24th April 2026
On the morning of Tuesday 14th April, to their great credit the Board of Harbourvest Global Private Equity (HVPE), a £2bn market cap listed investment company, with net assets of c. £3.5bn, announced a very friendly set of initiatives to enhance shareholder value. They included a $400m tender offer (expected to be at around a 10% discount to net asset value (NAV)) and a $100m buyback program. The shares, trading at a discount to NAV of c. 30% before the announcement, opened up just 3%, and brokers were offering us stock from willing sellers at that level pretty much immediately. Since then the shares have gained just a few pennies.
If anything illustrates the crisis facing the sector it is this.
Buyers have turned sellers
Stating the obvious, share prices are a function of supply and demand. The wide discounts we are currently witnessing are a function of a lack of demand for shares and an excess of supply. In turn, that excess of supply is clearly, in our view, a function of over-concentration of shareholder registers as a result of wealth management consolidation, centralisation of investment processes, and the client base of the wealth management industry switching away from bespoke portfolios to models (which cannot hold listed securities). Any sign of strength in share prices is met with a wave of selling, preventing discount narrowing.
Over the last 5 years, one huge constituency of investor that the investment company sector historically relied on as a source of gently growing demand has now turned into a source of growing supply and nowhere near enough has been done to replace it.
Activists inevitable
The discounts that now prevail across the sector have inevitably attracted activist investors and those seeking to make short-term profits – often at the expense of the very existence of trusts themselves. Rather than bemoan the tactics and conduct of some of these investors, more focus should be on the fact that such investors would not have been attracted to the sector if discounts were not so wide and if there were not shareholders willing to sell at these share prices.
An awful lot of time, effort, energy and money have been taken up fighting activist investors. It is a great shame that these same resources are not being spent more productively: i.e. finding new long-term sources of sustainable demand.
And today as we write, (22nd April), the good people at Metage Capital Limited (who have been instrumental in encouraging the board of HVPE to act) have again written to the Board of another private equity trust, Pantheon International (PIN) to encourage similar measures from them. This is the same PIN, who under the chairmanship of John Singer, had been at the vanguard of more disciplined capital allocation just a few years ago. And yet PIN shares today trade at a wide 27% discount to NAV.
The Mansion House Accord shows the way
The crying shame is that there is a clear source of potential demand: pension funds. The Mansion House Accord showed that pension funds are willing to allocate, voluntarily, at least 10% of their portfolios to private assets. It appears the vehicle of choice (where direct investments are not used or permitted), so far, is the semi-liquid open-ended fund. I won’t relitigate the reasons why semi-liquid funds are sub-optimal. Clearly these structures have features that pension funds value. The two obvious ones are: ability to accept large investments (on the way in) and lack of volatility. On the surface, investment companies (trusts) do not possess these features and are ruled out (as well as the fact that a few pension funds can’t invest directly in listed assets).
But we challenge the industry to tackle these issues head on, as well as illustrating the clear advantages of the investment company structure. We suggest this is both a marketing and an education problem.
Investment Companies can be liquid for large investors
Regarding liquidity…… investment companies can issue shares to new investors at NAV (or below NAV with shareholder approval). Imagine an investment company trading at a wide discount (over 15%). As a shareholder, I would love to see issuance at NAV (or even a small discount) to a brand-new large shareholder, who would then presumably go on to buy shares in the secondary market. Why might a pension fund do this? The issuance gives the investor the liquidity to initiate the position. The problem is that the position would have to be instantly marked down to where the shares are trading. For an investment company trading at a 20-30% discount, that is a big hit. But the rational response is to follow up that initial purchase by buying shares in the secondary market. Such buying would presumably help re-rate the shares. Alternatively, a pension fund could tender for their initial position. The Harbourvest situation shows that such an investor could gain a decent stake at a wide discount. Another option would be just to start buying in the secondary market. Some shareholders have been able to deploy huge sums into the sector via the secondary market over recent years. Saba Capital have invested well over £1bn and Boards have spent over £17bn on buybacks over the past 2 years (to end of 2025 according to the AIC) – and yet discounts remain wide. New investors requiring sizeable positions could first deploy in the secondary market, and add to positions from primary issuance once prices are back to NAV.
The Value Case
In these examples, a pension fund would arguably be getting better bang for their buck than investing in a semi-liquid fund. With the latter, £1 of investment buys c. 85p of asset exposure and c. 15p of cash. With an investment company, buying at a price equal to NAV means £1 buys over £1 of asset exposure (given most use some moderate leverage) and even more exposure if buying at a discount to NAV.
In addition, many investment companies (across the private asset landscape) have decades of excellent performance history and currently hold some very scarce assets.
We are certainly not suggesting investment companies replace semi-liquid funds. The share price volatility will always be a concern. But they should be used alongside each other. They are complements: each solving the faults in the other’s structure.
Time to focus on demand
But the industry must reach out to pension funds and market itself. A concerted and coordinated campaign to educate and work with pension funds must begin – starting with consultants and pension fund industry bodies. I am confident that once pension funds see the quality of assets they can get exposure to via established investment companies managed by talented industry specialists, they will see the benefits of utilising these listed structures alongside semi-liquid funds.
We urge Boards to work with the AIC to make this happen, and we would be happy to be advocates and provide references for investment companies to aid the cause.
This is not just another cyclical downturn
Too often we hear the refrain that the sector has weathered multiple world wars, global financial crises and other cataclysmic events. The implication is that the current malaise will work itself out eventually. We worry this is complacent.
The consolidation of the wealth management sector and the centralisation of investment processes are a natural response to a changed regulatory backdrop. Financial advisors are continuing to increase their outsourcing to model portfolios rather than to bespoke private client managers. This is structural, not cyclical.
If a coordinated effort to find new demand is not undertaken with alacrity, the investment company sector will continue to shrink and eventually become an irrelevant backwater of the UK’s asset management landscape. This would be a great shame. The sector should arguably be enjoying a renaissance with the fiduciaries controlling the nation’s largest pool of capital voluntarily agreeing to increase ownership of the very assets the investment company is ideally structured to hold.
Ben Conway – Head of Fund Management
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