Icg Enterprise Trust Plc Gbp · LSE:ICGT
Icg Enterprise Trust Plc Gbp — Graphite Enterprise Trust — 13 months to 31 January 2011 Earnings Presentation
49 slides from Icg Enterprise Trust Plc Gbp's earnings presentation, Apr 4, 2011
Slide 1: Results for 13 months to 31 January 2011 Presentation to Analysts
Results for 13 months to 31 January 2011 Presentation to Analysts 4 April 2011 0
Slide 2: Presentation to Analysts - 4 April 2011
Presentation to Analysts - 4 April 2011 1. Introduction 2. Results for the 13 month period to 31 January 2011 3. Balance sheet and liquidity 4. Investment activity 5. The portfolio at 31 January 2011 6. Share price and discount 7. Outlook and conclusions Appendices 1
Slide 3: 1. Introduction
1. Introduction GRAPHITE ENTERPRISE
Slide 4: Graphite Enterprise – objective
Introduction Graphite Enterprise – objective The objective of Graphite Enterprise is to provide shareholders with long term capital growth through investment in unquoted companies, mostly through specialist funds but also directly. 3
Slide 5: Graphite Enterprise – overview
Introduction Graphite Enterprise – overview Hybrid fund of • 75-80% third party, 20-25% Graphite investments funds and direct investor • Graphite directly controls many of the largest portfolio companies Focus on • Established managers in mature markets European buy-outs • No venture capital • 25 ye
Slide 6: Graphite Enterprise Trust is an attractive long term investment opportunity
Introduction Graphite Enterprise Trust is an attractive long term investment opportunity Exposure to the best European buy-out managers More concentrated than most funds of funds, more diversified than most direct funds – Top 30 investments account for 44.8% of the underlying portfolio, 15-20 ke
Slide 7: Graphite Capital is a highly experienced private equity investor
Introduction Graphite Capital is a highly experienced private equity investor Graphite is a leading UK mid-market private equity firm with £1.3 billion under management − Graphite Enterprise is the only fund of funds managed by Graphite Capital − It accounts for over 25% of funds under management
Slide 8: Graphite Enterprise has a focused and experienced team
Introduction Graphite Enterprise has a focused and experienced team Rod Richards 25 years PE experience. Joined in 1986. Led the buy-out from F&C in 2001. Degree in PPE from Oxford, MBA from INSEAD. Leads fund and direct investment businesses. Stephen Cavell 20 years PE experience. Joined in 1993. P
Slide 9: Graphite Enterprise benefits from the direct investment team's experience
Introduction Graphite Enterprise benefits from the direct investment team‟s experience Simon ffitch 21 years PE experience. Joined in 1992. Joint head of direct investment team. Previously at LEK and Hill Samuel Development Capital. Degree in PPE from Oxford. Andy Gray Rod Richards 19 years PE exper
Slide 10: 2. Results for the 13 months to 31 January 2011
2. Results for the 13 months to 31 January 2011 (“the Period”) 9
Slide 11: The net asset value per share increased by 15.1% to a record level of 534.0p
Results The net asset value per share increased by 15.1% to a record level of 534.0p 31 December 31 January Change 31 March Change 2009 2011 2011 Net asset value per share 464.1p 534.0p +15.1% Share price 305.0p 308.0p +1.0% 349.5p +14.6% FTSE All-Share Index 2,761 3,044 +10.3% 3,068 +11.1% The un
Slide 12: NAV per share has outperformed the All-Share over 1, 3, 5 and 10 years
Results The net asset value per share has outperformed the All-Share over 1, 3, 5 and 10 years* 1 3 5 10 Net asset value per share +15.1% +2.8% +34.0% +59.9% FTSE All-Share Index +10.3% -7.4% +6.9% +2.0% The net asset value per share has outperformed the FTSE All-Share in 16 of the last 20 years
Slide 13: The growth in NAV per share was driven by the strong performance of the portfolio
Results The growth in NAV per share was driven by the strong performance of the portfolio The portfolio increased in value by 27.2% in local currencies, or 25.6% in sterling As 33% of the opening NAV was in cash, the rise in the portfolio increased the NAV by 17.5% 12
Slide 14: Growth in the portfolio driven by realised and unrealised gains
Results The growth in the portfolio was driven by both realised and unrealised gains £m % of opening portfolio Realisations In the Period 3.8 1.6% After the Period end 19.4 8.4% Total 23.2 10.0% Unrealised gains 39.6 17.2% Total underlying 62.8 27.2% Currency (3.6) -1.5% Total portfolio movement 59.
