Icg Enterprise Trust Plc Gbp · LSE:ICGT
Icg Enterprise Trust Plc Gbp — ICG Enterprise Trust — H1 2017 Earnings Presentation
53 slides from Icg Enterprise Trust Plc Gbp's earnings presentation, October 2017
Slide 1: Interim results
Interim results For the six months to 31 July 2017
Slide 2: Introduction
Introduction October 2017 Pages Emma Osborne Company overview 4-6 Head of Private Equity Fund Investments Results and performance 8-10 Investment activity 12-15 Kane Bayliss Managing Director Top 30 underlying companies 17-19 Private Equity Fund Investments Balance sheet and financing 21 Nicola Edga
Slide 3: Company Overview
Company Overview ENTERPRISE TRUST
Slide 4: Company and Manager overview
Company and Manager overview The Company The Manager Private equity investor focused Specialist asset manager in on buyouts in developed markets private debt, credit and equity > Focus on generating consistently high returns > Expertise and long track record of lending to while protecting investment
Slide 5: Investment strategy
Investment strategy Focused on generating consistent growth through cycles Focused Focus on developed markets and established businesses Buyouts Favour more defensive businesses; uncorrelated to economic cycles and highly cash generative Increase exposure to high conviction investments to enha
Slide 6: Portfolio overview
Portfolio overview High conviction investments underpinned by a portfolio of leading funds 14.1% High conviction portfolio Underlying companies selected by ICG Third-party direct Increases exposure to attractive assets co-investments 21.3% 43% Enhances returns and increases visibility Enable
Slide 7: Results and performance
Results and performance For six months to 31 July 2017
Slide 8: Highlights for the six months to July 2017
Highlights for the six months to 31 July 2017 Strong performance and excellent progress against strategic goals 9.8% return from investment portfolio; 8.7% in local currencies +8.7% Driven by continued strong operating performance and realisation activity Total Return - Largest 30 companies gene
Slide 9: Consistently strong portfolio growth
Consistently strong portfolio growth 8.7% portfolio growth in local currencies; 24.1% in last 12 months Five year underlying portfolio growth of 15.0% p.a. (local currencies) 30% High quality portfolio performing well - 8.7% portfolio growth in local currencies; 9.8% in 25% sterling - Building on
Slide 10: Relative performance
Relative performance Outperforming over the short, medium and long term NAV performance* Share price performance* 120.7% 102.2% 10 years 70.4% 10 years 70.4% 82.8% 76.5% 77.4% 116.0% 5 years 65.0% 5 years 65.0% 58.9% 103.0% 45.9% ICG Enterprise Trust 38.2% 3 years 25.7% 3 years 25.7% FTSE All-Share
Slide 11: Investment activity
Investment activity ENTERPRISE TRI
Slide 12: Highly cash generative portfolio
Highly cash generative portfolio Realisations at 36% uplift to carrying value; 3.1x cost Percentage uplift to carrying value % £117m of proceeds; a record for a half year 60 - 28 full realisations 50 49 Average 32% - 20% of opening portfolio value 40 30 36 35 36 Largest realisation was the sale
Slide 13: Selective investment into compelling opportunities
Selective investment into compelling opportunities £65m invested; 54% into high conviction Investment activity £m 180 Market for new investment is challenging 162 - High pricing and strong competition for good quality 160 assets across all target markets 140 128 - Maintaining discipline is key, as
Slide 14: Case study: DomusVi
Case study: DomusVi Co-investment alongside ICG Europe VI – July 2017 £17.5m 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, c
Slide 15: £66m of new primary commitments
£66m of new primary commitments Two existing and three new managers Five new third-party primary commitments - Two existing relationships: CVC and Hollyport - Three new managers: £20.9m £12.0m • New Mountain (US) €15.5bn Europe and US large $2.65bn US upper mid market • Oak Hill (US) buyout fu
Slide 16: Top underlying companies
Top 30 underlying companies 16
Slide 17: Top underlying companies – 45% of the portfolio
Top 30 underlying companies – 45% of the portfolio Value is concentrated in our high conviction investments High Conviction Pre-Crisis 2009 - 2013 2014 - 2016 2017 76%1 Graphite primary 19% Third-party primary 5% 1 Percentages are of the top 30 value. High conviction includes ICG, direct co-investme
Slide 18: Strong revenue and earnings growth
