Electra taps market

Private equity trust Electra Private Equity is tapping the market for more funds to take advantage of significant private equity investment opportunities.The company intends to raise up to £100m through a placing and open offer of 5% subordinated convertible bonds due 2017.The initial conversion price will be 2,050p, equal to the net asset value (NAV) per ordinary share as at 30 September 2010. This represents a premium of some 27.7% to the closing price of 1,605p on 29 November 2010, the last business day prior to the date of this announcement.Qualifying shareholders will be able to subscribe for bonds on the basis of one bond, priced at £1,000, for every 354 ordinary shares held. The open offer is expected to close on 21 December 2010.Any bonds not taken up by shareholders will be placed with institutional investors.The board believes that recent macroeconomic and market events provide significant private equity investment opportunities with attractive potential investment returns over the current business cycle. These opportunities principally stem from both a lack of flexible capital following a severe economic recession and credit crisis, and a recovery in corporate profitability.The bond issue has not been underwritten.In a separate announcement the company said its NAV per share as at 22 November was 2,046p.The end-September NAV of 2,050p represented a record level for the company and a substantial improvement on the NAV of 1,720p at the end of September 2009. While the company's NAV rose 19.2% over the year, the FTSE All-Share managed a rise of just 8.8%.The trust invested £183m in the year to end-September, up from £88m the year before. Over the same period, £125m was realised through sales, as against £27m the year before."There are now positive indications that market conditions are beginning to improve," said Electra's chairman, Colette Bowe. "In the first half of 2010, the overhang of private equity funds in the market generally meant that high quality investment opportunities were attracting many potential buyers with the result that full prices were being paid. This overhang has begun to recede in recent months and there has been an increase in the number of potential transactions which our manager, Electra Partners, is prepared to consider," Bowe added.No dividend is being declared for the year; it is the company's policy to only pay a dividend to the extent required to maintain investment trust status.