Results analysis from Kepler Trust Intelligence

Schroder British Opportunities Tst.

12 July 2024

 

Schroder British Opportunities (SBO)

12/07/2024

Results analysis from Kepler Trust Intelligence

Schroder British Opportunities (SBO) has released its annual financial results for the year ending 31/03/2024. Over the year, the trust saw its NAV per share increase by 2.5% on a total return basis. This has contributed to a NAV total return of 12.3% since inception in 2020.

NAV growth in the past year has been primarily driven by performance in the private equity portion of the portfolio. The focus on growth capital and buyout has led to upwards fair value adjustments in valuations, leading to a gain of 6.3% over the year.

The public equity portfolio benefitted from the takeover of City Pub Group. Whilst beneficial, this was not enough to offset the negative performance seen elsewhere in the public equities.

The managers made commitments to two unquoted holdings in the year, meaning NAV consisted of 65% unquoted and 23.9% quoted holdings at year-end. In the period post results, the trust announced an investment in HeadFirst, an unquoted HR service provider for an undisclosed amount.

Cash and cash equivalents totalled £11.6m at year end, including uncalled capital commitments.

The discount narrowed in the year, from 36.2% to 27.8% as a result of share price appreciation.

Chairman Neil England stated: "The UK stock market represents one of the cheapest equity markets in the world and the UK mid-cap sector looks particularly attractive," adding, "inflation numbers are better which suggests a more positive medium-term outlook for growth companies."

Kepler View

Schroder British Opportunities (SBO), managed by a four-strong team, owns a portfolio of both public and private equities consisting predominantly of UK companies. This portfolio will contain between 30 and 50 holdings, with a tilt towards mid-sized companies. The ability to invest across both public and private offers flexibility to identify the best growth opportunities regardless of status.

SBO has delivered a year of solid performance, having returned 2.5% in NAV terms. This has predominantly come from the uplift in value of the private equities, which increased by an aggregate of 6.3%. EasyPark was the best performer partly as a result of an acquisition that will expand the company's global reach. We believe this is a good demonstration of the managers' expertise.

Despite some bright spot the public equities were a drag on performance. The focus on mid-caps and sector bias has meant their portfolio has had greater sensitivity to macro factors. They believe that valuations are very attractive and have the potential to recover.

The share price return was a positive which the managers argue could be a sign that investors are recognising the growing momentum in the portfolio. This has contributed to the discount narrowing at year end. We believe this discount could be attractive for long-term investors, especially in the context of the portfolio composition, inferring an even wider discount on the private equities.

The managers made two additions to private holdings in the period and sold three public equities. This has resulted in nine unquoted holdings totaling 65% of NAV, and 21 quoted holdings totaling 24%. Since the period end, the managers added one new unquoted holding. The managers believe this demonstrates the opportunity set in private markets, despite the negative sentiment.

CLICK HERE TO READ THE FULL REPORT 

Visit Kepler Trust Intelligence for more high quality independent investment trust research.

Important information

This report has been issued by Kepler Partners LLP.  The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

Kepler Partners is not authorised to make recommendations to retail clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.

The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. In particular, this website is exclusively for non-US Persons. Persons who access this information are required to inform themselves and to comply with any such restrictions.

The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.

This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.  

Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm's internal rules. A copy of the firm's Conflict of Interest policy is available on request.

PLEASE SEE ALSO OUR TERMS AND CONDITIONS

Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 480590), registered in England and Wales at 70 Conduit Street, London W1S 2GF with registered number OC334771.

 

END