Icg Enterprise Trust Plc Gbp · LSE:ICGT
Icg Enterprise Trust Plc Gbp — ICG Enterprise Trust — FY2019 Earnings Presentation
48 slides from Icg Enterprise Trust Plc Gbp's earnings presentation, Jan 31, 2019
Slide 1: Annual results
Annual results For the year ended 31 January 2019
Slide 2: Introduction
Introduction Page Company overview 3 Emma Osborne Head of Private Equity Fund Performance and portfolio 8 Investments Case studies 19 Colm Walsh Supplementary portfolio information 27 Managing Director Private Equity Fund Investments Appendices 36 2
Slide 3: Company Overview
Company Overview ENTERPRISE TRU:
Slide 4: Company overview
Company overview A leading listed private equity investor £731m Net asset value (1,057p 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 fun
Slide 5: Manager overview
Manager overview A leading specialist manager in private debt, credit and equity €35 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 6: 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 7: Investment Strategy
Investment Strategy High conviction investments underpinned by a portfolio of leading funds 20% Enhances returns by increasing exposure to the most attractive assets Underlying companies selected by ICG Third-party direct Increases control and enables greater flexibility in 15% portfolio manag
Slide 8: Performance and portfolio
Performance and portfolio Year to 31 January 2019
Slide 9: Highlights for the year
Highlights for the year Strong performance and continued progress against strategic goals Investment portfolio return of +16.6% in sterling; +15.0% in local currencies +12.4% 10th consecutive year of double digit underlying growth – 16.4% CAGR Total Return (1,057p NAV per share) Driven by cont
Slide 10: 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 431% 173% 148% 75% 63% 67% 54% 12% 29% 31% 3% -4% 1 year 3 years 5 years 10 years An investment in ICG Enterprise made on the ye
Slide 11: 10th consecutive year of double digit portfolio growth
10th consecutive year of double digit portfolio growth 15.0% underlying portfolio growth in the year; 16.6% in Sterling Underlying portfolio growth 28.9% High quality portfolio performing well 30.0% - Average CAGR in local currency 15.3% over five years; 16.4% over 10 years 25.0% All parts of th
Slide 12: Highly cash generative portfolio
Highly cash generative portfolio Realisations at 35% uplift to carrying value; 2.4x cost Cash conversion2 % 40 £153m1 of realisations 35 37 - 60 full realisations 30 33 - Cash proceeds 26% of opening portfolio value 25 28 26 20 Six realisations within the Top 30 companies 15 20 - Cambium (ICG) t
Slide 13: Selective investment into compelling opportunities
Selective investment into compelling opportunities £158m invested; 50% into high conviction investments New investment £m 158 160 Cautious in deploying capital in the current 142 market 140 128 125 - High pricing and strong competition for good 120 quality assets - Maintaining discipline is key, a
Slide 14: Finding value in the current market
Finding value in the current market Combining defensive growth with attractive deal dynamics Some of the growth drivers in the current market: Defensive growth Demographics Strong market positions in growing markets • Healthcare, education Highly resilient businesses with relatively low correlat
Slide 15: £162m of primary commitments
£162m of primary commitments 10 new commitments; four new relationships ICG Europe VII: €40m (£35m) ICG Strategic Equity III: $40m (£31m) Graphite Capital Partners IX: £30m €4.5bn subordinated debt and equity fund Acquires portfolios through fund £490m fund focused on UK mid-market Strategy
Slide 16: Top underlying companies – 46% of the portfolio
Top 30 underlying companies – 46% of the portfolio Value is concentrated in our high conviction investments Pre-Crisis 2009 - 2013 2014 - 2016 2017-18 High Conviction 70%1 Graphite primary 27% Third-party primary 3% 1 Percentages are of the top 30 value. High conviction includes ICG, direct co-inves
Slide 17: Top 30 underlying companies – 46% of the portfolio
Top 30 underlying companies – 46% of the portfolio Strong revenue and earnings growth Revenue growth 20% Consistently strong EBITDA growth 15% - LTM earnings growth of 16%1 - A third reporting EBITDA growth of 20% or 13% 10% 11% greater 8% - Driven by both organic growth and M&A 5% - EBITDA margin
