Father and son duo Paul and Richard Pindar, the fund managers of Literacy Capital (BOOK ), spoke to us after the investment trust won ‘Best Private Equity Trust’ at our annual awards two weeks ago.

In the recording, Richard Pindar says shareholders have largely responded well to the recent increase in the management fee and expects the Labour government’s capital gains tax (CGT) increase to have little impact on both the private equity and investment trust sectors.  

Can’t watch now? Read the transcript

What reaction have you had to cutting charity donations and lifting your management fee? 

Richard Pindar:

The response from shareholders has been, I’d say, neutral to positive, actually, once we explained to them the reasons for the change. Primarily, the reason for the change is to enable the manager to have the resources it needs to be able to manage the fund in the most positive way possible and to keep on generating the returns that we’ve been able to since we listed three years ago. But very supportive in general.

What are the prospects for private equity? 

Richard Pindar:

We’re always on the lookout for more investments and we’d hope to be able to announce something soon. I think in general the market is slightly more receptive than it has been, certainly last year. I think a further downward trajectory in terms of interest rates would also be very helpful, but there’s still plenty of dry powder among private equity funds who still need and want to spend the money they’ve got from investors. Now the Budget’s out the way, that will hopefully bring a bit more certainty and confidence to those investors looking to spend and invest money in the UK.

Will the CGT increase affect the trust sector?

Richard Pindar:

We know a lot of the shareholders personally, particularly as many of them are individuals who invested in the fund six, seven years ago and many of them informed us that they were thinking about or indeed selling their shares because of fears around where CGT might go to. Given the relatively modest change announced last week by the new Labour government, hopefully, that will stem any further selling, but we’ll have to wait and see. That was the primary cause. 

Will the CGT increase affect the trust sector? 

Richard Pindar:

It’s interesting. Actually, I would say, generally, investment trusts are quite a tax-efficient way for people to invest, by keeping gains within the trust. I would hope, long term, the investment trust sector could potentially become more popular as a result, but I don’t think the relatively modest change will have any negative impact in the short or medium term, I would hope.