Icg Enterprise Trust Plc Gbp · LSE:ICGT
Icg Enterprise Trust Plc Gbp — ICG Enterprise Trust — H1 2019 Earnings Presentation
44 slides from Icg Enterprise Trust Plc Gbp's earnings presentation, Jul 31, 2019
Slide 1: Interim Results
Interim Results For the six months to 31 July 2019
Slide 2: Contents
Contents Emma Osborne Page Head of Private Equity Fund Investments (outgoing) Company overview 3 Results and Performance 7 Oliver Gardey Head of Private Equity Fund Case Studies 19 Investments (incoming) Supplementary Portfolio Information 25 Colm Walsh Appendices 33 Managing Director Private Equity
Slide 3: Company Overview
Company Overview A leading listed private equity investor £811m* Net asset value (1,175p per share) 1981 > Focused on buyouts in Europe and the USA 38 year history of investing in private equity > Flexible and differentiated approach combining in-house and third-party managed investments: through fu
Slide 4: Manager Overview
Manager Overview A leading specialist manager in private debt, credit and equity €39 30 year track record of lending to and investing in private equity backed Stockholm businesses Amsterdam London Warsaw Paris Frankfurt New York Madrid Luxembourg San Francisco Tokyo to proprietary deal flow from the
Slide 5: Investment Philosophy
Investment Philosophy Defensive growth companies alongside leading PE managers All private equity Buyouts offer more consistent returns with lower risk Buyouts than other private equity strategies e.g. venture capital or distressed debt Developed markets have more established private Developed marke
Slide 6: Investment Strategy
Investment Strategy High conviction investments underpinned by a portfolio of leading funds HIGH CONVICTION INVESTMENTS 21% ▪ Enhances returns by increasing exposure to the most attractive assets ▪ Underlying companies selected by ICG Third-party direct ▪ Increases control and enables greater flexib
Slide 7: Results and Performance
Results and Performance For the six months to 31 July 2019
Slide 8: Highlights for the first six months
Highlights for the first six months Continued double digit growth ▪ Investment portfolio return of 14.8% in sterling; +10.7% in local currencies +12.4% ‒ 18.1% p.a. growth over the last 10 years in local currencies Total Return (1,175p NAV per share) ▪ Driven by continued strong profit growth and re
Slide 9: Performance
Performance Outperforming public markets through cycles NAV and share price performance (total return)* FTSE All-Share ICG Enterprise Share price ICG Enterprise NAV growth 279% 241% 172% 91% 71% 60% 57% 17% 39% 6% 27% 1% 1 year 3 years 5 years 10 years An investment in ICG Enterprise made on the hal
Slide 10: Consistent Portfolio Growth
Consistent Portfolio Growth Double digit portfolio return in the half year Underlying portfolio growth +28.9% ▪ High quality portfolio performing well - Average CAGR in local currency 16.4% over five years; 18.1% over 10 years ▪ Continued strong earnings growth +15.3% +16.6% +14.8% ▪ Significant per
Slide 11: Some of the Value Drivers in Our Portfolio
Some of the Value Drivers in Our Portfolio Benefiting from non-cyclical growth trends Demographics Increasing regulation ▪ Significant change in population composition ▪ Trend towards increased regulation across ▪ Ageing population increases demand for sectors healthcare ▪ Typically a small part of
Slide 12: Highly cash generative portfolio
Highly cash generative portfolio Realisations at 33% uplift to carrying value; 2.1x cost Cash conversion1 % 40 ▪ £67m of realisations 35 37 - 25 full realisations 30 33 22 - Cash proceeds 10% of opening portfolio value 25 28 (LTM) 26 20 ▪ Two realisations within the Top 30 companies 15 20 - Visma -
Slide 13: Selective investment into compelling opportunities
Selective investment into compelling opportunities £64m invested; 38% into high conviction investments New investment £m 158 160 145 ▪ Cautious in deploying capital in the current 142 140 market 125 128 - High pricing and strong competition for good 120 quality assets 100 - Maintaining discipline is
Slide 14: Finding value in the current market
Finding value in the current market Combining defensive growth with attractive deal dynamics Defensive growth EUROPE ▪ Strong market positions in growing markets ▪ Highly resilient businesses with relatively low correlation to economic cycles ▪ Strong recurring revenue streams, high margins and high
