Lexington picks up Electra assets

The London-listed PE fund sold Photobox and Knight Square for 103% of their carrying value and will now proceed to wind down the remainder of its portfolio.

Lexington Partners has bought part of the portfolio of London-listed private equity fund Electra Private Equity, which will proceed to wind down.

The secondaries firm has acquired non-control stakes in online photo printing company Photobox and residential property manager Knight Square for 103 percent of their adjusted carrying value as of 31 March, according to a stock market announcement.

The sale of the stake in Photobox is expected to complete in October for a cash receipt of £98 million ($127.7 million; €110.8 million). The stake in Knight Square is expected to return £21 million after regulatory approval in the first quarter of 2019.

Greenhill Cogent managed the process.

London-listed Electra announced in August that it had ended its quest for a buyer, having been on the lookout since May. In a communication published on its website, it wrote that while the board had received interest in acquiring each of its remaining five portfolio assets, individually and in groups, “no firm interest has been received in acquiring the company”.

Between September 2015 and October 2017, Electra disposed of all funds, secondaries, debt and listed-asset investments, and reduced its direct unlisted portfolio from 25 companies to five.

This was largely spurred by the May 2016 decision of activist investor and non-executive director Edward Bramson to issue a 12-month termination order to general partner Electra Partners – now renamed Epiris – in order to save approximately £28 million in management fees per year.

In a statement Thursday, the board concluded that although further value creation was possible in an “acceptable timeframe”, the concentration of the portfolio and structural inefficiency of investing in a listed vehicle with a significant market discount to NAV made liquidation the best option.

The Board has therefore concluded, and recommends, that it is in the best interests of shareholders to conduct a managed wind-down of the portfolio over a period of time, allowing optimisation of returns, the return of cash to shareholders and ultimately the winding up of the Company”, the statement noted.

The company will continue to be listed on the London Stock Exchange and will pay annual dividends funded by cash generated by the portfolio.