ICG Enterprise Trust Plc: Q3 update for the three months ended 31 October 2023
25 January 2024 - 6:00PM
UK Regulatory
ICG Enterprise Trust Plc: Q3 update for the three months ended 31
October 2023
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ICG Enterprise
Trust plc
Q3 update for the three months ended 31 October
2023
25 January 2024 |
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NAV per Share of 1,959p |
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Highlights
- NAV per Share of
1,959p (31 July 2023: 1,904p); NAV per Share Total Return of 3.3%
during the quarter and 3.8% over the last twelve months (5 year
annualised: 15.4%)
- Portfolio Return on
a Local Currency Basis of 0.1% during the quarter and 4.8% on an
LTM basis (5 year annualised: 17.5%)
- Portfolio was
cashflow positive during the quarter, with Realisations of £39m and
New Investments of £29m
- Twelve Full Exits
completed at a weighted average Uplift to Carrying Value of
33.7%
- Third quarter
dividend of 8p per share (Q3 FY23: 7p). Board intends to pay total
dividends of at least 32p per share for FY24 (FY23: 30p)
- £3.8m returned via
share buybacks in 27 separate transactions during the quarter.
£14.6m returned in aggregate so far via share buybacks at weighted
average discount to last reported NAV of 39.7% since programme
initiated in October 20221
- Consistent with our
active management of the Portfolio, post period-end we executed a
secondary sale that generated an attractive 1.8x return on invested
cost and gross cash proceeds of £68m (see page 6 for further
details)
1 Up to and including 19 January 2024 |
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PERFORMANCE
OVERVIEW |
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Annualised |
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Performance to 31 October 2023 |
3 months |
1 year |
3 years |
5 years |
10 years |
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Portfolio Return on a Local Currency Basis |
0.1 % |
4.8 % |
21.1 % |
17.5 % |
13.7 % |
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NAV per Share Total
Return |
3.3 % |
3.8 % |
18.3 % |
15.4 % |
13.4 % |
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Share Price Total Return |
(6.5) % |
11.6 % |
12.9 % |
8.4 % |
9.8 % |
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FTSE All-Share Index Total
Return |
(4.8) % |
5.9 % |
11.7 % |
3.9 % |
4.7 % |
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Portfolio activity overview for Q3 FY24 |
Primary |
Direct |
Secondary |
Total |
ICG-managed |
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Portfolio Return on a Local Currency Basis |
0.1 % |
(0.1) % |
0.1 % |
0.1 % |
2.4 % |
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Portfolio Return in Sterling |
3.1% |
3.4% |
4.3% |
3.4% |
6.0% |
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New Investments |
£26m |
£1m |
£2m |
£29m |
£5m |
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Proceeds |
£24m |
£1m |
£14m |
£39m |
£16m |
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New fund Commitments |
£29m |
— |
— |
£29m |
— |
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Closing Portfolio value |
£793m |
£384m |
£260m |
£1,437m |
£440m |
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% Total Portfolio |
55 % |
27 % |
18 % |
100 % |
31 % |
ENQUIRIES
Institutional investors and analysts: Chris Hunt, Head of
Shareholder Relations, ICG, +44 (0) 20 3545 2000
David Harris, Cadarn Capital, +44 (0) 20 7019 9042
Media: Cat Armstrong, Corporate Communications, ICG, +44 (0)
20 3545 1395
COMPANY TIMETABLE
A presentation for investors and analysts will
be held at 10:00 UTC today. A link for the presentation can be
found on the Results & Reports page of the Company website. A
recording of the presentation will be made available on the Company
website after the event.
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FY24 Third Interim Dividend |
Ex-dividend date |
15 February 2024 |
Record date |
16 February 2024 |
Dividend payment date |
1 March 2024 |
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, cash-generative private companies, primarily in Europe
and the US.
We invest in companies directly as well as
through funds managed by Intermediate Capital Group plc ("ICG") and
other leading managers who focus on creating long-term value and
building sustainable growth through active management and strategic
change.
ICG Alternative Investment Limited, a regulated
subsidiary of ICG, acts as the Manager of the Company.
NOTES
Included in this document are Alternative Performance Measures
(“APMs”). APMs have been used if considered by the Board and the
Manager to be the most relevant basis for shareholders in assessing
the overall performance of the Company, and for comparing the
performance of the Company to its peers and its previously reported
results.
All performance figures are stated on a Total
Return basis (i.e. including the effect of re-invested
dividends).
