Our expectation is that as investors become more familiar with the fund’s strategy (a distinctive approach to private equity) and the prospects for its largest assets, BOOK’s rating should develop further. Management’s confidence in its leading investees is such that they have publicly stated that RCI (30.5% of NAV) and Grayce (19.6%) have the potential to be grown into £500m companies (3-5x upside from current valuations); sufficient (if achieved) alone to increase the fund’s NAV by 140% (2.4x money multiple or 34%pa over 3 years). Reflecting the portfolio’s 30% EBITDA growth our central expectation is for a quarterly NAV growth of c.7.5%, augmented by exits and multiple expansion as investees scale. Trading at a c2.5% discount to its June NAV, BOOK is relatively undervalued (2 year average premium 8%). The fund has an interim results roadshow scheduled for the second half of September and reflecting that its management are effective communicators, we expect the market to react positively.