Slide 15: Graphite Enterprise has been the best performing fund of funds over the downturn
Results Graphite Enterprise has been the best performing fund of funds over the downturn Peak to trough 2010 1 NAV performance (2007-2008) 1 year 1 3 year 1 as % of peak % Graphite Enterprise - Reported -24.8% +15.1% +2.8% +0.5% - Pre-provision -21.3% Peer Group average 2 -33.9% +15.5% -11.6% -15.9%
Slide 16: Graphite Enterprise took less risk than the peer group
Results Graphite Enterprise took less risk than the peer group At 31 December 2007 2008 2009 2010 2 Cash/(debt) as % NAV Graphite Enterprise 33.8% 41.9% 33.1% 10.8% Peer Group average ¹ 4.7% (11.0)% (14.0)% (6.1)% Overcommitment % 3 Graphite Enterprise 42.3% 50.7% 37.5% 32.7% Peer Group average ¹ 67
Slide 17: 95% of our fund portfolio by value reported an increase in the Period
Results 95% of our fund portfolio by value reported an increase in the Period % change in value Number of funds % by value Increase of more than 20% 18 47% Increase of >10% - 20% 4 10% Increase of 0% - 10% 14 39% Decrease 6 5% Total 42 100% 16
Slide 18: 3. Balance sheet and liquidity
3. Balance sheet and liquidity 17
Slide 19: At 31 January 2011 the Company was 89% invested
Balance sheet At 31 January 2011 the Company was 89% invested January 2011 December 2009 Change January 2011 December 2009 £m £m £m % % Investments 356.6 231.2 +125.4 89.2% 67.1% Cash and near cash 42.9 113.4 -70.5 10.8% 32.9% Total assets 399.5 344.6 +54.9 100.0% 100.0% Outstanding commitments 173.
Slide 20: Available liquidity has increased from £42.9 million to £94.3 million
Balance sheet Since the Period end available liquidity has increased from £42.9 million to £94.3 million Contracted realisation proceeds total £30.5 million Cash outflow since the Period end is £9.1 million Commitments have fallen from £173.7 million to £162.4 million A 4-year £30 million ba
Slide 21: 4. Investment activity
4. Investment activity Si] " GRAPHITE ENTERPRISE
Slide 22: Net investment increased by over six times in the Period
Investment activity Net investment increased by over six times in the Period compared with 2009 21
Slide 23: £84.8 million was invested in the Period compared with £24.0 million in 2009
Investment activity £84.8 million was invested in the Period compared with £24.0 million in 2009 UK Continental Rest of Total Europe world Mid-market buy-outs 20.4 7.2 - 27.6 Large buy-outs 4.1 29.6 9.5 43.2 Small buy-outs 4.1 - - 4.1 Mezzanine - 9.9 - 9.9 Total 28.6 46.7 9.5 84.8 Fund drawdowns t
Slide 24: 50 new underlying investments were made in the Period
Investment activity 50 new underlying investments were made in the Period compared with 13 in 2009 Investment Description Country Manager £m U-POL Manufacturer of automotive refinish products UK Graphite Capital 6.1 London Square Developer of residential property UK Graphite Capital 3.5 Vue Entertai
Slide 25: Mix of primary commitments, secondary purchases and co-investments
Investment activity We made a mix of primary commitments, secondary purchases and co-investments Three primary commitments were made totalling £11.0 million − Piper V - £5.0 million (UK consumer focused small buy-outs and growth capital) − Trident III - £3.0 million (UK small buy-outs) − Graphite
Slide 26: £18.6 million of realisations were made in the Period
Investment activity £18.6 million of realisations were made in the Period, up from £13.1 million in 2009 Net Gross proceeds multiple of Number £m cost Full realisations in the Period 6 11.4 2.3 Partial realisations in the Period 5.9 Secondary sale 1.3 Total proceeds in the Period 18.6 Realisations a
Slide 27: Realisations in the Period remained low by historic levels
Investment activity Despite the increase, realisations in the Period remained low by historic levels Proceeds from realisations agreed after the Period end represent 8.6% of 31 January portfolio We expect to make further realisations in the coming year 26
Slide 28: 5. The portfolio at 31 January 2011
5. The portfolio at 31 January 2011 27
Slide 29: Third party investments accounted for 79% of the investment portfolio
Portfolio Third party investments accounted for 79% of the investment portfolio UK large buy-outs Third party UK small buy-outs Third party funds Third investments Non-UK buy-outs 64.5% party 79.2% directs Mezzanine 14.7% Infrastructure Graphite Graphite funds 14.2% Graphite directs 6.6% investments
Slide 30: Graphite Capital directly manages six of the top ten holdings
Portfolio Graphite Capital directly manages six of the top ten holdings The top 10 underlying investments represented 23.9% of portfolio value Individual companies can and do affect overall performance Value % of Company £m portfolio Wagamama Operator of Japanese noodle restaurants 17.0 4.8% Mic
Slide 31: The portfolio gives exposure to a variety of established managers
Portfolio The portfolio gives exposure to a variety of established managers Manager Value % of £m portfolio* Graphite Capital UK, mid-market 74.4 20.9% Doughty Hanson Pan-European, mid-market and large buy-outs 32.1 9.0% CVC Pan-European, large buy-outs 30.9 8.7% ICG Pan European, mezzanine loans 25
Slide 32: The Top 30 companies performed strongly in the Period
