JPEL raises $75m for secondaries deals

The listed fund of funds surpassed its target, selling shares at or above its current stock price.

JPMorgan Private Equity Limited (JPEL), a London-listed fund of funds focused on secondary fund interests, has raised more than $75 million in a series of share sales, surpassing its $50 million target.

“Going out, we thought $50 million was going to be difficult to [raise] because at the time we were selling at about a 5 percent premium to stock price. The stock price has come up a little bit, so now we’re right at about where we raised capital,” Troy Duncan, JPEL’s portfolio manager, told PEO.

JPEL shares were trading at around $1.02 per share at press time. In June, the firm disclosed it would issue between 50 million and 100 million new equity shares priced at $1 each. It was not an underwritten offering.

At the time we were selling at about a 5% premium to stock price.

Troy Duncan

“Most of this capital was raised at a premium to the stock price while the JPEL share price rebounded by 30.6 percent in the quarter ending 30 June,” JPEL chairman Trevor Ash said in a statement.

Roughly $30 million of the total raised was from existing investors, mainly high net worth individuals, Duncan said. Approximately $45 million was raised from UK multi-fund managers.

He attributed the fundraising success to a perception that NAVs of listed funds are “set to bottom out” and then appreciate in the next year or two, as well as to JPEL’s pledge to deploy the capital “in accretive ways in the secondary market over the next several months”.

Listed private equity trust Electra Private Equity also recently increased its dry powder for fresh deals, raising £43 million via zero dividend preference shares and agreeing a £185 million, three-and-a-half year revolving credit facility to expire in 2013.

Several listed private equity firms have been taking advantage of buoyancy in the public markets by raising capital, though in many cases this has been to shore up financial footing via underwritten offerings at a discount to stock price. In July, mezzanine-focused Intermediate Capital Group corralled £351 million at a 39 percent discount to the ex-rights price, while 3i’s £732 million rights issue in July featured about the same discount.

The listed private equity sector has been showing positive signs of a rebound, JPMorgan Cazenove analyst Christopher Brown wrote in research note published Monday. 

“The last month has been a good one for the LPX UK and LPX Europe Indices, up 17.8 percent and 21.7 percent, respectively, both outperforming equity markets,” he wrote. “It is not surprising that the increase in markets has led to outperformance by the sector – higher prices and falling earnings mean higher earnings multiples, which are very helpful for private equity valuations due to the leverage. However, falling earnings offset rising multiples.”