Strategic Equity Capital Plc

UK Smaller Companies

Rated Fund 2014-2018. Adopting a hands-on private equity approach

This trust won Money Observer's Best UK Smaller Companies Trust award in 2015, after achieving highly commended status in 2014.It lost its star fund manager, Stuart Widdowson, in early 2017 when he left to set up his own fund management company. Having met with the trust's current management team, however, we continue to be impressed by its solid investment process.Before investing, Jeff Harris, formerly Widdowson's assistant, and his co-manager Adam Khanbhai undertake an extensive due diligence process, assessing market conditions, management and stakeholders.Their investments are underpinned by in-house valuations, which they derive using private equity-based techniques, including a focus on cash flows, the potential value of the company to trade or financial buyers, and the capital structure.They regard themselves as long-term investors and typically aim to hold companies for the duration of rolling three-year investment plans that include an entry and exit strategy and a clearly defined route to value creation.During this period, the duo engages constructively with portfolio companies. The primary objective of this is to promote further value creation for investors as opposed to 'hostile activism', but they will 'vigorously defend' investors' interests if they believe they risk being threatened.In the third quarter of 2017, the trust had 17 holdings, with the top 10 accounting for 75 per cent of assets. The shares traded at a small double-digit discount for most of 2017, but had been on a 10 per cent premium during 2015.

Narrative and ratings content all as of 01 January 2018.

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Name
Strategic Equity Capital Plc
Manager
GVQ Investment Management Ltd
Type
Closed Ended Investment Company
ISIN
GB00B0BDCB21
Sector
UK Smaller Companies
Launched
19/07/2005
OCF
1.26 %
Risk Rating
3
3 Year Sharpe
0.02
3 Year Alpha
-11.25
Yield
0.3 %
Benchmark
0.30176 %
Fund Size
£ 145.98 million
NAV
257
Gearing
100
Discount Premium
-15
The investment objective of the company is to achieve absolute returns rather than relative returns over a medium-term period, principally through capital growth. The Company will invest primarily in securities quoted on any securities market operated by the LSE that the Manager believes are undervalued and could benefit from strategic, operational and management initiatives. The Company will also have the flexibility to invest up to 20% of the company’s gross assets at the time of investment in securities listed or traded on other recognised stock exchanges and up to 20% of the company’s gross assets at the time of investment in unquoted securities and in any class of debt or equity-related instrument.
Name
GVQ Investment Management Ltd
Address
SW1A 1NX, London, United Kingdom
UCITS
No
Legal Structure
Closed Ended Investment Company

Managers

Jeff Harris
Joined 02/07/2017

Jeff joined GVQ Investment Management in 2012 as an Analyst. He was appointed Assistant Manager in May 2014. Prior to joining he worked at PricewaterhouseCoopers within the Transaction Services Team on a number of private equity and corporate transactions. Jeff holds the ACA qualification.

Jeff Harris
Joined 02/07/2017

Jeff joined GVQ Investment Management in 2012 as an Analyst. He was appointed Assistant Manager in May 2014. Prior to joining he worked at PricewaterhouseCoopers within the Transaction Services Team on a number of private equity and corporate transactions. Jeff holds the ACA qualification.

Data provided by Morningstar.

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