Better Capital has reported a heavy fall in the value of its second fund in the financial year to March 31, weeks after it emerged that the turnaround firm founded by industry veteran Jon Moulton will not be raising fresh capital from investors.
The net asset value per share of the firm’s 2012 second fund dropped 27.2% following a series of writedowns in portfolio companies including Everest, Spot and CAV Aerospace.
Everest, a double-glazing business, which is the second biggest company in the portfolio, has performed particularly poorly having been written down by a further £9 million since its interim half-year results were published in November, according to an analyst note published by Numis. The holding value of the company has fallen from £69.4 million to £44.5 million for the financial year.
This fall accounted for about half of the overall fund’s drop in value by net asset value per share from 98.06p to 71.43p over the year.
The fund is currently trading at a 56% discount to net asset value having traded at a premium until mid-2014. The wide discount has prompted Better Capital to buy back shares in the fund, whose investment period ends on June 30.
The firm’s first fund is performing better, with the 2009 vehicle’s net asset value up 5.4% per share. The fund’s performance is largely dictated by the performance of Gardner, an aerospace supplier which accounts for approximately 82% of the value of the fund. Better Capital is in the process of exiting the asset which is “generating strong global interest”, the note said.
Elsewhere in the portfolio, Better Capital sold health and safety service provider Santia in December 2015 for £47 million, generating the firm a 2.8-times return.
Bonnie Kraus, director of finance and investor relations at Better Capital, said: “We are very pleased with the progress made by our first fund but we need more time to work on our second fund to fulfil our investment strategy. However, we are very encouraged with the positive trends our portfolio companies have shown since our last set of interim results.”
Better Capital’s chief executive Simon Pilling is responsible for managing the firm’s remaining investment portfolio.
The firm has seen a number of key figures leave in the last 12 months as it gears up for winding down. Mark Aldridge, Better Capital’s former chief executive, left in September 2015 while Kevin Dady, a former operating partner at the firm, left in October 2015.