Electra Private Equity PLC Result of Strategic Review - Phase II (2653U)

TIDMELTA

RNS Number : 2653U

Electra Private Equity PLC

23 October 2017

Electra Private Equity PLC

Result of Strategic Review - Phase II

London 23 October 2017

The Board of Electra Private Equity PLC (the "Company") today announces the outcome of the second phase ("Phase II") of its strategic review as first announced on 25 January 2016 ("the Review"). The commencement of Phase II was announced on 1 June 2017, following assumption of responsibilities from the former manager.

The principal objective of the Review is to maximise long-term shareholder value by assessing the Company's investment strategy and policy and its structure.

The key outcomes of activity undertaken since Phase I of the Review was announced in October 2016 have been:

-- The Company has completed the handover of the investment portfolio and operational responsibilities from its former external manager.

-- The resources required to pursue the strategy announced today are now in place.

-- Recurring annual management expenses have been reduced from approximately GBP33 million to approximately GBP5 million.

-- The Company has completed the disposal of all of its Funds, Secondaries, Debt, and Listed assets. Certain of these disposals are signed but not yet closed. A portfolio update based on published 31 March 2017 valuations is shown below.

-- A robust and sustainable corporate governance structure has been implemented with the Board responsible for continued delivery for shareholders.

-- Since the resumption of distributions to shareholders in 2015, including today's announced dividend the Company has distributed GBP1.9 billion (approximately GBP49.50 per share) to shareholders.

Strategic Review: Phase II

The key outcomes of Phase II of the Strategic Review are:

-- The Board intends to continue its strategy of focusing on optimising return on shareholder capital. The Board considers that current market conditions do not support new investment. However, should conditions change the Board will consider further investment.

-- In line with this capital allocation strategy, the Board is today declaring a further special dividend of GBP350 million, or 914p per share. This is to be paid on 1 December 2017 to shareholders on the register of members at the close of business on 3 November 2017.*

-- Subject to shareholder and regulatory approval the Company will update its investment policy to reflect a focus on shareholder returns and will explore options for reclassification of its current listing.

-- Taxation benefits related to the realisation of assets currently provided through the Company's Investment Trust Company tax status are expected to be obtained through the Substantial Shareholding Exemption (SSE) should its listing classification change.

-- Actions will be taken to further simplify the Group's corporate and underlying partnership structures realising cost and efficiency benefits.

-- The Company intends to change its name to remove the words "Private Equity" to better reflect its revised strategic focus.

-- The Board intends to convene a general meeting in due course to allow shareholders to vote on these proposals.

Current Pro Forma Composition of Net Asset Value

(Based on Unaudited 31 March 2017 valuations)

 
                                            Pro Forma as at 23 October 2017(1) 
                                    ------------------------------------------------- 
                                                  Attributable               NAV per 
                                     Investment      Carried     Net Asset     Share 
  (GBP millions)                        Value       Interest       Value      (pence) 
                                    -----------  -------------  ----------  --------- 
 TGI Fridays(2)                           156.6         (17.3)       139.3       364p 
 Hotter Shoes                              43.0          (6.1)        36.9        96p 
                                    -----------  -------------  ----------  --------- 
  Subtotal Buyouts                        199.6         (23.5)       176.1       460p 
 
 Photobox                                 103.8          (4.6)        99.2       259p 
 Knight Square                             26.5          (3.8)        22.7        59p 
 Sentinel                                   3.0          (0.4)         2.6         7p 
 Other Co-investments                       2.8          (0.5)         2.3         6p 
                                    -----------  -------------  ----------  --------- 
  Subtotal Co-investments                 136.1          (9.3)       126.8       331p 
 
  Investment Portfolio                    335.6         (32.7)       302.9       791p 
 
 Cash and Cash Equivalents(3)                                        435.1     1,137p 
 Assets Sold but 
  not Yet Closed                                                      42.4       111p 
 Other Net Assets/(Liabilities)                                      (4.0)      (10p) 
                                                                ----------  --------- 
  Net Asset Value                                                    776.5     2,028p 
 
 

Giving effect to the 914p dividend declared by the Company on 23 October 2017, pro forma net asset value would be GBP426.6 million (1,114p per share), comprised of net investments of GBP302.9 million, net cash balances of GBP81.2 million, and assets sold but not yet closed of GBP42.4 million.

 
 
 (1) Carrying values as at 31 March 2017 pending 
  completion of year-end audit; reflects purchase 
  of the former manager's 1% interest following 
  termination 
 (2) Gives effect to additional GBP35 
 million invested to support refinancing 
 (3) Prior to payment of dividend announced 
 23 October 2017 
 

Updated valuations as at 30(th) September 2017 will be published with the Group's results to 30(th) September 2017 in December.

Neil Johnson, Chairman of Electra Private Equity PLC, said today:

"I am pleased to present the findings of Phase II of the strategic review to shareholders. Having had the opportunity to review the portfolio fully for the first time, the Board remains firm in its conviction that the changes identified and implemented through the review process have been essential to driving shareholder returns both at the present time and in the future. Our analysis of the portfolio has also highlighted opportunities to create genuine value as opposed to transient shifts in valuation or financial engineering.

The Company has the required operational resources in place while benefitting significantly from the sizeable reduction in costs. Consistent with our stated aim to return excess capital to shareholders, I am delighted to announce a further special dividend taking total distributions to GBP1.9 billion since the resumption of distributions to shareholders in 2015. We will continue to manage the Company's capital needs closely with a view to optimising returns for shareholders.

We are also taking the first steps towards migration of the Company from a listed investment trust to a structure that we believe represents a more flexible platform for the future. At the same time we will change our name to remove the words "Private Equity" from our name to more accurately reflect the nature of the business in this exciting phase of its development and I look forward to discussing these and other matters with our shareholders in due course."

* The special dividend will not fall within the Dividend Reinvestment Plan.

- Ends -

Electra Private Equity PLC will host a meeting with investors and analysts at 10:00am BST today at Brunswick Group, 16 Lincoln's Inn Fields, London, WC2A 3ED. Participants wishing to join by telephone can use the dial-in details as follows:

Participant Dial-in: [phone]

Conference ID: 3295239

A Company presentation for investors is available at www.electraequity.com.

For further information:

Gavin Manson [phone]

Chief Financial Officer

Brunswick Group LLP [phone]

Gill Ackers/Rowan Brown [e-mail]

This information is provided by RNS

The company news service from the London Stock Exchange

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October 23, 2017 02:00 ET (06:00 GMT)