ICG Enterprise Trust PLC GBP · LSE:ICGT
ICG Enterprise Trust PLC GBP — Graphite Enterprise Trust — Shareholder Meeting (June 2013)
52 slides from ICG Enterprise Trust PLC GBP's shareholder meeting presentation, Jun 13, 2013
Slide 1: Graphite Enterprise Trust PLC: 32nd Annual General Meeting
Graphite Enterprise Trust PLC Investing in long term growth 32nd Annual General Meeting 13 June 2013
Slide 2: Agenda and speakers
32nd Annual General Meeting Agenda and speakers 1. Introduction Tim Spence Finance Director 2. Results 3. Investment activity and process Emma Osborne Head of Fund 4. The portfolio Investment 5. Discount 6. Dividend Rod Richards Managing Partner 7. Conclusions Page 1
Slide 3: 1. Introduction
1. Introduction Graphite Enterprise
Slide 4: 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 HYBRID MODEL FOCUSED STRATEGY Investor in funds and directly into European buy-outs – mature, profitable companies companies HIGHLY EXPERIENCED TEAM CONSISTENTLY STRONG PERFORMANCE RECORD The senior team
Slide 5: Graphite Capital is a leading independent private equity manager with a 32 year history
1. Introduction Graphite Capital is a leading independent private equity manager with a 32 year history Direct investment (mid-market buy-outs) Graphite Capital’s buy- Fund investment out funds have a blue-chip investor base Graphite Enterprise is the only fund investment client 70% (c.£900m) Graphi
Slide 6: Graphite Capital directly manages 23% of the portfolio
1. Introduction Graphite Capital directly manages 23% of the portfolio1 Graphite portfolio Third party portfolio Direct co- 23% Funds 71% invests 6% Note 1. As at 30.04.13. Page 5
Slide 7: Focus on established, top performing European buy-out managers
1. Introduction The focus is on established, top performing European buy-out managers ● The UK mid-market is mainly covered through Graphite Capital funds ● Continental Europe and other UK sectors are covered through third-party funds ● The approach is led by quality of the manager − No top-down all
Slide 8: Approximately 60% of shares are held by retail investors
1. Introduction Approximately 60% of the Company’s shares are held by retail investors Page 7
Slide 9: 2. Results
2. Results Graphite Enterprise
Slide 10: Net asset value per share increased by 10.9% to 631.5p
2. Results The net asset value per share increased by 10.9% to 631.5p over the year 31 Jan 31 Jan Change in 2013 2012 year Net asset value per 631.5p 569.4p +10.9% share Share price 487.0p 357.0p +36.4% FTSE All-Share Index 3,287 3,044 +12.1% ● The share price significantly outperformed the Index ●
Slide 11: Realisations continue to generate significant uplifts over prior valuations
2. Results Realisations continue to generate significant uplifts over prior valuations Gross Gross valuation multiple uplift on Full realisations No. of cost exit1 13 months to January 2011 6 2.3x 70% Year to January 2012 18 2.5x 51% Year to January 2013 14 2.7x 52% ● Eight investments were sold to
Slide 12: Activity in the quarter to April 2013 was relatively subdued
2. Results Activity in the quarter to April 2013 was relatively subdued Apr Jan Change Change 2013 2013 3 months 15 months Net asset value per share 635.7p 631.5p 0.7% +11.6% Share price 492.0p 487.0p 1.0% +37.8% FTSE All-Share Index 3,390 3,287 3.1% +15.6% ● March valuations were available for less
Slide 13: Share price has outperformed the FTSE All-Share since 31 Jan 2012
2. Results The share price has outperformed the FTSE All-Share by 23.6% since 31 Jan 2012 31 January 30 April Note To the close on 12 June 2013 (SP = 489p, FTAS = 3,326) Increases from 31 Jan 2012: SP +37.0%, Index +13.4% Page 12
Slide 14: NAV per share outperformed the All-Share over 3, 5 and 10 years
2. Results The net asset value per share outperformed the All-Share over 3, 5 and 10 years Years to 31 January 20131 3 5 10 Total return2 Net asset value per share 38.4% 26.8% 171.5% Share price 64.0% 9.3% 178.2% FTSE All-Share Index 32.1% 20.4% 146.4% ● The net asset value has increased for four co
Slide 15: Graphite Enterprise has consistently outperformed the peer group average
2. Results Graphite Enterprise has consistently outperformed the peer group average Year to 31 January 20131 1 3 5 10 Total return Graphite Enterprise NAV 11.8% 38.4% 26.8% 171.5% Peer group2 average NAV 3.5% 26.6% 3.5% 152.9% ● This outperformance is despite taking lower balance sheet risk than the
Slide 16: The balance sheet is strong and provides capacity for new investment
