RIT
Capital Partners PLC (LEI: P31Q1NLTW35JJGHA4667)
7 February
2024
December 2023 Preliminary Unaudited Net
Asset Value
The preliminary, unaudited, diluted net asset
value (NAV) of RIT Capital Partners plc as at 31 December 2023
(with debt at fair value) was 2,426p per £1 ordinary share (30
November 2023 NAV: 2,377p).
2023 Performance
Highlights
Despite consensus at the start of 2023
indicating an impending recession and the probability of interest
rate hikes, global equity markets posted strong returns throughout
the year. Concerns about central banks struggling with inflation
management, potentially leading to economic downturns, subsided as
economic growth remained favourable, and inflation pressures eased.
This set off a rally in asset prices, particularly in the final two
months of the year, resulting in significant year-on-year increases
in indices. The S&P 500 closed the year with a gain of +26.3%,
the MSCI ACWI (50% £) saw an increase of +18.4%, and the FTSE 250
rose +8.0%. However, the rally was driven by a small number of
stocks, especially in the US, where the majority of the S&P
500's annual return came from a select group of technology stocks
known as the 'Magnificent Seven'.
Our NAV return was positive for the year,
rising by 3.2%, with strong contributions from our quoted equities
book and our uncorrelated strategies holdings. Private Investments
and sterling's strength were the primary detractors. During the
year, we maintained our moderate net equity exposure of 39%,
reflecting our defensive positioning for this book.
Our aims and objectives remain long term.
Including 2023, our NAV per share total return over the last 10
years was almost 109%. Since inception, RIT has now
participated in 74% of monthly market increases but only 41% of
market declines, with our NAV compounding at 10.5% per annum and
generating a share price total return of 10.6% per
annum.
Key performance drivers in 2023
were:
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Quoted
equities performed strongly during the year.
The book delivered healthy double-digit returns, outpacing the MSCI
ACWI equal-weighted index for the year.
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The book benefitted from strong returns in our
direct stock holdings, including Builders FirstSource which we
exited earlier in the year, achieving a +67% return on our
investment in just under a year.
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Other significant contributors included our
holdings in Japan and healthcare-focused managers, both of which
delivered strong returns for the year.
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The key detractor during the year was China,
where disappointment with the speed and strength of the post-Covid
recovery, a lack of fiscal stimulus and global outflows exerted
downward pressure on shares.
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Private
investments detracted modestly from NAV during
the year. Our direct private investments showed resilience and were
roughly flat over the year. Our private fund investments fell
modestly, partly due to the customary lagged receipt
of valuations for the final quarter of
2022.
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During the year, we successfully exited three
direct positions via secondary sales. This includes Infinity, which
was sold in early 2023 at an uplift to our prior carrying value,
with final cash proceeds from the sale received in early February
this year.
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We also successfully completed sales of the
majority of two other positions within our top 10 holdings at their
carrying values, achieving returns of 2.0x and 3.9x our original
investments.
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In line with our usual practice, the NAV
reflects the six-monthly revaluation of our direct holdings to 31
December 2023 by our independent Valuation Committee. Of our
private funds, 99% are valued as at 30 September (with the
remainder at 30 June).
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Our uncorrelated strategies book also
performed well, delivering solid performance in line with our
expectations for this book.
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Performance during the period was led by credit
funds, which posted healthy double-digit returns for the
year.
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We also saw positive contributions from our
holding in California Carbon Credits, as well as our holdings in
gold.
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Underlying asset returns from our diversified
global exposure were impacted by currency movements given sterling
was the best performing currency in the G7. Our active hedging
efforts helped to mitigate the impact of currency
fluctuations.
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Discounts across the investment trust industry
widened considerably in 2023, and our discount was no exception,
ending the year at -22%. During the year, we completed the
largest buyback in our history and one of the largest in the
industry, repurchasing £162 million or approximately
8.6 million shares during the year. This buyback programme was
accretive to shareholders, adding 1.2% to the NAV per
share.
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In 2023, the Company also paid a total dividend
of 38p per share, paid in two equal instalments in April and
October, an increase over the prior year.
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As is customary at this point in our year-end
process, the preliminary NAV and associated performance numbers are
estimates, and subject to potential adjustment and audit.
Full details will be included in the 2023 Annual Report &
Accounts, which is expected to be published by early
March.
For more
information:
J. Rothschild Capital Management
(Manager):
T: 020 7647 8565
E: investorrelations@ritcap.co.uk
Numis (Joint broker):
David Benda
T: 020 7260 1000
JP Morgan Cazenove (Joint broker):
William Simmonds
T: 020 3493 8000
Brunswick Group LLP (Media
enquiries):
Nick Cosgrove, Tom Burns
T: 020 7404 5959
E: RIT@BrunswickGroup.com