Private equity trusts under threat as discounts continue to widen

Investec analysis

Private equity trusts could be facing a wave of takeovers from hostile investors as their average discount to NAV has widened from 13% to 27% over the last year.

Analysis from Investec found that 14 private equity trusts, including Chrysalis Investments and Pantheon International, were valued by markets at just £10.9bn, despite holding assets worth £17.3bn. Analysts Alan Brierley and Ben Newell noted that over ten years, the trusts had returned an "impressive" 301% in NAV total return, compared to MSCI World and FTSE All Share total returns of 187% and 76% respectively. However, the trusts have seen their returns "diluted by discounts" over this time, they said, which they warned has become "embedded". "For many years, we have been underwhe...