Dunedin Enterprise Inves... Share Discussion Threads

[spectoacc] 07/4/2016 08:03

Had my eye on this since they announced the review but slightly disappointed with the total lack of urgency. Can understand that they'd rather under-promise and over-deliver, but "...At least 7 years.." is a long time to be paying wages/bonuses/expenses.

[jhan66] 07/4/2016 07:51

I think I'll get a few more at this price. I was disappointed with the results. Losing £9M on EV, Premier Hytemp & Pyrogard but it still looks a safe place to park some funds. I can afford to wait a few years for the rump payment which may well exceed £5 in total by completion. Plus I have an eye on 16p later this month.

[skyship] 07/4/2016 07:42

Hidden near bottom of today's statement:

"In view of the life of Dunedin Buyout Fund III and absent of any earlier sale of the Company's interest in (and any outstanding commitment to) that fund, the Directors anticipate that it may take at least seven years to complete the managed wind-down of the Company. Of course, the Directors will seek to return in a timely manner to Shareholders surplus capital resulting from realisations during the realisation process."

So Rambutan is right, this will be a pretty long haul. However they see much hidden value from the funds, so the NAV and the GRY% likely to rise. Personally I bought in too early @ 545p; but with the 37% discount I will be holding and adding at some stage...

[eeza] 01/4/2016 16:46

Turning into 'L'enfant terrible'.

[skyship] 21/3/2016 14:49

Yes, the Circular should reveal a fair bit. As you know, PE "Commitments" don't necessarily lead to a funding requirement - on average I would say perhaps 30% is called down - but that is a random guess; others may have a more precise knowledge...esp. Rambutan....

[kramch] 21/3/2016 14:27

Yes, 'been following the threads, and I have some experience of PE from the entrepreneur's side. My point is having £50M committed to future investment and intending to wind up are contrary positions. PE investments often run for 5 years so we need to know how they intend to manage this, hopefully they will clarify it in their circular before the AGM.
K.

[skyship] 21/3/2016 13:31

kramch - DNE is just the next in line of the many PE Trusts going through liquidation: CDI (the only failure), HPEQ, LMS, MTH & NRI are the others; all of them citing their lack of scale and inability to grow through equity issue due to the substantial NAV discounts.

A quick winding up isn't much of a realistic proposition; but DNE has a fairly limited portfolio, so IMO 4years should well cover it.

[kramch] 21/3/2016 12:14

What a cynical lot!
But it would be beneficial to know how Dunedin are planning to wind up,
does this means the end of Dunedin LLP now their feeder fund is closed?
A tidy and relatively quick disposal of assets is usually better than a long drawn out process run by a rump management team.
K.

[flyfisher] 21/3/2016 10:46

kramch, 'This continuing investment just extends the wind-up period which is not what shareholders want.'

Yes, but it does allow the directors to extract their fees for longer!

[pvb] 21/3/2016 10:39

My guess is while easy sell offs may be possible with a conventional IT holding a typical mixture of equity assets which can conveniently be sold any time the market is open. But not with a PE trust, where commitments have been entered into and it would presumably cost to break out of them, along with the inability to readily sell off non quoted investments - which anyway may be only part owned.

So the bad news here is the likely long time frame, made more painful for shareholders by the high ongoing expenses and the likelyhood of more "bonuses" for the insiders doing the sell offs.

[kramch] 21/3/2016 10:33

Newly invested here.
The portfolio looks reasonably robust, but
my concern is the £50M of "undrawn commitments", some of which has already been invested this year. The management has acknowledged that the shareholders want the company to wind up so I am surprised new investments are being made.
From a shareholders perspective cash worth £1 is being turned into assets worth 70p (at a 30% discount).
Surely these commitments should be being renegotiated or sold to other PE funds. This continuing investment just extends the wind-up period which is not what shareholders want.
K.

[pvb] 20/3/2016 16:52

"Ongoing charges 2.9%"!

[rambutan2] 20/3/2016 16:42

Results presentation gives a fairly clear pic of what's what...

[skyship] 20/3/2016 07:41

Ram...of course, thanks.

[rambutan2] 20/3/2016 02:08

Sky, they have a commitment to the current Dunedin buyout fund, and this is still in its investment period. So the fund invested in Alpha and DNE paid up its share.

[eeza] 19/3/2016 17:53

Well, I make my own choices, Sky & whilst I agree that portfolio here has performed poorly, I think the exit strategy will be better performing.

