Foreign & Colonial expects increased M&A activity

7th Mar 2011 07:21

The performance of heavyweight investment trust Foreign & Colonial in 2010 was on par with that of the trust's benchmark index but lagged that of its peer group.The net asset value per share (NAV) rose 13.6% to 346.1p with debt priced at market value. With debt priced at its nominal value, NAV improved to 351.24p at the end of 2010 from 309.84p at the end of 2009.The group paid a total dividend of 6.75p in 2010. Total NAV return was 15.8%, the same return as the trust's benchmark index, but below the weighted average performance of its close peer group of 19.1%.Net return on ordinary activities before taxation slipped to £290.2m in 2010 from £343.3m in 2009.For the year as a whole the main positive influences on performance versus the index benchmark were the Emerging Markets, Developed Asia and Private Equity portfolios. At the year end these accounted for 31% of the trust's total assets compared with 6% in 2002.The main negatives were stock selection in the UK and Emerging Markets portfolios. "The increase in gearing over the year from 6.0% to 13.2% was a positive, as was the buyback of 21,970,048 shares," said chairman Simon Fraser."Profits and dividends are growing at a healthy rate across the world and outside the financial sector balance sheets are generally strong. We expect this will translate into increased takeover activity in 2011 which will help investor sentiment. This could be important for the private equity industry, which is under growing pressure to generate cash returns for investors," Fraser said. The group expects its own private equity portfolio to perform strongly in the first part of 2011 as valuations catch up with the recent rise in listed markets.