ICG Enterprise Trust Plc: Q1 Update for the period to 30 April 2021

·18 min read

ICG Enterprise Trust plc

21 June 2021

Q1 Update for the period to 30 April 2021

Highest ever quarter of Realisation Proceeds; twelve Full Exits executed at 42% Uplift to Carrying Value

Highlights

  • NAV per Share of 1,402p, NAV per Share Total Return during the quarter of 1.6%1

  • Portfolio Return on a Local Currency Basis during the quarter of 3.4%1 (Sterling return: 2.2%)

  • Record Realisation Proceeds of £100m in the quarter, representing approximately 70% of the average annual Realisation Proceeds for the last five years

  • Twelve Full Exits generated 42%1 uplift to Carrying Value and 3.9x1 Multiple to Cost

  • £32m of investments made during the period, 63% into High Conviction Investments including two Direct Investments

  • Substantial pipeline of further investment opportunities with a number expected to close in the coming months, anticipating a very strong year for High Conviction Investments

  • Recent realisation activity has resulted in expanded capacity to execute on investment opportunities. Available liquidity of £290m, comprising £116m of cash and £174m undrawn revolving credit facility

  • First quarter dividend of 6p per share for the quarter ended 30 April 2021, an increase of 1p compared to the quarter ended 30 April 2020. In the absence of any unforeseen circumstances it is the Board’s current intention to declare total dividends of at least 27p per share for the financial year ended 31 January 2022, an increase of 3p (12.5%) per share compared to the financial year ended 31 January 2021

Comparison to prior periods

Performance to 30 April 2021

3 months

1 year

3 years

5 years

10 years

NAV per Share Total Return

+1.6%

+29.8%

+53.1%

+108.7%

+199.9%

Share Price Total Return

+12.8%

+51.4%

+37.0%

+129.0%

+265.9%

FTSE All-Share Index Total Return

+10.6%

+25.9%

+7.7%

+39.9%

+81.0%


12 months to
30 April 2021

12 months to
30 April 2020

Quarter ended
30 April 2021

Quarter ended
31 January 2021

Portfolio Return on a Local Currency Basis

37.0%

6.1%

3.4%

17.1%

NAV per Share

1,402.2p

1,100.2p

1,402.2p

1,384.4p

NAV per Share Total Return

29.8%

5.0%

1.6%

11.8%

Realisation Proceeds

£208m

£142m

£100m

£43m

Total New Investment

£139m

£170m

£32m

£57m

Oliver Gardey, Head of Private Equity Fund Investments, ICG, commented:

“We were pleased with the performance delivered by the Portfolio in this quarter, generating a 3.4% Return on a Local Currency Basis. This is despite the reduction in Chewy’s share price during the quarter which impacted the value of our largest single investment. The performance of our Portfolio builds on the strong track record of our investments, which over the last twelve months have generated a Portfolio Return on a Local Currency Basis of 37.0%.

“In particular, I would highlight that the value of our Portfolio was underpinned during the quarter by a record level of realisations, generating £100m of proceeds. Twelve Full Exits occurred and were executed at an average 42% Uplift to Carrying Value, significantly above our five year historical average of 35%. I believe that our long term track record of realising investments at a material Uplift to Carrying Value underlines the substantial value within our Portfolio.

“We expect to invest these proceeds in the coming quarters into a number of exciting opportunities. Our long-standing relationships in the sector and the opportunities we get by being managed by ICG plc are strategic advantages in originating a large number of investment opportunities. We remain selective and disciplined in our investment approach as we navigate the current market conditions.

“Looking ahead, we believe the quality and breadth of investment opportunities we are seeing will lead to a very strong year of deployment for our High Conviction Investments. Our Portfolio is balanced by sector, geography and investment type, and we are well positioned to continue executing our investment strategy. This is an exciting time for ICG Enterprise Trust and I believe we are well placed to continue to deliver significant long-term shareholder value.”

Enquiries

Analyst / Investor enquiries: +44 (0) 20 3545 2000
Oliver Gardey, Head of Private Equity Fund Investments, ICG
Colm Walsh, Managing Director, ICG
James Caddy, Investor Relations, ICG

Media:
Clare Glynn, Corporate Communications, ICG: +44 (0) 20 3545 1395
Ed Gascoigne Pees, Eddie Livingstone-Learmonth, Camarco: +44 (0) 20 3757 4993

Website:
www.icg-enterprise.co.uk

Company timetable

Ex-dividend date: 12 August 2021
Record date: 13 August 2021
Payment of dividend: 3 September 2021

About ICG Enterprise Trust

ICG Enterprise Trust is a leading listed private equity investor focused on creating long-term growth by delivering consistently strong returns through selectively investing in profitable private companies, primarily in Europe and the US.