Top 30 underlying companies – 45% of the portfolio Strong revenue and earnings growth Revenue growth 20% Continued strong revenue growth 15% 17% - LTM revenue growth of 17% - Average revenue growth of 9% since Dec 12 10% 12% 8% Consistent strong EBITDA growth 5% 7% 6% 5% - LTM earnings growth of
Slide 19: Modest increase in valuation multiples
Top 30 underlying companies – 45% 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 9.1 9.2 9.0 - Modest increase in multiples overall 6.0 4.0 Net debt/E
Slide 20: Balance sheet and financing
Balance sheet and financing ENTERPRISE TRUST
Slide 21: Balance sheet
Balance sheet Strong balance sheet and positive financing outlook £m Jul 17 Jan 17 Cash balances increased to £75m Investments 600 594 Cash 75 39 Undrawn commitments of £346m Other net assets/liabilities -24 -20 - £254m relates to funds still in their investment Net Assets 651 613 periods Outsta
Slide 22: Outlook
Outlook ENTERPRISE TRI
Slide 23: Outlook
Outlook Well positioned to continue to generate significant shareholder value Focus on defensive businesses; uncorrelated to economic cycles and highly High quality portfolio cash generative generating strong Attractive maturity profile; balance of near term realisations and a strong EBITDA grow
Slide 24: Case studies
Case studies ENTERPRISE TRI
Slide 25: Case study: Oak Hill Capital Partners
Case study: Oak Hill Capital Partners Investments in Oak Hill II, III and IV – March 2017 $22.0m 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 in July managers tracing
Slide 26: Case study: New Mountain Capital
Case study: New Mountain Capital Commitment to New Mountain V – June 2017 $15.0m 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 acquir
Slide 27: ICG European Mezzanine and Equity
ICG European Mezzanine and Equity Flexible strategy aiming for PE returns with low downside risk Aiming for private equity returns (15-20% gross) with subordinated risk profile Objective Investing across the capital structure, often as sole institutional equity provider European mid-market foc
Slide 28: ICG Strategic Secondaries
ICG Strategic Secondaries Highly differentiated approach in a growing market segment Acquiring portfolios of PE-backed companies in mature funds Niche Offering liquidity for existing investors strategy Remaining companies require further time to realise potential value Strong Significant tar
Slide 29: Case study: Quirónsalud
Case study: Quirónsalud Sale by CVC European Equity Partners V – February 2017 4.4x Multiple of cost achieved on disposal Background Developments Realisation Quirónsalud is the leading private Well-invested hospitals in key In February 2017 Quirónsalud healthcare operator in Spain (84 hospital
Slide 30: Supplementary portfolio data
Supplementary portfolio data
Slide 31: Top 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 3.2% 2 DomusVi+^ Operator of retirement homes ICG 2017 France 3.0% 3 Standard Brands+⁻ Manufacturer of fire
Slide 32: Top underlying companies #16-30
Top 30 underlying companies #16-30 Company Manager Year of Country Value as a % of investment Portfolio 16 System One+ Provider of specialty workforce solutions Thomas H Lee Partners 2016 USA 1.4% 17 Visma+ Provider of accounting software and business outsourcing services Cinven 2014 Norway 1.3% 18
Slide 33: Strong revenue and earnings growth
Top 30 underlying companies – 45% of the portfolio Strong revenue and earnings growth Revenue growth % of top 30 35% Continued strong revenue growth 30% - Weighted average LTM growth of 17% 25% 21% 21% - 37%1 growing top line by more than 10% 20% 16% 14% - Driven by M&A and organic growth 15% 13%
Slide 34: Modest increase in valuation multiples
Top 30 underlying companies – 45% of the portfolio Modest increase in valuation multiples EBITDA valuation multiple % of top 30 Increase in the EBITDA multiples to 10.6x 35% - Change of mix and weightings to the larger 30% companies 25% 23% 22% 20% - Modest increase in multiples overall 20% 16% 14
Slide 35: Portfolio overview
Portfolio overview Single fee on almost half the portfolio ICG Graphite Third party Primary 61.0% 4.5% 12.4% 44.1% Secondary 13.1% 5.1% 0.8% 7.2% Co- Investment/ direct 25.9% 4.5% 6.7% 14.7% 100.0% 14.1% 19.9% 66.0% No management fee at ICGT level No management fee at underlying manager level 35
Slide 36: Portfolio geographic focus