Slide 18: Summary and outlook
Summary and outlook Well positioned to continue to generate shareholder value Consistently strong returns - 10th consecutive year of double digit underlying Continued strong portfolio growth performance Continued outperformance of FTSE All-Share Index Continued strong underlying profit growth
Slide 19: Case studies
Case studies ENTERPRISE TRU:
Slide 20: Case study: Cambium
Case study: Cambium Realisation by ICG Strategic Equity 4.8x Multiple of cost on sale Background Developments Realisation Cambium provides educational ICG Strategic Equity played an active Cambium was sold to Veritas Capital in software for primary schools in the US role in the management of C
Slide 21: Case study: IRI
Case study: IRI Co-investment in IRI – November 2018 £11m Invested by ICG Enterprise Background Rationale Outlook IRI is one of the world’s leading data Significant barriers to entry: core Transaction with structural downside providers to the Consumer Packaged business operates in a global duo
Slide 22: Case study: Minimax
Case study: Minimax Co-investment alongside ICG Europe VI and VII – July 2018 £17m Total investment by ICG Enterprise Background Rationale Outlook Leading global supplier of fire protection Largest pure play fire protection Positive current trading with systems and services, focused on solutio
Slide 23: Case study: Leeds Equity/Endeavor Schools
Case study: Leeds Equity/Endeavor Schools Commitment to Leeds Equity Partners VI – December 2017 Co-investment in Endeavor Schools – February 2018 $20m Invested and committed by ICG Enterprise Background Rationale Outlook Leeds specialises in ‘knowledge ICG has significant investment Leeds VI
Slide 24: Case study: Jordan Company
Case study: Jordan Company Commitment to Resolute Fund IV – July 2018 $15m Committed by ICG Enterprise Background Rationale Outlook The Jordan Company is one of the oldest Experienced senior team with deep Current fund portfolio is US buyout managers, established in 1982 experience through mar
Slide 25: Case study: Abode Healthcare
Case study: Abode Healthcare Co-investment alongside Tailwind Capital III – May 2018 $7m Total investment by ICG Enterprise Background Rationale Outlook Provider of at-home hospice care and other Tailwind knowledge and experience Company has made good early home care services in the United Sta
Slide 26: ICG Strategies
ICG Strategies Investing in four out of ICG’s 18 strategies Total Strategy Description Funds / co-investments Value Undrawn exposure £m £m £m ICG Europe • ICG Europe VII (2018) 91 46 137 Subordinated debt and equity in European mid-market • ICG Europe VI (2015) companies targeting companies with exp
Slide 27: Supplementary portfolio information
Supplementary portfolio information
Slide 28: Detailed portfolio overview
Detailed portfolio overview ICG Graphite Third party Primary 64.6% 6.1% 14.7% 43.8% Secondary 9.8% 4.0% 0.4% 5.4% Co- Investment/ direct 25.6% 9.8% 2.2% 13.6% 100.0% 19.9% 17.3% 62.8% No management fee at ICGT level Single fee on over half of the portfolio No management fee at underlying manager lev
Slide 29: Top 30 underlying companies #1-15
Top 30 underlying companies #1-15 Year of Value as a % of Company Manager Country investment Portfolio 1 City & County Healthcare Group Provider of home care services Graphite Capital 2013 UK 3.4% 2 DomusVi+ Operator of retirement homes ICG 2017 France 3.2% 3 Minimax+ Supplier of fire protection sys
Slide 30: Top 30 underlying companies #16-30
Top 30 underlying companies #16-30 Year of Value as a % of Company Manager Country investment Portfolio 16 PetSmart+ Retailer of pet products and services BC Partners 2015 USA 1.4% 17 YSC Provider of leadership consulting and management assessment services Graphite Capital 2017 UK 1.3% 18 Endeavor S
Slide 31: Top 30 underlying companies: valuation multiples and earnings growth
Top 30 underlying companies Increase in valuation multiples and strong earnings growth1 EBITDA growth 100% 90% Earnings growth of 16% 80% - Half1 reporting EBITDA growth of 10% or 70% 60% greater 50% - A number of companies investing for growth, 40% expect to see the benefit of this over next 12-