As a listed private equity investor, our purpose is to provide shareholders with access to the attractive long-term returns generated by investing in private companies, with the added benefit of daily liquidity.

We invest in companies directly and through funds managed by ICG and other leading private equity managers who focus on creating long-term value and building sustainable growth through active management and strategic change.

We have a long track record of delivering strong returns through a flexible mandate and highly selective approach that strikes the right balance between concentration and diversification, risk and reward.

Disclaimer

This report may contain forward looking statements. These statements have been made by the Directors in good faith based on the information available to them up to the time of their approval of this report and should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward-looking information. These written materials are not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration under the US Securities Act of 1933, as amended, or an exemption therefrom. The issuer has not and does not intend to register any securities under the US Securities Act of 1933, as amended, and does not intend to offer any securities to the public in the United States. No money, securities or other consideration from any person inside the United States is being solicited and, if sent in response to the information contained in these written materials, will not be accepted.

Business review

Solid performance across the Portfolio

  • Investment portfolio valued at £893m

  • Underlying Portfolio gains of £32m, comprising gains of £53m and losses of £21m, resulting in a Portfolio Return on a Local Currency Basis of 3.4%

  • High Conviction Investments (48% of the Portfolio) experienced local currency returns of 0.5% during the quarter, or 4.3% when excluding the decrease in value of our investment in in PetSmart/Chewy

  • Third Party Funds (52% of the Portfolio) generated 6.3% local currency returns

  • Gains of £53m in the quarter were broad-based across our High Conviction and Third Party Fund investments

  • The main driver of the £21m losses was the reduction in the share price of Chewy, which is reflected in the valuation of the PetSmart/Chewy investment. The decrease in Chewy’s share price from $102 to $80 during the period reduced the Portfolio value by circa £16m on a Local Currency Basis and circa £17m on a Sterling basis. Excluding the impact of PetSmart/Chewy on this quarter’s performance, we estimate the Portfolio Return on Local Currency Basis would have been circa 5.6%. ICG Enterprise Trust’s investment in PetSmart/Chewy has generated a mid-to-high single digit multiple on cost at current valuations and therefore significant value for our shareholders

  • Sterling’s appreciation against the USD and EUR during the period resulted in a £11m reduction in the Portfolio value on a Sterling basis and therefore a Portfolio Return on a Sterling basis of 2.2%

Record Realisation Proceeds and at significant Uplift to Carrying Value

  • Total Proceeds of £109m over the quarter, our most active quarter for realisations on record

    • Realisation Proceeds of £100m, of which £77m was generated from 12 Full Exits that were executed at an average of 42% Uplift to Carrying Value and 3.9x Multiple to Cost, materially above our five year historical average of 35% and 2.4x respectively

    • Fund Disposals generated £9m proceeds and released £10m of Undrawn Commitments

Investment opportunities across High Conviction Investments and Third Party Funds

  • £32m of Total New Investment in the quarter; 63% (£20m) invested into High Conviction Investments with the remaining £12m being drawdowns on commitments to Third Party Funds

  • Within our High Conviction Investments we invested £6m in two new Direct Investments during the quarter:

Company

Manager

Company sector / description

ICG Enterprise Trust investment during the quarter

Ivanti

Charlesbank

Provider of enterprise IT software

£6m

AMEOS Group

ICG

Private hospital operator in the DACH region

n/a1


1 Commitment made in April 2021 but not funded until after the quarter end

  • Third Party Funds are important to our strategy of having an appropriately balanced portfolio and to sourcing High Conviction Investments. During the quarter we committed £83m in aggregate to two ICG funds and two third party managers:

Fund

Focus

ICG Enterprise Trust Commitment during the quarter

Resolute V

North American mid-market buyouts

$15m (£11m)

Bregal Unternehmerkapital III

European mid-market buyouts

€10m (£9m)

ICG Europe Fund VIII

Mezzanine and equity in mid-market buy-outs

€40m (£35m)

ICG Strategic Equity IV

Secondary fund restructurings

$40m (£29m)


