Banks burdened with assets they were forced to acquire when loans went bad during the financial crisis are looking to offload many of them, which is a major opportunity for private equity.
So says Electra Private Equity, the investment trust chaired by former City regulator Colette Bowe and managed by Hugh Mumford.
Talking up the case today, deputy managing partner Tim Syder said: “The key thing we are beginning to see is a major shift of assets away from the banks. They are also selling their non-core businesses.”
Examples include Lloyds selling eSure and Royal Bank of Scotland moving to offload Direct Line.
Syder insists Electra will be looking for assets where the underlying business is good even if the finances are not.
In the half year to March, Electra saw its net asset value up 6% to 2360p. That compares with a share price of 1780p, a discount to net asset value of 27%, which must be of concern to investors.
Electra agrees the discount is high but points out that it has narrowed since September when it was 40%.
“We see it as a symptom of equity markets generally. Discounts narrow when stock markets do well,” says Syder.
Electra has £449 million of funds ready to unleash.
