Icg Enterprise Trust Plc Gbp · LSE:ICGT
Icg Enterprise Trust Plc Gbp — ICG Enterprise Trust — FY2018 Earnings Presentation
51 slides from Icg Enterprise Trust Plc Gbp's earnings presentation, April 2018
Slide 1: Annual results
Annual results For the year ended 31 January 2018
Slide 2: Introduction
Introduction Pages Company overview 4-8 Emma Osborne Head of Private Equity Fund Investments Results and performance 9-20 Case studies 21-28 Kane Bayliss Supplementary portfolio information 29-35 Managing Director Private Equity Fund Investments Appendices 38 2
Slide 3: Company Overview
Company Overview ENTERPRISE TRUST
Slide 4: Company overview
Company overview A listed private equity investor with net assets of £664m > Investing in profitable unquoted companies, primarily in Europe and the US > Focused on strong and consistent returns while limiting downside risk > Unique portfolio combining in-house directly controlled investments with t
Slide 5: Manager overview: Intermediate Capital Group plc
Manager overview: Intermediate Capital Group plc A specialist asset manager in private debt, credit and equity 29 €27.4 293 15 Stockholm Amsterdam London 13 New York Paris Madrid Warsaw Frankfurt Luxembourg San Francisco Tokyo 32 investment 84 investment Hong Kong 17 investment professionals profess
Slide 6: A differentiated offering
A differentiated offering Combining a proven strategy with the strength of a global platform Listed private equity Specialist asset manager investor - £664m net in private debt, credit assets and equity - €27bn AUM on strong and consistent returns and long track record of lending to and investing in
Slide 7: Investment strategy
Investment strategy Generating growth through cycles – Established, profitable, cash generative growing private companies, primarily Europe and the US – Partnering with three specialist in-house teams and other leading private equity managers – Balancing concentration with diversification – High con
Slide 8: Investment portfolio
Investment portfolio High conviction investments underpinned by a portfolio of leading funds – Underlying companies selected by ICG 18.3% – Increases exposure to attractive assets – Enhances returns and increases visibility and control Third-party direct 17.1% co-investments – Enables greater flexib
Slide 9: Results and performance
Results and performance For the year to 31 January 2018
Slide 10: Highlights for the year
Highlights for the year Strong performance and excellent progress against strategic goals +12.5% Investment portfolio return of 16.4% return in constant currencies Total Return ‒ 15.3% return in sterling (959p NAV per share) Driven by continued strong operating performance and realisations activ
Slide 11: Performance
Performance Outperforming public markets through cycles NAV and share price performance (total return)* FTSE All-Share ICG Enterprise Share price NAV and share price continue to ICG Enterprise NAV growth outperform FTSE All-Share 113% - Over 20 years NAV and share price has 107% returned 9.6% p.a.
Slide 12: Consistently strong portfolio growth
Consistently strong portfolio growth 16.4% portfolio growth in local currencies Underlying portfolio growth High quality portfolio performing well 30% - 16.4% portfolio growth in local currencies; 15.3% in sterling 25% - Building on 15.0% p.a. growth in local currencies over the last five years; 1
Slide 13: Highly cash generative portfolio
Highly cash generative portfolio Realisations at 40% uplift to carrying value; 2.7x cost Realisations £m 250 £227m of realisations - a record period 227 - 59 full realisations 200 - Cash proceeds 37% of opening portfolio value 150 163 100 120 Seven realisations within the Top 30 118 companies 85
Slide 14: Selective investment into compelling opportunities
Selective investment into compelling opportunities £142m invested; 42% into high conviction Investment activity £m 160 Cautious in deploying capital in the current 142 market 140 128 - High pricing and strong competition for good 125 quality assets 120 - Maintaining discipline is key, as always 10
Slide 15: Finding value in the current market
Finding value in the current market Selective investment across three key themes Focused On strong and consistent Defensive growth returns • Highly resilient businesses Flexible with relatively low correlation Strategy allows us to be to economic cycles nimble and adjust mix of • Strong recurring re
Slide 16: £110m of primary commitments
£110m of primary commitments Nine commitments; four new relationships £22m £21m £15m €5.0bn European mid-market buyout fund €15.5bn Europe and US large buyout fund $3.5bn US mid-market buyout fund Relationship since 2005 Relationship since 2005 Relationship since 2007 £12m £12m £8m $2.
