Bottom Line: Electra suffers under 3i's shadow

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IT WAS a bit churlish of the market to widen Electra Investment Trust's discount yesterday from 17 to 20 per cent on the back of a much improved performance.

Perhaps investors were concentrating too much on 3i, where the advisers completed institutional bookbuilding in preparation for the formal underwriting agreement later today.

The discount for 3i, which is valued at three times the size of Electra, is likely to be only 12 to 13 per cent, and there were no signs yesterday that the gyrations of the market, or indeed the Electra results, had pushed this off course.

Superficially, the two trusts are similar, in that both specialise in investment in private companies, but that is about as far as the similarity goes.

In fact, Electra is so keen to distinguish itself from 3i that it presented analysts with a seven-point list of differences, the nub of which is that it is likely to be a more volatile performer than its bigger rival.

For example, Electra's average investment is bigger, the companies it supports are also bigger and fewer and it invests equity only, rather than 3i's mix of shares and loans.

The 11.6 per cent increase in fully diluted net asset value per share in the first six months is three times the rise in the FT All- share index, and is the second half-year of outperformance after a year of falling behind the index.

With investments such as Eurodollar, the car rental firm, and Pillar Property coming to market, and several others ready to join the pipeline, the market's reaction yesterday may have been a little too grudging.