Schroders trust shares pep up as former Woodford holding merges with Spac

Value of SUPP’s holding in Benevolent AI written up by a further 40%

Schroder UK Public Private (SUPP) has received a much needed boost to its share price following the merger of one of its legacy Woodford holdings with a European special purpose acquisition company (Spac).

In December, the £364.9m trust flagged that unlisted biotech stock Benevolent AI had entered into a definitive agreement to combine its business with Odyssey Acquisition, which is listed on the Euronext Amsterdam.

At the time, SUPP said the implied valuation for the transaction would be positive for NAV and put Benevolent AI in a strong cash position, allowing it to invest in its technology platform and accelerate the scale-up of its clinical pipeline.

Following the announcement, the trust’s AIFM marked up the value of its holding by 27% from £22.4m at 30 September 2021 to £28.5m at 31 December 2021. This took the holding to 6.5% of the trust’s NAV.

However, in an RNS filing today, SUPP said it now expects the value of its holding to jump by a further 40% to £39.6m, reflecting a further fair value increase of £11.1m since the end of December.

Shares in the trust were up over 2% at 25p at the time of writing. However, they are still down 25% year-to-date and miles off their peak price of £1.19 in the months after the trust, formerly known as Patient Capital, was launched by Woodford in 2015.

Benevolent AI’s value will now be determined by its unadjusted quoted price on the Euronext Amsterdam, which will be reflected in the trust’s daily unaudited NAV per share as of 25 April 2022.

Last week SUPP floated proposals to change its investment policy to allow managers Tim Creed and Roger Doig to invest in global private equity businesses in a departure from the trust’s traditional UK hunting ground.

The strategy change is the board’s latest effort to address the trust’s lacklustre share price performance, which has seen it trading on a 31.2% discount to NAV.

However, even if the proposals go ahead, Investec has warned problem ex-Woodford holdings like Rutherford Health and an immature portfolio will continue to put a damper on its medium-term prospects.

See also: Investec maintains sell rating on ex-Woodford trust despite strategy change

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