Fund Research

Standard Life Private Equity Trust

Last update 17 October 2018

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.

Please see the important information by following this link or at the bottom of the page.

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

Important Information

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.

Please see the important information by following this link or at the bottom of the page.

Kepler Partners is not authorised to market products or make recommendations to Retail Clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.

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This is an information-only document derived from publicly available facts. It does not, and is not intended to, constitute investment research or marketing.

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Fund History: Standard Life Private Equity Trust

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