Slide 17: Third-party High Conviction
Top 30 underlying companies – 47% of the portfolio Value is concentrated in our high conviction investments High Conviction Pre-Crisis 2009 - 2013 2014 - 2016 2017-18 71%1 Graphite primary 28% Third-party primary 1% 1 Percentages are of the top 30 value. High conviction includes ICG, direct co-inves
Slide 18: Top 30 underlying companies – strong revenue and earnings growth
Top 30 underlying companies – 47% of the portfolio Strong revenue and earnings growth Revenue growth 15% 71% of Top 30 companies in high conviction portfolio 10% 11% 8% Continued strong revenue growth 7% 5% - LTM revenue growth of 11% 6% 5% - Five year revenue CAGR of 8% 0% Dec-13 Dec-14 Dec-15
Slide 19: Top 30 underlying companies – modest increase in valuation multiples
Top 30 underlying companies – 47% of the portfolio Modest increase in valuation multiples EV/EBITDA multiple 12.0 EBITDA multiples increased to 10.6x 10.0 10.6 - Change of mix and weightings to the larger 9.7 9.4 companies 8.0 9.2 9.0 - Modest increase in multiples overall 6.0 4.0 Net debt/EBITD
Slide 20: Summary and outlook
Summary and outlook Well positioned to continue to generate shareholder value Driven by continued strong operating performance and realisation activity Continued strong performance Outperformed FTSE All-Share sector over the short, medium and long term High quality, Portfolio is biased to grow
Slide 21: Case studies
Case studies ENTERPRISE TRI
Slide 22: Case study: Visma
Case study: Visma Co-investment alongside ICG Europe VI – September 2017 £15m Total investment by ICG Enterprise Background Rationale Outlook Nordic market leader with over 600,000 ICG knowledge and experience of Positive current trading with small and medium-sized business and the company, ma
Slide 23: Case study: DomusVi
Case study: DomusVi Co-investment alongside ICG Europe VI – July 2017 £18m Total investment by ICG Enterprise Background Rationale Outlook Third largest nursing home operator in ICG knowledge and experience of Positive current trading with Europe (#1 in Spain and #3 in France) with sector, com
Slide 24: Case study: Leeds Equity Partners
Case study: Leeds Equity Partners Commitment to Leeds Equity Partners VI – December 2017 Co-investment in Endeavor Schools $20m Invested and committed by ICG Enterprise Background Rationale Outlook Leeds specialises in investing in the ICG has significant investment Leeds VI is expected to hol
Slide 25: Case study: Oak Hill Capital Partners
Case study: Oak Hill Capital Partners Investments in Oak Hill II, III and IV – March 2017 $22m Invested and committed by ICG Enterprise Background Rationale Outlook Oak Hill is one of the longest-standing US ICG has been tracking Oak Hill’s At the $2.65bn final close the fund managers tracing
Slide 26: Case study: New Mountain Capital
Case study: New Mountain Capital Commitment to New Mountain V – June 2017 $15m Committed by ICG Enterprise Background Rationale Outlook New Mountain was established in 1999 ICG has been tracking New New Mountain V had a final close and has broad investment experience Mountain since it acquired
Slide 27: ICG European Mezzanine and Equity
ICG European Mezzanine and Equity Flexible strategy aiming for private equity returns with low downside risk Aiming for private equity returns (15-20% gross) with subordinated debt risk profile Objective Investing across the capital structure, often as sole institutional equity provider Europe
Slide 28: ICG Strategic Secondaries Fund
ICG Strategic Secondaries Fund Highly differentiated approach in a growing market segment Acquiring portfolios of private equity baked companies in mature funds Niche Offering liquidity for existing investors strategy Remaining companies require further time to realise potential value Strong
Slide 29: Supplementary portfolio information
Supplementary portfolio information
Slide 30: Detailed portfolio overview
Detailed portfolio overview Single fee on half the portfolio ICG Graphite Third party Primary 64.1% 6.1% 15.1% 42.9% Secondary 12.0% 5.4% 0.7% 5.9% Co- Investment/ direct 23.9% 6.8% 3.9% 13.2% 100.0% 18.3% 19.7% 62.0% No management fee at ICGT level No management fee at underlying manager level 30
Slide 31: Top 30 underlying companies #1-15
Top 30 underlying companies #1-15 Company Manager Year of Country Value as a investment % of Portfolio 1 City & County Healthcare Group Provider of home care services Graphite Capital 2013 UK 3.5% 2 DomusVi 1 / 2 Operator of retirement homes ICG 2017 France 2.9% 3 Visma 1 Provider of accounting soft
Slide 32: Top 30 underlying companies #16-30
Top 30 underlying companies #16-30 Company Manager Year of Country Value as a investment % of Portfolio 16 Frontier Medical 1 Manufacturer of medical devices Kester Capital 2013 UK 1.5% 17 TMF 2 Provider of management and accounting outsourcing services Doughty Hanson 2008 Netherlands 1.5% 18 Yudo 1
Slide 33: Top 30 underlying companies: valuation multiples and earnings growth
Top 30 underlying companies Increase in valuation multiples and strong earnings growth EBITDA growth 100% 90% Earnings growth of 12% 80% - 59%1 reporting EBITDA growth of more than 70% 60% 10% 50% - A number of companies investing for growth, 40% expect to see the benefit of this over next 12- 30%
Slide 34: Realisations at significant uplifts to carrying value
