ICG Enterprise Trust Plc: Q3 Update for the period to 31 October 2020
4 February 2021
ICG Enterprise Trust Plc
Q3 Update for the period to 31 October 2020
Strong performance delivered by actively constructed portfolio
Highlights
-
Portfolio performance driving NAV growth
- Strong underlying investment gains resulted in +12.1% local currency portfolio return in the quarter; +12.5% sterling return
- High Conviction Investments experienced strong local currency returns of +17.6% during the quarter, Third Party Funds generated +7.6% local currency returns
- NAV per share of 1,243.0p; +10.7% total return over the quarter, +9.6% total return over the last nine months
-
Realisations at significant uplifts to carrying value
- Substantial proceeds from realisations and secondary sales of £72m in the quarter, including the realisation of the Roompot co-investment alongside PAI VI
- Total proceeds over the last nine months of £166m and a further £42m of undrawn commitments released
- Realisations generated proceeds of £94m from 22 full exits; 40% uplift to carrying value; 2.4x multiple to cost, in line with recent historical trend
- Secondary sales generated proceeds of £72m proceeds over nine months and released £42m of undrawn commitments
-
Continued investment activity across High Conviction Investments and Third Party Funds
- Robust deployment in the quarter of £30m; 42% invested into High Conviction Investments
- High Conviction Investments increased over the last nine months from 41% to 46% of portfolio
- Three Third Party Funds commitments made in the quarter to top-tier managers
- Momentum has continued since period end, with a healthy pipeline of High Conviction Investments and Third Party Funds
-
Quarterly dividend of 5p per share
- Dividends for the nine months total 15p per share
| Performance to 31 October 2020 | 3 months | 9 months | 1 year | 3 years | 5 years | 10 years |
| NAV per share (total return) | +10.7% | +9.6% | +11.1% | +41.2% | +97.0% | +202.5% |
| Share price (total return) | +4.2% | -13.4% | -9.8% | +6.2% | +50.9% | +237.4% |
| FTSE All-Share Index (total return) | -3.2% | -20.4% | -18.6% | -14.4% | +8.9% | +53.7% |
Oliver Gardey, Head of Private Equity Fund Investments, ICG, commented:
“We were extremely pleased with the performance we delivered in this strong third quarter. The significant returns delivered across the portfolio demonstrate the benefits of our differentiated strategy of actively constructing a portfolio of investments with defensive growth characteristics. The strength of this portfolio construction is underlined by the strong performance of our High Conviction Investments and Third Party Funds.
“We continued to source attractive investment opportunities across our High Conviction Investments and Third Party Funds. Our portfolio is well diversified by sector and geography, well positioned in this time of uncertainty, and we continued to enjoy good momentum across the business after the end of this reporting period. I am confident that we are extremely well placed to take advantage of a growing investment pipeline and will continue to deliver significant shareholder value over the long term.”
Business review
Strong performance across the portfolio
- Investment portfolio valued at £818m1
- +12.1% local currency portfolio return for the quarter; +12.5% sterling return
- +7.9% local currency portfolio return for the first nine months; +11.9% sterling return
- High Conviction Investments delivered local currency returns of +17.6% in the quarter, are now contributing £378m to reported NAV, and represents 46% of the total portfolio value (31 July 2020: 44%)
- Third Party Funds delivered local currency returns of +7.6% the quarter and is now contributing £440m to reported NAV
