Electra returns to full private equity investing

The UK-quoted investment trust has finally put behind it the defence of 3i’s hostile bid seven years ago, with a decision to abandon the cap on its re-investment policy in favour of full-blown commitment to asset class.

Electra Private Equity, a UK-quoted investment trust, is lifting restrictions on its investment in private equity, seven years after it partially suspended its activity while defending itself from a hostile bid by 3i, a rival.

The board has now proposed to return to full-scale investing, instead of only being allowed to reinvest a third of the profits from portfolio realisations.

It has decided to pursue the new strategy because of its success in realising value from its portfolio since the change of investment strategy in April 1999, it said.

In the period Electra sold 68 investments realising a total of £2.1 billion, invested £0.6 billion in 52 companies and returned a total of £1.2 billion in cash to shareholders through tender offers and on-market share buybacks.

During this period, Electra’s net asset value increased by 89 percent compared with a rise in the FTSE All-Share Index of 1 per cent over the same period, the trust said.

Under its revitalised investment programme, the Electra Private Equity will target returns of between 10 and 15 percent by investing in private equity, either directly, through funds or through secondary buyouts of portfolios and funds.

It will focus on investments in western Europe, with the majority expected to be made in the UK. It will invest across all sectors.

Electra Partners, the team that has advised the quoted Electra fund since 1999 and is led by Hugh Mumford, will continue to manage the portfolio and its future investments.

Lazard advised Electra on its strategic review. Shareholders will meet at an extraordinary general meeting on October 12 to vote on the new proposals.

To avoid confusion, Electra Partners Europe, which established a standalone private equity business after the 1999 defence, has dropped the Electra name and rebranded Cogentas.