24 Feb 2022 07:00
London, UK, 24 February 2022
Edison issues review on Standard Life Private Equity Trust (SLPE)
Standard Life Private Equity Trust (SLPET) delivered a strong NAV total return (TR) of 37.9% in FY21 to end-September 2021, ahead of the FTSE All-Share index at 27.9%. It benefitted from particularly high deal activity in private markets, benign public equity markets and strong interest in quality private assets in 2021. SLPET continued to pursue its broadened investment mandate, with co-investments making up 11% of NAV at end-FY21 (c 16% accounting for deals post reporting date) and its exposure to secondary investments standing at 12% of NAV at end-FY21. With an overcommitment ratio of 34.5% (at the lower end of its targeted 30-75% range), it is likely to sustain a high level of investment activity into FY22.
While competition for quality private assets remains high, we note that SLPET invests primarily in PE mid-market funds, typically of €1.0-5.0bn in size and, increasingly, in lower mid-market players of €150m to €1.0bn in size. In recent years, these funds have overall accumulated less capital that needs to be deployed than PE 'megafunds' of high single-digit billion euros or more in size, which should allow the mid-market funds to be more selective in their investments and time their capital deployment better. At the same time, mid-market funds should have a broader choice of exit routes, as they are less dependent on exits through IPOs and have a wider group of potential corporate and PE buyers (including megafunds).
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