18 August 2008, 15:58
Private Equity Inv: Interim Management Statement
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Private Equity Investor Plc
Interim Management Statement - 4 Months to 31 July 2008
Investment Objective
The Company was launched in February 2000 and provides both private and
institutional investors with a means to participate in specialised venture
capital funds in the USA, a category of funds that is not otherwise accessible
to many investors. The Company's objective is to achieve substantial capital
appreciation for shareholders over its intended life.
Investment Policy
Risk Diversification
The Company has invested in high quality venture capital funds, managed by
several different management groups, focused on various stages of growth from
early stage to pre-IPO, so as to obtain exposure to a diversified underlying
portfolio of investments in unlisted companies in the IT and other technology
sectors. Such funds have been selected with regard to the experience and track
record of the managers, their investment strategy and the strength and quality
of their deal flow.
As an Investment Trust, it is the Company's policy that no single investment
will represent more than 15% by value of the Company's investments at the time
of investment.
The Company's policy is that it will invest no more than 15% of its gross
assets in other closed-end listed investment companies (including investment
trusts). The Company currently has made no such investments and the Directors
do not envisage circumstances in which it is likely to do so.
Asset Allocation
The Company's investments are in funds based in the USA ("the Funds"). The
Managers of the Funds invest principally in the USA and in unlisted companies.
As a result of the flotation or sale of their investments, the Funds may hold
listed securities and these may be distributed to the Company so that the
Company may from time to time hold listed securities which, however, are
unlikely to represent a significant part of the Company's investments.
The Company continues to invest in the Funds to meet existing commitments but
is not making commitments to new investments. The Company proposes to make
periodic returns of capital to shareholders from the return cash flows from the
Funds.
Gearing
In normal circumstances the Company does not expect to borrow. The Company's
Articles of Association limit borrowing to an amount broadly equal to its
capital and reserves. Some investments made by the Funds may be geared but the
Company does not review the level of
gearing of these underlying investments.
Liquidity
Because of distributions from the Funds, the Company may hold substantial
balances of liquid funds. These are held principally in open-ended investment
funds pending investment in the Funds or distribution to shareholders.
Derivatives
The Company does not make use of financial derivatives and does not hedge
against currency fluctuations.
Distribution
The Funds provide little, if any, income. Income may be generated from liquid
funds and the Company may be required to pay dividends to continue to qualify
as an Investment Trust. Such dividends are, however, likely to be small and
irregular. In 2007, the Company made a Tender Offer to shareholders with a
value of up to £12.5 million, which was fully taken up. In May 2008,
shareholders approved the cancellation of the Company's Share Premium Account
which, subject to the necessary court approval, will permit the creation of a
special distribution reserve. This will enable the Company to make returns of
capital to shareholders from time to time.
Benchmark
NASDAQ Composite Index.
Continuation Vote
Shareholders will have the opportunity to vote at the Annual General Meeting in
2014 whether to continue the Company and at five yearly intervals thereafter.
Management
The Company is self-managed. The Company has appointed Campton Group, Inc.
("Campton") which is based in San Francisco as its non-discretionary investment
adviser and has provided it with finance, with a view to developing Campton's
private equity fund-of-funds management and advisory business. The Company has
the right to acquire a majority stake in Campton.
Financial Highlights
31 March 2003 = 100%
To 31 July To 31 To 31 To 31 To 31 To 31
2008 March 2008 March 2007 March 2006 March 2005 March 2004
Share price* 143.88% 167.12% 191.38% 187.59% 118.71% 113.32%
NASDAQ 197.76% 169.93% 180.56% 174.46% 149.24% 148.69%
Composite
*Ordinary share total return with dividends reinvested
Company's Financial Position
As at 31 July 2008 As at 31 March
2008
Net assets and shareholders funds £77,117,000 £77,336,000
Net assets per ordinary share 180.50p 181.02p
Net assets and shareholder' funds $152,762,000 $153,705,000
in US $
Net assets per ordinary share in US 357.56c 359.78c
cents
Mid-market price per ordinary share 124.00p 144.50p
Discount to NAV 31.30% 20.17%
Exchange rate (US$ / £) $1.9809 $1.9875
LP Portfolio Revaluations
As at 31 July 2008 the Company's NAV included re-valuations by the Limited
Partnerships at the following dates:
APV Technology Partners III 31 March 2008
Bay III 31 March 2008
Crescendo IV 30 June 2008
Dawntreader Fund II 31 March 2008
Draper Fisher Jurvetson ePlanet Ventures 31 March 2008
Draper Fisher Jurvetson Fund VI 31 March 2008
Draper Fisher Jurvetson Fund VII 31 March 2008
Draper Fisher Jurvetson Gotham Venture Fund 31 March 2008
Focus Ventures II 30 June 2008
Francisco Partners II 31 March 2008
Institutional Venture Partners XII 31 March 2008
New Enterprise Associates 9 30 June 2008
New Enterprise Associates 10 30 June 2008
New Enterprise Associates 12 30 June 2008
Oak Investment Partners X 30 June 2008
Sprout Capital IX 30 June 2008
TCV IV 30 June 2008
Vanguard VII 30 June 2008
Vantagepoint Venture Partners IV 31 March 2008
Vantagepoint 2006 Fund 31 March 2008
Vector Capital IV 31 March 2008
Zone Venture Fund II 31 March 2008
Zone Venture Fund II Annex 31 March 2008
Material Events
There were no material events to report during the period under review.
Material Transactions
During the four months to 31 July 2008 the Company received cash and shares
totalling $2,790,000. Limited Partnerships drew down $4,150,000 during the four
months.
Future outlook
As previously reported to shareholders, the Chairman commented that: It is
clear that the sub-prime debacle and subsequent credit crunch, and the rising
price of oil are having an adverse impact on the US and other economies and
that financial markets are currently volatile and nervous. There are, however,
companies in the various Funds that continue to make solid progress and,
although timing is always difficult to predict, a number of these should be M&A
candidates in the reasonably near term or IPO candidates when the market
returns. We were pleased with the level of distributions received by the Fund
in the previous year. While difficult to predict with accuracy we expect there
will be a continuing flow of distributions in the current year although
possibly at a lower level than last year as a result of the more volatile
market conditions.
On 29 May 2008 shareholders authorised the application to the Courts to cancel
the share premium account. If approved the Board anticipates being able to make
a further return to shareholders later this year, of an amount similar to the
initial payment made on 13 December 2007 of £12.5million.
Annual General Meeting
The Company's Annual General Meeting of the Company will be held on Thursday 18
September 2008 at 11.00am 23 Bentinck Street, London W1U 2EZ.
Shareholders are being asked to approve a number of amendments to the articles
of association primarily to reflect the provisions of the Companies Act 2006.
An explanation of the main changes between the proposed and the existing
articles of association is set out in the notice to the Annual General Meeting.
The Directors consider that all the resolutions to be put to the meeting are in
the best interests of the Company and its shareholders as a whole. The
Directors intend to vote in favour of all resolutions in respect to shares
owned or controlled by them.
Peter Dicks
Chairman
18 August 2008
END</pre>
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