34 Realisations at significant uplifts to carrying value Continued strong performance Percentage uplift to carrying value Weighted average 33% Largest realisation was the sale of Micheldever 45 by Graphite Capital (£36m) 40 35 40 - Other sales from the Top 30 companies: 30 36 35 - Standard Brands
Slide 35: Portfolio geographic focus
Portfolio geographic focus Increasing exposure to the US Movement in geographic split 0.3% 3.0% 100% 14.1% Increasing exposure to the US market 90% 21.8% 80% - Largest most developed private equity 70% market 40.5% Rest of World 60% - 22% of portfolio; up from 14% at Jan 16 40.0% 50% US - Expect U
Slide 36: Portfolio sector and deal size
Portfolio sector and deal size Focus on mid-large companies with a well balanced sector exposure Sector 3% 5% Healthcare and education 10% 22% Industrials Well balanced sector exposure Business services - Bias to structural growth 12% Consumer goods and - Healthcare and education 22% services Leis
Slide 37: Portfolio vintage year exposure
Portfolio vintage year exposure Attractive and well balanced maturity Investment vintage 25% Balance of near term realisations prospects with a strong pipeline of medium to longer 21% term growth 20% 19% 18% Investments completed prior to 2014 – 45% of the portfolio 15% - Likely to generate gain
Slide 38: Appendices
Appendices ENTERPRISE TRI
Slide 39: Return attribution
Return attribution Strong portfolio gains NAV per share bridge 1050p Change in NAV Jan-18 (% of opening NAV) Underlying portfolio return in local currencies 16.4% 1000p 118.6 -10.2 -3.9 3.9 -20.0 Currency (1.1%) 129.5 950p 959.1 Total portfolio valuation movement 15.3% Effect of cash drag* (0.5%) 90
Slide 40: Balance sheet
40 Balance sheet Strong balance sheet £m Jan 18 Jan 17 Cash balances increased to £78m Investments 601 594 Cash 78 39 Undrawn commitments of £321m Other net assets/liabilities -15 -20 - If outstanding commitments were to follow a Net Assets 664 613 linear investment pace, estimate £80m of calls
Slide 41: Balance sheet evolution
Balance sheet evolution History of conservative balance sheet management 800 600 400 601 428 594 432 433 265 415 192 231 357 378 200 £ million 133 140 113 104 55 69 90 78 43 46 39 0 -43 -46 -55 -69 -39 -113 -90 -104 -78 -133 -140 -103 -111 -45 -26 -98 -96 -97 -104 -200 -136 -185 -119 -58 -185 -64 -1
Slide 42: Management fees and expenses
Management fees and expenses Effective management fee of 1.1% of NAV Costs as a % of investment portfolio Incentive (excluding cash) Headline management fee of 1.4%1 of portfolio 3% value plus 0.5% of undrawn commitments to funds in investment period Excludes funds managed by both ICG and Graphi
Slide 43: Incentive arrangements
Incentive arrangements Strong alignment of interest through co-investment scheme Incentive net payments as a % of cash proceeds Management fees Co-investment scheme in which the Manager 5% Incentive 10 year average invests 0.5% in every investment 4% Incentive of 10% provided the investment 3% e
Slide 44: Dividends and buybacks
Dividends and buybacks Continuing to return capital to shareholders Dividends Share buybacks The Board intends to pay a minimum dividend each £7.8m share buy backs the year year of 20.0p per share and to grow the annual – 1,082,437 shares at an average price of 716.5p dividend progressively – Av
Slide 45: Team: biographies
Team: biographies Unique combination of direct deal and fund investment experience Private Equity Fund Investment Team IC member IC member IC member IC member Emma Osborne Benoit Durteste Andrew Hawkins Kane Bayliss Fiona Bell Colm Walsh Nils Schander Kelly Tyne Head of Private Chief Investment Head
Slide 46: Market environment
Market environment Strong exit environment; patient and selective approach to investment is key New investments (Europe & US) $bn 400 4,500 355 Response 350 4,000 292 We invest with established private equity managers 286 3,500 300 270 276 that have significant experience of successfully 250 232 2
Slide 47: Market environment
Market environment Strong exit environment; patient and selective approach to investment is key Outstanding dry powder (US & Europe) $bn 600 553 Response 490 500 In terms of exits, our private equity managers are 431 432 387 414 taking advantage of favourable market conditions 400 375 337 365 for
Slide 48: How does private equity create value?
How does private equity create value? Active ownership model generating outperformance through cycles Long term outlook – Able to prioritise fundamental value creation over short term profit targets – Building an attractive business for the future acquirer Alignment of interests Due diligence and kn
Slide 49: Discount
Discount Discount does not reflect the long term performance Company vs sector long term discount Company NAV vs FTSE All Share 10 700 626 - 600 -10 500 -20 400 -30 330 300 -40 200 -50 100 -60 -70 - 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2
Slide 50: Useful information
Useful information Structure: Company registered in England and Wales Ticker: ICGT.LON Investment trust tax status ISIN: GB0003292009 Registered company number: 01571089 SEDOL: 0329200 Listing: Premium London listing Website: www.icg-enterprise.co.uk Broker: Numis Securities Limited James Glass (Sal
Slide 51: Legal notice
Legal notice What this document is for This document has been prepared by ICG Alternative Investment Limited (“ICG AIL”) as manager of ICG Enterprise Trust plc (“ICG Enterprise”). The information and any views contained in this document are provided for general information only. It is not intended t