Performance

Over October the Company’s Net Asset Value (NAV) rose 1.16%, and the Company’s share price rose 0.71% total return basis).  The FTSE World Total Return Index, which the Company has historically aimed to outperform over the long-term, returned -3.0% in sterling terms.  The Company’s NAV is down 3.5% for the year at end October (same period: FTSE World Total Return, 0.1% and share price return, 10.3%)[1].

The two most significant contributors to October performance were our holdings in Ceiba Investments Ltd and Baring Vostok Investments Core. These were positive contributions, with the former’s move driven by positive sentiment around the implications for a rapprochement in the US-Cuban relationship in the event of a win by the Democrats in the US. With the latter, the price move reflected the successful London IPO of underlying holding Kaspi, a Kazakh bank and ecommerce holding company. Performance contributions from the remaining portfolio were minimal, reflecting both the illiquid nature of the majority of the remaining portfolio and that October saw us complete the final sales of our liquid portfolio (with the exceptions of those names noted in the realisation update below).

Company update

Investors in the Company should note the following.

1. The Company adopted a realisation investment objective in July 2020. Accordingly, whilst the FTSE World index remains the Company’s official benchmark, shorter term performance measurement periods that incorporate post-July 2020 performance may differ materially from ongoing benchmark performance. Until such point as cash is returned to shareholders (see realisation update below) any performance disparity is most likely to be due to the current high cash weighting that has been driven by the ongoing realisation process (and is now pending return to shareholders).
2. On November 11 2020 the Company published a circular setting out proposals for the voluntary liquidation of the Company, to be considered at a General Meeting of the Company on 30 November. Subject to shareholder approval, the Company will delist from the London Stock Exchange and enter Voluntary Liquidation. As liquidators, FRP Advisory Trading Ltd (‘FRP’) will be responsible for the affairs of the Company until it is wound up. FRP are expected to make an initial cash distribution shortly after their appointment (expected to be on or around 7 December 2020). Upon appointment of the liquidator the Company’s independent Board will stand down.
3. The Company will pay an interim dividend of 2.0 pence per Ordinary Share on 30 November to Shareholders on the register.

Realisation update

• As at 10 November cash as a percentage of NAV stood at 78.4%, of the portfolio. This included an imminent settlement of 4.5% which has since settled.
• As at 10 November the portfolio comprised of (i) a pool assets that have been included in an auction process that is currently underway and on which we make brief comments below (‘the Auction assets’) and (ii) a smaller portfolio of remaining illiquid listed assets that are unlikely to be sold prior to entering voluntary liquidation (‘the illiquid listed assets’).
  • The Auction Assets, which, as a percentage of NAV at 10 November were 16.6%, comprise of:
    • Mantra Secondary Opportunities
    • Renewable Energy and Environmental Infrastructure Fund II
    • Baring Vostok Investments Limited Core
    • Eurovestech Plc
    • Firebird Republics Fund SPV
    • Amber Trust SCA
    • ASM Asian Recovery Fund
    • Century Capital Partners IV LP
    • Armadillo Investments
  • The illiquid listed assets, which, as a percentage of NAV at same date were 5.0%, comprise of:
    • Ceiba Investments Ltd
    • NB Distressed Debt Global Shares NPV
  • The Auction process commenced in October and over 40 specialist secondary investors (both private equity and infrastructure) were invited to tender. Non-binding Letters of Intent were received from a smaller pool of buyers who are currently in the process of completing due diligence and submitting final bids. These bids will likely be for varying combinations of these assets. We expect final bids to be at a substantially wide discount to their end-Q2 reference value, upon which the auction has been based. We are unable to give further specific guidance, however the LOI stage indicative bids were broadly in line with current secondary market pricing for assets of similar size, quality, underlying asset exposure and vintage[2].
    • We expect this auction process to complete by January. Investors should note that such processes are not without completion risks and equally there is no guarantee that this process will run to its expected timeline, albeit a best efforts basis to do so is being utilised.

 

Glossary

Interim dividend: dividend payment made before a company’s annual general meeting (AGM) and the release of final financial statements

Liquidity: The ability to buy or sell a particular security or asset in the market. Assets that can be easily traded in the market (without causing a major price move) are referred to as ‘liquid’.

Net asset value (NAV): The total value of a fund’s assets less its liabilities.

[1] Sources: Bloomberg, Janus Henderson, 31^st October 2020.

[2] Age of fund – specifically, date of first fund raise ‘closing’ (or fund formation)