(In Feb. 11 story, corrects paragraph 5 to say the company cut the fee paid on its non-core portfolio, not entire portfolio. Adds line to clarify fee on core portfolio remains unchanged)
(Reuters) - Electra Private Equity Plc (ELTA.L), one of Britain’s oldest private equity firms, said on Wednesday it planned to return 3 percent of its net asset value (NAV) to investors each year through a cash dividend or share buybacks.
The decision was one of several financial changes Electra said it would make, following a review it announced in October after a series of meetings with shareholders.
The company, whose holdings range from holiday parks operator Park Resorts to retailer Hotter Shoes, said it would look at portfolio performance, liquidity and the market outlook when deciding how much to return each year. Electra has not initiated a buyback since 2008.
“Electra’s strategic review doesn’t contain any major surprises and we are pleased to see that the board has not been panicked into making any radical changes,” Oriel Securities analyst Iain Scouller wrote in a note, maintaining his ‘hold’ rating on the stock.
Electra cut the fee it pays to Electra Partners LLP, its investment manager, to 1 percent of its non-core investment portfolio from 1.5 percent earlier. It added that the fee would no longer be paid on Electra’s cash assets. The company said the fee on its core investment portfolio would remain unchanged at 1.5 percent.
Under these new terms, the management fee paid out for the year ended September 2014 would have been 28 percent lower at 18 million pounds, Electra said.
The company, which traces its roots back to 1935, also said would save 4 million pounds in annual financing costs as it planned to fully repay its 154 million pound multi-currency revolving credit facility.
“The board is content in present circumstances to accept the additional currency exposure that this debt repayment will bring,” Electra said in a statement, but added that it would keep its foreign currency exposure under review.
Electra’s thinly traded stock was up 0.3 percent at 3,016 pence at 0953 GMT on the London Stock Exchange.
The company had gross assets of 1.6 billion pounds and a diluted net asset value per share of 3,174 pence as at Sept. 30, according to its website.
Reporting by Richa Naidu in Bengaluru; Editing by Gopakumar Warrier