Private Equity Holding (PEH), the listed Swiss private equity fund, has reported a E181m net loss for the financial year ending March 31, the consequence of significant write downs on the firm’s portfolio.
The CHF264.9m net loss, slightly worse than forecasts had predicted, was the result of both direct investment and fund investment corrections. The largest correction was CHF118m, written down on an investment in US Ventures, a US tech investor to which PEH made its largest single commitment in March 2000.
Total capital gains from investments fell by over two-thirds to CHF67.5m. The firm blamed a dearth of exit opportunities for the sharp fall in returns, adding that the high level of outstanding commitments had also prevented the fund from taking advantage of attractive opportunities resulting from a re-alignment of valuations.
Swiss Life Private Equity Partners took over management of the fund in July 2001, and has since implemented a strategic overhaul of the firm’s operations, as well as a re-assessment of the portfolio, which currently comprises 84 fund investments and 37 direct investments.
Following the release of its results statement, the firm this week announced a further fall of the fair value of the fund. PEH’s fair value now stands at CHF 208.17, with PEH stock trading at a 48 per cent discount at CHF109. However company chairman Marinus Keijzer believes that the firm’s restructuring, coupled with a change in the management fee structure that will see it linked to net asset value, will produce results in the medium to long term.
According to Keijzer: “Our major mid-term objective is to shift the portfolio mix to achieve a better balance between various stages of investments and to add the flexibility to allow new commitments. The work we have done over the past few months will hopefully enable us to take advantage of an upswing in the markets.”