Last year, about 200,000 children left primary school without being able to read or write. The problem was already quite big before the pandemic. Now it is much worse and is predicted to become even more acute in the coming years.
The issue has widespread implications. Over 7 million adults in the UK can recognize only the most basic of words and that number is likely to grow. Illiteracy reduces job prospects, affects self-esteem and can even reduce life expectancy, with an estimated total economic cost of £81 billion a year.
Sharon Pindar has personally experienced all of this. Her mother could not read or write and suffered emotional and physical damage for much of her life. So when Paul Pindar turned to his wife on a dreamy vacation five years ago and asked what she would like to do with the rest of her life, she simply said she would like to teach children to read.
Lead: Philanthropic investment firm Literacy Capital contributes 0.9% of its assets to literacy
Those few words spawned an idea: Literacy Capital, a fast-growing investment company with a twist. The shares are £3.89 and should gain ground despite the tumultuous economic environment.
Driven and highly successful, Paul Pindar co-founded the consultancy Capita when he was a young man, taking it from a £330,000 venture in 1987 to a £8.5 billion FTSE 100 company when he retired as chief executive in 2014.
Fast forward to 2017 and Pindar worked with his son Richard, a former accountant, on a number of private business ventures. The duo decided to combine their financial interests with Sharon Pindar’s charitable mission and Literacy Capital was born. The company invests in all kinds of small but promising British companies and helps them grow.
Investments are made for the long term, sectors such as gambling and cheap alcohol are avoided and the group annually donates 0.9 percent of the value of its assets to charities in the field of literacy.
This new approach produces financial and social results. Companies in the Literacy Capital portfolio are growing rapidly and the group’s shares have risen significantly since its listing in June 2021.
As the company has grown, so do charitable donations. To date, more than £4 million has been donated to literacy charities, including Sharon Pindar’s own company, Bookmark, which partners with nearly 200 schools and offers one-to-one reading sessions to struggling children.
The two companies are run separately, but there is a symbiosis. Many of the companies that Literacy Capital acquires are run by their original founders, who would rather sell their businesses to a company with a philanthropic bent than one that is run entirely for financial gain.
As a result, Pindar senior and junior are approached dozens of times a week with offers from companies that are for sale.
However, most are rejected. The Pindars are looking for companies with real long-term potential, through economic cycles. There are only 18 companies in the Literacy Capital portfolio and the results so far have been impressive.
Butternut Box was founded by a couple of investment bankers who cook healthy dog food in their family’s kitchen. Literacy Capital invested in the company in 2018, when the founders were still operating from home. They fed a thousand dogs and the annual turnover was about £1 million.
Today, Butternut Box feeds more than 150,000 puppies, sales run into the tens of millions and operates from an eight-acre site in Doncaster, one of the largest of its kind in Europe. Literacy Capital has a nearly 6 percent stake in the company and the outlook is good.
Many of the portfolio companies are wholly owned, including the two largest investments, Grayce and RCI.
Founded by a husband and wife, Grayce recruits, trains and employs graduates in IT and related fields. Literacy Capital acquired the company in 2018, when the founders wanted to reduce their involvement but sell it to a buyer who would nurture and nurture the company they had built. Literacy Capital has since invested time and money in the company and sales have increased fivefold.
RCI tells a similar story. The company works with the police and the NHS to provide specialist support to victims of crime and assault. It was founded by four partners, who were looking for a buyer to help them build the business. Literacy Capital bought the group in 2018, strengthened management, made four acquisitions and expanded to include data analytics to help NHS trusts reduce waiting times. Demand is high and revenues are growing steadily.
An update on portfolio performance is expected later this week and should show Literacy Capital continues to perform. The group is not yet paying a dividend, but that will change within a few years.
It’s also reassuring that Paul and Sharon Pindar own 28 percent of the company, Richard owns a 10.7 percent stake, and several members of the team have recently bought shares.
Midas verdict: Literacy Capital offers shareholders the opportunity to invest in a company that is growing rapidly and doing well. At £3.89 the shares are a buy. Bookmark is also looking for volunteers, who offer a different kind of reward.
Traded on: Main market ticker: BOOK Contact: literacycapital.com or 020 3960 0280
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