Partners Group Private Equity (PEY), a £576m investment company struggling with performance and a chronic 28% share price discount, is offering shareholders a 30% exit through a new class of realisation shares.
The company, whose unquoted investments are run by Swiss fund manager Partners Group, has proposed a dual share class structure giving shareholders the choice of a continuation share class, which will continue with the existing investment strategy, and a realisation share class, which will gradually sell its investments and return cash to shareholders.
The realisation shares, which will not participate in new investments, will be capped at 30% of the company to ensure the continuation shares have sufficient scale and liquidity. Applications for realisation shares above this limit will be scaled back.
The company has striven to narrow the gap between the share price and the net asset value (NAV) of its investments with a 5% dividend policy and share buybacks. Having seen these fail to make an impact, chair Peter McKellar said the proposal was a “pragmatic” step to reflect the differing needs of shareholders.
He said it would enable “those who wish to exit to do so in an orderly and value-optimising manner, while allowing continuing shareholders to retain exposure to a portfolio with long-term growth potential and an attractive income profile”.
McKellar said the board with its advisers and Partners Group had conducted a strategic review of the company whose shares stand near the bottom of the AIC Private Equity sector on an 11% loss over five years. They had concluded that the dual class structure was the best available option but would keep the position under review and would consider a “credible alternative” if one became available.
Last week PEY announced it had written off its €20m (£17.3m) investment in Pharmathen, a Greek developer of advanced drug delivery technologies hit by an import alert from the US Food and Drug Administration (FDA). It has reported four successive months of NAV declines this year after the portfolio shed 8.7% in 2025.
Full details will be published in the third quarter of this year following which a general meeting will be held seeking shareholder approval.
Partners Group will pay €1.5m to cover the legal and advisory fees of the restructuring.
Our view
James Carthew, head of investment company research at QuotedData, said: “For some time, I have been suggesting that private equity trusts explore the idea of providing exits periodically (say every five to seven years) through the offer of a switch into a realisation share class; therefore, this move from Partners Group Private Equity is welcome. However, it is being presented as a one-off opportunity, which could have the effect of encouraging more of a rush for the exit, especially given that the company’s returns have been towards the bottom end of peer group tables for some time. If the board and manager want to hang onto some of the money, they will have to work to convince investors that things will improve.”
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