Private equity trust Literacy Capital’s (LON:BOOK) NAV (net asset value) decreased by 4.7% to 450.5p in Q3. The decline was driven by ‘BOOK’s’ disastrous investment in flexible office provider Cubo Work. The holding was marked down by £22.4 million and subsequently disposed of.
The good news is revenue and EBITDA growth across the trust’s top 10 holdings accelerated to 37% and 32% respectively in Q3. This represented the strongest revenue growth reported since Q3 of FY23. As a result, it should help BOOK rebuild confidence among investors following the Cubo setback.
Cubo calamity
Richard Pindar, CEO of BOOK’s investment manager, said: ‘The previously reported issues at Cubo, which resulted in its carrying value being heavily reduced, offset the more positive developments across other portfolio companies.
| At 30 Sep 2026 | At 30 June 2026 | At 30 Sep 2025 | |
| Net asset value (£m) | 271.1 | 284.4 | 311.6 |
| Net asset value (p) | 450.5 | 472.6 | 517.8 |
| Cumulative cash returned to shareholders (£m) | 6 | 6 | n/a |
Source: Literacy Capital, Q3 trading update
‘While we believe the disposal of our minority stake in Cubo was in the best interests of shareholders, it is frustrating that Q3 NAV performance would have been strong without this unwelcome setback.’
Fastest growth in three years
During Q3, BOOK benefited from improved trading across much of its portfolio. Revenue and earnings growth, of 37% and 32% respectively, was the strongest reported by its top 10 holdings for three years.
Red Sky Food enjoyed a £4.5 million valuation uplift. The meat products maker continued to win new business and became the trust’s fourth largest holding.
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Electronics manufacturer TechPoint and graduate recruitment consultant Grayce also contributed strongly to NAV during Q3. TechPoint completed an important bolt-on acquisition. And this deal was funded entirely through debt without the need for shareholder funding.
Furthermore, trading at Grayce continued to improve. As a result, Q3 was its strongest quarter for some time. No new investments were completed in Q3. However, BOOK did invest £6.6 million into existing portfolio companies.
In addition to the Q3 update, the board published a capital allocation policy. This set out a framework for balancing the needs of the portfolio with reducing the discount and returning capital to shareholders.
To help narrow the wide discount, BOOK may buy back shares, launch tender offers or issue B shares.
We admire BOOK’s strong long-term record. In addition, we are big fans of its unique charitable objective, to donate 0.5% of annual NAV to charities focused on improving UK literacy in children. Since the trust’s creation in 2017, £13.8 million has been donated or reserved for donation to charities.
It is encouraging to see growth accelerating across BOOK’s top 10 holdings. Unfortunately, it will take time to restore confidence in the story and close the near-40% discount to NAV.
The trust’s recent move to the Official List and trading on the LSE’s Main Market should help. In time, this switch should drive a re-rating by stimulating incremental demand for the shares.