2. Results The balance sheet is strong and provides significant capacity for new investment Apr 2013 Apr 2013 £m % Investments 418 88% Net current assets 56 12% Total assets less current liabilities 474 100% Undrawn bank facility1 99 Total liquidity2 154 Commitments 139 Over/(under)commitment3 (15)
Slide 17: We expect to increase commitments significantly in the coming year
2. Results We expect to increase commitments significantly in the coming year ● New primary commitments will help ensure the Company stays close to full investment – Drawdowns will fall quickly if new commitments are not made ● Commitments since 31-Jan of £22.4m are already more than 80% of last yea
Slide 18: 3. Investment activity and process
3. Investment activity and process Page 17
Slide 19: Recent activity includes a mix of primary, secondary and co-investments
3. Investment activity and process Recent activity includes a mix of primary, secondary and co-investments Primary Secondary Co-investment £27.3m £4.7m Year ended 31 Jan 2013 £22.4m £9.0m Since Year end ● In the next 12 months we expect to complete both primary commitments and secondaries ● Co-inves
Slide 20: Manager selection is important as there is a large gap between best and worst
3. Investment activity and process Manager selection is important as there is a large gap between the best and worst Greater 4.0x than 4.0x 1st quartile 3.5x 2nd quartile 3rd quartile 3.0x 4th quartile Multiple of cost 2.5x 2.0x 1.5x 1.0x 0.5x 0.0x 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2
Slide 21: Systematic sourcing is key to accessing the best managers
3. Investment activity and process Systematic sourcing is key to accessing the best managers Initial Initial Final due Final due Sourcing Origination Investment Investment screening screening diligence diligence • Continuous market research • Proactive sourcing of opportunities • Early introductions
Slide 22: As a direct buy-out manager we are well placed to judge other managers
3. Investment activity and process As a direct buy-out manager we are well placed to judge other managers Initial Initial Final due Final due Sourcing Sourcing Investment Investment screening screening diligence diligence • Attend management presentation • Review investment strategy • Analysis of tr
Slide 23: Our due diligence is rigorous and focuses on underlying companies
3. Investment activity and process Our due diligence is rigorous and focuses on underlying companies Initial Initial Initial Final Final due due Final due Sourcing Sourcing Origination Investment Investment Investment screening screening screening diligence diligence diligence Investment committee d
Slide 24: Post investment we remain active
3. Investment activity and process Post investment we remain active Initial Initial Initial Final Final due due Final due Sourcing Sourcing Origination Investment Investment Investment screening screening screening diligence diligence diligence • Attend annual investor meetings • Regular scheduled a
Slide 25: Investment process is highly selective
3. Investment activity and process Graphite Enterprise’s investment process is highly selective Funds considered 95 Management meetings 55 Detailed due diligence 12 Invested 4 Page 24
Slide 26: 4. Portfolio
4. Portfolio Graphite Enterprise
Slide 27: Portfolio provides access to a wide range of managers across various markets
4. Portfolio The portfolio provides access to a wide range of managers across various markets Mid-market Upper mid- country UK lower mid- Other Large market specific market • Exposure to 345 companies, through 54 funds and 30 managers Page 26
Slide 28: Portfolio is well diversified by geography, sector and vintage
4. Portfolio The portfolio is well diversified by geography, sector and vintage Notes 1. Geography denotes where a company is headquartered. 2 All charts are based on underlying company data as at 30.04.13. Page 27
Slide 29: Balance between diversification and concentration
4. Portfolio The portfolio strikes a balance between diversification and concentration ● The top 30 underlying companies represent 41% of the portfolio ● This ensures individual winners can make a difference − e.g. NES added 7p in the year and 14p over the life of the investment ● The top 30 compani
Slide 30: Example – NES Group (Graphite Capital disposal)
4. Portfolio Example – NES Group (Graphite Capital disposal) Background ● International technical recruitment group ● Places highly skilled contract engineers with blue chip clients ● Acquired in a secondary management buy-out in September 2006 ● Enterprise value of £70 million on acquisition Perfor
