Schroder Br.Opps.Tst

Investment update

RNS Number : 3502M
Schroder British Opportunities Tst.
20 January 2021

Schroder British Opportunities Trust plc


Investment Update


It has been seven weeks since the initial public offering ("IPO") of the Schroder British Opportunities Trust plc ("SBO" or the "Company") and we are delighted to provide the update below from the Company's Portfolio Managers.  This has been an exciting period for the Company, through which excellent progress has been made in deploying your capital.  The portfolio currently includes twenty-three public equity and three private equity holdings and we are now more than 70% invested1


Investment Update from the Portfolio Managers


Public Equity Investments


Given the news towards the end of Q4 2020 of a number of successful COVID-19 vaccine discoveries, followed by expectations of an immediate rollout of a vaccination programme, and probable clarity around Brexit negotiations, we got to work quickly in early December to invest.  Our belief that the small and mid-cap segment of the UK public equity market offers investment potential was corroborated within the first two weeks of SBO's launch when one of our holdings was bid for - a first for the portfolio.  Calisen, a provider of energy meters and metering systems,  received an offer from Coyote Bidco (a consortium consisting of investors including BlackRock Alternatives Management and Mubadala Investment Company) that was c.26% above the previous day's closing share price.  Calisen's directors and KKR owned c.73% of the company and voted in favour of the deal; as such we believed limited acceptance would be required from the remaining shareholders to obtain the 75% supermajority required for the acquisition to go through. In addition we believed there would be no counter bid; as such we sold our position, making a c.30% return on our first exit.


In our experience, share prices often perform well after companies announce they are issuing equity, again illustrating our view that the market offers opportunities in a number of areas.  Since launch, we have participated in two equity offerings and the market has since responded positively to both issuances. The first was Invinity Energy Systems, a manufacturer of vanadium flow batteries for the large-scale stationary energy storage requirements of businesses, which raised approximately £22.5m in a placing and open offer. The second was Ideagen, a leading supplier of information management software solutions to highly regulated businesses, which raised approximately £48.7m and has since used part of the proceeds to fund the acquisition of Harmony UK Holdings, a SaaS-based secure content collaboration and workflow solution with customers across highly regulated sectors.


On the public side, the portfolio has greater exposure to the industrials and technology sectors. Industrial manufacturers are recovering well, as seen via stronger PMI data, and against a backdrop of rising housing starts, improving 'Repair, Maintenance & Improvement' activity and low interest rates; our holdings in Volution and Polypipe for instance have been a beneficiary of improved end markets, leading to better than expected reported results. Our tech holdings have also fared well; for example Keywords Studios, a leading outsourcer to the video games industry, announced three earnings accretive acquisitions in December that drove its share price higher.


Whilst we see bright sparks of a recovery in some parts of the market, we are however wary of having too much direct exposure to consumer cyclicals, given datasets continue to point towards falling consumer confidence, with levels that do not appear to indicate we have reached a floor. That being said, our focus on bottom-up, fundamentally-driven stock picking has led us to hold some interesting names that we see as being relatively better placed to navigate the crisis than others in the sector. An example is Trainline, the independent rail and coach travel platform, which we believe is a long term beneficiary of a channel shift to digital. In 2020 Trainline experienced rapid recovery in volumes as restrictions initially eased, which we believe is indicative of what can be expected in a post-vaccine world. Another example is Gym Group, the UK's second largest health & fitness chain in the low cost gym sector, which has been negatively impacted by lockdown measures and restrictions on opening its full estate. However we believe the company is well placed given its strong balance sheet, ample liquidity and competitive position; more so, its low cost subscription model should enable it to regain the members it lost during 2020.


Although we have made a very good start, one of our holdings, Blue Prism, recently announced lower than expected revenue growth for FY 2021, detracting slightly from the portfolio's overall performance. Whilst the market did not take the news well, we used the weakness in the share price as an opportunity to replenish our position, highlighting the conviction that we have in the strength of the longer term business model. Our approach to portfolio construction is to ensure we are well diversified from a concentration risk perspective; as such our position in Blue Prism, as with all our holdings, is small in the context of the wider portfolio.


Private Equity Investments


We have also been extremely busy on the private side of the portfolio. Our first investment was into Learning Curve Group ("LCG"), a leading private UK training and education specialist based in Durham, helps learners improve their employability and economic well-being through practical education. LCG benefits from a flexible model, offering online and face-to-face delivery. Since it was founded in 2004, LCG has grown rapidly, expanding to offer its services across the UK. It was named in The Sunday Times's 'Best Companies to Work for Top 100' list in 2019 and 2020.


