Prelude Trust to sell off investments and wind up; fund manager DFJ Esprit to work for new owners
Prelude Trust plc said it proposes to sell off its portfolio of unquoted investments in early stage technology based businesses for £24.2m, hand the cash back to shareholders and then wind up itself up.
The decision followed the strategic review announced in mid January and discussions with potential purchasers.
Prelude estimated that, based on the sale price and net cash on hand of around £5.2m, shareholders could receive around 86p per share, compared with 80.5p when the review was announced and 72p two days ago.
The proposal is subject to shareholder aproval, but 48% of shareholders have already indicated they will vote in favour.
Prelude Trust was launched in 1997 and raised £20.8m for investment in unquoted technology based businesses. An extra £29.1m was raised in 2000.
The Cambridge-based company made a number of successful investments and retains a portfolio of companies that “may have significant value”, it said.
“However, there have also been disappointments and failures, a risk associated with early-stage technology investments; some investments have taken longer than expected to mature and to create value; exits have been difficult to achieve; and companies have in some cases required more funding than was originally envisaged.
“In recent years, the technology sector has underperformed the FTSE All Share Index and generally been out of favour with investors and there has been limited demand for the shares.
“Since 2001, the shares have traded at a discount to net asset value, reaching a high of 70% in 2002. This has meant that the Directors have not considered it possible to raise new funds.
Irrespective of whether it believes the portfolio has growth potential over the long term, the Board said cash reserves have continued to decline as portfolio companies have required further funding for development. Prelude’s capacity to invest in new companies as well as supporting the existing portfolio is governed by its ability to generate funds through realisations. Such opportunities are not expected to be material in the near term, the Board said.
The successful bidder for the portfolio in a competitive process was CIP V, a fund advised by Coller Capital, a leading global investor in private equity secondary investments, and which advises funds with approximately $8 billion in committed capital.
CIP V will appoint current portfolio managers DFJ Esprit LLP to manage the portfolio on an on-going basis.
Prelude’s shares gained 12% to 82p on the news.
1 May 2008
