Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by CT Private Equity. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
A new version of this profile is available. View Latest
Overview

CT Private Equity Trust (CTPE), formerly the BMO Private Equity Trust, has continued to deliver a strong NAV performance this year, latterly driven by the very successful exit of a co-investment. This illustrates the benefits of the differentiated investment strategy well. In terms of deploying capital, the team employ a fund of funds’ approach, but aim to boost returns through selective co-investments, constituting between one third and one half of the portfolio.

As we discuss in the Portfolio section, CTPE’s real differentiator to peers comes with the managers’ preference for managers at an earlier stage of their development, who are arguably hungrier and who tend to invest in small deals, i.e. the ‘lower mid-market’. The CTPE team argue that this gives the trust access to a less competitive part of the market and, in the current market, allows managers to sell investments to larger private equity firms and trade with buyers at a premium to holdings’ values. Mitigating the inherent risks of private equity investment is important to the managers and they aim to diversify exposure to individual companies and managers to reduce these risks.

CTPE has been successful at maintaining a fully-invested exposure and has, at times, been geared (see Gearing section). This has added to returns, historically. Mindful of the economic backdrop, the team are cautiously positioned and gearing will be largely extinguished, all things being equal, when cash is received from the recently-announced San Siro exit.

CTPE pays a formulaic dividend which aims for steady growth but provides downside protection. As we discuss in the Dividend section, by taking the most recently announced 6.62p dividend, we can project a prospective dividend yield of 6.2% at the current share price.

Analyst's View

Co-investments are an important part of CTPE’s investment strategy and the most recently announced quarterly results illustrate just how explosively successful this strand of the strategy can be. In the context of the economic and market backdrop, in our view, this should serve as reassurance that activity continues and that there are still good opportunities in the lower mid-market, the area of the private equity market that CTPE focusses on.

As we highlight in the Portfolio section, CTPE has exposure to a widely-diversified portfolio of companies with resilient growth trajectories. In our view, the maturity of CTPE’s portfolio potentially puts the trust in a strong position going forward. As at 30/09/2022, around 50% of the portfolio was over four years old and, therefore, potentially approaching realisation. At the same time, given the lower valuations and smaller deal size of the lower mid-market that CTPE targets, it is possible that realisation activity will be supported by the need for larger private equity managers to continue to deploy capital. With lower valuations in the portfolio, CTPE’s managers arguably have more room to agree deals, whilst still reporting uplifts to NAV.

We think CTPE’s portfolio has definite attractions. Aside from that, the high prospective dividend of 6.2% is likely to be attractive to income investors because of its predictable nature and security, with it being paid from capital. Last but not least, the shares have seen significant further widening of the discount (see Discount section). CTPE now trades at a discount to the most recently published NAV of nearly 40%, a level not seen since the depths of the coronavirus sell-off in Q1 2020.

Bull

  • Strong and long track record of beating listed equity returns
  • Diversified exposure, complemented by significant proportion of co-investments
  • Wide discount relative to history, broadly in line with peer group average

Bear

  • Private equity is a relatively high-cost investment area, as seen in the OCF/KID figures
  • Historically, higher gearing than most peers, which can exacerbate downside-risks
  • Private equity is a highly-illiquid asset class, meaning discounts can, potentially, exist for longer
Continue to Portfolio

Fund History

08 May 2024 The doctor will see you now
Taking the pulse of the listed private equity sector…
08 May 2024 Fund Analysis
CTPE’s portfolio represents a tangibly different opportunity…
21 Dec 2023 The best-performing investment trust of 2023 (so far)
3i’s price rise this year is unlikely to be repeated, but what of the rest of the LPE sector?
14 Dec 2023 Fund Analysis
CTPE continues to deliver on its unique strategy…
31 May 2023 Fund Analysis
Increasing co-investment activity should add to CTPE’s appeal…
18 May 2023 Treasure hunters
What can a corporate raider’s perspective tell us about private equity trusts..?
19 Apr 2023 Are we nearly there yet?
We look at which trusts have done best year to date, and ask where there may be value…
13 Apr 2023 Far from the madding crowd
Smaller nimble companies, both public and private, may be best placed to navigate the current environment…
22 Mar 2023 Good vibrations
We identify some sectors with structural discounts we think could close over time…
28 Dec 2022 Fund Analysis
CTPE’s differentiated strategy continues to deliver strong results…
30 Nov 2022 Cry havoc!
Lessons from a year in which an already troubled world was savaged by the dogs of war...
03 Aug 2022 Diverging fortunes in listed private equity
Growth capital and buyout trusts now trade at similar wide discounts. In our view, this belies very different prospects for underlying earnings and for valuations...
27 Apr 2022 Fund Analysis
BPET’s discount and differentiated portfolio make the trust stand out…
02 Feb 2022 Getting in on the act: Private markets
Private markets could be the next big opportunity for investors…
03 Nov 2021 Don't fear the reaper
With market direction hard to call, we consider the case for taking a long-term view in the investment trust sector…
13 Oct 2021 Fund Analysis
BPET currently seems to be in a private equity sweet spot, potentially making its discount attractive…
23 Sep 2021 Even better than the real thing
We explain private equity and examine why tweaks to listed private equity trusts give the sector an advantage over the direct route...
21 Apr 2021 Fund Analysis
BPET’s strong 2020 and the recent sale of Dotmatics highlights the attractive returns private equity can generate…
25 Nov 2020 Fund Analysis
BPET has slipped to a meaningful discount, but offers a differentiated strategy that has outperformed equity markets…
View all

Welcome to Kepler Trust Intelligence

Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
?
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
{{item.msg}}
Please select an option
{{item.msg}}
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
How will this information be used? Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase.
Our Website uses Cookies Cookies are small text files held on your computer. They allow us to give you the best browsing experience possible and mean we can understand how you use our site. Some cookies have already been set. You can delete and block cookies, but parts of our site won’t work without them. By using our website you accept our use of cookies. For further information please refer to the Kepler Privacy Notice.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.