Castelnau Group (CGL ), the special situations investment company run by Phoenix Asset Management’s Gary Channon, has had to take a writedown on its ownership of Stanley Gibbons after the stamp dealer tumbled into administration following the purchase of world’s most expensive stamp.

Phoenix SG, which owns Stanley Gibbons and its subsidiary coin specialist AH Baldwins & Sons, is the fourth largest holding in the £212m Castelnau investment trust, accounting for 9.8% of the portfolio at the end of November before it backed a management buyout of the stamp auctioneer before Christmas.

Castelnau is also backed by Aurora (ARR ), the strongly-performing UK equities trust Channon also runs, which is over 14% invested in the fund. 

Stanley Gibbons, the 167-year-old stamp specialist, announced its insolvency on 22 December after its purchase of the British Guiana 1 c Magenta for £6.3m. The auctioneer had taken a £6.5m interest-free loan from Phoenix SG to buy the stamp, which was issued in limited numbers in British Guiana in 1856 and now only one is known to exist.

Stanley Gibbons purchased the stamp in 2021, hoping to recoup £8m by selling 80,000 shares in the stamp online for £100 each. The first lot of sales generated revenues of £1.14m in the year ending March 2022, and a secondary marketplace was then launched to allow investors to trade their stakes.

However, Stanley Gibbon had difficulties in refinancing the Phoenix debt, which totalled £20m as it continued to make a loss of more than £2m a year. The loan was due for repayment in March 2023 but Phoenix granted a waiver after the stamp company failed to meet cashflow and earnings markers tied to the debt.

This has resulted in a management buyout under a newly formed company called Strand Collectibles Group, which will take on all management, employees, assets and intellectual property.

Tom Pickford, who was the former chief executive of Stanley Gibbons and now holds the same position at Strand Collectibles Group, said Stanley Gibbons had been ‘unable to find a solution to its long-standing historic liabilities, which includes legacy acquisitions, leases, and debt’ and as a result it was bought as part of a ‘pre-pack administration process’ overseen by auditor PwC.

‘Under the ownership of Strand Collectibles Group, Stanley Gibbons will continue to serve the needs of philatelists with catalogues, magazines, albums and accessories, dealing and auctions and will be launching a new digital stamp collecting experience later in the year,’ he said.  

In a stock exchange announcement, Castelnau said it had an interest in Stanley Gibbons and AH Baldwin through its ownership of Phoenix SG, which at 30 November was worth £20.9m.

The ‘pre-pack administration’ will see Phoenix SG become the ‘resultant owner’ of the group through a ‘wholly owned subsidiary’ called PSG Holdco 1 Limited.

‘The impact of the notice will be reflected in a reduction in the valuations of the Phoenix SG holding at 31 December 2023,’ said the fund in a stock market announcement.

‘Each of the Castelnau portfolio companies are subject to revaluation at 31 December 2023, and notwithstanding this reduction in value of Phoenix SG, the company is not anticipating an overall reduction in NAV per share.’

The trust said Phoenix SG will ‘continue to support Stanley Gibbons and AH Baldwin businesses going forward, which we believe have an exciting growth strategy’.

This time last year, Channon (pictured) was in the middle of a buyout plan involving funeral services group Dignity – a company where he once sparked a shareholder rebellion – after teaming up with Direct Line founder Sir Peter Wood.

Through an investment vehicle called SPWOne, the duo created Valderrama, which made a cash offer of 525p per share for Dignity, valuing it at £260m. This accounted for 71.9% of Castelnau’s assets in November.

Castelnau returned 9% to shareholders last year but at 75p has fallen 30% since launch in October 2021.  

Aurora had a much stronger year. Boosted by a fourth quarter rally on hopes of interest rate cuts and Mars’ bid for Hotel Chocolat, Aurora shares returned 29% last year, making it the best performer in the UK All Companies sector.