DISCLAIMER
The information contained herein and on the pages that follow does
not constitute an offer to sell, or the solicitation of an offer to
acquire or subscribe for, any securities in any jurisdiction where
such an offer or solicitation is unlawful or would impose any
unfulfilled registration, qualification, publication or approval
requirements on ICG Enterprise Trust PLC (the "Company") or its
affiliates or agents. Equity securities in the Company have not
been and will not be registered under the applicable securities
laws of the United States, Australia, Canada, Japan or South Africa
(each an “Excluded Jurisdiction”). The equity securities in the
Company referred to herein and on the pages that follow may not be
offered or sold within an Excluded Jurisdiction, or to any U.S.
person ("U.S. Person") as defined in Regulation S under the U.S.
Securities Act of 1933, as amended (the "U.S. Securities Act"), or
to any national, resident or citizen of an Excluded
Jurisdiction.
The information on the pages that follow may contain forward
looking statements. Any statement other than a statement of
historical fact is a forward looking statement. Actual results may
differ materially from those expressed or implied by any forward
looking statement. The Company does not undertake any obligation to
update or revise any forward looking statements. You should not
place undue reliance on any forward looking statement, which speaks
only as of the date of its issuance.
MANAGER’S REVIEW
Our investment strategy
We focus on investing in buyouts of profitable,
cash-generative businesses in developed markets that exhibit
defensive growth characteristics which we believe will support
strong and resilient returns across economic cycles.
We take an active approach to portfolio
construction, with a flexible mandate that enables us to deploy
capital in Primary, Direct and Secondary investments.
Geographically we focus on the developed markets of North America
and Europe, including the UK, which have deep and mature private
equity markets supported by a robust corporate governance
framework.
Investments managed by ICG accounted for 31% of
the Portfolio.
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Medium-term target |
Q3 FY24 |
Five-year average |
1. Target Portfolio composition
1 |
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Investment category |
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Primary |
~50% |
55% |
61% |
Direct |
~25% |
27% |
24% |
Secondary |
~25% |
18% |
15% |
Geography |
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North America |
~50% |
43% |
40% |
Europe (inc. UK) |
~50% |
50% |
53% |
Other |
— |
7% |
7% |
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2. Balance
sheet |
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(Net cash)/net
debt2 |
~0% |
4% |
(3)% |
1 As percentage of Portfolio; 2 (Net cash)/net debt as a percentage
of NAV |
Performance overview
- At 31 October
2023, the Portfolio was valued at £1,437m. The Portfolio Return on
a Local Currency Basis for the quarter was 0.1% and in Sterling
terms the Portfolio value grew by 3.4%
- The Portfolio
generated £10m of cash during the quarter, comprised of £29m new
investments and £39m proceeds
- ICG Enterprise
Trust generated a NAV per Share Total Return of 3.3% during the
quarter, ending the period with a NAV per Share of 1,959p
- Over the
last five years ICG Enterprise Trust has generated an annualised
NAV per Share Total Return of 15.4%
Movement in the Portfolio |
3 months to
31 October 2023 |
Opening Portfolio |
£1,399m |
Total New Investments |
£29m |
Total Proceeds |
£(39)m |
Net (proceeds)/investments |
£(10)m |
Valuation
movement1 |
£1m |
Currency movement |
£47m |
Closing Portfolio |
£1,437m |
% Portfolio growth (local currency) |
0.1 % |
% currency movement |
3.3 % |
% Portfolio growth (Sterling) |
3.4 % |
Impact of (net cash)/net
debt |
0.3 % |
Expenses and other income |
(0.4) % |
Co-investment Incentive Scheme
Accrual |
(0.2) % |
Impact of share buybacks and dividend reinvestment |
0.2 % |
NAV per Share Total Return |
3.3 % |
- 93% of the
Portfolio is valued using 30 September 2023 (or later)
valuations.
