Fund Profile

Standard Life Private Equity 17 October 2018

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SL Capital Partners, Aberdeen Standard Investments is a client of Kepler Trust Intelligence. Material produced by Kepler Trust Intelligence should be considered as factual information only and not an indication as to the desirability or appropriateness of investing in the security or securities discussed.

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Overview
Standard Life Private Equity is a private equity fund of funds and is the only such trust with no performance fee...
Overview

Standard Life Private Equity (SLPE) is a private equity fund of funds and is the only such trust with no performance fee. SLPE invests in a high conviction portfolio of third party private equity funds. At any one time, the Trust is investing through about a dozen core managers and currently the top ten managers’ investments constitute 66% of NAV.

At the start of 2017, the company started to increase exposure to North America by broadening its investment criteria to include US domestic funds The team expects exposure to gradually increase, as well as continuing to target secondary investments to take advantage of attractive investment opportunities and help reduce cash drag.

In common with peers, realisations from the portfolio have been coming in steadily. SLPE currently has c.13.5% of NAV in cash which the Manager is happy with, giving it the flexibility to be opportunistic if market conditions deteriorate. The company runs an “over-commitment” strategy to try to maintain investment levels. Its long-term target range is 30-75%, and as at 30th September 2018 we calculate that the level was 35% - which is in the target range – considerably up on the September 2017 figure of 24.5%.

Last year and this, the manager has been trying to place more emphasis on buying fund interests in the secondary market, which can be used to increase the company’s exposure to attractive funds without adding significantly to outstanding commitments. It has been actively bidding on deals, but reports a very competitive backdrop. A successful transaction would likely absorb a significant amount of cash, and quickly transform the invested position of the company.

Since inception in 2001 to 31st July 2018, SLPE has delivered an annualised NAV total return of 9.6% relative to the FTSE All-Share Index's annualised total return of 6.0% - representing strong outperformance against quoted markets. Indeed, the underlying portfolio returns will have been higher than this, given cash drag over the years and the fact that until 2016 the manager was paid a performance fee. Over the past five years, SLPE is well ahead of quoted markets, driven by strong realisations at material uplifts.

The board is targeting a dividend of 12.4p per share, equivalent to a yield of approx. 3.7% on the current share price. Going forward, the board intends to grow the dividend at least in line with inflation and has moved to pay quarterly dividends, further enhancing the attractiveness of the trust to income investors.

SLPE currently trades at a discount of c 16%, in line with the peer group average.

William Heathcoat Amory
William Heathcoat Amory is a co-founding partner of Kepler Partners LLP and leads the Kepler investment trust research team. William has over 20 years of experience as an investment company analyst. Prior to co-founding Kepler Partners in 2008, he was part of the Extel number 1 rated research team at JPMorgan Cazenove.
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Fund History

09 Jun 2021 Slides and Audio: Masterclass in Private Equity investing
Watch the replay of our roundtable teach-in led by William Heathcoat Amory, head of research at Kepler Trust Intelligence...
17 Oct 2018 Missing something?
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17 Oct 2018 Fund Analysis
Standard Life Private Equity is a private equity fund of funds and is the only such trust with no performance fee...
22 Aug 2018 Reassuringly expensive?
Some investment trust premiums have been stretched to eye-watering levels. Have investors been enjoying themselves in the sun too much? We try to rationalise current levels and suggest alternatives...
29 May 2018 Staying disciplined in a crowded market
Standard Life Private Equity Trust fund manager Roger Pim explains why increasingly frothy valuations mean a cool head is essential...
22 Feb 2018 Once bitten, twice shy
Fearful memories of 2008 mean discounts remain wide in the listed private equity sector, despite excellent returns from some of the trusts it contains...
22 Feb 2018 Fund Analysis
A 'pure' private equity fund (with no co-investments) and the only one without a performance fee...
05 Jul 2017 Searching for value
We look at how investment trusts are seeking value in the booming listed private equity sector...
04 Jul 2017 Fund Analysis
A lower cost, pure fund of funds private equity trust that represents SL Capital's highest conviction ideas...
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