27 slides from Icg Enterprise Trust Plc Gbp's earnings presentation, Mar 25, 2015
Slide 1: Graphite Enterprise Trust PLC Analysts presentation
Graphite Enterprise Trust PLC Investing in long term growth Year ended 31 January 2015 Analysts presentation 25 March 2015
Slide 2: Full year results presentation – March 2015
Graphite Enterprise Full year results presentation – March 2015 1. Introduction Tim Spence Senior Partner, Finance Director 2. Performance Emma Osborne Senior Partner, Head of Fund Investment 3. Investment activity Kane Bayliss Partner, 4. Portfolio Fund Investment 5. Market Rod Richards Managing Pa
Slide 3: Graphite Enterprise has a distinct offering in the listed private equity sector
1. Introduction Graphite Enterprise has a distinct offering in the listed private equity sector FOCUSED STRATEGY DISTINCTIVE INVESTMENT STYLE European buy-outs - mature, profitable Focus on analysis of underlying companies companies - both through funds and directly and building long-term relationsh
Slide 4: Summary – year ended 31 January 2015
1. Introduction Summary – year ended 31 January 2015 • Good underlying portfolio performance – 12% growth in local currencies • Further NAV progression – 5%, despite adverse currency movements • Very strong realisations – £142m, 33% of opening portfolio • Record new investment – £125m, 38% increase
Slide 5: The net asset value made progress despite the adverse impact of currency
2. Performance The net asset value made progress despite the adverse impact of currency Jan-14 Total return Jan-15 12 months Net asset value per share 695.2p 677.2p +5.0% Share price 575.0p 563.5p +4.6% FTSE All-Share Index 3,622 3,497 +7.1% ● 92% of the portfolio was valued based on December report
Slide 6: The portfolio made good progress once more, increasing by 12.3% in local currencies
2. Performance The portfolio made good progress once more, increasing by 12.3% in local currencies % of opening % of opening Year to Jan-15 £m portfolio NAV Underlying valuation gains 12.3 % 10.8 % 53.5 Currency (3.9)% (3.4)% (17.0) Total portfolio 8.4 % 7.2 % 36.5 Expenses and other (2.2)% (12.1) T
Slide 7: Realisations continued to be the main driver of performance
2. Performance Realisations continued to be the main driver of performance Year to Jan-15 Year to Year to Jan-14 Jan-13 % of total £m % % gain Gains from realisations 56% 29.8 57% 51% Unrealised gains 44% 23.7 43% 49% Total portfolio 100% 53.5 100% 100% ● Gains from realisations represent full exits
Slide 8: Graphite Enterprise outperformed the fund-of-funds peer group over 3 and 5 years
2. Performance Graphite Enterprise outperformed the fund-of-funds peer group over 3 and 5 years Years to Jan-151 1 3 5 10 Total return Graphite Enterprise NAV growth 5% 27% 57% 141% Fund-of-funds2 average NAV growth 12% 22% 49% 169% ● This performance is despite taking lower balance sheet risk than
Slide 9: The portfolio generated 20% more cash than last year
3. Investment activity The portfolio generated 20% more cash than last year ● The rate of realisation of the opening portfolio was 33% – This is the highest conversion rate since 2007 ● Full realisations accounted for £98 million (69% of the total) Note Excludes proceeds from secondary sales in all
Slide 10: Full realisations continue to generate substantial uplifts to prior valuations
3. Investment activity Full realisations continue to generate substantial uplifts to prior valuations1 Year ended Jan-12 Jan-13 Jan-14 Jan-15 Valuation uplift1 51% 49% 36% 35% Number of full realisations 18 14 33 39 Multiple of original cost 2.5x 2.7x 2.1x 2.1x ● Approximately half the proceeds were
Slide 11: Secondaries and co-investments significantly increased the rate of new investment
3. Investment activity Secondaries and co-investments significantly increased the rate of new investment Note 1. Discretionary investments includes Graphite fund drawdowns, secondary Page 10 purchases of fund interests and co-investments.