Slide 31: 5. Discount
5. Discount Graphite Enterprise
Slide 32: Discount on listed private equity is out of line with investment trust sector
5. Discount The discount on listed private equity is out of line with the investment trust sector Page 31
Slide 33: Discounts have recently moved closer to historic norms
5. Discount Discounts have recently moved closer to historic norms • At 12 June 2013, the discount was 23.1% (share price 489p) – The Company’s average discount in the 15 years prior to the financial crisis was 10% – The average discount from Dec 2007 to Dec 2012 was 34% Note Sector includes 3i, Abe
Slide 34: The Graphite Enterprise discount is in line with the sector average
5. Discount The Graphite Enterprise discount is in line with the sector average ● Market sentiment appears to be the key driver of discounts in the sector 14 12 ● Efforts to reduce discounts do not appear to have a material effect (35)% 10 Return of capital/buy-backs (30)% Higher dividend payout 8 L
Slide 35: 6. Dividend
6. Dividend Graphite Enterprise
Slide 36: Board recommends dividend be maintained at 5.0p per share
6. Dividend The Board is recommending that the dividend should be maintained at 5.0p per share ● The proposed dividend is the same as last year ● Net revenue per share fell from 6.33p to 3.15p in the year to Jan 2013 ● This was driven by a fall in realisations – Income typically accrues until a port
Slide 37: 7. Conclusions
7. Conclusions Graphite Enterprise
Slide 38: Graphite Enterprise is well positioned to grow further
7. Conclusion Graphite Enterprise is well positioned to grow further ● The portfolio continues to perform well – The Top 30 companies grew profits in 2012 by 14% ● The portfolio is mature and managers will be seeking exits in the short term – 58% is more than 4 years old ● Recent exits have been at
Slide 39: Questions?
Questions? Page 38 Graphite Enterprise
Slide 40: Results of proxy votes
Results of proxy votes Page 39
Slide 41: Resolution 1: Approval of the annual report and accounts
Resolution 1 Approval of the annual report and accounts For: 25,070,591 99.63% Chairman’s discretion: 25,830 0.10% Against: 67,547 0.27% Withheld: 31,466 Page 40
Slide 42: Resolution 2: Approval of the final dividend of 5.0p
Resolution 2 Approval of the final dividend of 5.0p per share For: 25,085,996 99.63% Chairman’s discretion: 25,830 0.11% Against: 66,463 0.26% Withheld: 17,146 Page 41
Slide 43: Resolution 3: Election of Sandra Pajarola
Resolution 3 Election of Sandra Pajarola For: 24,845,253 99.13% Chairman’s discretion: 27,560 0.11% Against: 191,646 0.76% Withheld: 130,976 Page 42
Slide 44: Resolution 4: Re-election of Peter Dicks
Resolution 4 Re-election of Peter Dicks For: 23,190,311 93.69% Chairman’s discretion: 23,318 0.09% Against: 1,539,625 6.22% Withheld: 442,181 Page 43
Slide 45: Resolution 5: Re-election of Mark Fane
Resolution 5 Re-election of Mark Fane For: 24,833,258 99.00% Chairman’s discretion: 23,318 0.09% Against: 228,363 0.91% Withheld: 99,923 Page 44
Slide 46: Resolution 6: Re-appointment of PwC as auditors
Resolution 6 Re-appointment of PwC as auditors For: 24,821,707 98.94% Chairman’s discretion: 27,560 0.11% Against: 238,185 0.95% Withheld: 107,982 Page 45
Slide 47: Resolution 7: Directors' Remuneration Report
Resolution 7 Directors’ Remuneration Report For: 24,552,047 98.35% Chairman’s discretion: 27,560 0.11% Against: 383,966 1.54% Withheld: 231,862 Page 46
Slide 48: Resolution 8: Authority to allot shares
Resolution 8 Authority to allot shares For: 24,896,665 99.06% Chairman’s discretion: 28,560 0.12% Against: 207,096 0.82% Withheld: 62,813 Page 47
Slide 49: Resolution 9: Disapplication of pre-emption rights
Resolution 9 (special resolution) Disapplication of pre-emption rights For: 24,719,719 98.45% Chairman’s discretion: 28,830 0.12% Against: 359,773 1.43% Withheld: 78,533 Page 48
Slide 50: Resolution 10: Share buy-backs
Resolution 10 (special resolution) Share buy-backs For: 24,867,995 98.92% Chairman’s discretion: 30,560 0.12% Against: 241,272 0.96% Withheld: 47,028 Page 49
Slide 51: Resolution 11: Notice period for general meetings
Resolution 11 (special resolution) Notice period for general meetings For: 24,310,460 96.74% Chairman’s discretion: 26,318 0.10% Against: 793,576 3.16% Withheld: 56,501 Page 50
Slide 52: Graphite Enterprise
Graphite Enterprise
Graphite Enterprise Trust — Shareholder Meeting (June 2013) on 6ix