(Reuters) – Britain’s Electra Private Equity (ELTA.L) is back targeting distressed sellers for new deals after a year of firefighting to protect investments and limit declines in asset valuations.
Electra, one of Britain’s few listed private equity houses, said on Tuesday net asset value (NAV) per share in the year to end-September slipped 4.5 percent to 1,720 pence, the top end of analyst forecasts, driving its shares 6.1 percent higher.
“In the last couple of months, deal flow seems to have got more promising; prices seem to be more realistic,” managing partner Hugh Mumford told Reuters in a telephone interview.
“We are reasonably confident we are going to start putting some deals on the books,” Mumford said, adding the firm was eyeing one deal in the food industry, which it sees as well priced in an attractive sector.
Electra’s NAV showed a 14 percent improvement on its end-March lows. That compares with rival 3i Group’s 2 percent increase over the same period, which disappointed investors and stoked concerns over the performance of its portfolio and the wider economy. [ID: nLB267369]
“We believe Electra should trade at the narrower end of the discount range, compared with the rest of the private equity sector,” Oriel analysts said in a note, highlighting the firm’s diversified portfolio and good long term performance.
Electra’s shares climbed 6.09 percent to 12.21 pounds by 1110 GMT.
After a year of focusing on protecting its existing portfolio, Electra, whose largest investments include animal identification tags business Allflex and feminine hygiene products company Lil-lets, is eyeing distressed sellers across the capital structure, including equity owners and debt holders.
With rival bidders curbed by a shortage of capital, Electra is targeting deals such as restructurings, buyouts, investment in public companies and the purchase of debt.
“The current portfolio appears to be in good shape and with net cash on the balance sheet, Electra is in a very strong position to invest,” said Cazenove analyst Chris Brown.
Electra has about 281 million pounds ($463 million) available to invest, after spending just 88 million pounds in a second slow year for deals as prices remained high. It invested 322 million pounds in 2007.
Deals have included an investment in German private equity firm Steadfast Capital and in distressed debt.
Subsequently, returns from disposals have also been muted. Electra realised 27 million pounds from the sale of quoted investments and positions in private equity funds to other investors — compared with 192 million pounds the previous year.
Despite efforts to protect its investments, the firm lost control of its largest portfolio company, office supplies business Vasanta, to lenders and distressed company specialist Endless in July.
(Editing by John Stonestreet and Hans Peters) ($1 = 0.6070 pound) ((firstname.lastname@example.org; +44 207542 9969; Reuters Messaging: email@example.com))