Quoted Companies

  • We do not invest in publicly quoted companies but gain listed investment exposure when IPOs are used to exit an investment

  • At 30 April 2021, we had 42 investments in quoted companies, representing 14.3% of the Portfolio value compared to 20.4% at 31 January 2021. The reduction was largely driven by the sale of our entire stake in Telos during February, as well as by the reduction in Chewy’s share price

  • During the quarter Signify Health listed on the NYSE and therefore became a quoted company within our Portfolio. It now represents 0.5% of our Portfolio by value. The company provides technology-enabled healthcare payor services, and we have exposure through our investment via New Mountain V

  • At 30 April 2021 there were three quoted investments that individually accounted for 0.5% or more of the Portfolio value:

Company

Ticker

% value of Portfolio

1

Chewy (part of PetSmart)1

CHWY-US

8.2%

2

Allegro

ALE-PL

0.9%

3

Signify Health

SGFY-US

0.5%

Other

4.7%

Total

14.3%

1 % value of Portfolio includes entire holding of PetSmart and Chewy. This investment is referred to generally within this announcement as PetSmart/Chewy. Most of the value in this investment is within Chewy

Robust balance sheet

  • Closing NAV of £964m; investment portfolio represents 93% of NAV

  • Strong liquidity position of £290m, comprising £116m cash and £174m undrawn bank facility

  • Uncalled commitments of £473m (£87m of which are to funds outside of their investment period)

Dividend

  • Continued commitment to progressive dividend in line with current policy

  • First quarter dividend of 6p per share for the quarter ended 30 April 2021, an increase of 1p compared to the quarter ended 30 April 2020. The Board’s current intention is to declare quarterly dividends of at least 6p per share, and a final dividend of at least 9p per share for the financial year ended 31 January 2022

  • In the absence of any unforeseen circumstances, it is therefore the Board’s current intention to declare total dividends of at least 27p per share for the financial year ended 31 January 2022. This would represent an increase of 3p (12.5%) per share compared to the financial year ended 31 January 2021

Board

  • Lucinda Riches retires from the Board today having served for ten years. We would like to thank Lucinda for her contributions to ICG Enterprise Trust

  • David Warnock will replace Lucinda as the Senior Independent Director, subject to his election at the forthcoming AGM

Activity since the period end (to 31 May 2021)

  • Total Proceeds

Proceeds of £5m received

  • Deployment

Invested £26m, 70% into High Conviction Investments

  • New Fund Commitments

Hellman & Friedman X, focused on large buyouts in North America: $10m (£7m)
Thomas H. Lee Partners IX, focused on mid-market buyouts in North America: $20m (£14m)

Supplementary information

The 30 largest underlying investments

The table below presents the 30 companies in which ICG Enterprise Trust had the largest investments by value at 30 April 2021. These investments may be held directly or through funds, or in some cases in both ways. The valuations are gross and are shown as a percentage of the total Portfolio.

Company

Manager

Year of investment

Country

Value as a % of Portfolio

1

PetSmart/Chewy+^

Retailer of pet products and services

BC Partners

2015

United States

8.2%

2

DomusVi+

Operator of retirement homes

ICG

2017

France

4.1%

3

Minimax+

Supplier of fire protection systems and services

ICG

2018

Germany

3.5%

4

IRI+

Provider of mission-critical data and predictive analytics to consumer goods manufacturers

New Mountain Capital

2018

United States

2.4%

5

Leaf Home Solutions

Provider of gutter protection solutions

Gridiron Capital

2016

United States

2.2%

6

Visma+

Provider of business management software and outsourcing services

ICG / HgCapital

2017 / 2020

Norway

2.2%

7

DOC Generici+

Retailer of pharmaceutical products

ICG

2019

Italy

2.2%

8

Yudo+

Manufacturer of components for injection moulding

ICG

2017

Hong Kong

2.0%

9

Supporting Education Group+^

Provider of temporary staff for the education sector

ICG

2014

United Kingdom

1.9%

10

Froneri^

Manufacturer and distributor of ice cream products

PAI Partners

2019

United Kingdom

1.8%

11

Berlin Packaging+

Provider of global packaging services and supplies

Oak Hill Capital

2018

United States

1.7%

12

Endeavor Schools+

Provider of paid private schooling

Leeds Equity Partners

2018

United States

1.5%

13

U-POL^

Manufacturer and distributor of automotive refinishing products

Graphite Capital

2010

United Kingdom

1.3%

14

PSB Academy+

Provider of private tertiary education

ICG

2018

Singapore

1.1%

15

Curium Pharma+

Supplier of nuclear medicine diagnostic pharmaceuticals

ICG

2020

United Kingdom

1.0%

16

Allegro

Operator of an online marketplace and price comparison website

Cinven / Permira Advisers

2017

Poland

0.9%

17

VitalSmarts+

Provider of corporate training courses focused on communication skills and leadership development

