Q1 has been relatively quiet as far as deals are concerned but activity levels will rise as the year progresses. In fact Winterflood described the first few private equity company reports out so far this quarter as giving “mixed” results, adding the short-term focus will be on changes to NAVs, also themselves under pressure during the second half of 2011.
One trend Winterflood has spotted for private equity firms so far this year as that their discounts have tightened.
“We estimate that the average discount of UK-listed private equity funds, excluding 3i Group, is 27% at present, compared with 37% at the start of 2012. Accordingly, most listed private equity funds have performed strongly in share price terms this year,” said Simon Elliott, head of research at Winterflood.
“Assuming market conditions remain stable, we remain positive on the outlook for listed private equity funds in 2012. Although discounts have tightened, they remain at historically wide levels and we believe that this represents a considerable value opportunity. We retain our recommendations of Electra Private Equity (29% discount), Standard Life European Private Equity (38%), and Pantheon International (35%).”
