Listed private equity funds have delivered sharply diverging returns, even as discounts to net asset value remain wide across much of the sector. Pantheon International and HarbourVest Global Private Equity have returned almost 20% in one year, while Patria Private Equity is up over 50% in three, all helped significantly by narrowing discounts.
By contrast, 3i has lost 25% and HgCapital Trust almost 15%, as their discounts headed in the wrong direction. 3i traded on a large premium thanks to the performance of discount retailer Action, which came to account for over three quarters of its NAV. When Action's growth appeared to falter, 3i's share price slumped. The £28 billion trust now trades on a 7% discount, up from 30% a few months ago.
HgCapital Trust specialises in software and has suffered from fears that its holdings will be disrupted by AI. In its June update, it reported growth in revenue and cash generation of 16% and 19% respectively, as well as £134 million of realisation proceeds in the first half at an average uplift to carrying value of 31%. Its portfolio is now valued at a weighted average multiple of 23 times cash generation, while the shares trade at a 23% discount.
Oakley Capital still sits on a 33% discount despite reporting a gain of 6% in NAV in the first half. Literacy Capital's shares have slid 40% over two years to a 37% discount, with NAV down 7% over the last year and up just 3% over three.
Funds of funds such as HarbourVest, Pantheon, Patria, ICG Enterprise and CT Private Equity all trade on discounts of 25%-30%. Their boards continue to focus on share buybacks to reduce the discount, but the article argues they need to focus more on increasing demand for their shares than reducing supply.