Dunedin Enterprise (DNE) to Wind Up

Back in August 2015, I commented on the high discount at which Dunedin Enterprise Investment Trust traded – about 38% at that time. I subsequently wrote to the Chairman suggesting some action be taken. Well they have finally decided to do something about it. Namely after the disposal of one of their large investments they plan to wind up the company (subject to shareholder approval of course).

This has caused the discount to narrow to 35% at the time of writing (according to the AIC). Is that a bargain? Perhaps but bear in mind that because this is a private equity investment trust with commitments to funds, the wind up could take a long time and the valuation of private equity investments can be uncertain.

But at least some decisive action is being taken bearing in mind that the performance of this trust has been disappointing for a number of years, particularly in terms of share price as investors lost confidence in the management. But investors need to examine whether the fund managers will be rewarded in any special way as they were when previous downsizing linked to tender offers was implemented.

Roger Lawson


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