The board of Schroder UK Public Private trust (SUPP) has proposed tweaks to its investment policy, as its new management team looks to "rebalance the portfolio towards what they believe is a more sustainable risk/reward profile".
Changes for shareholder approval include a reduction in the minimum number of holdings in the portfolio to 30, from 40 previously, and the removal of the limit on unquoted holdings of up to 80% of the trust's gross assets.
The latter will be replaced with a "long-term intention for quoted companies to be not less than 20% of gross assets, although the actual exposure may vary from time to time".
The proposals, laid out in the trust's annual financial report, were in response to the challenges the board highlighted new manager Schroders had in overhauling the portfolio.
Schroders took on the mandate from Woodford Investment Management at the end of 2019, appointing Tim Creed and Ben Wicks as portfolio managers.
Chairman Susan Searle, who committed to retiring from the board in 2021, said Schroders was expected, over time, to "seek to increase the overall liquidity of the portfolio and the level of diversification within it".
However, Searle noted, the previous investment policy restricted Schroders' ability to raise capital through disposals due to not being able to hold fewer than 40 companies, while it could not make further investments into existing assets due to the 80% restriction on unlisted assets at the time of investment.
The proposed "minor changes", Searle explained, "reflect the strategy that Schroders will deploy in managing the portfolio and to provide the necessary flexibility in the short term with regards to the minimum number of holdings and the mix of private and public assets".
Searle claimed Schroders was "well-placed to maximise value in the portfolio", while noting "challenges remain" surrounding the re-positioning of the trust's portfolio.
"The continuing delays in the sale of the assets from the LF Equity Income Fund, whilst an entirely separate entity from the company will, nevertheless, continue to cause disruption to a number of investee companies," she said.
"This, together with the current general market conditions created by the outbreak of the COVID-19 pandemic, may impact the private equity market and may further affect our ability to pay down the gearing within the timeframe that the board would like."
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