Electra, the former investment trust, is a bit like its chairman, Sir Brian Williamson. He keeps saying he is going to retire, but six months later he is back doing something else and each time the City has reason to be grateful. Now Electra seems to have caught the same bug.
It was an investment trust that was bid for by 3i but, rather than sell to the upstart, the directors decided they would do better for shareholders if they liquidated the fund themselves. They have been as good as their word, delivering a huge premium on what 3i was prepared to pay.
Then, earlier this year, the company was renamed Electra Private Equity � which in effect only recognised what it had always done � and said that going forward only two-thirds of funds raised from asset sales would be returned to shareholders, with the balance going into new investment. Clearly, since then the board has got excited by the opportunities out there because yesterday it said all the money raised will in future be available for reinvestment. Electra has in effect decided to relaunch itself.
Sir Brian says the fund will aim for a return of about 10%-15%, and the managers' track record suggests it will achieve this more often than not. From an investors' standpoint, if it does, it will deliver the return a lot more cheaply and with much more modest charges than most private equity houses or hedge funds.
Mention of hedge funds prompts me to highlight Amaranth Advisors which, in case you missed the news, has just blown itself up gambling that gas prices would keep on rising. Its flagship funds have gone from being 22% up this year to 35% down in a matter of weeks, its losses are said to run into billions of dollars and the rumour is that it is urgently trying to sell £1.35 billion of syndicated loans in the London markets to cover margin calls on its gas losses.
Its founder has written to investors, saying they are doing their best to protect them while meeting their obligations to creditors � all of which serves to underline how much safer investors' money would be in Electra.
(c) 2006 Associated Newspapers. All rights reserved.