Listed PE funds launch lobbying group

A consortium of UK fund managers have formed a new industry body with the aim of educating retail and small institutional investors on the workings and merits of private equity investment trusts (PEITs).

The Initiative for Private Equity Investment Trusts (iPEIT) has been launched by 10 investment trusts with the intention of increasing awareness of both private equity in general and private equity investment trusts amongst retail investors, smaller institutions and asset managers not currently investing in private equity.
 
PEITs trade as public companies on the London Stock Exchange. They invest either directly in a portfolio of companies alongside institutionally limited partnerships or in funds  of funds. Unlike limited partnerships, PEITs have no fixed lifespan and retain proceeds from portfolio sales for reinvestment. They also differ from venture capital trusts, which like PEITs offer tax advantages to investors as with PEITs but are restricted on the size and type of companies they invest in.
 
According to iPEIT, the market capitalisation of the PEIT sector is approximately £9 billion (€13.4 billion; $17.1 billion).
 
The group’s ten founding members are August Equity Trust, Dunedin Enterprise Investment Trust, Electra Private Equity, Prelude Trust, F&C Private Equity Trust, Graphite Enterprise Trust, Hg Capital Trust, Pantheon International Participations, Rutland Trust and Standard Life European Private Equity Trust.
 
Peter McKellar, investment director at Standard Life European Private Equity Trust, said that the group had come about as a result of a need to provide a forum for debate and a source of information: “This is a segment of the asset class that is not properly represented and is slightly misunderstood, so we felt the need to present the case better.”
 
iPEIT aims to explain issues such as net asset value, cash drag and the differences in quarterly rather than daily valuations of portfolios, said McKellar.
 
McKellar added that the group would be an information source rather than being a financial promotion point, and would provide information on all 20 UK PEITs currently available.
 
Ian Armitage, chief executive of HgCapital and an iPEIT committee member, said in a statement: “PEITs have become a holding choice of smart, long term investors and advisers who understand that the best returns are made over years, not months. iPEIT can explain the reasons for that.”
 
The initiative has the backing of both the AITC and the British Venture Capital Association.