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
CTPE’s portfolio is full of interesting gems…
Overview

CT Private Equity (CTPE) offers exposure to a diversified portfolio of ‘lower mid-market’ private equity-backed companies. The lower mid-market is equivalent to the UK’s small-cap universe, and there are specialist managers who focus exclusively on this area. CPTE’s rationale for focussing here is that there is less competition for deals, and companies are capable of significant organic growth if they are successful. CTPE mitigate risks through diversification, with exposure to over 500 underlying companies, led by around 50 different private equity management groups.

In this note, we provide commentary on CTPE’s inaugural Capital Markets Event (CME)). Two of the underlying managers presented, as well as the CEOs of three co-investments. One of the clearest messages we came away with was that private equity investing at this end of the spectrum is as much about the private equity managers and their skills, as much as picking good businesses and good managers for these businesses. As such, successful private equity investing can be defined as capital that comes with expertise. We discuss Inflexion and MVM in the Portfolio section, before outlining the exciting investments CTPE has in Amethyst (radiotherapy services), HOFI (funeral services) and Weird Fish (clothing).

The CTPE portfolio offers exposure to opportunities and niches that are not found within quoted equities. It is also very different to the private equity ‘mega-deals’ that typically make the headlines. Co-investments, such as those we heard from at the CME recently, represent 44% of the portfolio as of 30/06/2024 with the long-term target being 50%. CTPE’s managers continue to believe that they are seeing early signs of realisation activity improving, which could be a positive for performance and for reducing Gearing.

Analyst's View

CTPE’s inaugural CME (see Portfolio section for a detailed commentary) was interesting for a number of reasons. In our view, it shone a light on what can be a relatively opaque opportunity set, given that these are relatively small private companies. Each of the three companies in the portfolio was able to give a feel for the exciting potential growth trajectory ahead. Aside from the upside, it is clear that each company’s opportunity set is relatively unique, and probably hard to get exposure to through quoted companies. We came away enthused that private equity managers add a lot of value, both in picking interesting companies and management teams, but also in helping shape the strategy and value-creation over the life of the investment.

CTPE’s shares remain on a wide discount to NAV. Relatively low levels of deal activity are perhaps one reason why there aren’t more investors buying shares, but perhaps too they may have worries about gearing levels ticking up slightly (see Gearing section). On the other side of the argument, CTPE’s portfolio has lower valuations and lower gearing than peers’ portfolios, and with record levels of private equity dry powder, CTPE’s portfolio companies may increasingly be in the cross-hairs of larger private equity houses looking to invest. If realisation activity steps back up, it is entirely possible that CTPE could once again trade at a consistent premium relative to peers as more favourable conditions return.

Bull

  • Long, strong track record of beating listed equity returns
  • Diversified exposure, complemented by significant proportion of co-investments
  • Differentiated strategy that has delivered strongly in the past

Bear

  • Private equity is relatively opaque and high-cost
  • Historically, higher gearing than most peers, which can exacerbate downside risks
  • Discount may prove persistent
Continue to Portfolio

Fund History

06 Nov 2024 Divi Up!
Enhanced dividend strategies are growing in popularity, what do they offer investors?
30 Oct 2024 Cream of the crop
We identify those trusts that use the distinctive features of investment trusts to the full…
16 Oct 2024 Slow burn
Falling rates have boosted private equity managers’ share prices, but what of PE funds?
15 Oct 2024 Fund Analysis
CTPE’s portfolio is full of interesting gems…
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

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