Icg Enterprise Trust Plc Gbp · LSE:ICGT
Icg Enterprise Trust Plc Gbp — ICG Enterprise Trust — FY2020 Earnings Presentation
46 slides from Icg Enterprise Trust Plc Gbp's earnings presentation, April 2020
Slide 1: Annual results
Annual results For the year ended 31 January 2020
Slide 2: Contents
Contents Page Company overview 3 Highlights 4 Oliver Gardey Impact of COVID-19 5 Head of Private Equity Fund Investments Investment strategy and focus on defensive growth 9 Outlook 13 Colm Walsh Managing Director Private Equity Fund Investments Results and performance for the year 14 Case studies 21
Slide 3: Company overview
Company overview A leading private equity investor with long track record of strong returns NAV and share price performance (total return) FTSE All-Share ICG Enterprise Share price Focused On buyouts in ICG Enterprise NAV growth Europe and the US 286% Selective Investment process and a strong track
Slide 4: Highlights for the year
Highlights for the year Another strong year; well placed in the current environment Investment portfolio return of 14.6% in sterling; 16.6% in local currencies +11.2% ‒ 11th consecutive year of double-digit growth Total Return Driven by continued strong profit growth and realisation activity (1,
Slide 5: Impact of COVID-19 – private equity
Impact of COVID-19 – private equity Private equity model well suited to periods of market stress Ability to react Experience of More resilient Well placed to take quickly managing through nature of mid to advantage of cycles large buyouts market conditions Rapid market decline and Lessons learnt
Slide 6: Impact of COVID-19 – our Portfolio
Impact of COVID-19 – our Portfolio Diversified and resilient Portfolio Our focus on defensive growth means Portfolio Portfolio sector exposure is weighted towards more resilient sectors and 4% Healthcare and education larger companies 5% 23% Industrials 8% Portfolio focused on experienced ‘top-tie
Slide 7: Impact of COVID-19 – our Portfolio (cont’d)
Impact of COVID-19 – our Portfolio (cont’d) Performance and speed of recovery will vary by sector and company 1 Healthcare (16%) and Education (7%) 2 Industrials (15%) 3 Business services (15%) • Healthcare expected to be resilient • Broad sector with a variety of business models and • Wide range of
Slide 8: Impact of COVID-19 – Top 30 companies
Impact of COVID-19 – Top 30 companies Significant bias to defensive growth and resilient sectors Top 30 companies’ sector exposure Top 30 companies - 46% of the Portfolio; dominated by our high conviction 5% investments 7% 33% 10% The vast majority of our Top 30 investments have low impact or shor
Slide 9: Highly focused strategy
Highly focused strategy Targeting long term structural growth trends LEADING ALL PRIVATE BUYOUTS DEVELOPED MID-MARKET AND PRIVATE EQUITY EQUITY MARKETS LARGER DEALS MANAGERS DEFENSIVE Offer more Primarily in More likely to be With track records GROWTH consistent returns Europe and the resilient to e
Slide 10: Differentiated and nimble investment approach
Differentiated and nimble investment approach Can adapt the mix of investment to market conditions THIRD PARTY FUNDS HIGH CONVICTION INVESTMENTS 14% Underlying companies selected THIRD PARTY DIRECT Underlying companies selected C0-INVESTMENT by 40 leading private equity by ICG mangers 5% THIRD P
Slide 11: Defensive growth characteristics
Defensive growth characteristics Companies which can grow even in a difficult economic environment Typical company characteristics SOME DEFENSIVE GROWTH INVESTMENT THEMES Profitable The portfolio benefits Strong competitive position from many growth Growth drivers are not necessarily reliant d
Slide 12: Many defensive growth themes in the portfolio
Many defensive growth themes in the portfolio Two examples include… TECHNOLOGICAL ADVANCEMENTS NAVIGATING REGULATORY COMPLEXITY Businesses Shift towards cloud- Technology Rising burden Greater focus on health Geographical embedding based applications has enabled the of regulatory and safety, safegua
