Listed funds' share prices jump 25%

According to the AIC data, the listed private equity market has had a strong 2013 so far, with discounts at their narrowest since the financial downturn. The average listed private equity discount reached -13.8% at the end of February this year. However, by the end of June the average discount had crept up to -18.4%. By way of comparison, average discounts sunk to -61% in February 2009.

The increase in share prices have propelled listed funds to outperform the average investment company by 9% over the last 12 months.

According to Electra Private Equity manager Tim Syder, the improvement in share prices has been driven by better investment opportunities. "A key theme of the last 18 months has been the growing number of financial institutions releasing capital from their balance sheets by divesting non-core assets. Capital adequacy has been the central driver. We believe that this pressure will continue to create investment opportunities for private equity firms," he said.

Improving investment opportunities are further enhanced by better access to debt, giving listed managers another reason to be cheerful. "With plentiful availability of debt from many sources, and statistics suggesting that the worst of the macro environment may be behind us, particularly in North America, it's a good opportunity to buy well-run, quality companies. The key for private equity investment managers will be avoiding the pitfalls and making sure that they do not overpay for, and importantly over-leverage, assets," explained Alex Barr, manager for Aberdeen Private Equity.

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• Topics
• Fundraising
• Electra Private Equity