Manager cuts listed PE exposure as discounts narrow

Cayman-based Overseas Asset Management looks to ‘end game’ funds returning capital at NAV.

Overseas Asset Management (OAM) has reduced its exposure to listed private equity amid narrowing discounts to net asset value (NAV), according to Desmond Kinch, managing director at the Cayman-based firm.

The decision follows a decline in the average discount to NAV to around 10 percent this year from around 40 percent five years ago, Kinch told Private Equity International at listed private equity association LPEQ’s Annual Investor Conference in London on Thursday.

OAM has been reducing its listed private equity exposure over the last year “partly through distributions coming back to us and partly by selling listed funds that are on close to single-digit discounts to NAV or low teens,” Kinch told delegates.

OAM’s European Value Fund (EVF) had more than $42 million, or 18 percent, of its net assets invested in six listed private equity investments as of 24 January, according to a letter to shareholders.

As of January, EVF owned 5.2 percent of Swiss-listed vehicle Spice Private Equity. Kinch told PEI the fund still traded at a 25 to 30 percent discount to NAV.

“…We [also] like to invest in what we call end games, where listed PE funds are returning capital at NAV so there is a clear catalyst for the discount to NAV to disappear,” he said.

One such holding is a $12.6 million stake in Ashmore Global Opportunities (AGO). The investment, which represents 28 percent of the Ashmore fund, is EVF’s largest listed private equity asset.

“[AGO] is selling its PE assets on an orderly basis and returning capital to shareholders, yet trades on a steep discount to NAV,” Kinch explained.
Founded in 1989, OAM provides specialist investment management to institutions and high-net-worth individuals. The company principally manages Asian and European equity portfolios as well as open-ended and close-ended funds.