Private Equity Investor

Private Equity Investor is an unique investment vehicle which raised £100m at the height of the tech bubble in February 2000. This cash was committed to 18 top-performing US venture capital funds to invest. After three years, two thirds of the money has been drawn down but the bear market has meant the uncommitted cash, parked in bonds, has outperformed the venture capital investments made so far. This approach has also protected the company's net asset value to a certain extent, restricting its fall since launch to 25.9% leaving it at 143.6p per share at the end of March. Chairman Barbara Thomas has now prudently called the top of the bond market and switched the group's fixed income portfolio into a bespoke fund of hedge funds. Over the past year, net asset value fell 21.4%, but the shares fell even further, sliding 29.4% to 87.5p, putting them at a 39% discount to net assets. Some £35m, or 70p a share, remains uninvested, meaning the £37.8m venture capital portfolio is valued at only £13.5m, or 27p a share. This seems unfair, particularly as some investments, such as in Internet travel agent Expedia, are being realised. Since the year-end active investor Laxey Partners has built up a 11.7% stake in the company, noticing the extreme value. The shares have risen 9.5p but still stand at a 32.5% discount. Investors should follow Laxey's lead and take advantage of this.

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Sector: General Financial

Companies: Private Equity Investor

Market cap: £48.5m

PE Forecast: n/a

Share price: 97p

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