Slide 12: Our investment programme was more focused on secondaries and co-investments
3. Investment activity Our investment programme was more focused on secondaries and co-investments Primary commitments £22.0m Secondary purchases £26.6m Co-investments £30.8m Undisclosed business services investment ● Following a high level of commitments in 2013, fewer of our target managers were f
Slide 13: Secondary investment – PAI Europe V
3. Investment activity Secondary investment – PAI Europe V Background ● £8.5m secondary purchase of an additional interest in PAI Europe V – €2.7 billion 2007 vintage upper mid-market buy-out fund ● Highly sought-after position in the secondary market ● Strong relationship with the manager since 200
Slide 14: New Graphite Capital investment in HCIG (£8.7m)
3. Investment activity New Graphite Capital investment in HCIG (£8.7m) Background ● Recruitment company serving range of specialist areas within the UK public & private sectors ● Trades under a number of brands ● Focused on health & social care, social housing, construction & infrastructure, enginee
Slide 15: The proportion of the portfolio over which we had discretion has increased to 53%
4. Portfolio The proportion of the portfolio over which we had discretion has increased to 53% Page 14
Slide 16: The portfolio is balanced and well diversified
4. Portfolio The portfolio is balanced and well diversified ● The portfolio strikes a good balance between diversification and concentration – Exposure to over 380 underlying companies – The top 30 underlying companies represent 47% of the portfolio value Note Geography denotes where a company is he
Slide 17: The portfolio was valued at 1.4x cost and its average maturity was 4.4 years
4. Portfolio The portfolio was valued at 1.4x cost and its average maturity was 4.4 years 34% 46% 20% ● At an average of 1.4x cost, we believe there is potential for considerable growth Note Multiples of cost include amounts realised by current portfolio companies of 0.4 times and Page 16 reflect ma
Slide 18: The Top 30 companies continue to perform well and are reasonably valued
4. Portfolio The Top 30 companies continue to perform well and are reasonably valued ● Revenues and EBITDA grew by an average of 5.8% and 8.4% respectively (LTM to Dec-14) ● Aggregate FTSE 250 revenues were flat and EBITDA grew by 2.4%3 ● The Top 30 were valued on average at 9.0x EBITDA and had net
Slide 19: Six of the top ten holdings are managed directly by Graphite Capital
4. Portfolio Six of the top ten holdings are managed directly by Graphite Capital Company Country Manager % of portfolio 1 Distributer and retailer of tyres UK Graphite 5.4% 2 Provider of home care services UK Graphite 3.2% 3 Provider of repair and maintenance services UK Graphite 3.0% 4 Provider of
Slide 20: Valuations and leverage increased notably in 2014
5. Market Valuations and leverage increased notably in 2014 European buy-out market ● The European buy-out market was slightly more active in 2014: – Europe ex UK >€50m EV: volumes -3% and value +3% – UK deals >€50m EV: volumes +20% and value -2% – The UK is around one quarter of the market but is h
Slide 21: Fundraising fell by more than 40% following the exceptionally high level in 2013
5. Market Fundraising fell by more than 40% following the exceptionally high level in 2013 Fundraising ● The total amount raised by European buy-out funds fell by more than 40% in 2014 – Funds of more than €1bn raised half as much as in 2013 (€20bn vs €41bn) 8 funds over €1bn were raised vs 12 in
Slide 22: The secondary market has become increasingly competitive
5. Market The secondary market has become increasingly competitive Secondary market ● The total secondary market grew strongly in 2014: $42bn of volume vs $28bn in 2013 ● Average prices are reported1 to have fallen from 100% to 95% of net asset value, however: – Average pricing masks a wide variatio
Slide 23: Despite strong cash inflows, we have broadly maintained the level of investment
6. Balance sheet Despite strong cash inflows, we have broadly maintained the level of investment Jan-15 Jan-14 Jan-15 Jan-14 £m £m % % Investments 432 433 84% 86% Net current assets 85 69 16% 14% Total assets less current liabilities 517 502 100% 100% Outstanding commitments 234 277 Undrawn bank fac
Slide 24: We are considering a programme of share buy-backs
6. Balance sheet We are considering a programme of share buy-backs ● At nearly £80m today, cash has remained higher than we would like ● Realisations are expected to remain high: – 25-35% of opening portfolio is possible (average over the last 4 years is 27%) – This would generate £110-150m of proce
Slide 25: Graphite Enterprise is well positioned to grow further
7. Conclusion Graphite Enterprise is well positioned to grow further ● The environment for realisations remains favourable and managers will be seeking exits – The post-crisis vintages are expected to drive performance ● The market for new investment has become more challenging as prices have risen
Slide 26: Useful information
Useful information Structure: Company registered in England and Wales Ticker: GPE.LN Investment trust tax status ISIN: GB0003292009 Registered company number: 01571089 SEDOL: 0329200 Listing: Premium London listing Website: www.graphite-enterprise.com Broker: J.P.Morgan Cazenove Angus Wilton (sales)
Slide 27: 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