Private equity trust Literacy Capital (LON:BOOK) suffered a ‘material widening’ of its share price discount to net asset value (NAV) in H1. The fund’s NAV per share declined by a modest 2.4% to 472.6p. Unfortunately, this sharp de-rating meant Literacy Capital delivered a disappointing 20.6% loss for shareholders.
That compared to a 10.4% increase for the FTSE All-Share Closed End Investment Trust Index. And Literacy Capital underperformed the 7.2% rise in the FTSE All-Share Index.
However, manager Richard Pindar insisted several portfolio companies are ‘gaining momentum and showing promise’. And Winterflood also highlighted some encouraging signs within the underlying portfolio.
Tough backdrop for BOOK
Literacy Capital’s NAV decline reflected a more challenging trading environment for smaller UK businesses in 2026. It was also the result of limited valuation uplift across the portfolio during H1.
Offshoring services group Amplify5 and trampoline-to-adventure parks operator Oxygen Activeplay proved the largest detractors to NAV. During a tough half, Literacy Capital completed no new platform investments.
But RCI, the trust’s biggest holding, completed the bolt-on acquisition of 33n, a healthcare consultancy that works with NHS trusts. And the fund saw strong contributions from school travel operator Bright Ventures and sausage-to-burger maker Red Sky Food, driven by positive trading and solid cash generation.
Turning the page
Across Literacy Capital’s top 19 investments, revenue growth improved during H1 2026 at 17% year-on-year. In addition, EBITDA growth improved to 10%. The trust also raked in £36.6 million of cash proceeds, predominantly generated by the sales of Tyrefix and Wifinity.
| Total return (%) | 6 months | 1 year | 5 years |
| BOOK NAV per share | (2.4%) | (7.1%) | 163.6% |
| BOOK total shareholder return | (20.6%) | (28.4%) | 64.2% |
| FTSE All-Share Index | 7.2% | 21.9% | 67.9% |
Source: Literacy Capital, H1 results
Pindar said: ‘Despite UK macro conditions remaining generally sluggish, encouragingly, several portfolio companies are gaining momentum and showing promise.
‘These improving trends and stronger sales pipelines are expected to translate into higher earnings for the businesses, ultimately increasing their carrying values in future reporting periods.’
What did Winterflood say?
‘Overall, a disappointing period of performance for the fund,’ commented Winterflood’s Alex Trett.
‘While there have clearly been macro challenges that have particularly affected the small business sector, a portfolio of high-growth, quality businesses should arguably have provided greater scope for value creation over the period.
‘There are, however, some encouraging signs, with EBITDA and revenue growth improving. Given the significant fall in the share price, shareholders will likely be looking for greater evidence that the underlying portfolio is translating operational progress into tangible value.’
While Literacy Capital delivered a subdued H1 performance, its long-term record remains strong. And the managers remain confident that the trust’s strategy can outperform benchmark indices over the long term for patient investors.
Further initiatives are planned to stimulate awareness and demand for Literacy Capital’s shares, which should help narrow the discount. These include discussions to explore moving the fund’s listing to the official list on the Main Market, which Literacy and its brokers believe will create ‘significantly more liquidity over time’.
It should also be noted that Literacy Capital has a unique and worthy charitable objective to donate 0.5% of annual NAV to charities focused on improving UK literacy in children. Since Literacy Capital’s creation in 2017, £13.5 million has been donated or reserved for donation to charities.
