ICG Enterprise Trust PLC GBP · LSE:ICGT
ICG Enterprise Trust PLC GBP — Graphite Enterprise Trust — H1 2011 Earnings Presentation
32 slides from ICG Enterprise Trust PLC GBP's earnings presentation, September 2011
Slide 1: Investor presentation September 2011
Investor presentation September 2011 0
Slide 2: Investor presentation – September 2011 contents
Investor presentation – September 2011 Page 1. Introduction 2 2. Performance 8 3. Balance sheet and liquidity 14 4. Investment activity 15 5. The portfolio at 31 July 2011 21 6. Share price and discount 25 7. Outlook and conclusions 27 1
Slide 3: Graphite Enterprise – overview
1. Introduction Graphite Enterprise – overview Hybrid 75-80% third party funds and co-investments fund of funds/ 20-25% companies typically directly controlled by Graphite Capital direct investor Invest in primary funds, secondary fund purchases and direct co-investments Focus on Buy-outs –
Slide 4: The Manager of Graphite Enterprise is Graphite Capital
1. Introduction The Manager of Graphite Enterprise is Graphite Capital Graphite Capital is a leading UK mid-market private equity firm with £1.2 billion under management – Buy-out funds investing in the UK mid-market (almost £900 million) – Fund investments and co-investments (more than £400 milli
Slide 5: Graphite Capital – an experienced and focused team manage Graphite Enterprise
1. Introduction Graphite Capital – an experienced and focused team manage Graphite Enterprise 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 exp
Slide 6: The investment strategy is focused on European buy-outs
1. Introduction The investment strategy is focused on European buy-outs The focus is on established, top performing European buy-out managers – UK mid-market mainly through Graphite Capital funds (in which it is the largest investor) – Other European markets and other UK sectors covered through th
Slide 7: The portfolio combines Graphite Capital and third-party investments
1. Introduction The portfolio combines Graphite Capital and third-party investments Direct Graphite investments 19% portfolio Third Third party funds party Third party 73% co- portfolio invests 8% The portfolio is more diversified than most direct funds, more concentrated than most fund of funds –
Slide 8: We apply a direct investment manager approach to third party fund investments
1. Introduction We apply a direct investment manager approach to our third party fund investments The Graphite Enterprise team has extensive direct investing experience – Well positioned to judge other private equity managers – Understanding of direct co-investment opportunities We benefit from
Slide 9: The NAV and share price strongly outperformed the FTSE All-Share
2. Performance The NAV and share price strongly outperformed the FTSE All-Share in the 6 months to July 31 January 31 July % 2011 2011 change Net asset value per share 534.0p 580.2p +8.6% Share price 308.0p 392.0p +27.3% FTSE All-Share Index 3,044 3,026 -0.6% Discount 42.3% 32.4% 8
Slide 10: The net asset value per share increased by 8.6% in the six months
2. Performance The net asset value per share increased by 8.6% in the six months to 580.2p 6 months to 31 July % £m Portfolio 8.2% 31.8 Currency 2.3% 9.1 Total portfolio 10.5% 40.9 Dividend -0.4% (1.6) Expenses and other -1.5% (5.7) Total NAV movement 8.6% 33.6 9
Slide 11: The portfolio performed well
2. Performance The portfolio performed well Gain as % % of Gain of opening underlying £m portfolio gain Realisation activity * 19.4 5.4% 61% Unrealised 12.4 3.5% 39% Total underlying gain 31.8 8.9% 100% Currency 9.1 2.5% Total portfolio movement 40.9 11.4% As the portfolio represented 89% of openi
Slide 12: NAV per share has outperformed the All-Share over 1, 3, 5 and 10 years
2. Performance 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 +23.5% +11.5% +38.6% +101.1% Share price +40.8% -6.7% +7.0% +58.4% FTSE All-Share Index +11.4% +6.0% +2.0% +10.9% The NAV per share has outperformed the FTSE Al
Slide 13: Graphite has been the best performing fund of funds during the downturn
2. Performance In NAV terms, Graphite has been the best performing fund of funds during the downturn Peak to trough July 2011 NAV performance (2007-2008) 1 year 1 3½ years2 as % of peak % Graphite Enterprise -24.8% +23.5% +11.7% +9.2% Peer Group average 3 -29.1% +15.8% -1.2% -6.7% At 31 July 2011
Slide 14: Graphite Enterprise is managed conservatively
2. Performance Graphite Enterprise is managed conservatively December June/July 2008 2011 Cash/(debt) as % NAV Graphite Enterprise 42% 17% Peer Group average ¹ (9)% (1)% Overcommitment % 2 Graphite Enterprise 51% 18% Peer Group average ¹ 86% 32% ¹ Peer group is: Conversus, F&C PE, HarbourVest, JPM P
Slide 15: The balance sheet is strong
3. Balance sheet The balance sheet is strong 31 July 31 Jan 31 July 31 Jan £m £m % % Investments 359 357 82.6% 89.2% Cash and near cash 76 43 17.4% 10.8% Total assets 435 400 100% 100% Undrawn bank facility 30 - Total available liquidity 106 43 Outstanding commitments 153 174 Overcommitment 1 77 131
Slide 16: Disposal proceeds in the first six months were higher than in the last three years combined
