Patria Private Equity Trust (PPET ) has offloaded a portfolio of 14 funds for £180m, which will be put towards reducing debt and investing in new opportunities.

The £1.2bn former Abrdn Private Equity Opportunities Trust said the funds, which made up 13% of the portfolio and were sold at a 5% discount to their valuation in March, were older investments with limited alignment to its growing focus on the European mid-market buyout space.

Ten of the funds, or half the sale by value, were from older vintage years between 2011 and 2016, while the remainder were from 2017 to 2019 and weighted towards large-cap buyouts.

The proceeds will be received in two waves, with just under half due in December and the remainder in September next year, it said.

A portion of the proceeds will be used to pay down the £142m drawn on its £300m revolving credit facility at the end of August, providing short-term resources of £333m, including the deferred payments. These will be used to meet outstanding commitments of £634m, of which £93m are not expected to be drawn, and provide firepower for other investments. 

Some cash will also likely be put towards the ongoing share buyback programme that was launched in January .

‘As manager of PPET, we are continually monitoring both buy-side and sell-side opportunities in the secondary market. The investments we are selling in this transaction have performed well, but many were from older vintage years or focused outside of the mid-market buyout space,’ fund manager Alan Gauld (pictured) said.

‘We were very pleased with the quality of buyer interest and the pricing achieved further illustrates the disconnect between the valuations of listed private equity investment trusts relative to the quality and attractions of their underlying portfolios.’

Shares in the trust traded sideways at 525p on Wednesday morning after the update, putting them on a 32% discount to the August net asset value of 771.6p per share.

Analysts praised the transaction, with Winterflood’s Elliott Hardy calling the sale was a ‘sensible’ capital allocation decision. He added that selling at a discount was standard practice in secondary fund transactions, which should not be viewed the same as disposals of direct investments.

Stifel’s Iain Scouller said the disposal was more of a ‘portfolio tidy-up’ and was a helpful source of liquidity at a time when realisations have been slow for the private equity sector. He added that there could be some good opportunities for reinvestment as activity picks up.

‘Even following this sale, over 40% of the portfolio has a vintage of over four years plus, which continues to represent a future source of liquidity and gains,’ said Scouller.

‘The sale was baked into the June valuations and August NAV of 771.6p and so the discount remains 32%. This sale again highlights the disconnect between the share price and the NAV. We retain our “buy” recommendation.’

Over the last 12 months, the fund of funds has delivered underlying returns of 22%, while the shares have delivered a 28% total return, according to Deutsche Numis data.

Patria took over running the trust in April, when it purchased Abrdn’s European private equity business. Although, the trust did not change its investment process and Gauld remained lead manager of the portfolio.

The trust remains on Fidelity’s list of investments restricted to new investors, which has put further pressure on the discount since it was added in January 2023. Recent changes to cost disclosure rules could see it removed, as happened to RIT Capital Partners (RCP ).