- In line with our strategic objectives, we increased the weighting towards the US in our portfolio during the quarter, from 35% to 39%. This was partially driven by the strength of the performance of a number of our Top 30 investments (in particular Telos, Leaf Home Solutions and PetSmart) and partially by investments made in US companies
Strong realisations at significant uplift to portfolio value
- 8 full realisations in the quarter; £55m of proceeds received
- Cash proceeds for the quarter include the realisation of the Roompot co-investment alongside PAI VI
- Cash proceeds for the quarter include the realisation of the Roompot co-investment alongside PAI VI
- 22 full realisations in the first nine months of the financial year; £94m of proceeds received
- Realisations at a 40% uplift to carrying value; 2.4x multiple of cost
- Realisations at a 40% uplift to carrying value; 2.4x multiple of cost
- Secondary sales in the first nine months generated £72m of proceeds and released £42m of undrawn commitments
Continued momentum in investment activity
- £30m of new investment in the quarter, taking total to £82m for the nine months
- High Conviction Investments represented 42% of capital deployed in the quarter
- High Conviction Investments represented 42% of capital deployed in the quarter
- Two co-investments made during the quarter
- $5m (£4m) completed in Visma alongside Hg in the world’s largest ever software buyout
- €7m (£6m) committed to Curium Pharma, a leading provider of radiopharmaceuticals, alongside ICG Strategic Equity and CapVest
- Third Party Funds remain critical to our strategy of having an appropriately balanced portfolio and to sourcing High Conviction Investments. During the quarter we committed £17m to three top-tier managers, all of which are focussed on expanding our presence in North America
- Bain XIII, focused on large buyouts in North America: $10m (£8m)
- Clayton, Dubilier & Rice XI, focused on mid-market and large buyouts in North America: $10m (£7m)
- Gridiron IV, a US mid-market buyout fund: $3m (£2m) top-up commitment, bringing our total commitment to $18m and reflecting the strength of fund performance
Strong balance sheet
- Closing NAV of £855m; investment portfolio represents 96% of NAV
- Strong liquidity position of £231m, comprising £73m cash and £158m undrawn bank facility
- Uncalled commitments of £431m (£74m of which are to funds outside of their investment period)
Dividend
- Third quarter dividend of 5p declared, taking dividends for the nine months to 15p
Board
- David Warnock appointed as a non-executive director with effect from 1 December 2020, joining the Audit and Nominations Committees
- David brings extensive private equity, investment trust and listed company experience
Activity since the period end (to 31 December 2020)
- Realisations
- Proceeds of £38m received, including from the realisation of City & County Healthcare Group
- Thomas H. Lee Partners reached an agreement to sell System One to Oaktree Capital Management
- Deployment
- Invested £48m, 56% into High Conviction Investments
- Invested £48m, 56% into High Conviction Investments
- Third Party Funds commitments
- New Mountain Partners VI, focused on mid-market buyouts in the US: $14m (£10m)
- Leeds Equity Partners VII, focused on mid-market buyouts in North America: $10m (£7m)
- PAI Mid-Market Fund, focused on mid-market buyouts in Europe: €10m (£9m)
- FSN Capital VI, focused on mid-market buyouts in Northern Europe: €10m (£9m)
- Bank facility
- Terms agreed on a new €200m (£180m) 4-year RCF to replace our existing €176m (£158m) facility
Company timetable
Ex-dividend date 11 February 2021
Record date 12 February 2021
Payment of dividend 5 March 2021
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:
Fiona Laffan, Global Head of Corporate Affairs, ICG: +44 (0) 20 3545 1510
Ed Gascoigne Pees, Eddie Livingstone-Learmonth, Camarco: +44 (0) 20 3757 4993
