With the summer break coming to an end, we go into the latter months of the year reinvigorated and with certain key topics at the forefront of our minds.
Starting with transaction activity, we continue to expect the remaining months of 2024 and the start of 2025 are likely to see a measured increase in activity across the market as a whole.
Several reports on this topic have been published in recent weeks, such as this from Bain – it’s a worthwhile read and their conclusion is a two-year lull in private equity activity looks to be bottoming out, with both deal-making and exit activity potentially turning a corner. Global buyout deal activity (by count) is on track to finish broadly flat compared to last year’s tally, and by value on track to finish up 18% on 2023’s figure. Exits follow a similar trend – expected to track flat by count year-on-year, whilst exit value is running at levels that annualise up 17% vs 2023. These are encouraging signs for our industry, and from our interactions with the top-tier managers we back, we know realisations are top of mind for them.
Separately, many of us are familiar with the long-running campaign on cost disclosure in the UK for investment trusts, and we are encouraged a fresh bill on this issue will be heard on 5 September. As our Chair Jane Tufnell said in May, we support these efforts; these legislative changes would create greater understanding of the sector and are much needed. From a shareholder perspective, as well as more accurately representing the true cost (and value) of these vehicles, we expect such changes could increase demand for our shares and further widen the pool of capital that is able to invest in us.
On the topic of shareholder demand, there has been a lot of discussion in recent years about widening access to private markets investments. We were therefore interested to see this article by Preqin (subscription required) which was published last week. It looks at the benefits of the investment trust structure for investing in private assets and discusses the potential for a resurgence in demand from retail investors.
However, these macro and legislative influences are to a large extent out of our hands, and as a team we are focused on playing the ball in front of us. From an investment perspective, investment committees have continued over the summer, reviewing primary, secondary and direct opportunities; from a shareholder returns perspective, our buyback programme has been active over the summer, purchasing £1.6m of shares at a weighted-average discount of ~33.6% during August; and from a shareholder engagement perspective, we have a number of shareholder meetings and roadshows lined up for the coming months across the UK, and we look forward to speaking to a number of you then.
All the very best,
Oliver & Colm
Past performance is not reliable indicator of future results.
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