LONDON Electra Private Equity (ELTA.L) expects its number of deals to rise over the next 18 months as problematic debt refinancing and regulation force companies and banks into selling more assets.
"At the moment there is an interesting opportunity to buy debt, chief investment partner Alex Fortescue said after Electra reported higher full year asset values on Wednesday.
"If you take to a 2, 3 or 4 year view, then good value will return to control buyouts," he said referring to deals for outright control of companies.
Electra said it expects the number of deals will increase as some companies dispose of non-core assets and simplify their businesses, while others are forced to sell as they struggle to refinance their debt burdens.
Other deals are also expected to come from the banks as a result of new banking capital requirements.
The prospective pickup follows a period of high prices for assets that prevented Electra from sealing as many deals as it would normally expect.
"The investment rate has been slower than we would have expected at this point in the cycle because it has been a better time to be a seller than a buyer," Fortescue said in a telephone interview.
Electra said its diluted asset value per share rose to 2,473 pence at the end September, up nearly 4 percent from the end of June and 11 percent above the previous year.
The rise was helped by write-ups in the value of some of its largest investments, including 47 percent increases for animal tags maker Allflex and motor and home insurer esure.
Oriel Securities said in a note to investors that these assets could now themselves be ripe for sale.
"Both of those companies are now of a size where there would be worldwide interest in them," conceded Electra deputy managing partner Tim Syder. He added, however, that both companies are performing strongly and the firm can hold on to them longer.
Electra has a broad investment remit, ranging from deals to take control of companies to minority investments and buying up their debt. Unlike most private equity firms, it does many of its deals without using bank lending.
Electra's share price has gained some 28 percent since the start of the year, compared with its larger peer 3i Group (III.L) that has gained 13 percent over the same period.
Its share were up 1.43 percent at 1,843 pence at 6:22 a.m. EDT.
Electra said it invested 150 million pounds ($240 million)in the year to the end of September, up from 136 million pounds in the previous year, with a large gap between seller and buyer price expectations preventing it from sealing more deals.
The company bought a 30 million pound portfolio of debt holdings in five British and European companies in September, including caravan holiday group Park Resorts.
(Reporting by Simon Meads; Editing by Steve Slater and Hans-Juergen Peters)