Riverstone Energy (RSE ) shares have jumped 13% after the cash-laden investor in North American oil and gas explorers announced a £158m ($200m) return of capital to offset the wide discount at which its stock has been trading.

Flush with the $200m (£162.7m) profits from its sale of Canadian shale group Hammerhead last year, the £694m ($874m) investment company is proposing a tender offer that will let investors sell 36% of its shares at £10.50, or 31% more than yesterday’s closing price of £8.

However, the price represents 16% less than RSE’s net asset value of £12.53 a share at 31 December.

That means investors who sell will effectively transfer value to shareholders who remain, although not to the extent of the company’s tender offer last summer which outraged our columnist James Carthew by being priced at a 43% below NAV.

The tender offer will be launched later this month and will require shareholder approval at an extraordinary general meeting next month before closing in March.  

Shares in the London-listed but Guernsey-domiciled closed-end fund leaped 108p to 908p, close to a five-year high and a five-fold increase from their 2020 pandemic low when they crashed to 150p. However, it is well below the £13.51 peak the 10-year-old company reached in 2017.

Since 2015 the shares have consistently traded below NAV, putting the company under pressure in recent years to buy back shares and improve shareholder returns. This has succeeded with shareholders receiving a total return of 178.7% in the past three years, the best of any UK listed fund not winding down, according to data from its broker Deutsche Numis.

The top holders of the stock are US hedge fund manager Moore Capital with a 20% stake, according to Refinitiv data, followed by wealth manager Quilter on nearly 15% and sovereign wealth fund Alaska Permanent Fund Corporation at just over 11%.

Numis analyst Ewan Lovett-Turner and Ash Nandi said the news was a ‘significant positive development’ for investors that would add 9% of 113p to NAV per share.

They said the lack of ‘friction’ from Riverstone International fund managers Pierre Lapeyre and David Leuschen, who would approve the return of assets without charging hefty termination fees, was also pleasing.

The fourth quarter saw RSE’s assets rise 2.5% in dollar terms to $15.96 per share, although in sterling NAV fell 1.8%. The larger conventional energy portfolio grew 7.4% but the decarbonisation assets slumped 22.9% with Enviva, a US producer of wood pellets crashing 85% after missing earnings and operational targets, leading to a shakeup of management.

The company said the decarbonisation assets mostly ‘continued to suffer from fundraising headwinds caused by the impact of rates and lower risk appetite from investors’.