Portfolio geographic focus Increasing exposure to the US Historic geographic split 0.3% 1.4% 100% 14.1% Increasing exposure to the US market 90% 22.6% 80% Largest most developed private equity market 70% 40.5% 23% of portfolio; up from 14% at Jan 16 Rest of World 60% 38.7% Expect US focus to
Slide 37: 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 22% Well balanced sector exposure 9% Business services Consumer goods and Bias to structural growth services 12% Industrials - Healthcare and education largest L
Slide 38: 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 term growth 20% 20% 20% Investments completed prior to 2014 – 57% of the portfolio 15% - Likely to generate gains fr
Slide 39: Realisations history
Realisations history Highly cash generative portfolio Realisation proceeds (£m and as % of opening portfolio) % of opening £ million portfolio 180 60% 160 50% 140 120 40% 100 30% 80 142 60 118 120 117 20% 112 93 40 85 74 10% 20 26 20 14 0 0% Dec-07 Dec-08 Dec-09 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Ja
Slide 40: Investment activity history
Investment activity history Redeploying realisation proceeds into compelling new investments Investment activity Investment Disposal proceeds 180 162 157 160 142 140 125 128 118 120 117 120 112 103 100 93 91 85 £ million 85 81 78 74 80 64 65 54 60 40 26 24 20 14 20 0 Dec-07 Dec-08 Dec-09 Jan-11 Jan-
Slide 41: Appendices
Appendices ENTERPRISE TRI
Slide 42: Return attribution
Return attribution Strong portfolio gains NAV per share bridge 2.8 -5.0 77.9 2.2 -2.2 -10.0 950p 936.7 Change in NAV Jul-17 930p (% of opening NAV) Underlying portfolio return in local currencies 8.7% 910p 83.1 Currency 1.1% 890p Total portfolio valuation movement 9.8% 871.0 870p Effect of cash drag
Slide 43: Dividends and buybacks
Dividends and buybacks Continuing to return capital to shareholders Dividends Share buybacks The Board intends to pay a minimum dividend £6.3m share buy backs in period each year of 20.0p per share – 882,437 shares at an average price of 705.9p – Estimated average discount of 17.5% Interim of
Slide 44: Management fees and incentive arrangements
Management fees and incentive arrangements Effective management fee of 1.1% of NAV Management fees Incentive Headline management fee of 1.4% of portfolio Co-investment scheme in which the Manager value plus 0.5% of undrawn commitments to invests 0.5% in every investment funds in investment perio
Slide 45: Intermediate Capital Group plc, the Manager
Intermediate Capital Group plc, the Manager A specialist asset manager in private debt, credit and equity 28 €23.3 290 Stockholm Amsterdam 15 London Warsaw Paris Frankfurt New York Madrid Luxembourg 13 San Francisco 28 investment 85 investment Hong Kong Tokyo 19 investment professionals professional
Slide 46: 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 47: Team: Why direct investment experience matters
Team: Why direct investment experience matters Deal experience enhances analysis and relationships Primary fund investments Secondary investments Co-investments Able to look behind the marketing Bottom-up company analysis Understanding of deal dynamics Why direct deal story Assessment of int
Slide 48: Balance sheet evolution
Balance sheet evolution History of conservative balance sheet management 800 600 400 600 428 594 432 433 195 236 265 415 152 192 231 357 378 200 £ million 144 150 145 133 140 113 69 90 104 75 43 46 55 39 0 -83 -43 -46 -55 -69 -39 -113 -30 -90 -104 -75 -148 -145 -133 -140 -59 -58 -98 -103 -111 -45 -2
Slide 49: Discount
Discount Discount does not reflect the long term performance Company vs sector long term discount Company NAV vs FTSE All Share 10 800 756.90 - 700 -10 600 -20 500 -30 400 354.37 -40 300 -50 200 -60 100 -70 - 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2
Slide 50: Market: New Investment
Market: New Investment Significant European buyout activity including in the UK European buyout market1 The market is very active with €95bn of buyouts in H1 2017 (up 52% on H1 2016 and 42% on H2 2016) − Excluding the UK, €69bn of buyouts in H1 2017 was 25% higher than H1 2016 and 28% higher than
Slide 51: Market: Fundraising
Market: Fundraising Investor appetite for buyout funds remains very high Fundraising1 Buoyant conditions with €33bn raised for European buyouts in H1 2017 (€20bn in H1 2016 and €36bn in H2) − Over the last five years, European buyout dry powder has steadily increased from c. €94bn to c. €165bn € b
Slide 52: 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 53: 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