Literacy Capital (BOOK ) is reaping a £20m windfall enabling the private equity fund to repay its overdraft after helping one of its largest holdings to refinance.

The £289m portfolio of unquoted UK companies helped to find new lenders for the undisclosed business.

The transaction included a reorganisation of the shareholder base that saw some minority investors exit, while Literacy Capital increased its holding and benefited from a £20m return of cash, £18.5m of which it received last month.

The investment trust, launched nearly three years ago, will use the proceeds to repay its revolving credit facility and provide ‘flexibility to fund further investments or return capital to shareholders in future’.

‘This refinancing represents a further example of Literacy’s portfolio companies growing maturity and interest from institutional funders in the fund’s portfolio companies,’ said the trust in a statement to the stock exchange.

‘It also demonstrates the active involvement in managing the fund’s interests, ensuring that capital is recycled and deployed efficiently.’

Fund managers Paul and Richard Pindar expect to receive ‘meaningful cash inflows over the remainder of 2024’ from its holdings.

Last month the company published its 2023 annual results showing a 19% increase in net asset value (NAV) to 500.4p per share. This represented a slowdown from the  previous two years when it grew 51.7% in 2022 and 94.1% in 2021. The sale of recruitment business Kernel Global and premium dog food maker Butternut Box at premiums of 49% and 54% to their previous carrying value saw cash realisations more than treble from £13.1m to £46.3m in 2023.

The company donates 0.9% of NAV to literacy charities each year. As a result of the NAV growth these donations rose from £2.3m to £2.8m.

At 487p the shares trade at a 2.7% discount to NAV, a narrow gap that reflects their strong performance. The average listed fund in its growth capital peer group trails at a much wider 42% discount.