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.
Supplementary information
The 30 largest underlying investments
The table below presents the 30 companies in which ICG Enterprise had the largest investments by value at 31 October 2020. 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+ | ||||
| Retailer of pet products and services | BC Partners | 2015 | United States | 5.8% | |
| 2 | DomusVi+ | ||||
| Operator of retirement homes | ICG | 2017 | France | 4.6% | |
| 3 | Minimax+ | ||||
| Supplier of fire protection systems and services | ICG | 2018 | Germany | 3.2% | |
| 4 | Telos+2 | ||||
| Provider of information technology and cybersecurity | Direct shareholding | 1998 | United States | 2.9% | |
| 5 | Leaf Home Solutions | ||||
| Provider of gutter protection solutions | Gridiron Capital | 2016 | United States | 2.5% | |
| 6 | DOC Generici+ | ||||
| Retailer of pharmaceutical products | ICG | 2019 | Italy | 2.3% | |
| 7 | Yudo+ | ||||
| Manufacturer of components for injection moulding | ICG | 2017 | Hong Kong | 2.3% | |
| 8 | Visma+ | ||||
| Provider of accounting software and accounting outsourcing services |
ICG / HgCapital | 2017 / 2020 | Norway | 2.0% | |
| 9 | Froneri^ | ||||
| Manufacturer and distributor of ice cream products | PAI Partners | 2019 | United Kingdom | 2.0% | |
| 10 | City & County Healthcare | ||||
| Provider of home care services in the UK | Graphite Capital | 2013 | United Kingdom | 1.9% | |
| 11 | Supporting Education Group+^ | ||||
| Provider of supply teachers and support staff | ICG | 2014 | United Kingdom | 1.8% | |
| 12 | Berlin Packaging+ | ||||
| Provider of global packaging services and supplies | Oak Hill Capital | 2018 | United States | 1.6% | |
| 13 | IRI+ | ||||
| Provider of mission-critical data and predictive analytics to consumer goods manufacturers | New Mountain Capital | 2018 | United States | 1.6% | |
| 14 | Endeavor Schools+ | ||||
| Provider of paid private schooling | Leeds Equity Partners |
2018 | United States | 1.4% | |
| 15 | System One+ | ||||
| Provider of specialty workforce solutions | Thomas H. Lee Partners | 2016 | United States | 1.4% | |
| 16 | PSB Academy+ | ||||
| Provider of private tertiary education | ICG | 2018 | Singapore | 1.2% | |
| 17 | VitalSmarts+ | ||||
| Provider of corporate training courses focused on communication skills and leadership development | Leeds Equity Partners | 2019 | United States | 1.0% | |
| 18 | Allegro | ||||
| Operator of an online marketplace and price comparison website | Cinven / Permira | 2017 | Poland | 1.0% | |
| 19 | U-POL^ | ||||
| Manufacturer of automotive aftermarket products | Graphite Capital | 2010 | United Kingdom | 0.9% | |
| 20 | Cognito+^ | ||||
| Supplier of communications equipment, software & services | Graphite Capital | 2002 / 2014 | United Kingdom | 0.7% | |
| 21 | Compass Community | ||||
| Provider of fostering services and children's residential care | Graphite Capital | 2017 | United Kingdom | 0.7% | |
| 22 | EG Group | ||||
| Operator of petrol station forecourts | TDR Capital | 2014 | United Kingdom | 0.7% | |
| 23 | nGAGE | ||||
| Provider of recruitment services | Graphite Capital | 2014 | United Kingdom | 0.7% | |
| 24 | RegEd+ | ||||
| Provider of SaaS-based governance, risk and compliance enterprise software solutions | Gryphon Investors | 2018 | United States | 0.6% | |
| 25 | David Lloyd Leisure+ | ||||
| Operator of premium health clubs | TDR Capital | 2013 | United Kingdom | 0.6% | |
| 26 | IRIS Accountancy Solutions | ||||
| Provider of business-critical software and services to the accountancy and payroll sectors | ICG | 2018 | United Kingdom | 0.6% | |
| 27 | Beck & Pollitzer | ||||
| Provider of industrial machinery installation and relocation | Graphite Capital | 2016 | United Kingdom | 0.6% | |
| 28 | YSC Consulting | ||||
