ICG Enterprise Trust PLC GBP · LSE:ICGT
ICG Enterprise Trust PLC GBP — Graphite Enterprise Trust — FY2012 Earnings Presentation
35 slides from ICG Enterprise Trust PLC GBP's earnings presentation, Apr 5, 2012
Slide 1: Results for the year ended 31 January 2012
Results for the year ended 31 January 2012 Presentation to analysts 5 April 2012 0
Slide 2: Presentation to analysts – April 2012
Presentation to analysts – April 2012 1. Introduction 2. Performance 3. Balance sheet and liquidity 4. Investment activity 5. The portfolio at 31 January 2012 6. Share price and discount 7. Outlook and conclusions 1
Slide 3: Introduction: differentiated position in listed private equity
1. Introduction Graphite Enterprise has a differentiated position in the listed private equity sector Hybrid fund of funds and direct investor Focused strategy – European buy-outs Highly experienced team with direct investment backgrounds Strong performance record over 25 years Conservative approach
Slide 4: Direct investment manager approach to third party fund investments
1. Introduction We apply a direct investment manager approach to our third party fund investments The Graphite Enterprise team has extensive direct investing experience – Well positioned to judge other private equity managers – Understanding of direct co-investment opportunities We benefit from
Slide 5: NAV per share increased 6.6% to a record 569.4p
2. Performance The net asset value per share increased by 6.6% to a record level of 569.4p 31 January 31 January Change 4 April YTD 2011 2012 2012 change Net asset value per share 534.0p 569.4p +6.6% n/a n/a Share price 308.0p 357.0p +15.9% 391.0p +9.5% FTSE All-Share Index 3,044 2,933 -3.7% 2,967 +
Slide 6: NAV per share has outperformed the All-Share over 1, 5 and 10 years
2. Performance The net asset value per share has outperformed the All-Share over 1, 5 and 10 years 1 3 5 10 Net asset value per share +6.6% +26.8% +25.3% +99.9% Share price +15.9% +90.9% -7.5% +56.2% FTSE All-Share Index -3.3% +32.8% -9.0% +16.2% The NAV per share has outperformed the Index in 17
Slide 7: Growth in NAV per share driven by portfolio performance
2. Performance The growth in NAV per share was driven by the strong performance of the portfolio Year to 31 January 2012 % £m Portfolio 11.0% 42.8 Currency -1.6% (6.2) Total portfolio 9.4% 36.6 Dividend -0.4% (1.6) Expenses and other -2.4% (9.1) Total NAV movement 6.6% 25.9 6
Slide 8: Portfolio growth driven by realised and unrealised gains
2. Performance Growth in the portfolio was driven by realised and unrealised gains Gain as % % of Gain of opening underlying £m portfolio gain Gains from realisations 19.9 5.6% 46% Other gains 22.9 6.4% 54% Total underlying gain 42.8 12.0% 100% Currency (6.2) -1.7% Total portfolio movement 36.6 10.3
Slide 9: Consistently outperformed the peer group
2. Performance Graphite Enterprise has consistently outperformed the peer group Years to 31 January 2012 1 3 5 10 Graphite Enterprise NAV 7.1% 29.2% 31.4% 127.8% Peer group NAV 5.8% 9.5% 17.7% 120.3% The strong performance is despite taking lower balance sheet risk than the peer group At 31 Janu
Slide 10: The balance sheet remains strong
3. Balance sheet The balance sheet remains strong Jan-12 Jan-11 Change Jan-12 Jan-11 £m £m £m % % Investments 377.7 356.6 +21.1 89.2% 89.2% Cash and other net current assets 45.9 42.9 +3.0 10.8% 10.8% Total assets 423.6 399.5 +24.1 100.0% 100.0% Outstanding commitments 142.8 173.7 -30.9 Undrawn bank
Slide 11: Realisations exceeded new investment by £15.5 million
4.Activity Realisations exceeded new investment by £15.5 million The portfolio ended the year at its highest ever level of £377.7 million 10
Slide 12: Disposal proceeds at highest level since 2007
4.Activity Disposal proceeds were at their highest level since 2007 Notes: Excludes proceeds from secondary sales (£3.8m in year to 31 January 2012). 11
Slide 13: Realisations generated significant uplifts over prior valuations
4.Activity Realisations continued to generate significant uplifts over prior valuations Year to 31 January 2012 Gross Net Gross valuation proceeds multiple uplift on Number £m of cost exit1 Realisations included in 31 Jan 11 value2 3 31.0 n/d n/d Full realisations 15 39.5 2.5x 51% Partial realisatio
Slide 14: New investment marginally lower than prior period
4.Activity New investment was marginally lower than in the 13 months to January 2011 Drawdowns were 22% lower than in the prior period We increased the amount invested through secondaries and co-investments by 56% 13
Slide 15: Mix of secondaries, primaries and co-investments
4.Activity We completed a mix of secondaries, primaries and co-investments in the year We acquired 6 secondary interests in funds for £26.8 million – Fourth Cinven Fund – Charterhouse VII & VIII – Candover 2005 – Steadfast II – Graphite VI We made 2 co-investments for £1.9 million – National Fos
Slide 16: Example – National Fostering Agency
4.Activity Example – National Fostering Agency (Graphite Capital buy-out) Background UK’s second largest independent fostering agency (IFA) More than 1,500 carers looking after more than 2,000 children Secondary buy-out completed January 2012 The opportunity Growing number of looked after ch
Slide 17: Example – Project Blackfriars
4.Activity Example – Project Blackfriars (secondary purchase of funds) Background Introduced in August 2011 by an intermediary we know well, seller was a German bank Portfolio of 19 funds with NAV of c.€140m − We bid initially on four funds, reduced to three after due diligence Secondary transac
Slide 18: Portfolio combines Graphite Capital and third party investments
