Investors revisit private equity after discount disaster

Investment trust buyers are building positions in the listed private equity sector, as strong performance and narrowing discounts continue to boost returns.

Private equity trusts were one of the worst-affected areas during the financial crisis, with discounts on the highly-leveraged sector widening out to 60% or more in December 2008. But while a pick-up in mergers and acquisitions has boosted many trusts and seen them enter a cash-generative phase, the relentless search for income by investors means private equity trusts – which pay little or no dividend – are still trading at 20% discounts. Nick Greenwood (pictured), manager of the Miton Worldwide Opportunities fund of investment trusts, has added to holdings in Dunedin Enterprise, Pant...