| Leadership consulting and management assessment business | Graphite Capital | 2017 | United Kingdom | 0.6% | |
| 29 | ICR Group | ||||
| Provider of repair and maintenance services to the energy industry | Graphite Capital | 2014 | United Kingdom | 0.6% | |
| 30 | ELITech | ||||
| Manufacturers of in-vitro diagnostic instruments and reagents | PAI Partners | 2017 | Italy | 0.5% | |
| Total of the 30 largest underlying investments | 48.1% | ||||
| ⁺ 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 31 October 2020 are:
| Fund | Year of commitment | Country/ region | Value £m | Outstanding commitment £m | |||
| 1 | Graphite Capital Partners VIII * | ||||||
| Mid-market buyouts | 2013 | UK | 46.7 | 10.6 | |||
| 2 | Gridiron Capital Fund III | ||||||
| Mid-market buyouts | 2016 | North America | 29.9 | 4.3 | |||
| 3 | ICG Europe VII | ||||||
| Mezzanine and equity in mid-market buyouts | 2018 | Europe | 22.2 | 17.7 | |||
| 4 | BC European Capital IX ** | ||||||
| Large buyouts | 2011 | Europe/USA | 22.2 | 1.5 | |||
| 5 | ICG Europe VI ** | ||||||
| Mezzanine and equity in mid-market buyouts | 2015 | Europe | 20.1 | 4.6 | |||
| 6 | Sixth Cinven Fund | ||||||
| Large buyouts | 2016 | Europe | 20.0 | 2.9 | |||
| 7 | Advent Global Private Equity VIII | ||||||
| Large buyouts | 2016 | Europe/USA | 19.1 | 0.6 | |||
| 8 | Thomas H Lee Equity Fund VII | ||||||
| Mid-market and large buyouts | 2015 | USA | 18.7 | 1.5 | |||
| 9 | CVC European Equity Partners VI | ||||||
| Large buyouts | 2013 | Europe/USA | 18.2 | 2.7 | |||
| 10 | PAI Europe VI | ||||||
| Mid-market and large buyouts | 2013 | Europe | 15.5 | 1.4 | |||
| 11 | PAI Strategic Partnerships ** | ||||||
| Mid-market and large buyouts | 2019 | Europe | 15.0 | 1.6 | |||
| 12 | BC European Capital X | ||||||
| Large buyouts | 2016 | Europe | 14.0 | 1.7 | |||
| 13 | One Equity Partners VI | ||||||
| Mid-market buyouts | 2016 | Europe/USA | 13.4 | 0.6 | |||
| 14 | Graphite Capital Partners VII * / ** | ||||||
| Mid-market buyouts | 2007 | UK | 12.2 | 2.8 | |||
| 15 | ICG Strategic Secondaries Fund II | ||||||
| Secondary fund restructurings | 2016 | Europe/USA | 11.8 | 16.2 | |||
| 16 | ICG Asia Pacific Fund III | ||||||
| Mezzanine and equity in midmarket buyouts | 2016 | Asia Pacific | 11.4 | 3.0 | |||
| 17 | CVC European Equity Partners VII | ||||||
| Large buyouts | 2017 | Europe/ North America | 11.4 | 10.8 | |||
| 18 | Resolute IV | ||||||
| Mid-market buyouts | 2018 | USA | 11.4 | 5.5 | |||
| 19 | Gryphon V | ||||||
| Mid-market buyouts | 2019 | North America | 11.3 | 1.5 | |||
| 20 | Permira V | ||||||
| Large buyouts | 2013 | Europe/USA | 11.2 | 0.5 | |||
| 21 | New Mountain Partners V | ||||||
| Mid-market buyouts | 2017 | North America | 11.2 | 2.3 | |||
| 22 | Oak Hill Capital Partners IV | ||||||
| Mid-market buyouts | 2017 | USA | 10.5 | 0.7 | |||
| 23 | TDR Capital III | ||||||
| Mid-market and large buyouts | 2013 | Europe | 10.4 | 1.7 | |||
| 24 | Permira VI | ||||||
| Large buyouts | 2016 | Europe | 10.3 | 2.0 | |||
| 25 | Charterhouse Capital Partners X | ||||||
| Large buyouts | 2015 | Europe | 9.6 | 4.5 | |||
| 26 | Thomas H Lee Equity Fund VIII | ||||||
| Mid-market and large buyouts | 2017 | USA | 9.6 | 8.8 | |||
| 27 | Resolute II ** | ||||||
| Mid-market buyouts | 2018 | USA | 9.5 | 1.7 | |||
| 28 | Leeds Equity Partners VI | ||||||
| Mid-market buyouts | 2017 | North America | 8.4 | 0.7 | |||
| 29 | Graphite Capital Partners IX | ||||||
| Mid-market buyouts | 2018 | UK | 7.8 | 20.6 | |||
| 30 | Bain Capital Europe IV | ||||||
| Mid-market buyouts | 2014 | Europe | 7.2 | 1.3 | |||
| Total of the largest 30 fund investments | 450.6 | 136.3 | |||||
| Percentage of total investment Portfolio | 55.1% | ||||||
| * Includes the associated Top Up funds. | |||||||
| ** All or part of an interest acquired through a secondary fund purchase. | |||||||