Just before the new year, we invested into Bristol based Graphcore. Graphcore was founded in 2016 and has developed the Intelligence Processing Unit ("IPU"), a new type of microprocessor specifically designed from the ground up to meet the needs of current and next-generation artificial intelligence applications. Graphcore's proprietary technology combines its advanced semiconductor hardware, the world's most complex processor and powerful software tools to dramatically outperform legacy technologies. The investment from our funding round will be used to support the company's continued global expansion and to further accelerate future IPU silicon, systems and software development.


Finally, we were very pleased to have announced last week our third private investment, into Rapyd, a leading global Fintech-as-a-Service company with significant UK operations. Rapyd offers one of the fastest ways to power local payments anywhere in the world, enabling companies across the globe to access markets quicker than ever before. The new financing will be used to double the size of the engineering and product teams, as well as expanding the "Self-Service" element of Rapyd's platform, empowering businesses globally to onboard and begin utilizing any of Rapyd's financial capabilities in the shortest possible time frame.


Our pipeline of companies seeking private equity capital is strong and we expect to make further announcements in due course.



ESG, SDGs & Company Engagement


The public equity sleeve of the portfolio achieved ESG accreditation at the end of 2020 from Schroders' robust in-house 'Sustainability Accreditation', which formally recognises investment teams that have integrated ESG analysis into their investment decision-making. In addition, the overall portfolio scores highly on Schroders' proprietary 'SustainEx' system, which is an objective tool that quantifies companies' unpriced social and environmental impacts and helps to identify companies and sectors exposed to costs at risk of crystallisation.


Prior to making our public equity investments we carry out a qualitative analysis using companies' annual reports together with Schroders' in-house tool, 'Context', in order to identify where we should focus our engagement efforts with management teams. Post-investment we have continued with this, and have engaged with a number of companies, focussing on key areas where we would like to see improvements.


All of our holdings were successfully mapped against the relevant UN Sustainable Development Goals ("SDGs") prior to investment. We have wide exposure including but not limited to Quality Education (SDG 4), Gender Equality (SDG 5), Reduced Inequalities (SDG 10), Responsible Consumption And Production (SDG 12) and Climate Action (SDG 13). Our aim is to encourage our companies to incorporate SDGs within their reporting if they have not already done so; in December we had positive discussions with one particular company, and we expect them to begin incorporating some of our recommendations within their next annual report.





We believe the agreement of a Brexit trade deal in December should help to remove the negative overhang that has weighed on the UK equity market for the last several years. Indeed, international investors have been buying exposure to the UK primarily through the FTSE 100, pushing the market up approximately 4% already this year.  Typically we would anticipate the mid and small cap areas to follow, as global investors seek out more opportunities at the individual stock level; however we acknowledge that domestic companies are more exposed to lockdown measures, which may hamper the upside in the very near term. Despite this, our enthusiasm and belief in this once in a generation opportunity is undiminished. We believe that the valuation dislocation between many UK companies and their global peers is likely to persist and we continue to see significant opportunities to provide capital to small and mid cap companies to help them achieve their growth potential.


We look forward to providing further detail on the progress of the overall portfolio in due course.


1 Source: Schroders, 15 January 2021





Schroder Investment Management Limited

Estelle Bibby


020 7658 3471

Peel Hunt
Liz Yong, Luke Simpson, Tom Pocock (Investment Banking)

Alex Howe, Chris Bunstead, Ed Welsby, Richard Harris (Sales)


020 7418 8900










About Schroder British Opportunities Trust plc


Schroder British Opportunities Trust plc has been established to invest in a diversified portfolio of both public equity investments and private equity investments consisting predominantly of UK Companies with strong long-term growth prospects.


ESG company engagement is a key feature of the Company's investment strategy. The Company's focus is on companies with business models which are considered to be sustainable in terms of both the longevity and durability of their businesses and their environmental, social and governance (ESG) behaviours.


The Company's ordinary shares are listed on the premium listing segment of the Official List of the Financial Conduct Authority and have been admitted to trading on the main market for listed securities of the London Stock Exchange in December 2020 under the ticker "SBO".


Further information on the Company is available at



The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. This information is not an offer, solicitation or recommendation to buy or sell any financial instrument or to adopt any investment strategy.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.