Private Equity News & Analysis

SVIIT posts minor net asset decline

Schroder Ventures International Investment Trust continues to outperform public markets despite difficult economic conditions.

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Schroder Ventures International Investment Trust Plc (SVIIT), the quoted private equity investment manager, has published interim results for the six months ended 31 December 2001 showing a 2.8 per cent decrease of net assets to £405.3m, or 396.3p per share. This compares to a fall in the FTSE World Index and FTSE All-Share index of 10.5 per cent and 7.5 per cent respectively. Over the past 12 months, SVIIT’s net asset value has lost 9.8 per cent, against a 15.8 per cent in the FTSE World Index.

SVIIT’s compound annual growth rate in net assets over five years stands at 15.8 per cent per annum.

“This is a good result. My job obviously is to worry about things, but the robustness of the business and the portfolio makes me sleep very well at night”, commented SVITT chief executive, Nick Ferguson.

Ferguson attributed the decline to reduced valuations of SVIIT holdings in the semiconductor sector, but added these had been partly offset by write-ups of a number of other investments including Homebase. According to Ferguson, the UK DIY-retailer, which accounts for 7.53 per cent of SVIIT’s net assets, was performing “beautifully” and ahead of schedule, justifying a write-up from a cost of £20m to £30.5m.   

Ferguson said the company and its portfolio were in good shape, as SVIIT had successfully avoided the dot.com boom and exited most of its investments in telecoms ahead of the slump in 2000.

Another reason Ferguson cited as to why SVIIT was outperforming was that it had taken significant measures to ensure that both its own balance sheet and those of its portfolio companies were in order. “None of our companies have got balance sheet problems. It’s when investee companies are excessively leveraged that you get hurt in a recession.”

Ferguson said SVIIT had taken significant discounts in the portfolio, holding its companies at an average PE ratio of 8 across the portfolio, against the current ratio of 18 in the public market.   

SVIIT holds investments in all of Schroder Ventures’ and Permira’s buyout and development capital funds, and invests in life science companies via Schroder Venture Life Sciences.

The company also undertakes to manage private equity investments for third parties. It is currently fundraising for a private equity fund of funds that recently held a first closing at E172m.