Leeds Equity Partners

2019

United States

0.9%

18

AML RightSource+

Provider of compliance and regulatory services and solutions

Gridiron Capital

2020

United States

0.8%

19

David Lloyd Leisure+

Operator of premium health clubs

TDR Capital

2013 / 2020

United Kingdom

0.7%

20

RegEd+

Provider of SaaS-based governance, risk and compliance enterprise software solutions

Gryphon Investors

2018

United States

0.6%

21

Ivanti+

Provider of IT management solutions

Charlesbank Capital Partners

2021

United States

0.6%

22

IRIS Accountancy Solutions

Provider of business-critical software and services for the accountancy and payroll sectors

ICG

2018

United Kingdom

0.6%

23

EG Group

Operator of petrol station forecourts

TDR Capital

2014

United Kingdom

0.6%

24

Compass Community

Provider of fostering services and children residential care

Graphite Capital

2017

United Kingdom

0.6%

25

CCC Information Services

Provider of auto collision software and service

Advent International / Oak Hill Capital

2017

United States

0.5%

26

WCT^

Drug development services

The Jordan Company

2007

United States

0.5%

27

Trust Holding

Distributor of branded consumer electronics accessories in the value-for-money segment

Egeria

2018

Netherlands

0.5%

28

proALPHA

Developer and vendor of resource planning software

ICG

2017

Germany

0.5%

29

Springer^

Publisher of professional and academic media

BC Partners

2013

Germany

0.5%

30

Synlab

Operator of medical diagnostic laboratories

Cinven

2015

Germany

0.5%

Total of the 30 largest underlying investments

46.4%

⁺ All or part of this investment is held directly as a co-investment or other direct investment

^ All or part of this investment was acquired as part of a secondary purchase

The 30 largest fund investments
The 30 largest funds by value at 30 April 2021 are:

