E-TECHNOLOGY : 80p of NAV for 42.5p, and no CGT to pay!!

I reckon E-technology VCT's current NAV is around 80p compared to the current mid-price of 42.5p (a m/cap of only £5.78m).

In addition:
- my understanding is there's no CGT to pay on profits on secondhand VCT shares acquired in the open market
- ETH has plenty of tax losses, so shouldn't have to pay any tax itself for a long time, i.e no discount to NAV need be allowed for this
- I was recently offered some shares at 45p, i.e inside the 50p offer, so you may be able to snap up some shares cheaply

The reason for the discount imo is because few have cottoned on that ETH has a decent 8% stake in the recently floated Sarantel (SLG).

ETH's Sarantel holding is:

2,452,448 shares last valued at 50p each - SGL's current price is 112.5p.
900,000 options exerciseable at 33p each (per an ETH director)

The options came as a pleasant surprise to me as they weren't mentioned in ETH's last results RNS:

http://www.uk-wire.com/cgi-bin/articles/200411120700021276F.html

Here's the Sarantel IPO RNS:
http://www.uk-wire.com/cgi-bin/articles/200502150730016069I.html

ETH's last NAV was 61.68p at 30/9/04, i.e £8.4m net assets on 13.6m shares. The uplift on the Sarantel shares at 112.5p is around £1.53m, and on the options around £0.72m, i.e £2.25m in total. This takes ETH's NAV to over 78p. ETH's other quoted holdings are roughly stable, except for its holding in Vectura, which is increasing fast and has also increased NAV by another 2p to 80p.

Risks:
- ETH is illiquid and the spread wide, though I managed to get shares inside the spread and, as I say, there were more available
- The other unquoted holdings may not be worth their valuations. My take is that these would now be valued at the bottom end having made it through the dark years, and if anything could provide more upside.

But given ETH's current tiny m/cap, any further uplift in Sarantel will provide disproportionate uplift in ETH. The Sarantel float was oversubscribed 5 times, so there's plenty of demand for it. My guess is that the venture capitalist shareholders will see it sold to the Americans in the next year or two at 50%-100% higher than the current price. Given the minimal downside in buying at 45p or so imo, the choice is yours....and remember, no CGT!!