F&C Private Equity Share Discussion Threads

[vacendak] 22/9/2017 09:55

Ticking back up nicely and steadily despite Sterling's sugar rush.

[cerrito] 27/8/2017 21:57

Good points raised in 163 and 164 and have noted it down to bring up at next year's AGM if I can make it-could not go this year as it clashed with another

[vacendak] 27/8/2017 17:08

@Cerrito
About their shifting towards coinvestment, this may be linked to a more active PE stance from the people at F&C in general.
They could indeed become more engaged and move away from the fund-of-PE funds approach.

From the last AR (the 2616 annual report, not the latest HY 2017 report) of Foreign & Colonial Investment Trust (FRCL):
"The Board has agreed to recommit capital to a new private equity programme taking a more focused, opportunistic and direct
approach that is flexible and will ultimately be considerably cheaper. We are doing this by making good use of the internal expertise at F&C. New commitments to this programme have been made over the course of the year." [page 7].

They have been discussing the fees they pay to Pantheon, Harbourvest and a few others for a while now, and concluded that they were becoming a bit dear. Hence the extract about the direct approach.

It may only be circumstantial of course, but these two ITs are from the same BMO/F&C stable, so could take advantages of synergies if they expanded their PE expertise.

[rcturner2] 26/8/2017 06:03

vacendak, thank you for your reply. Part of the reason that PE funds have done well recently is the strong performance of the listed market, since PE funds value their holdings, at least in part based on the ratings applied to comparable companies that are listed. Therefore a 3.5% gain in NAV over the last 6 months could easily be a fall in the actual real performance of the underlying companies, that is certainly my understanding. A PE fund that is not outperforming the wider market is holding stakes in companies that are not doing well, in my opinion. A 10% increase in EBITDA for a company held by a PE fund could lead to a 20% increase in the value attributed to that holding if the wider market ratio applied to such companies has also increased. I haven't drilled down into the actual holdings of this fund in any detail, probably that is my weakness, but IMHO in the current market PE funds should be making good gains and this fund are not.

[cerrito] 25/8/2017 21:11

Nothing much for me to say as they continue on in their stately fashion; given the current Euro/£ Fx rate and their long position in Euros they must be doing well in £ terms- would have preferred more info in these interims on their FX position.
Yes SpectoAcc they do have a lot of cash but do have undrawn commitments of £126m- I am never sure why the figure for funds where the investment period has expired is included.
I see they wrote down their Byron exposure-or at least the Manager did. Does not surprise me as they never seem very busy.
Note that CoInvestments are over 30% so they are shifting their business model.
Incidentally I could not find an explicit figure for their NAV-from the info in the footnotes I worked it out as £356.81- what is the understanding of you folks?
I sold down quite a lot during May and do not see myself spending too much time on this stable company.

[vacendak] 25/8/2017 10:33

@RC
Remember, when things go well, it is all down to good choices by the manager.
When things go less well, even compared to peers, the manager would be quick to remind us that "Investing in PE is for the longer term. Investor wary about quarterly returns should look elsewhere". :)

I see FPEO as less volatile than the rest, being a fund-of-funds, so am not too concerned. Like others I got used to the very good returns over the last year, so keeping that in perspective, 3.5% over six months should not be sniffed at, even if others do better. I still wish I had more skin in FPEO, but I have redirected my investment stream towards more boring defensive stocks. I am not officially turning into a bear, just hedging a bit.

The sector as a whole seems to attract more money that it can handle. The FT has at least one article a week on that subject. I am ambivalent about egging them on to spend those £8.3 mils on more adventurous stuff than usual or still sitting on it.

[rcturner2] 25/8/2017 09:38

Do you not think that 3.5% over 6 months is quite a poor performance though?

PEY which is a PE trust that has a higher yield has managed 8% over the same period.

[spectoacc] 25/8/2017 09:12

Also only read quickly but all seemed good - though I also thought the uninvested cash a bit high.

[vacendak] 25/8/2017 09:00

Well, I was complaining about the lack of updates and we are getting a HY report today.


Reading quickly through it (I shall try to spend more time on it later):

This is for end of June, so the recent drop in share price is not explained (it went down then back up before June 30th).

They are "listening to their shareholders" - aren't they all? - and since we seem to like getting dividends from Private Equity, they are proposing to move to a quarterly dividend distribution; with the first quarterly ex-div date being end of March 2018. I have to say that they are disciplined. I mean being able to promise a yield (4% at the moment) based on the NAV is bold. The FPEO dividend puts them in the ball-park of income focused Investment Trusts, in fact beating some.
Weird world to live in for sure when income comes not from bonds but EM and PE stocks. These used to be radioactive to moderate risk taking investors such as humble me.

Geographic spread:
A slight increase towards the US is mentioned.

Dry powder:
Cash in the bank still high: £8.3 mils and the £70 mil borrowing facility remains untouched.