Portfolio The Top 30 companies performed strongly in the Period The top 30 underlying investments accounted for 44.8% of the portfolio at 31 January Revenues grew by 14.1% and EBITDA by 36.2% Revenue EBITDA¹ Growth rate Number % Value Number % Value >20% 7 23% 11 33% >10-20% 8 22% 10 42% >0-10%
Slide 33: Top 30 companies valued at an average of 8.7x EBITDA and 3.4x gearing
Portfolio The Top 30 companies were valued at an average of 8.7x EBITDA and had 3.4x gearing Valuation multiples fell marginally from 9.0x at December 2009 Leverage fell from 4.6x due to strong growth and debt paid down in the period % Top 30 underlying investments by EBITDA multiple % Top 30 un
Slide 34: The portfolio remained balanced and well diversified
Portfolio The portfolio remained balanced and well diversified At 31 January 2011, the portfolio comprised 42 funds and 23 direct investments – giving exposure to 294 underlying companies 33
Slide 35: Almost two thirds of the portfolio was valued between cost and twice cost
Portfolio Almost two thirds of the portfolio was valued at between cost and twice cost * 0.95 to 1.05 times cost 34
Slide 36: Portfolio valued at 1.3x cost with average maturity of 4.8 years
Portfolio The portfolio was valued at 1.3x cost and had an average maturity of 4.8 years 35
Slide 37: 6. Share price and discount
6. Share price and discount 36
Slide 38: Performance in the 15 months to 31 March 2011
Share price Performance in the 15 months to 31 March 2011 120 115 110 105 100 95 NAV 90 Share Price 85 FTSE All-share 80 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 The share price rose by 1.0% in the Period vs a 10.3% rise in the Index Since the Period end the share price has risen by 13.5% vs a
Slide 39: The discount remains well above the long term average
Discount The discount remains well above the long term average 5% 0% (5)% (10)% (15)% (20)% Discount(%) (25)% (30)% (35)% (40)% (45)% Discount (50)% 5 year rolling (55)% average discount (60)% (65)% Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 At 31 March 2011 the discount was 34.5% (share price 349.
Slide 40: Private equity discounts are at a long term high relative to the investment trust sector
Discount Private equity discounts are at a long term high relative to the investment trust sector 20% 3500 10% 3000 Discount/premium to Net Asset Value 0% 2500 -10% FTSE All-Share Index -20% 2000 -30% 1500 Private Equity discount -40% Investment Trust discount 1000 -50% FTSE All Share 500 -60% -70%
Slide 41: 7. Outlook and conclusions
7. Outlook and conclusions 40
Slide 42: The private equity market
Outlook The private equity market The expiry of investment periods is putting upward pressure on the rate of new investment The pipeline of new funds being raised is strong Fund raising plans may also influence the timing of exits The availability of debt will influence pricing 41
Slide 43: Graphite Enterprise is well positioned to grow further
Outlook Graphite Enterprise is well positioned to grow further The portfolio is growing strongly - The top 30 investments (44.8% of the portfolio) are performing particularly well - Valuation multiples are reasonable given recent performance - Debt levels have been falling Many companies are bei
Slide 44: Appendices
Appendices 1. Background and history 2. Graphite Capital funds 3. Recent Graphite investments 4. Useful information 43
Slide 45: Graphite Enterprise has a long history of making unquoted investments
Appendices Graphite Enterprise has a long history of making unquoted investments 1999: 2003: 1983: 1989: Invests 30:70 Commits £50m to Raises further First 3rd party fund alongside Graphite CPVI £13m commitment Graphite CPV 2007: Commits £70m to 1981: 1986: 1994: 2000: Graphite CPVII Listed with Foc
Slide 46: Graphite Capital funds
Appendices Graphite Capital funds Fund Final Total Graphite Graphite Allocation of Graphite investments close commitments Enterprise’s Enterprise’s commitment share CPVII Main Fund May ‟07 £475m £40m 8.4% First £38m (8% of total commitments) CPVII Top Up May ‟07 £80.5m £10m 12.4% Share excess over £
Slide 47: Recent Graphite Capital investments
Appendices Recent Graphite Capital investments Company Date Enterprise Type Vendor Business value U-POL Sept „10 £130m MBO AAC Capital Manufacture and distribution of Partners automotive refinish products to over 110 countries Teaching Personnel July ‟10 £45m MBO RJD Partners Provider of supply teac
Slide 48: Background Information
Appendices Background Information Structure: Company registered in England and Wales Ticker: GPE.LN Investment trust tax status ISIN: GB0003292009 Registered company number: 01571089 SEDOL: 0329200 Listing: Official List (main market) in London Broker: JPMorgan Cazenove: Sales: + 44 (0) 20 7155 8122
Slide 49: Legal notice
Legal notice What this document is for This document has been prepared by Graphite Capital Management LLP (“Graphite Capital”) as managing Graphite Enterprise Trust PLC (“Graphite Enterprise”). The information and any views contained in this document are provided for general information only. It is
Graphite Enterprise Trust — 13 months to 31 January 2011 Earnings Presentation on 6ix