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Private Equity Investor helped by sterling weakness

Private Equity Investor has published results for the year ended 31 March 2016. The Company’s Net Asset Value per share at 31 March 2016 was 211.2p, compared with 238.7p a year earlier, a decline of 11.5%. This was predominantly due to a decrease in LP valuations. The NAV per share in dollars decreased by 14.3% from 354.4c per share to 303.7c per share, reflecting a decrease in the dollar valuation of the Company’s fund investments. The unfavourable effect of this, however, was offset by the strengthening of the Dollar against Sterling from $1.48 to $1.44.  The Company’s share price decreased by 14.7% during the year, from 194.5p to 166.0p. The discount to NAV at 31 March 2016 was 21.4%, compared with 18.5% a year earlier. No dividend is proposed for the period (2015: nil).

In the twelve months ended 31 March 2016, the Company received cash and stock distributions from the Funds totalling $5.9 million, compared with $11.4 million in the twelve months ended 31 March 2015 and $13.5 million in the twelve months 31 March 2014. Of the $5.9 million received during the period, cash distributions amounted to $4.9 million (GBP3.2 million) and stock distributions amounted to $1.0 million (GBP0.6 million). The largest distribution received by the Company was $0.9 million in cash from Dawntreader Fund II.

During the period, two Funds called capital from the Company in the aggregate amount of $0.3 million (2015: $1.1 million). Of the Company’s 20 portfolio of Funds, 10 Funds have been fully drawn down but an aggregate of $4.0 million (GBP2.8 million) in uncalled capital commitments remains outstanding in respect of the other 10 Funds. At 31 March 2016, the Company’s uncalled capital commitments are held in ring-fenced accounts in accordance with an obligation given to the Court at the time of the conversion of the Company’s Share Premium Account.

The Company regularly contacts vintage 1999-2004 Funds that have uncalled capital to explore the possibility of the Fund releasing the Company from its uncalled capital commitments. In most cases, the Company’s requests have been rejected by the Funds. These requests have been refused for a number of reasons including the need to call additional capital to participate in future portfolio company financings, Fund expenses, or on the advice of legal counsel. In one case, however, at the request of PEI, a Fund has agreed to release all limited partners from a substantial portion of the Fund’s uncalled capital commitments. The value of this return of uncalled capital represents over 25% (or $1 million) of the Company’s outstanding commitments.

During the period, the Company also successfully led efforts to re-negotiate the management fees of one Fund, which resulted in a reduced management fee and a fee structure that incentivises the Fund to return cash to Limited Partners in the near term. Where appropriate, the Company will seek to continue these efforts with other Funds.

PEQ : Private Equity Investor helped by sterling weakness

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