"The investment portfolio is relatively mature and a number of our investee companies offer interesting prospects for realisation ."

But, as always, time will tell. Happier here than LMS.

Or LXB.

[skyship] 19/3/2016 17:25

eeza - pity though that the BoD thought they should mark down those two valuations yet again. I suspect we may need a good recovery in the oil price to turn those into marketable assets.

Also a bit bizarre that they should commit £7m to the new Alpha Financial investment just 6weeks ago...they obviously knew what might be in the offing, so why make a new investment. To be generous one could see it as a positive, an investment at such good value that they had to go for it - possible I suppose.

Plenty of negatives; but hopefully the discount covers the concerns and the first Tender will come before two years have passed.

[eeza] 19/3/2016 11:17

From the email I posted yesterday, interesting to note that Skyship's estimate of NAV was exactly right (excluding the write downs).

i.e Skyship; -
Sept NAV = 512.0p + 11.0p (est uplift CitySprint) = 523.0p
Then
Less 10.0 (EV) Less 7.0p (Premier Hytemp) = 506.0p

Given that the write-downs were due to O&G sector exposure seems harsh to criticise the BOD, as without those the NAV would have been 523.0p.

Look at the impact of the O&G sector at Candover or Weatherford for example.

[skyship] 18/3/2016 12:03

pvb - yes, their performance has been pretty lamentable, so really Liquidation can't come soon enough. The big question is how long will it take. hopefully the Circular will provide an indication and so enable us to make credible Gross Redemption Yield calculations.

[eeza] 18/3/2016 11:05

Sent an email to DNE 1 hr ago so quick reply

"In your Prelims, released today, NAV is stated to be 505.8p as at 31 Dec 2015.
At 30 Sept 2015 NAV was stated to be 512.0p. (un-audited)
A decrease in NAV of 6.2p. However, the Prelims today state that the uplift from the disposal of CitySprint (I estimate as being approx 11p) is included in the year end NAV of 505.8p, and if so then the decrease in NAV is approx 17p.

Could you please confirm whether this is the case?
With thanks"

Reply
"I refer to your email today regarding the year end results announcement for Dunedin Enterprise.
There are of course a number of contributing factors from within the portfolio to the NAV per share movement in the quarter.

The most significant movements in the quarter being an uplift from CitySprint of 14p offset by reductions in value at our two oil and gas related investments, EV (10p) and Premier Hytemp (7p).
I hope this clarifies the position."

Kind regards,
Graeme

Graeme Murray
Finance Director

[pvb] 18/3/2016 10:51

I think I'll just give up on formatting text on ADVFN. :-(

Works perfectly on the TEST thread!

[pvb] 18/3/2016 10:37

They are failing. See from their own summary of results over a ten year period:


FTSE Small Cap (ex Inv Cos)Year to 31 December 2015 Net Asset value Share price IndexOne year 0.0% -7.5% 13.0%Three years 0.0% -16.4% 58.2%Five years 12.0% 23.0% 82.9%Ten years 39.6% -6.4% 75.7%



Whatever happened to this once successful PE company, originally very popular with private investors? Was it them, or the PE environment?

I will be voting for the wind-up, there seems little reason to continue any further from here.

[skyship] 18/3/2016 09:22

As I state above, NAV includes the CS revaluation upon sale - unfortunately.

See halfway down the Statement:

Unrealised movements in valuations

In the year to 31 December 2015 there were valuation uplifts generated from the following investments: CitySprint (GBP7.2m), Hawksford (GBP4.2m) and Kee Safety (GBP2.1m).

The valuation of CitySprint has been based upon the value of the transaction completed in February 2016.

The maintainable earnings of Hawksford have increased by 6% during the year and net external debt has been reduced by GBP3.4m. The EBITDA multiple applied to the valuation has been increased from 7x to 8.5x to reflect recent transactions in the sector, where multiples of 9x - 10x have been paid.

etcetcetc...

[eeza] 18/3/2016 08:21

But further down says this

" Unrealised movements in valuations

In the year to 31 December 2015 there were valuation uplifts generated from the following investments: CitySprint (GBP7.2m), Hawksford (GBP4.2m) and Kee Safety (GBP2.1m).

The valuation of CitySprint has been based upon the value of the transaction completed in February 2016. "


So not clear to me if it is included in NAV 505.8 - But still tend to think not, as NAV of 505.8 is stated as being at 31 Dec 15