IFSL RC Brown UK Primary Opportunities | Fund Update | July 2021

5th August 2021

July: Sun, sea and IPO’s

Investment bankers have started to drift off on holidays, allowing us some respite in what has been an exceptionally busy eighteen months for equity fund raisings. 2021 has been very much about equity raisings as companies seek capital in order to expand into the sharp global economic rebound. The IPO market is active in the UK after a relatively quiet couple of years. Our conversations with our contacts at investment banks suggest a busy autumn and winter for IPO’s and equity raises – there is a substantial pipeline of companies wanting to come to the market and existing listed companies wanting to raise equity for growth purposes. As ever, it is our job to invest in those we believe will produce strong, stable returns for our investors, whilst maintaining a well-balanced portfolio across different sectors and market capitalisations.

CMO Group, Saietta and Lords Trading Group were purchased at IPO. K3 Capital was also added to the portfolio as part of an equity raise. A particular theme we are currently witnessing and taking advantage of using our primary opportunities process is the money being raised by companies benefitting from the home improvement surge as a result of people spending more time at home as a result of lockdown.  Going forward, even as the country unlocks, we anticipate more home working, resulting in people continuing to want to improve their home environment. Coupled with an active house moving environment, we believe the sector has strong tailwinds for years to come. Hence the purchase of Brickability and Victorian Plumbing last month, and CMO and Lords Trading this month.

The UK market made modest progress in the month, albeit lagging US and European markets. Whilst the latest delta variant continues to cause concern, we consider equity markets well placed to benefit further from the recovery. With the Q2 earnings’ season largely complete, the vast majority of companies are hitting or exceeding their forecasts. This suggests the economic recovery is ahead of forecasts.

In July the IFSL RC Brown UK Primary Opportunities Fund returned 0.42% compared with 0.53% for the FTSE All Share and 1.34% for the IA UK All Companies sector. Our lower exposure to mid-caps relative to many of our peers was unhelpful with the FTSE 250 materially outperforming large and small caps.

***Stock in Focus***

Watches of Switzerland

WoS is the largest retailer of luxury watches in the UK and also has a growing presence in the US. Its high street brands include Mappin & Webb and Goldsmiths. The shares have performed exceptionally strongly, more than doubling, since we acquired our holding from private equity last September. Fears of a pandemic related sales slowdown have receded and we view this as a unique play on the growing market for luxury watches and despite the share price strength, continue to offer attractive value. With a market capitalisation of over £2bn, they are a constituent of the FTSE 250.


CMO Group

CMO is the UK’s largest online only retailer of building materials. It aims to revolutionise the shopping experience of homeowners and tradespeople to become the digital go-to retailer of building materials. We acquired the shares at IPO, attracted by its strong growth prospects. Whilst early days, the shares have already appreciated over 60%.

Saietta Group

Saietta is a UK based engineering company that designs electric motors for lightweight vehicles such as motorcycles. We acquired the shares at IPO where the money raised will be used for further expansion. Whilst at the higher end of our risk threshold, the market opportunity and technology warrant a modest investment.

K3 Capital

K3 is a group of complementary professional services’ businesses focused on advising the SME market. Its companies range from tax and debt advisory to corporate finance. We acquired the shares as part of a placing to fund the acquisition of two further businesses.

Lords Trading Group

Lords is a distributor of building, plumbing, heating and DIY goods, principally in the South East of England. It is also has a growing online presence, making up 25% of sales. Similar to CMO Group, it stands to benefit from the increased spend patterns on people’s home environment.


Cash was raised to provide capital for the new investment opportunities we wished to invest in. Ten Entertainment and Compass were both sold for profits following updates. Both had been purchased when raising equity in 2020 to shore up their balance sheets as a result of the impact of the pandemic on their businesses. We still have plenty of exposure to re-opening plays in the portfolio that we believe, despite a soft patch in recent months, will benefit from the further re-opening of the economy. IP Group was also sold. Avid readers will recall we purchased the shares in 2019 from Neil Woodford’s discredited funds which were seeing large redemptions. The shares have more than doubled from the distressed price we paid and we now believe our capital better deployed in new opportunities. Team17 was also sold for profits following bid activity in the sector. Parsley Box was sold following a disappointing update and we felt it best to take a loss and view future progress from the side-lines for the time being.

Cumulative Performance (Total Return %) – July 2021

Fund/Benchmark Name

3M to


6M to


Year to 31/07/2021 3 Years to 31/07/2021 5 years to 31/07/2021 Since Inception (28/05/1997)
IFSL RC Brown UK Primary Opportunities P Acc 0.6 14.4 34.5 18.3 63.0 503.5

Quartile Ranking

IA UK All Companies

4 2 2 1 1 1
IA UK All Companies 2.7 14.2 32.3 11.8 41.4 315.3
FTSE All Share 1.8 12.6 26.6 5.5 32.3 302.5

Source: FE: 31/07/2021


Discrete Annual Performance (Total Return %) – July 2021

Fund/Benchmark Name Year to 31/07/2021 Year to 31/07/2020 Year to 31/07/2019 Year to 31/07/2018 Year to 31/07/2017
IFSL RC Brown UK Primary Opportunities P Acc 34.5 -12.5 0.6 8.1 27.5

Quartile Ranking

IA UK All Companies

2 2 2 3 1
IA UK All Companies 32.3 -14.5 -1.2 8.5 16.6
FTSE All Share 26.6 -17.8 1.3 9.2 14.9

Source: FE: 31/07/2021

Please be advised that the past is not necessarily a guide to future performance. Investments and the income derived from them can fall as well as rise and the investor may not get back the amount originally invested.