Portfolio analysis
All balance sheet 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 |
24.7% |
| Third party co-investments | 16.4% |
| Third party secondary investments | 5.1% |
| Total High Conviction Investments |
46.2%
|
| Third Party Funds |
53.8%
|
| Total | 100.0% |
| Portfolio by investment type | % of value of underlying investments |
| Large buyouts | 54.1% |
| Mid-market buyouts | 35.8% |
| Small buyouts | 10.1% |
| Total | 100.0% |
|
Portfolio by calendar year of investment |
% of value of underlying investments |
||
| 2020 | 5.4% | ||
| 2019 | 20.0% | ||
| 2018 | 20.7% | ||
| 2017 | 18.7% | ||
| 2016 | 10.7% | ||
| 2015 | 8.6% | ||
| 2014 | 6.3% | ||
| 2013 | 3.6% | ||
| 2012 | 1.0% | ||
| 2011 | 0.0% | ||
| 2010 | 1.2% | ||
| 2009 | 0.4% | ||
| 2008 | 0.1% | ||
| 2007 | 0.5% | ||
| 2006 and before | 2.8% | ||
| Total | 100.0% | ||
| Portfolio by sector | % of value of underlying investments | |
| Consumer goods and services | 20.0% | |
| Healthcare | 19.4% | |
| TMT | 17.0% | |
| Business services | 13.0% | |
| Industrials | 10.5% | |
| Education | 6.9% | |
| Financials | 5.8% | |
| Leisure | 2.8% | |
| Other | 4.6% | |
| Total | 100.0% |
|
Portfolio by geographic distribution based on location of Company headquarters |
% of value of underlying investments |
|
| North America | 39.2% | |
| Europe | 32.5% | |
| UK | 20.1% | |
| Rest of world | 8.2% | |
| Total | 100.0% |
Balance sheet information
The summary balance sheet at 31 October 2020 is set out below.
| 31 October 2020 | % of net assets | 31 January 2020 | % of net assets | |
| £m | £m | |||
| Total portfolio | 818.1 | 95.7% | 806.4 | 101.6% |
| Cash and liquid assets | 72.7 | 8.5% | 14.5 | 1.8% |
| Other net current liabilities | (36.0) | (4.2%) | (27.4) | (3.4)% |
| Net assets | 854.8 | 100.0% | 793.5 | 100.0% |
| Movement in the portfolio | 9 months | |||||
| £m | 31 October 20 | |||||
| Opening Portfolio* | 806.4 | |||||
| Third Party Funds drawdowns | 64.2 | |||||
| High Conviction Investments – ICG funds, secondary investments and co-investments |
17.8 | |||||
| Total new investment | 82.0 | |||||
| Realisation Proceeds | (166.2) | |||||
| Net cash outflow | (84.2) | |||||
| Underlying Valuation Movement** | 63.6 | |||||
| Currency movement | 32.3 | |||||
| Closing Portfolio* | 818.1 | |||||
| % underlying Portfolio growth (local currency) | 7.9% | |||||
| % currency movement | 4.0% | |||||
| % underlying Portfolio growth (Sterling) | 11.9% | |||||
| ** 90% of the Portfolio is valued using 30 September 2020 (or later) valuations (31 Jan 20: 95%). |
||||||
|
Movement in liquid assets
£m |
9 months
31 October 20 |
|||||
| Additions | (82.0) | |||||
| Cash proceeds generated by the portfolio (including income) | 166.2 | |||||
| Net cash generated by the investment portfolio | 84.2 | |||||
| Non-investment cash flows | (12.6) | |||||
| Effect of changes in foreign exchange rates | (0.2) | |||||
| Cash inflow before shareholder distributions | 71.4 | |||||
| Dividends paid to shareholders | (12.4) | |||||
| Share buy backs | (0.8) | |||||
| Net cash movement | 58.2 | |||||
| Opening cash and liquid assets | 14.5 | |||||
| Closing cash and liquid assets | 72.7 | |||||
| Uncalled commitment coverage | |||
|
31 October
2020 £m |
31 January 2020 | ||
| £m | |||
| Cash and liquid assets | 72.7 | 14.5 | |
| Undrawn bank facility | 158.3 | 147.8 | |
| Total liquidity | 231.0 | 162.3 | |
| Outstanding commitments | 431.4 | 458.6 | |
| Less: Total liquidity | (231.0) | (162.3) | |
| Over-commitment | 200.4 | 296.3 | |
| Over-commitment as % of net assets | 23.4% | 37.3% |
|
1 90% of the Portfolio is valued using 30 September 2020 (or later) valuations.
2 Valuation based on the terms of the initial public offering which priced at $17 per share on 19 November 2020
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