The discount has fallen to 3.9% down from a more standard 15.8% at December 31st. Again this is as of June 30th, so it might have widened a bit now.

Good read so far, but again quick parsing, so there could be some nasties buried in the accounts.

[vacendak] 23/8/2017 09:50

The share price is coming back to Earth.

Hard to find any news about FPEO and their factsheets/updates are few and far between. So no real idea what is going on with whatever they are invested in going potentially bad.

Still happilly in the money, but not by as much as a few months ago.

[rcturner2] 26/7/2017 13:09

Sold mine today.

[cerrito] 26/7/2017 10:54

I need to say surprised by the restrengthening of the share price and have lightened up a bit; perhaps related given their Euro exposure to the strength of the Euro at 0.89-£

[vacendak] 07/7/2017 10:39

And back over 350p, so it was only a "correction" then, and nothing more sinister.
[edit] I spoke too soon and jinxed it!

The F&C people seem to have put a lot of update videos on their investment trusts' websites, most are dated end of May. Technically they are uploaded on Youtube and the link for the FPEO one is:


FPEO website:

[spectoacc] 06/6/2017 12:20

3i still at highs and still at a premium that makes FPEO look very cheap :)

[vacendak] 06/6/2017 12:12

@Skyship
Yep, just checked your PE thread and FPEO is not alone indeed.

Technically this is happening a few days before my monthly drip-feed, so not really complaining...

[skyship] 06/6/2017 11:34

Yes, a shakeout across many in the sector; but then all others weren't as overpriced as FPEO which had risen to a premium to its underlying NAV level of 351p!

[vacendak] 06/6/2017 09:32

Oops, some serious correction today.

[vacendak] 25/5/2017 11:55

1st quarter results:


The NAV has grown by 0.01p over the quarter or "virtually unchanged" as expressed in the report. So the recent enthusiasm is unlikely to have been about valuation.

Serious cash on hand still and very positive report overall.

[chrisgail] 20/5/2017 12:55

I started investing in these via a monthly Childrens saving scheme, when they were small, for each of my daughters to help pay for University when the time came, I was fortunate (and so were they) that we did not need to touch those pots, so onwards and upwards. Now house buying is on the horizon, today one of my daughters has sold part of her holding yielding a very nice return. An absolute illustration of the power of regular drip feeding into an investment that year on year gets it right. Regrets? why the hell did I not do the same in my pension?

[spectoacc] 17/5/2017 08:37

@v - even worse for me, I was a bull of them & must have sold out of the last 40p ago!

I still say they're a quality operator - put some of the other p/e managements (DNE for eg) to shame.

[vacendak] 16/5/2017 20:48

I put only a few groats in FPEO last year to taste the waters with PE. Had I known, I would have sold my first born into slavery at Sports Direct and invested the proceeds!

Already beyond 360p.

[vacendak] 02/5/2017 10:50

@Tudes100
True... but if the jump was only due to going ex-divi soon, that would be an expensive 6.5p! :)

Like Cerrito, I got to read the AR that dropped through my mail slot recently.

Sure, there was the big hitter with SkyScanner, but overall, it is indeed well diversified, they collect half a million here, a couple of mils there, so it adds up quite nicely in the end. Most of the report mentions them doing their homework when they choose the funds in which they invest, the results speak for themselves; and the AR does not even include the latest activity and share price going up.
They are also seriously diversified globally.

FPEO has negative gearing right now (lot of cash in hand), but they said they are actively looking at spending that cash before it burns their pockets. Their aim is to achieve a modest amount of gearing too; but they have difficulties finding targets to acquire/invest in. I guess, this is the "dry powder" which is often mentioned in the various articles about the PE sector these days.

[tudes100] 02/5/2017 02:04

don't forget its going ex-div for 6.5p this week

[cerrito] 01/5/2017 10:29

As with you all, surprised at the increase in the share price SpectoAcc thanks for pointing out that 3I(who I do not follow as I sold out some years back far too early) trades at a serious premium.
I have long wondered why FPEO with its stable shareholder base, well structured balance sheet and reasonable liquidity in its shares has traded at such a big discount; given the difficulty of valuing the assets some discount is warranted but as you point out vacendek sometimes the asset valuations are under valued.
I have been through the AR no change in the Principal Risks which is what I would expect; no real change in major shareholders or their holdings for at least the third year running; checked the FX exposures…basically the principal FX exposure is the Euro with the £ equivalent of £103m of Euro assets are partially offset by the Euro 30m loan and a 5% movement in the £ has a £6m effect on the balance sheet.
Will need to consult with my pillow as to if I sell some tomorrow.

[rcturner2] 28/4/2017 09:28

One thing I have noticed is that if you can find the right PE fund, then they tend to get momentum going, with the assets continually being revalued upwards.