When the trust launched, its board pledged that if its shares trades at an average discount of 10% or more over the course of a financial year, it will put forward a continuation vote.
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In the trust’s interim results this week (27 November), it revealed the average discount at which the shares have traded in the current financial year to date has been approximately 13%.
It is currently sitting at a discount of 20.1%, according to data from the Association of Investment Companies.
“The board is actively monitoring the share price discount and will be engaging with shareholders in the coming months to discuss any concerns they may have,” it said.
In its results, the trust added that its dividend was expected to be “healthily covered for the years ahead,” adding it had forecast a “particularly strong year” next year, as it will benefit from “several high price fixes secured in recent years”.
However, Numis analyst Colette Ord noted that while the trust’s overall gearing was lower than many of its peers, at 28.7%, it also has several “hard commitments” to meet, which suggested the potential for buybacks was “limited in the near term”.
She estimated existing commitments were about £41.6m, while it had also planned follow-on investments and asset enhancements and had to manage its revolving credit facility, which had seen £125m drawn from an available £170m.
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“While the shares do not look expensive, we believe there are more compelling value stories in the pure play generation funds, particularly those which have more options available to address discounts,” said Ord.
