Dunedin Enterprise Inves... Share Discussion Threads

[eeza] 15/4/2016 10:22

Excellent reward - for failure.

[pvb] 15/4/2016 09:49

It isn't true that they don't mention the high running costs. They do indeed mention them. A whopping '2.9% Ongoing charges', same as in 2014.

On the company's consolidated income statement the investment management fee itself came in at £380,000 on net assets of £104,427,000. about 0.36%. Along with other charges of £599,000 these total a very reasonable £979,000 or 0.94%. In 2015 the company's revenue was £196,000 with gains on investment of £853,000 giving a Total income of £1,049,000.

From Note 22 Related party transactions:

"The Company has investments in Dunedin Buyout Fund LP, Dunedin Buyout Fund II LP, Dunedin Buyout Fund III LP and Equity Harvest Fund LP. Each of these limited partnerships are managed by Dunedin. The Company has paid a management fee of £2.1m (2014: £2.2m) in respect of these limited partnerships. The total investment management fee payable by the Company to the Manager is therefore £2.2m (2014: £2.6m)."

Hence 2.9%

That's before we get to the carried interest schemes for management.

[rambutan2] 10/4/2016 00:37

SpectoAcc, the norm for a non liquid trust going into wind-up mode is to, at the minimum, give an outline of how costs will be kept under control as the trust shrinks. This could take the form of ratchetting down management fees at specific nav sizes, or fixed fees for set periods etc etc. Of course, the bulk of the fees are the fund fees, which are fixed and not in the control of the board. However, this makes it even more important that the board shows it's independence and keeness to get best value for shareholders whilst the process plays out. DNE reports never mention the (high) running costs and it looks as though that is set to continue...

[rambutan2] 10/4/2016 00:37

Duplicate.

[spectoacc] 09/4/2016 20:13

@rambutan2 - I asked them why they weren't incentivised to wind the trust up for as much as possible as fast as possible - "We're not getting any increase in fees, if that's what you mean". Er, no, it wasn't - not remaining incentivised to keep the trust running for as long as possible was what I meant.

Nice work if you can get it.

[rambutan2] 09/4/2016 15:06

I also spoke to them and expressed my dismay that not one mention of costs or fees in the circular. Hadn't seemed to have occured to them that they should! Which to my mind rather sums up why DNE has been such a poor trust over the years.

[eeza] 08/4/2016 13:54

Yes, woeful performance.

Very much doubt anyone will be fighting to poach any of the BOD - so they will be stringing it out as along as possible.

[spectoacc] 08/4/2016 13:28

Had a chat with them earlier today, now understand why there's no Plan B: "We've spoken to the 5 largest shareholders and it's highly unlikely it won't get voted through". So it's a fait accompli.

Some possibility of things getting sold rather than waiting until the bitter end, but it won't wind up "..In the next 3 or 4 years..". Nothing that isn't in the RNS, but I'd have preferred more urgency.

Happy to hold, but can see little point in adding, unless there's movement up in the NAV or down in the shareprice. Difficult to estimate returns when final NAV largely unquantifiable 7+ years hence, duration of costs uncertain, timetable of returns impossible to know. But at least it's highly likely there'll be returns, with the current discount to NAV.

Mind you - money in the bank has guaranteed returns, which even at low interest rates would have been a better home for the money over 1, 3, 5 and even 10 years:

Comparative Total Return Performance
(NAV - Shareprice - FTSE Smallcap index)
One 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%

[eeza] 08/4/2016 11:31

Lol !!!

328p bid - that'll soon get sold.

Edit: Lol !!!! 30 seconds.

[spectoacc] 07/4/2016 12:20

I wonder what Plan B is if shareholders vote against? There seems little incentive for fast realisations, unlike in some previous wind-ups.

Clearly they'll be holding on to quite a bit of realised cash to cover the large outstanding commitments, but if they could just sell the interest in no.3..

I'd vote for that, not that it's given as an option.

[eeza] 07/4/2016 09:59

As said by the BOD earlier.

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

It'll be 'interesting' to see whether they can make a better fist of the disposals than their management of the assets have achieved so far.

[nk104] 07/4/2016 09:46

Looking at this, it seems there's a chance of getting money back relatively quickly from Buyout Fund 2 which on course to end in September 2016 - currently the largest single investment.

However buyout fund 3 is still in the build-up phase until November 2017 and has potentially £27.8m of outstanding commitment. This fund is due to run to November 2022.

[spectoacc] 07/4/2016 07:03

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 06:51

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 06:42

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 15:46

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...