THE CHAIRMAN of Aberdeen Asset Management’s private equity investment trust has predicted the discounts at which such vehicles trade is likely to improve as investors become more comfortable with the asset class.

At the end of the year to March 2017 the trust’s shares traded at a discount to net asset value of 23.1 per cent, which reflected relatively low investor demand for the trust.

This was an improvement on 34.1 per cent a year earlier, with the figure narrowing further to 10.6 per cent since the year-end.

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Despite this, chairman Howard Miles said the level of the discount remained “unjustified”, although he added that there were signs that people were beginning to get more comfortable with the idea of investing in a vehicle that itself invests in a range of private equity funds.

“There appears to be a better understanding across a wide range of listed private equity buyers that the drivers of growth and realisations are solidly in place,” he said.

“These drivers range from simple demand for the asset class to the clear evidence that operational intervention in privately owned businesses does have measurable impacts on longer-term success and the record of achieving realisations at prices above book value.”

The vehicle, which is run by Aberdeen’s Alex Barr and Colin Burrow and invests in funds offered by big name private equity houses such as Apax and Lion Capital, made a net asset value total return of 17.5 per cent in the year to March, up from 6.6 per cent a year earlier.

The trust does not measure its performance against any benchmark, with Mr Miles saying that because of “timing differences in committing to new private equity funds and co-investments, and the varying nature of many of the underlying assets, there is no appropriate benchmark with which to compare the company’s performance”.

The Thoma Bravo IX Fund contributed the most to overall performance, with exits from software companies Deltek and LANDesk Software to Roper Technologies and Clearlake Capital respectively boosting returns.

The Lion Capital Fund III and HG Capital 5 Co-Invest, meanwhile, were among the biggest detractors from performance.

Investors in the $208 million trust will receive a full-year dividend of 4p per share, up from 2.2p for the 2016/17 financial year.

This will be paid in September, subject to shareholder approval.