5. Portfolio The portfolio combines Graphite Capital and third party investments Direct Graphite investments 21% portfolio Third party Third primary funds party Third party 60% co- portfolio invests 7% Third party secondary funds 12% The portfolio is more diversified than most direct funds, more c
Slide 19: Portfolio balanced and well diversified
5. Portfolio The portfolio remained balanced and well diversified At 31 January 2012, the portfolio comprised 48 funds and 24 direct investments – exposure to 310 underlying companies Investment type Geography Sector Note: Investment type is at the fund level, Geography and Sector are on an underl
Slide 20: Graphite Capital managed six of the top ten holdings
5. Portfolio At January 2012, Graphite Capital directly managed six of the top ten holdings Value % of Country Manager £m portfolio 1 Distributor and retailer of tyres UK Graphite 14.3 3.8% 2 Provider of recruitment services UK Graphite 8.7 2.3% 3 Provider of foster care services UK Graphite 8.5 2.3
Slide 21: Top 30 companies performed strongly in the year
5. Portfolio The Top 30 companies performed strongly in the year At 31 January 2012 the top 30 accounted for 42% of the portfolio These companies performed well in the year to 31 December 2011 – revenues grew by an average of 13% – EBITDA grew by an average of 14% By contrast, the EBITDA of th
Slide 22: Top 30 valued at average 9.0x EBITDA
5. Portfolio The Top 30 companies were valued at an average of 9.0x EBITDA and had 3.8x gearing Average valuation multiple increased slightly from 8.7x at January 2011 to 9.0x at January 2012 Average net debt multiple increased slightly from 3.4x at January 2011 to 3.8x at January 2012 In each
Slide 23: Scope for future upside as the portfolio matures
5. Portfolio There is considerable scope for future upside as the portfolio matures At January 2012 the portfolio was valued at 1.2 times cost* and had an average maturity of 4.1 years * Including amounts realised by current portfolio companies 22
Slide 24: Share price outperformed the FTSE All-Share
6. Share price The share price has strongly outperformed the FTSE All-Share since 31 January 2011 31 January In the year to 31 January, the share price rose by 15.9% while the Index fell by 3.7% Since then, the share price has risen by 9.5% and the Index by 1.2% Since 31 January 2011, the shar
Slide 25: Discount has narrowed since the period end
6. Share price The discount has narrowed since the period end, as has that of the peer group 31 January At 4 April 2012 the discount was 31.3% (share price 391p) – The average discount over ten years is 23.0% – The average discount in the ten years prior to Q4 2008 was 12.4% 24
Slide 26: Outlook: The European buy-out market
7. Outlook The European buy-out market Fund raising increased strongly in 2011, while new investment was broadly flat Pricing remains relatively high for good quality companies Debt availability remains variable depending on quality of underlying company and sponsor The pipeline of new funds
Slide 27: Graphite Enterprise is well positioned to grow further
7. Outlook Graphite Enterprise is well positioned to grow further The portfolio is growing strongly – The top 30 investments (42% of the portfolio) are performing particularly well – Valuation multiples are reasonable given recent performance Many companies are being positioned for exit in the s
Slide 28: Background Info
Background Info Structure: Company registered in England and Wales Ticker: GPE.LN Investment trust tax status ISIN: GB0003292009 Registered company number: 01571089 SEDOL: 0329200 Listing: Official List (main market) in London Broker: JPMorgan Cazenove: Sales Angus Wilton + 44 (0) 20 7155 8122 Corpo
Slide 29: Appendices
Appendices BR] 28 Graphite Capital
Slide 30: The Manager of Graphite Enterprise is Graphite Capital
The Manager of Graphite Enterprise is Graphite Capital Graphite Capital is a leading UK mid-market private equity firm with £1.2 billion under management – Buy-out funds investing in the UK mid-market (almost £900 million) – Fund investments and co-investments (more than £400 million) Independen
Slide 31: An experienced and focused team manage Graphite Enterprise
Graphite Capital – an experienced and focused team manage Graphite Enterprise Rod Richards 25 years PE experience. Joined in 1986. Led the buy-out from F&C in 2001. Degree in PPE from Oxford, MBA from INSEAD. Leads fund and direct investment businesses. Stephen Cavell 20 years PE experience. Joined
Slide 32: Benefits from the direct investment team's experience
Graphite Enterprise benefits from the direct investment team’s experience Simon ffitch 21 years PE experience. Joined in 1992. Joint head of direct investment team. Previously at LEK and Hill Samuel Development Capital. Degree in PPE from Oxford. Andy Gray Rod Richards 19 years PE experience. Joined
Slide 33: Graphite Capital's buy-out funds
Graphite Capital’s buy-out funds Fund Final Total GPE’s GPE’s Allocation of Graphite Investments close comms comm share investments Graphite Capital May £475m £42.8m 9.0% First £38m (8% of fund’s total National Fosterling Agency, AMS, U-POL, London Square, Partners VII Main 2007 commitments) Willowb
Slide 34: Almost half of portfolio valued between cost and twice cost
Almost half of the portfolio was valued at between cost and twice cost * 0.95 to 1.05 times cost 33
Slide 35: Legal notice
Legal notice What this document is for This document has been prepared by Graphite Capital Management LLP (“Graphite Capital”) as manager of Graphite Enterprise Trust PLC (“Graphite Enterprise”). The information and any views contained in this document are provided for general information only. It i
Graphite Enterprise Trust — FY2012 Earnings Presentation on 6ix