10 Feb 2012
UK listed financial services company Alliance Trust’s exit from private equity fund investment is nearing its end following the sale of interests in a further three managers in its portfolio. The group chose to wind down the division last March following pressure from activist shareholders.
According to a person close to the situation, Alliance, one of the UK's largest-listed investment trusts, sold its remaining interests in the UK mid-market managers August Equity and Silverfleet Capital shortly before Christmas while the sale of its interest in UK growth capital firm Alcuin Capital was completed in October.
This follows the sale of interests in mid-market fund managers HgCapital and Argos Soditic in the summer. The bulk of the remaining portfolio is understood to be made up of co-investments with a limited number fund interests still to be sold. One person said that there was still “good interest” in the portfolio but it would “suit small cap buyers”.
Alliance announced it would close its private equity investment arm and sell its fund interests in an "orderly disposal" in March 2011 following pressure by activist hedge fund shareholder Laxey Partners, which argued the company should take steps to improve its share price.
As of February 28 2011, Alliance managed about $200m in private equity fund interests, equivalent to 3.8% of the firm’s net assets.
With the sale process being conducted in the public eye, Alliance heavily tailored the auction, dividing most of its interests into lots to maximize values, according to a person close to the situation. For example the firm’s £30m interest in HgCapital 6 was divided into two lots with the listed arm of the firm, HgCapital Trust, buying one and a secondaries fund – believed to be LGT Capital Partners – buying the second lot.
HgCapital declined to comment but in its results statement last month, it announced that it had purchased an interest in HgCapital 6 but declined to identify the vendor. The results statement said HgCapital had paid £7.8m in cash for the funds already invested, a 2% premium above its net asset value, for a £15m interest.
LGT did not respond to requests for comment.
In a further indication that the process was reaching its conclusion, former Alliance Trust Private Equity director Richard Hope last month joined the private equity investment and advisory firm Hamilton Lane as a vice-president in the firm’s London office.
Alliance Trust did not respond to requests for comment.
--write to Kiel Porter at kiel.porter@dowjones.com
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