Key Takeaways
- • Literacy Capital (BOOK) trades at a 30% discount to net asset value following a 15.6% share-price decline in 2025 despite NAV edging 0.3% higher to 484.3p, driven by a £41m write-down of healthcare provider RCI and losses in graduate recruitment firm Grayce.
- • Fund experienced worst performance since 2021 listing, with chair Paul Pindar acknowledging the year was "disappointing," though management expects turnaround at RCI and Grayce under new leadership and notes both companies have delivered 6x cash returns historically.
- • New investments showing promise with £23.3m NAV contribution from Red Sky Food Group and Trinitatum (test automation software provider), offsetting portfolio headwinds and signaling management conviction in fresh deployment opportunities.
- • Modest leverage profile with net debt at 2.8x portfolio earnings (up from 2.3x in December 2024) and top 10 holdings representing 83% of assets at 9.4x earnings multiple, reflecting prudent valuation discipline across the portfolio.
- • Main Market listing move under consideration as the fund seeks to revive investor confidence and access broader shareholder base, with management pointing to post-Budget certainty and falling interest rates as catalysts for private equity sector recovery.
Summary
Literacy Capital, a UK-listed private equity fund, faces significant valuation pressure after delivering its worst annual performance since inception in 2021. The fund's net asset value increased modestly by 0.3% to 484.3p in 2025, yet the share price declined 15.6% during the same period, widening the discount to NAV to 30%—a substantial disconnect that reflects investor skepticism regarding portfolio fundamentals and near-term recovery prospects. Chair Paul Pindar characterized the performance as "disappointing," citing two major portfolio headwinds: a £41m write-down of RCI, the fund's largest holding in healthcare provision, and underperformance in graduate recruitment platform Grayce.
Management attributed the underperformance to operational and leadership challenges rather than structural portfolio weakness. Pindar emphasized that both RCI and Grayce remain "good businesses" and have historically delivered significant returns, including 6x cash multiples. The fund announced the appointment of new chief executives at both companies with expectations they will "swiftly return to an upward trajectory." This narrative—positioning 2025 as a cyclical trough rather than fundamental deterioration—reflects management's attempt to rebuild confidence among holders frustrated by share-price erosion that has extended into 2026, with shares falling a further 15% year-to-date.
Offsetting portfolio challenges, Literacy Capital deployed fresh capital into new positions that demonstrated early momentum. Investments in Red Sky Food Group and Trinitatum, a test automation software provider, contributed £23.3m to NAV and displayed "great promise," according to Richard Pindar, CEO of the fund's investment manager. The fund also realized £42.5m in value from multiple sources during the period, including a majority-stake sale of Voliciti, a public transport software provider, alongside company refinancings and distributions from co-invested funds.
The portfolio remains conservatively structured, with the 10 largest holdings accounting for 83% of total assets valued at 9.4x earnings—a modest increase from 8.8x the prior year. Net debt rose to 2.8x portfolio earnings from 2.3x in December 2024, though management characterizes leverage as "modest." The fund completed its first capital distribution to shareholders in November 2025, returning approximately £6m via B-share redemptions, which partially cushioned the 15.6% share-price decline to a net loss of 13.4% for the year. Management's consideration of a Main Market listing move reflects strategic efforts to broaden investor appeal and restore confidence, with positioning around sector tailwinds including post-Budget certainty and declining interest rates as potential catalysts for private equity activity acceleration.
Management attributed the underperformance to operational and leadership challenges rather than structural portfolio weakness. Pindar emphasized that both RCI and Grayce remain "good businesses" and have historically delivered significant returns, including 6x cash multiples. The fund announced the appointment of new chief executives at both companies with expectations they will "swiftly return to an upward trajectory." This narrative—positioning 2025 as a cyclical trough rather than fundamental deterioration—reflects management's attempt to rebuild confidence among holders frustrated by share-price erosion that has extended into 2026, with shares falling a further 15% year-to-date.
Offsetting portfolio challenges, Literacy Capital deployed fresh capital into new positions that demonstrated early momentum. Investments in Red Sky Food Group and Trinitatum, a test automation software provider, contributed £23.3m to NAV and displayed "great promise," according to Richard Pindar, CEO of the fund's investment manager. The fund also realized £42.5m in value from multiple sources during the period, including a majority-stake sale of Voliciti, a public transport software provider, alongside company refinancings and distributions from co-invested funds.
The portfolio remains conservatively structured, with the 10 largest holdings accounting for 83% of total assets valued at 9.4x earnings—a modest increase from 8.8x the prior year. Net debt rose to 2.8x portfolio earnings from 2.3x in December 2024, though management characterizes leverage as "modest." The fund completed its first capital distribution to shareholders in November 2025, returning approximately £6m via B-share redemptions, which partially cushioned the 15.6% share-price decline to a net loss of 13.4% for the year. Management's consideration of a Main Market listing move reflects strategic efforts to broaden investor appeal and restore confidence, with positioning around sector tailwinds including post-Budget certainty and declining interest rates as potential catalysts for private equity activity acceleration.
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