Slide 32: Realisations at significant uplifts to carrying value
32 Realisations at significant uplifts to carrying value Continued strong performance Percentage uplift to carrying value Six opening top 30 companies were sold 45 Weighted average 33% during the year: 40 35 40 - Cambium (ICG) 35 35 30 - The Laine Pub Company (Graphite) 25 20 - Swiss Education Gro
Slide 33: Portfolio geographic focus
Portfolio geographic focus Increasing geographical diversification Movement in geographic split 0.3% 4.4% 100% Increasing exposure to the US market 14.1% 80% 25.9% - Largest most developed private equity market 40.5% Rest of World 60% - 26% of portfolio; up from 14% at Jan 16 US 38.8% Europe - Exp
Slide 34: Portfolio sector and deal size
Portfolio sector and deal size Focus on mid-large companies with a well balanced sector exposure Sector 3% 3% 16% Business services Well balanced sector exposure 6% Consumer goods and services - Bias to structural growth Industrials 12% - Healthcare and education 21% Leisure TMT - Business service
Slide 35: Portfolio vintage year exposure
Portfolio vintage year exposure Attractive and well balanced maturity Investment vintage 25% Balance of near term realisations prospects with a strong pipeline of medium to longer 20% 20% term growth 20% 18% Investments completed on or before 2015 – 42% of the portfolio 15% - Likely to generate
Slide 36: Appendices
Appendices ENTERPRISE TRU:
Slide 37: Return attribution for the year
Return attribution for the year Strong portfolio gains NAV per share bridge 1150p Change in NAV 14.2 11.1 Jan-19 1100p 11.5 (% of opening NAV) 130.5 4.1 21.0 Underlying portfolio return in local currencies 15.0% 0.3 1050p 1056.5 Currency 1.6% 1000p Total portfolio valuation movement 16.6% Effect of
Slide 38: Balance sheet
Balance sheet Strong balance sheet £m Jan-19 Jan-18 Cash balances decreased to £61m Investments 695 601 Cash 61 78 Undrawn commitments of £411m Other net assets/(liabilities) (25) (15) - If outstanding commitments were to follow a linear investment pace, estimate £90m of calls in the next Net As
Slide 39: Balance sheet evolution
Balance sheet evolution History of conservative balance sheet management 1000 800 600 400 695 601 428 594 433 432 265 415 192 231 357 378 200 £ million 133 140 113 104 55 69 90 78 61 0 43 46 39 -43 -46 -55 -69 -39 -113 -30 -90 -104 -78 -61 -133 -140 -59 -58 -98 -103 -111 -45 -26 -96 -104 -104 -97 -2
Slide 40: Management fees and expenses
Management fees and expenses Effective management fee of 1.1% 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 41: Incentive arrangements
Incentive arrangements Strong alignment of interest through co-investment scheme Incentive net payments as a % of cash proceeds Management fees Co-investment scheme in which the Manager 5% Incentive 10 year average invests 0.5% in every investment 4% Incentive of 10% provided the investment 3% e
Slide 42: Dividends and buybacks
Dividends and buybacks Continuing to return capital to shareholders Dividends and share buy backs Dividends 40 Buybacks The Board has committed to a progressive Special div annual dividend policy with quarterly payments 35 Ordinary div Q3 dividend of 5p paid on 1 March 2019 30 ‒ Total dividends
Slide 43: 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 2010 Joined the team in 2009 ICG Enterprise for over 14 14 years of PE experience 12 years of PE experience years Graphite Capital (funds, Gra
Slide 44: 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 45: 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 46: 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 10 600 527 - 500 -10 456 400 -20 -30 300 279 -40 200 -50 100 -60 -70 - 2001 1998 1999 2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Slide 47: Useful information
Useful information Structure: Company registered in England and Wales Ticker: ICGT.LON Investment trust tax status ISIN: GB0003292009 Registered company number: 01571089 SEDOL: 0329200 Listing: Premium London listing Website: www.icg-enterprise.co.uk Broker: Numis Securities Limited James Glass (Sal
Slide 48: 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