Slide 15: £118m of primary commitments
£118m of primary commitments Eight new commitments; two new relationships Advent IX: €15.0m (£13.2m) Oak Hill V: $20.0m (£15.8m) Permira VII: €15.0m (£13.4m) ▪ $16bn fund seeking control buyouts in ▪ $3bn fund focused on North American ▪ €10bn global fund targeting investments Europe and the US. Hig
Slide 16: Third-party High Conviction
Top 30 underlying companies – 48% of the portfolio Value is concentrated in our high conviction investments Pre 2013 2013-15 2016-19 High Conviction 73%1 1 Graphite primary 23% Third-party primary 4% 1 Percentages are of the top 30 value. High conviction includes ICG, direct co-investments and secon
Slide 17: Top underlying companies – 48% of the portfolio
Top 30 underlying companies – 48% of the portfolio Strong revenue and earnings growth Revenue growth 15% ▪ 73% of Top 30 companies in high conviction portfolio 13% 13% 10% 11% ▪ Consistently strong EBITDA growth 8% - LTM earnings growth of 16% 5% - Driven by both organic growth and M&A 5% - EBITDA m
Slide 18: Summary and Outlook
Summary and Outlook Well positioned to continue to generate shareholder value Continued strong ▪ Consistent double digit returns performance ▪ Continued outperformance of FTSE All-Share Index High quality, ▪ Strong underlying profit growth cash generative ▪ Realisations at significant uplifts to car
Slide 19: Case Studies
Case Studies ENTERPRISE TRU:
Slide 20: Case study: Abode Healthcare
Case study: Abode Healthcare Co-investment Realised by Tailwind Capital III 81% Gross realised IRR 2.0x Multiple of cost on sale Background Developments Realisation ▪ Provider of at-home hospice care and ▪ Successfully expanded the business ▪ Abode was sold to Summit Partners in home care services i
Slide 21: Case study: AEA
Case study: AEA Commitment to AEA Fund VII – April 2019 $20m Committed by ICG Enterprise Background Rationale Outlook ▪ One of the longest established US PE ▪ Experienced senior team with deep ▪ Fund has completed its first managers, established in 1968 experience through market cycles investment: J
Slide 22: Case study: Gryphon Investors
Case study: Gryphon Investors Commitment to Gryphon Investors V – April 2019 $15m Committed by ICG Enterprise Background Rationale Outlook ▪ Gryphon Investors is a US middle ▪ Experienced senior team with deep ▪ Fund has already invested in six market manager, based in San experience through market
Slide 23: Case study: PetSmart (Chewy)
Case study: PetSmart (Chewy) Co-investment alongside BC European Capital IX $11m Total investment by ICG Enterprise Background Rationale Outlook ▪ PetSmart is the leading ‘bricks and ▪ PetSmart is a leader in an attractive ▪ Chewy was listed on the NYSE in June mortar’ US retailer of pet products as
Slide 24: ICG Strategies
ICG Strategies Investing in five out of ICG’s 21 strategies Strategy Gross Total Latest fund return Value Undrawn exposure (ICGT invested Description size target £m £m £m since) ICG Europe Subordinated debt and equity in mid- market companies with experienced €4.5 billion 15-20% p.a. 116 40 156 (198
Slide 25: Supplementary portfolio information
Supplementary portfolio information
Slide 26: Detailed portfolio overview
Detailed portfolio overview ICG Graphite Third party Primary 63.8% 6.5% 13.2% 44.1% Secondary 8.2% 3.6% 0.1% 4.5% Co- Investment/ direct 28.0% 11.3% 2.1% 14.6% 100.0% 21.4% 15.4% 63.2% No management fee at ICGT level Single fee on over half of the portfolio No management fee at underlying manager le
Slide 27: Top underlying companies #1-15
Top 30 underlying companies #1-15 Year of Value as a % of Company Manager Country investment Portfolio 1 DomusVi + Operator of retirement homes ICG 2017 France 3.6% 2 PetSmart + Retailer of pet products and services BC Partners 2015 USA 3.0% 3 City & County Healthcare Group Provider of home care ser
Slide 28: Top underlying companies #16-30
Top 30 underlying companies #16-30 Year of Value as a % of Company Manager Country investment Portfolio 16 Ceridian + Provider of payroll and human capital software Thomas H Lee Partners 2007 USA 1.5% 17 Endeavor Schools + Operator of schools Leeds Equity Partners 2018 USA 1.4% 18 Doc Generici + Pha
Slide 29: Portfolio geographic focus