Slide 13: Outlook
Outlook Well positioned to continue to generate shareholder value over the longer term Performance and the speed of recovery will vary between geographies, sectors and Lack of visibility on companies impact of COVID-19 at this stage In the short term, falls in public markets and broader immediat
Slide 14: Results and Performance
Results and Performance For the year ended 31 January 2020
Slide 15: Consistent Portfolio Growth
Consistent Portfolio Growth Double digit portfolio return in the year Underlying portfolio growth +28.9% High quality portfolio performing well Continued strong earnings growth Significant percentage of growth driven by a number of co-investments +15.3% +16.6% +14.6% Realisations, IPOs and q
Slide 16: Exits were at strong uplifts
Exits were at strong uplifts Realisations at 37% uplift to carrying value; 2.4x cost Cash conversion1 % £149m2 of proceeds 40 - 48 full realisations 35 37 30 - Cash proceeds 20%1 of opening portfolio value – in line with 10 year average 25 28 26 20 - £8m of secondary disposals in period at a 20 20
Slide 17: Investment pace consistent with prior year
Investment pace consistent with prior year £159m invested; 39% into high conviction investments New investment £m 158 159 160 Continued to deploy capital cautiously 142 140 - High pricing and strong competition for good 125 128 quality assets 120 - Maintaining discipline is key, as always 100 80
Slide 18: £156m of primary commitments
£156m of primary commitments 12 new commitments; five new relationships Global IK IX €15.0m (£13.5m) Advent IX: €15.0m (£13.2m) Oak Hill V: $20.0m (£15.8m) Mid-market buyout fund focused on $16bn fund seeking control buyouts in $3bn fund focused on North American northern Europe with a focus o
Slide 19: Top companies – 46% of the portfolio
Top 30 companies – 46% of the portfolio Value is concentrated in our high conviction investments Pre 2013 2013-15 2016-20 High Conviction 71%1 1 Graphite primary 22% Third-party primary 7% 1 Percentages are of the top 30 value. High conviction includes ICG, direct co-investments and secondary invest
Slide 20: Top 30 companies – 46% of the portfolio
Top 30 companies – 46% of the portfolio Strong revenue and earnings growth Revenue growth 15% 71% of Top 30 companies in high conviction portfolio 13% 12% 10% 11% Consistently strong EBITDA growth 8% - LTM earnings growth of 17% 5% - Quarter of Top 30 averaged EBITDA growth >20% 5% - Driven by b
Slide 21: Case Studies
Case Studies
Slide 22: Case study: Abode Healthcare
Case study: Abode Healthcare Co-investment Realised by Tailwind Capital III 69% Gross 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 in the US:
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: Case study: Berlin Packaging
Case study: Berlin Packaging Co-investment alongside Oak Hill Capital Partner $13m Total investment by ICG Enterprise Background Rationale Outlook Berlin Packaging provides global Offers compelling value proposition to Organic growth potential even in a packaging services with a focus on both
Slide 25: 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 is 10% drawn; well positioned to managers, established in 1968 experience through market cycles bene
Slide 26: 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 11 market manager, based in San experience through market c
Slide 27: 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. 121 35 156 (198
Slide 28: Supplementary portfolio information
Supplementary portfolio information
Slide 29: Detailed portfolio overview
Detailed portfolio overview Single fee on almost half of the portfolio ICG Graphite Third party Primary 65.8% 6.6% 13.1% 46.1% Secondary 9.0% 3.8% 0.1% 5.1% Co- Investment/ direct 25.2% 11.4% 2.6% 12.2% 100.0% 21.8% 14.8% 63.4% No management fee at ICGT level No management fee at underlying manager
Slide 30: 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 City & County Healthcare Group Provider of home care services Graphite Capital 2013 UK 2.9% 3 Minimax + Supplier of fire protection s
