Quarterly Investment Update

Capital for Colleagues reported a quarter-ended 31 Aug 2025 NAV of £13.47m, down from £13.90m, with NAV per share falling to 72.86p from 75.18p; its portfolio comprises 17 unquoted employee-owned businesses valued at £12.20m, weighted to Industrials (52%) and Technology (42%). Cash rose to £821,582 (driven by £674k net loan repayments) and the company has no debt; operational moves in the period included receipt of a £75,259 tranche from the sale of HBC and conversion of £1.0m of short-term loans into 10% p.a. convertible loan notes in Bright Ascension (convertible into equity). The update signals a modest NAV contraction but improved liquidity and upside potential from convertible exposure, while continued reliance on unquoted EOB holdings means realization risk and valuation sensitivity remain key drivers of future returns.

Analysis

Capital for Colleagues reported a NAV of £13,472,681 for the quarter ended 31 August 2025, down from £13,902,446 at 31 May 2025, with NAV per share falling to 72.86p from 75.18p. The company's portfolio remains 17 unquoted employee-owned businesses with a reported valuation of £12,204,479 and directors valuing holdings in line with International Private Equity and Venture Capital Guidelines.

The portfolio is concentrated in Industrials (£6,352,416; 52.05% of portfolio) and Technology (£5,159,941; 42.28%), with smaller allocations to Leisure & Travel (£491,785) and Media (£200,337). Key cash and balance-sheet moves in the quarter were conversion of £1.0m of short-term loans into 10% p.a. convertible loan notes in Bright Ascension, receipt of a £75,259 tranche from the sale of HBC (above the £50,000 minimum), cash balances rising to £821,582 largely from £674,000 of net loan repayments, and no corporate debt.

Implications are mixed: the modest NAV contraction contrasts with improved liquidity and upside optionality from the Bright Ascension convert, while continued reliance on unquoted EOBs leaves returns highly dependent on realizations and subjective fair-value assessments. Monitor realization cadence, convertible conversion terms and any tax provisions assumed in quarterly valuations; valuation sensitivity and liquidity constraints are the principal near-term risks to investor returns.

Key Decisions for Investors

• Maintain or modestly increase exposure only if you have a multi-year horizon and can tolerate illiquidity and valuation uncertainty, given the modest NAV decline but improved cash and convertible optionality
• Monitor quarterly NAV movements, realization events (including future HBC tranches), net loan repayment trends, and any conversion activity or dilution from the Bright Ascension convertible notes
• Limit position size or hedge if realizations slow or NAV per share trends downward persistently, because unquoted valuations are subjective and dependent on directors' assessments
• Require clarity on valuation methodology and any deferred tax assumptions at the next update and reassess allocation if cash runway or exit visibility weakens