Fund

Year of commitment

Country/ region

Value £m

Outstanding commitment £m

1

BC European Capital IX **

Large buyouts

2011

Europe/North America

39.8

2.0

2

ICG Europe VII

Mezzanine and equity in mid-market buyouts

2018

Europe

30.7

11.9

3

Gridiron Capital Fund III

Mid-market buyouts

2016

North America

26.4

4.0

4

Graphite Capital Partners VIII *

Mid-market buyouts

2013

UK

24.7

4.4

5

ICG Strategic Equities Fund III

Secondary fund restructurings

2018

Global

23.6

11.3

6

Sixth Cinven Fund

Large buyouts

2016

Europe

23.6

2.1

7

Advent Global Private Equity VIII

Large buyouts

2016

Europe/North America

21.5

0.6

8

ICG Europe VI **

Mezzanine and equity in mid-market buyouts

2015

Europe

20.9

4.5

9

CVC European Equity Partners VI

Large buyouts

2013

Europe/North America

20.7

2.6

10

CVC European Equity Partners VII

Large buyouts

2017

Europe/North America

16.3

7.5

11

BC European Capital X

Large buyouts

2016

Europe

16.3

1.6

12

PAI Strategic Partnerships **

Mid-market and large buyouts

2019

Europe

15.7

0.6

13

One Equity Partners VI

Mid-market buyouts

2016

Europe/North America

15.4

0.6

14

Graphite Capital Partners VII * / **

Mid-market buyouts

2007

UK

15.1

2.8

15

PAI Europe VI

Mid-market and large buyouts

2013

Europe

14.9

1.4

16

Resolute IV

Mid-market buyouts

2018

North America

14.3

1.9

17

New Mountain Partners V

Mid-market buyouts

2017

North America

14.2

1.3

18

Thomas H Lee Equity Fund VIII

Mid-market and large buyouts

2017

North America

13.2

7.5

19

Permira V

Large buyouts

2013

Europe/North America

12.7

0.5

20

Permira VI

Large buyouts

2016

Europe

12.0

2.0

21

Gryphon V

Mid-market buyouts

2019

North America

12.0

1.4

22

ICG Asia Pacific Fund III

Mezzanine and equity in mid-market buyouts

2016

Asia Pacific

11.5

2.8

23

Charterhouse Capital Partners X

Large buyouts

2015

Europe

10.9

3.9

24

TDR Capital III

Mid-market and large buyouts

2013

Europe

10.8

1.6

25

Leeds Equity Partners VI

Mid-market buyouts

2017

North America

10.5

0.7

26

Resolute II **

Mid-market buyouts

2018

North America

10.3

1.6

27

PAI Europe VII

Mid-market and large buyouts

2017

Europe

10.1

12.1

28

Egeria Private Equity Fund IV

Mid-market buyouts

2012

Netherlands

9.2

1.1

29

Thomas H Lee Equity Fund VII

Mid-market and large buyouts

2015

North America

8.9

1.6

30

Oak Hill Capital Partners IV

Mid-market buyouts

2017

North America

8.3

0.7

Total of the largest 30 fund investments

494.6

98.6

Percentage of total investment Portfolio

55.4%

* Includes the associated Top Up funds

** All or part of an interest acquired through a secondary fund purchase

Portfolio analysis

All data is presented on a look-through basis to the investment portfolio held by the Company, consistent with the commentary in previous annual and interim reports

Investment category

% of portfolio

High Conviction Investments

ICG funds and co-investments

26.8%

Third party co-investments

14.4%

Third party secondary investments

6.7%

Total High Conviction Investments

47.9%

Third Party Funds

52.1%

Total

100.0%


Portfolio by investment type

% of value of underlying investments

Large buyouts

53.9%

Mid-market buyouts

35.2%

Small buyouts

10.9%

Total

100.0%




Portfolio by calendar year of investment



% of value of underlying investments

2021

2.6%

2020

11.8%

2019

19.5%

2018

20.9%

2017

17.0%

2016

8.5%

2015

10.0%

2014 and older

9.7%

Total

100.0%




Portfolio by sector

% of value of underlying investments

Consumer goods and services

25.0%

Healthcare

18.9%

TMT

16.8%

Business services

12.1%

Industrials

8.1%

Education

6.7%

Financials

5.2%

Other

4.5%

Leisure

2.7%

Total

100.0%




Portfolio by geographic distribution based on location of Company headquarters



% of value of underlying investments

North America

39.7%

Europe

34.7%

UK

17.7%

Rest of world

7.9%

Total

100.0%

Summary balance sheet information

£m

30 April 21

% of net assets

31 January 21

% of net assets

Portfolio

892.8

92.6%

949.2

99.7%

Cash and liquid assets

116.0

12.0%

45.2

4.7%

Other net current liabilities

(44.6)

(4.6%)

(42.4)

(4.4)%

Net assets

964.2

100.0%

952.0

100.0%


Movement in the Portfolio

3 months

£m

30 April 21

Opening Portfolio (31 January 2021)

949.2

Total New Investment

31.8

Total Proceeds

(109.4)

Net cash (inflow) / outflow

(77.6)

Underlying Valuation Movement*

31.9

Currency movement

(10.7)

Closing Portfolio

892.8

% underlying Portfolio growth (local currency)

3.4%

% currency movement

(1.2%)

% underlying Portfolio growth (Sterling)

2.2%

Expenses and other

(0.6)%

NAV per Share Total Return

1.6%



* 82% of the Portfolio is valued using 31 March 2021 (or later) valuations. The remaining 18% is valued using 31 December 2020 valuations.

Movement in liquid assets
£m

3 months
30 April 21

Net cash inflow / (outflow) generated by movement in Portfolio

77.6

Non-investment cash flows

(2.1)

Effect of changes in foreign exchange rates

(1.3)

Cash inflow before shareholder distributions

74.2

Dividends paid to shareholders

(3.4)

Share buy backs

-

Net cash movement

70.8

Opening cash and liquid assets

45.2

Closing cash and liquid assets

116.0




Uncalled commitment coverage

£m

30 April 21

31 January 21

Cash and liquid assets

116.0

45.2

Undrawn bank facility

174.0

155.9

Total liquidity

290.0

201.1

Outstanding commitments

473.3

418.5

Less: Total liquidity

(290.0)

(201.1)

Over-commitment

183.3

217.4

Over-commitment as % of net assets

19.0%

22.8%




1 Alternative Performance Measure

Attachment


Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting