt.

More than 75 percent of the firm’s portfolio is now less than three years old.

Sherborne Investors, a fund manager that specialises in turnaround plays and has a reputation for activism, recently became the largest holder of Electra stock, taking a 19 percent stake. However, new Electra chairman Roger Yates – who took over from Collette Bowe in March – said that Sherborne had not given any indication that it was looking for a change in strategy. “If they have a specific agenda, we’re not aware of it. So we’ll see where we go from here.”