Private Equity Investor, the UK-listed firm that specialises in making US technology private equity fund investments, has reported a 15 per cent downturn in its net asset value for the year to 31 March, as US technology funds continue to suffer from a collapse in market confidence.
The firm, which is trading at a 44 per cent discount to its net asset value, saw its value fall from £107.2m to £91.4m in the year to April. However in the longer term the firm’s NAV has fallen by a lower 2.4 per cent since February 2000 when dividend payments helped lift the figures. Barbara Thomas, chairman of PEI, commented, “In an extremely hostile environment for the technology sector over the last two years, the value of the company’s assets has been substantially maintained.”
The firm’s $200m WIT VCI has been fully drawn down, with Private Equity Investor having existing financial commitments to 17 of its 18 US technology venture partnerships. The firm said that its investment level had fallen to $1.8m per month, a level that was not likely to increase until there was evidence of a recovery. “In the meantime fund managers are spending more time managing their existing companies,” said Thomas, “persuading entrepreneurs to reduce rates of cash burn, re-pricing deals where possible, analysing target markets and preparing detailed competitive analyses.”
Thomas adds that many of the firm’s US partnerships are upbeat about the current prospects. “Many of our funds are optimistic about delivering significant returns for investors, because they believe that they are now investing at, or near, the bottom of the technology cycle.”
The firm’s positive sentiment has not been reflected in the company’s share price, which despite a net asset value of just over 182p per share, sees the firm trading only slightly above £1.