4.Investment activity Disposal proceeds in the first 6 months were higher than in the last three years combined * Represents £9.6m of proceeds for Salient and Phadia Notes: (1) includes income from the portfolio (£6.3m in six months to 31 July). (2) Excludes proceeds from secondary sales (£3.8m in s
Slide 17: Eleven full realisations were completed at an average of 2.6x cost
4.Investment activity Eleven full realisations were completed at an average of 2.6x cost 6 months to 31 July 2011 Net Gross proceeds multiple Uplift on Number £m of cost valuation1 Full realisations 2 11 52.5 2.6 83% Partial realisations 12.3 64.8 Secondary sale 3.8 Total proceeds 68.6 Five invest
Slide 18: Recent examples – Kurt Geiger disposal
4.Investment activity Recent examples – Kurt Geiger disposal Background A leading UK-based retailer of luxury footwear and accessories Acquired by Graphite Capital in a £95 million secondary buy-out in February 2008 Developments under Graphite Capital ownership Turnover increased by 70% to £20
Slide 19: New investment was materially lower than in the 13 months to January 2011
4.Investment activity New investment was materially lower than in the 13 months to January 2011 18
Slide 20: Example – Charterhouse VIII (secondary purchase of fund interest)
4.Investment activity Example – Charterhouse VIII (secondary purchase of fund interest) Background Charterhouse is a leading large buy-out manager, focusing on UK and France Graphite Enterprise first invested with the team in 1989 Fund VIII is a €4 billion 2006 vintage fund which was oversubsc
Slide 21: Example – Steadfast Funds II & III (stapled secondary transaction)
4.Investment activity Example – Steadfast Funds II & III (stapled secondary transaction) Background Steadfast is a German mid-market manager established in 2001 Focus on buy-outs €25-150 million, mainly industrial companies Formerly 100% funded by BHF Bank Fund II was raised in 2006 with €19
Slide 22: The portfolio remained balanced and well diversified
5. Portfolio The portfolio remained balanced and well diversified At 31 July 2011, the portfolio comprised 44 funds and 23 direct investments – exposure to 310 underlying companies The portfolio is more concentrated than most funds of funds, more diversified than most direct funds – Top 30 inves
Slide 23: Graphite Capital directly managed five of the top ten holdings
5. Portfolio At 31 July 2011, Graphite Capital directly managed five of the top ten holdings The top 10 underlying investments represented 19.6% of portfolio value Value % of Country Manager £m portfolio 1 Distributor and retailer of tyres UK Graphite 15.8 4.4% 2 Operator of caravan parks UK Graph
Slide 24: Top 30 companies accounted for 39.5% of the portfolio
5. Portfolio At July 2011 the Top 30 companies accounted for 39.5% of the portfolio These companies performed well in the twelve months to 30 June − revenues grew by an average of 14% − EBITDA grew by an average of 18% Valuation multiples increased marginally from 8.7 to 9.1 times EBITDA from Ja
Slide 25: Considerable scope for future upside as the portfolio matures
5. Portfolio There is considerable scope for future upside as the portfolio matures The portfolio was valued at 1.3 times cost* and had an average maturity of 4.0 years * Including amounts realised by current portfolio companies 24
Slide 26: The share price has strongly outperformed the FTSE All-Share
6. Share price The share price has strongly outperformed the FTSE All-Share since 31 January 2011 31 July In the six months to 31 July, the share price rose by 27.3% while the Index fell by 0.6% Since then, the share price has fallen by 13.7% and the Index by 13.4% Since 31 January, the share
Slide 27: The discount has widened since the period end
6. Share price The discount has widened since the period end, as has that of the peer group 31 July Discount At 23 September 2011 the discount was 41.7.% (share price 338.25p) – The average discount over ten years is 21.7% – The average discount in the ten years prior to Q4 2008 was 12.4% 26
Slide 28: The performance of the portfolio was resilient following the 2008 market fall
7. Outlook The performance of the portfolio was resilient following the fall in the market in 2008 In the second half of 2008, the FTSE All-Share fell by 22.5% – At Dec 2008, third party managers marked companies down to an average of 8.5x EBITDA – We applied a provision of 10% to the third party
Slide 29: Cash balance and portfolio EBITDA growth may offset recent market falls
7. Outlook The cash balance and the growth in portfolio EBITDA may offset recent market falls If the portfolio were to fall in line with the market (13.2%): – The net asset value would fall by approximately 11% – The discount would fall from 41.7% to 35% based on the 23 September share price of 33
Slide 30: The strength of the balance sheet represents a significant advantage
7. Outlook The strength of the balance sheet represents a significant advantage The portfolio has demonstrated consistent growth – The top 30 investments (39.5% of the portfolio) performed well to June 2011 – Valuation multiples are reasonable given the strong recent performance – Private equity a
Slide 31: Background Info
Background Info 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 Angus Wilton + 44 (0) 20 7155 8122 Corpo
Slide 32: 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
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