Electra Private Equity to migrate to a corporate structure following review
Updated : 09:10
After a review of Electra Private Equity’s investment strategy, policy and structure the company is to return control of all functions to the board in order to create value for shareholders, while switching to a corporate structure.
Following on from the first phase of the review announced in January, the company said it would create a “robust and sustainable” corporate governance structure by returning control of all executive and investment functions to the board from June next year.
It is currently developing internal resources to assume all operating responsibilities from June 2017.
The FTSE 250-listed company said it intends to migrate from a listed investment trust to a corporate structure over time, as it believes this could “result in reduced expenses and reduced discounts to underlying portfolio value”.
An initial £200m return of capital through a tender offer is to be made during the final quarter of 2016, subject to shareholder approval including support for migrating to a corporate structure to be sought during the second phase, while the company will start a consultation with shareholders on a new capital allocation strategy.
In May, the company served notice to terminate contracts which it had outsourced all of its activities to Electra Partners effective from 31 May.
The second phase of the review of the company’s portfolio will start in June, or earlier with the consent of Electra Partners.
Chairman Neil Johnson said: "I believe that by returning control of all functions to the board we will put in place a more effective, transparent corporate governance structure. A much lower-cost executive team, fully accountable to the board and shareholders, will then pursue a strategy of portfolio company improvement and value enhancement, creating maximum value for our shareholders.
“We believe that it is important that we move investment management responsibilities to the board, in line with the new strategic direction of the company, to adopt a corporate structure with more typical financial reporting and transparency."