Bridgepoint new holding – High return over 35 years

More quarterly reports were published by our holdings in November. Like earlier reports, these showed very strong development. The month saw good value growth for the fund, despite stock market turbulence in the last week after the discovery of another Covid mutation.

Carnegie Listed Private Equity held up well, just as it has done in previous market slides, and outperformed both its benchmark and similar funds globally. The best performers this month were our European holdings HarbourVest, HG Capital, Syncona and Aurelius, followed by US Blackstone.

HarbourVest has invested in a large number of private equity funds and provides a good picture of market development. HG Capital has a high proportion of investments in software and digital business models and reported strong performance by its holdings, with profit growth of 29% over 12 months at an EBITDA margin of 30%. We place great weight on our holdings’ long-term value growth, and HG Capital provided an update on its 20-year performance with an annual increase for the share of 16.7% (10.7% better annual return than the FTSE All Share TR). Our largest holding, Blackstone, continued upward during the month after a strong quarterly report in October and many interesting acquisitions presented in November, along with several announced large fund raisings.

The fund companies have an interesting business model where they create value growth through investments and the market value increases in step with new fund raisings and greater assets under management. During the autumn, we invested in a new fund company, British Bridgepoint, at a valuation of 14% of assets under management. The company was founded in 1984 and has delivered very high historical returns to its investors while showing high growth and profitability today.

We are optimistic about the prospects of private equity to deliver sound value growth going forward and assess that the current market conditions offer solid opportunities for the development of the portfolio companies while the conditions for investments, divestments and fund raisings are good.