Literacy Capital, a private equity investment trust with a charitable mission, has announced a shift in its financial strategy. Established in 2017, the trust has donated £10 million to literacy charities in the UK. However, it will now increase management fees from 0.9% to 1.5% of underlying assets, while reducing charitable donations from 0.9% to 0.5%. Consequently, overall fees will rise from 1.8% to 2%.

Analysts from Numis, Ash Nandi and Ewan Lovett-Turner, noted that this increase in management fees is atypical for the sector, where many firms are reducing fees. They highlighted that Literacy Capital is already unique, as it operates solely on a base fee without performance fees. Following the announcement, the trust's share price rose by 1.7%, reflecting positive investor sentiment.

Since its listing on the London Stock Exchange in 2021, Literacy Capital's underlying assets per share have surged by 225.4%, outpacing other trusts. The trust's total assets have grown from £54 million to over £300 million, with charitable donations increasing significantly from £532,000 in 2018 to £2.8 million in 2023.

A key recipient of these donations has been Bookmark Reading Charity, which the trust credits for its effective fundraising efforts. Shareholders representing about 20% of the trust's shares were consulted and supported the changes. The increase in management fees is justified by the need to manage a growing portfolio of 19 businesses, necessitating investments in data, technology, and back-office functions.

Richard Pindar, a director at Literacy Capital, expressed pride in the trust's contributions to charitable causes, emphasizing the positive impact on children from disadvantaged backgrounds. He reassured stakeholders that despite the fee adjustments, the trust remains committed to supporting UK literacy charities while also focusing on private business investments that promise additional value creation.