Dunedin Enterprise, the private equity investment trust, has detailed its plans for winding up the company and returning cash to shareholders.
Dunedin announced its intention in February as it exited from its biggest holding CitySprint, making a 180 per cent return on its original £10m investment six years ago. The disposal saw the trust’s shares jump 14 per cent, but they still stand at a 36per cent discount to net asset value.
It has asked shareholders to approve a managed wind-down at a general meeting on May 11.
The board says a distribution policy introduced in November 2011 had seen £55.6m of dividend pay-outs, which combined with a flat investment performance and the wide discount meant the company’s market capitalisation was now only £66million. “This backdrop makes generating new investor interest in the company increasingly challenging,” the board says.
A third of the portfolio is in the active investment phase, but 42 per cent of it is relatively mature and can be realised in the short to medium term, with the rest following in an orderly manner on the model of peer trusts Northern Investors and Mithras, the board says, adding that shares can still be traded and the discount should continue to narrow.
Dunedin’s performance has lagged most of its 12 or 13 private equity trust peers over three, five, seven and 10 years, according to Lipper figures for Investment Life & Pensions Moneyfacts.
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