Quoted company exposure
- We do not actively
invest in publicly quoted companies but gain listed investment
exposure when IPOs are used as a route to exit an investment. In
these cases, exit timing typically lies with the manager with whom
we have invested
- During the period
Chewy and PetSmart were legally separated, which we believe will
facilitate getting liquidity from these investments. The valuation
impact of this transaction was minimal. As a result of this legal
separation, our investment in the quoted company (Chewy, ticker:
CHWY-US) is now shown separately from our investment in
PetSmart
- At 31 October
2023, ICG Enterprise Trust’s exposure to quoted companies was
valued at £72m, equivalent to 5.0% of the Portfolio value (31 July
2023: 6.9%). There was one quoted investment that individually
accounted for 0.5% or more of the Portfolio value:
Company |
Ticker |
31 October 2023
% of Portfolio value |
Chewy |
CHWY-US |
1.4 % |
Other companies |
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3.6 % |
Total |
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5.0 % |
Realisation activity
- Total Realisation
proceeds of £39m during the quarter
- Twelve Full Exits
completed during the quarter, at a weighted average Uplift to
Carrying Value of 33.7% and a 3.3x Multiple to Cost
New investment activity
- Total New
Investments of £29m during the quarter, of which 17% (£5m) was
alongside ICG
- The split of Total
New Investments was split by category as follows:
Investment Category |
Cost |
% of New Investments |
Primary |
£26m |
89 % |
Direct |
£1m |
4 % |
Secondary |
£2m |
7 % |
Total |
£29m |
100 % |
- The £1m of direct
investments were follow-on investments in existing portfolio
companies
Commitments
- We made two new
fund Commitments totalling £29m during the quarter:
Fund |
Manager |
Type / Focus |
Commitment during the period |
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Local currency |
GBP |
New Mountain VII |
New Mountain Capital |
Primary / large buyouts |
$20.0m |
£16.4m |
Bowmark VII |
Bowmark |
Primary / mid-market buyouts |
£12.5m |
£12.5m |
- At 31 October 2023
we had Total Undrawn Commitments of £490m to funds in their
investment period and a further £95m to funds outside their
investment period
Liquidity
- Total available
liquidity at 31 October 2023 was £154.2m (31 July 2023:
£158.6m)
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£m |
Cash at 31 July 2023 |
24.0 |
Realisation Proceeds |
39.1 |
Total New Investments |
(29.2) |
Debt drawn down |
(14.7) |
Shareholder returns |
(9.4) |
Management fees |
(4.0) |
FX and
other expenses |
(2.1) |
Cash at 31 October 2023 |
3.7 |
Available undrawn debt facilities |
150.4 |
Cash and undrawn debt facilities (total available
liquidity) |
154.1 |
- The cash balance
was £3.7m (31 July 2023: £24.0m) and drawn debt was £58.5m (31 July
2023: £72.9m). As a result, we had net debt of £54.8m (31 July
2023: £48.9m)
- At 31 October 2023
the Portfolio represented 108.8% of net assets (31 July 2023:
108.4%)
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£m |
% of net assets |
Portfolio |
1,436.6 |
108.8 % |
Cash |
3.7 |
0.3 % |
Drawn debt |
(58.5) |
(4.4) % |
Co-investment Incentive Scheme
Accrual |
(58.1) |
(4.4) % |
Other
net current liabilities |
(2.9) |
(0.2) % |
Net assets |
1,320.8 |
100.0 % |
Dividend and share buyback
- Progressive
dividend policy maintained: third quarter dividend of 8p per share
(Q3 FY23: 7p)
- It remains the
Board’s current intention to declare total dividends of at least
32p per share for the financial year ended 31 January 2024. This
would represent an increase of 2p (6.7%) per share compared to the
financial year ended 31 January 2023
- The following
purchases have been made under the Company's long-term share
buyback programme:
|
Q3 FY24 |
Since 19 October
20221 |
Number of shares purchased |
326,515 |
1,282,188 |
Capital returned to
shareholders |
£3.8m |
£14.6m |
Number of days shares have been
acquired under the buyback programme |
27 |
92 |
Weighted average discount to last
reported NAV |
38.9 % |
39.7 % |
1 Being the date the long-term share
buyback programme was announced, up to and including 19 January
2024
Activity since the period
end
Notable activity between 1 November 2023 and 31 December 2023
has included:
- Realisation
Proceeds of £9m
- New investments of
£28m
- As part of our
active approach to managing our Portfolio, we executed a Secondary
sale of certain investments that we expect to generate lower
returns in the future than the rest of the Portfolio. The sale
generated an attractive return of 1.8x invested cost, and gross
cash proceeds of £68m that were received in December 2023. It also
reduced our undrawn commitments by £9m. The sale was executed at a
discount of 15.9%, which we estimate led to a reduction in our NAV
per Share of approximately 1%. Pro-forma for this transaction at 31
October 2023 our NAV per Share would have been 1,937p (31 July
2023: 1,904p)
25 January 2024
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