Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

JP Morgan unveils private equity trust 'clean out'

JP Morgan unveils private equity trust 'clean out'

JP Morgan has announced a 'clean out' of its £262 million private equity trust.

The closed-end fund of private equity funds is looking to repurchase up to $20 million of equity shares and re-position its portfolio by exploring the potential for secondary sales of pre-crisis assets, recycling the proceeds into growth opportunities.

This should create a more 'transparent and concentrated' portfolio, its board believes, while analysts note the secondary market has also provided a useful exit route for rivals Princess Private Equity and SVG Capital.

The move follows an announcement by the trust in August to issue a raft of zero dividend preference shares, which offer no income but a fixed return at a pre-defined date.

However, since the deal the NAV of JP Morgan Private Equity ordinary shares has fallen by 21%, while the average private equity fund was up around 1% at the end of October.

Analysts at Investec pointed out that with its wide discount of more than 45% it was 'positive' to see the trust's manager and board take action.

'A clean out of the portfolio should also be beneficial in order to recycle cash into opportunities with greater upside,' Investec's investment company research team said.

But they added that sales of pre-crisis assets would likely be at a discount to current carrying values, though share buybacks could offset this.

'The key will be just how discounted the sales would come at and do the newer opportunities provide a greater upside from the sale prices achieved for legacy assets,' the team explained.

'The quantum of the share buyback will have the most impact on share price movement in the short-term as liquidity is provided.  With shares being bought back at up to a 35% discount to 30 September NAV, the buyback will be NAV accretive and could offset any reduction in NAV from the sales of non-core pre-credit crunch assets.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play WMR: Why Russia will lose this war

WMR: Why Russia will lose this war

Author and journalist Adam Lebor believes a perfect storm is brewing when it comes to the Russian economy. .

Play WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

Chief economic adviser to London mayor Boris Johnson outlines the geo-political risks in Asia and explains why the risk of another eurozone crisis must not be underestimated.

Play Japan's slump, the umbrella revolution and the battle for Brazil

Japan's slump, the umbrella revolution and the battle for Brazil

With the arrows of Abenomics appearing to be missing their targets and political uncertainty rife in Hong Kong and Brazil we take a look at investor sentiment in this week's Investment Pulse

Your Business: Cover Star Club

Profile: The adviser that tempted Robin Minter-Kemp on board

Profile: The adviser that tempted Robin Minter-Kemp on board

It is rare to meet an impassioned individual who is willing to bang the drum for investment advisory right now

Wealth Manager on Twitter