Portfolio geographic focus Increasing geographical diversification Movement in geographic split 0.3% 4.1% 100% ▪ Increasing exposure to the US market 14.1% 80% 29.3% - Largest most developed private equity market 40.5% Rest of World 60% - 29% of portfolio; up from 14% at Jan 16 US 37.2% Europe - Str
Slide 30: Portfolio sector and deal size
Portfolio sector and deal size Focus on mid-large companies with a well balanced sector exposure Sector 3% Healthcare and education 6% ▪ Well balanced sector exposure 22% Business services 13% Consumer goods and - Bias to structural growth services Industrials - Healthcare and education 22% 8% Leisu
Slide 31: Portfolio vintage year exposure
Portfolio vintage year exposure Attractive and well balanced maturity Investment vintage 25% ▪ Balance of near term realisations prospects 22% with a strong pipeline of medium to longer 19% term growth 20% 17% ▪ Investments completed in 2015 or earlier – 35% of the portfolio 15% - Likely to generate
Slide 32: ESG
ESG ICG is committed to responsible investing ICG’s approach to ESG ESG is an integral part of investment decision-making ▪ ICG has been a signatory to United Nations Principles for Responsible Investment (“PRI”) since 2013 - 2018 assessment rated Grade A ▪ Firmwide Responsible Investment Policy - E
Slide 33: Appendices
Appendices ENTERPRISE TRU:
Slide 34: Return attribution for the 6 months
Return attribution for the 6 months Strong portfolio gains NAV per share bridge 1250p 12.8 6.7 Change in NAV 1200p 1.7 12.0 Jul-19 43.8 (% of opening NAV) 0.7 Underlying portfolio return in local currencies 10.7% 1150p 1175.4 107.6 Currency 4.1% 1100p Total portfolio valuation movement 14.8% 1050p 1
Slide 35: Balance sheet
Balance sheet £m Jul-19 Jan-19 ▪ Cash balances £47m Investments 794 695 Cash 47 61 ▪ Undrawn commitments of £512m Other net assets/(liabilities) (30) (25) - £80m to funds post investment period - Outstanding commitments drawn over 4-5 years – Net Assets 811 731 estimate approximately £80m to be call
Slide 36: Balance sheet evolution
Balance sheet evolution History of conservative balance sheet management 1000 800 600 794 400 695 601 428 594 433 432 265 415 192 231 357 378 200 £ million 133 140 113 90 104 43 46 55 69 39 78 61 47 0 -43 -46 -55 -69 -90 -39 -61 -47 -133 -113 -30 -59 -104 -78 -140 -58 -103 -111 -45 -26 -98 -96 -104
Slide 37: Management fees and expenses
Management fees and expenses Effective management fee of 1.2% of NAV Costs as a % of investment portfolio Incentive (excluding cash) 3% ▪ Headline management fee of 1.4%1 of portfolio value plus 0.5% of undrawn commitments to funds in investment period ▪ Excludes funds managed by both ICG and Graphi
Slide 38: Incentive arrangements
Incentive arrangements Strong alignment of interest through co-investment scheme Incentive net payments as a % of cash proceeds Management fees ▪ Average incentive accrual over the last 10 5% Incentive 10 year average financial years of <7% of portfolio gain 4% ▪ Co-investment scheme in which the in
Slide 39: Dividends and buybacks
Dividends and buybacks Continuing to return capital to shareholders Dividends Dividends and share buy backs ▪ The Board has committed to a progressive 40 Buybacks annual dividend policy with quarterly payments Special div 35 Ordinary div ▪ Q2 dividend of 5p to be paid on 6 December 2019 30 ‒ Total d
Slide 40: Discount
Discount Discount does not reflect the long term performance Company vs sector long term discount Company NAV and share price vs FTSE All Share 10 600 567 - 500 460 -10 400 -20 -30 300 276 -40 200 -50 100 -60 -70 - 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Slide 41: 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 42: ICG Enterprise Trust investment team
ICG Enterprise Trust investment team A strong combination of direct and fund investment experience ▪ Lead portfolio manager of ▪ Joined the team in ▪ Joined the team in 2010 ICG Enterprise for over 14 September 2019. ▪ 14 years of PE experience years ▪ Over 20 years of private ▪ Graphite Capital (fu
Slide 43: ICG Enterprise Trust Board
ICG Enterprise Trust Board Private equity, investment and commercial experience ▪ Appointed to the Board in ▪ Appointed to the Board in ▪ Appointed to the Board in 2008 and became 2018 2011 Chairman in 2017 ▪ Over 25 years of private ▪ Former global head of ▪ Extensive financial equity experience eq
Slide 44: 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