Slide 31: Top underlying companies #16-30
Top 30 underlying companies #16-30 Year of Value as a % of Company Manager Country investment Portfolio 16 IRI + Provider of data and predictive analytics to consumer goods manufacturers New Mountain 2018 USA 1.4% 17 Endeavor Schools + Operator of schools Leeds Equity Partners 2018 USA 1.4% 18 YSC P
Slide 32: Portfolio geographic focus
Portfolio geographic focus Increasing geographical diversification Movement in geographic split 100% Increasing exposure to the US market 80% 27% - Largest most developed private equity 45% market 60% UK - 30% of portfolio; up from 14% at Jan 16 37% Europe - Strategic objective for US focus to 40%
Slide 33: Portfolio vintage year exposure
Portfolio vintage year exposure Balanced maturity Investment vintage 25% Investments completed in 2016 or earlier – 44% of the portfolio 20% 20% 19% 17% 56% of value in investments made in 2017 16% or later 15% High relative weighting to recent investments reflects: 10% - High level of realisa
Slide 34: Appendices
Appendices
Slide 35: Manager Overview
Manager Overview A leading specialist manager in private debt, credit and equity €43 31 year track record of lending to and investing in private equity backed Stockholm businesses through multiple cycles Amsterdam London Warsaw Paris Frankfurt New York Madrid Luxembourg San Francisco Tokyo to propri
Slide 36: ICG Enterprise Trust investment team
ICG Enterprise Trust investment team A strong combination of direct and fund investment experience Joined the team in Joined the team in 2010 Joined the team in 2009 September 2019. 15 years of PE experience 13 years of PE experience Over 25 years of private Graphite Capital (funds,
Slide 37: 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 - 2020 assessment rated Grade A- Firmwide Responsible Investment Policy -
Slide 38: NAV bridge
NAV bridge Strong portfolio gains NAV per share bridge 1250p Change in NAV 19.3 Jan-20 1200p 166.8 13.0 (% of opening NAV) 13.8 4.3 17.0 1.2 Underlying portfolio return in local currencies 16.6% 1150p 1152.1 Currency (2.0%) 1100p Total portfolio valuation movement 14.6% 1050p 1056.5 Effect of cash d
Slide 39: 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 40: Incentive arrangements
Incentive arrangements Strong alignment of interest through co-investment scheme Management fees Incentive accrual as a % of portfolio gain Average incentive accrual over the last 10 financial years of <7% of portfolio gain1 15% Impact of accounting policy change on incentive Incentive 13% Co-in
Slide 41: Balance sheet
Balance sheet Enlarged facility gives us increased flexibility £m Jan-20 Jan-19 Objective is to be broadly fully invested Investments 806 695 through the cycle Cash 14 61 Other net assets/(liabilities) (26) (25) Size of facility increased to €176m during the Net Assets 794 731 year Outstanding c
Slide 42: Balance sheet evolution
Balance sheet evolution Increasing balance sheet efficiency and steady growth 850 650 450 695 806 601 428 594 433 432 250 265 415 192 231 357 378 50 133 140 113 104 69 90 78 £ million 43 46 55 39 61 14 43 46 55 69 39 14 113 30 90 104 78 61 133 140 59 58 98 103 148 -150 111 45 26 96 104 104 97 136 18
Slide 43: Dividends and buybacks
Dividends and buybacks Continuing to return capital to shareholders Dividends Dividends and share buy backs Final dividend of 8p proposed; taking total 40 Buybacks dividends for the year to 23p Special div 35 ‒ 4.5% increase on 2019 and 2.3% yield on year Ordinary div end share price 30 ‒ Will be
Slide 44: Discount
Discount Sector discounts have significantly widened since year end Company vs sector long term discount Company vs sector discount (since 31 Jan 2020) 10 10 - - -10 -10 -20 -20 -30 -30 -40 -40 -50 -50 -60 -60 -70 -70 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20
Slide 45: 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 46: 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