27 slides from Icg Enterprise Trust Plc Gbp's earnings presentation, Sep 28, 2015
Slide 1: Investing in long term growth
Investing in long term growth Half year results presentation 28 September 2015
Slide 2: Half year results presentation
Half year results presentation September 2015 1. Introduction 2. Performance Tim Spence Senior Partner Finance Director 3. Investment activity 4. Portfolio Emma Osborne Senior Partner 5. Market Head of Fund Investment 6. Balance sheet Kane Bayliss 7. Conclusion Partner Fund Investment Rod Richards M
Slide 3: Graphite Enterprise has a distinctive offering in the listed private equity sector
1. Introduction Graphite Enterprise has a distinctive offering in the listed private equity sector Focused strategy Distinctive investment style European buy-outs – mature, profitable Highly analytical approach with a focus on companies – both through funds and directly building long-term relationsh
Slide 4: Highlights of the six months ended 31 July 2015
1. Introduction Highlights of the six months ended 31 July 2015 Net asset value per share Share price Underlying value of the portfolio in local currencies +3.0% +5.4% +7.8% The NAV per share increased to The share price increased to 590p The portfolio grew strongly, driven by 700p, extending its pe
Slide 5: The NAV and share price outperformed the FTSE All-Share Index
2. Performance The NAV and share price outperformed the FTSE All-Share Index Total return Jul-15 Jan-15 6 months Net asset value per share 700.3p 695.2p +3.0% Share price 590.0p 575.0p +5.4% FTSE All-Share Index 3,653 3,622 +2.8% The share price has decreased by 4.6% since 31 July to 563p* — This
Slide 6: The portfolio made good progress, increasing by 7.8% in local currencies
2. Performance The portfolio made good progress, increasing by 7.8% in local currencies 6 months to Jul-15 % of opening portfolio % of opening NAV £m Underlying valuation gains 7.8% 6.7% 33.8 Currency (3.1)% (2.7)% (13.5) Total portfolio 4.7% 4.0% 20.3 Expenses and other (1.2)% (6.2) Buy-backs 0.2%
Slide 7: Unrealised gains were a larger proportion of the total than in previous years
2. Performance Unrealised gains were a larger proportion of the total than in previous years Year to Year to 6 months to Jul-15 Jan-15 Jan-14 % of total gain £m % % Gains from realisations 33% 11.2 55% 51% Unrealised gains 67% 22.6 45% 49% Total portfolio 100% 33.8 100% 100% Gains from realisation
Slide 8: Graphite Enterprise has outperformed the peer group over 3, 5 and 10 years
2. Performance Graphite Enterprise has outperformed the peer group over 3, 5 and 10 years Years to Jul-151 1 3 5 10 Graphite Enterprise NAV growth 5% 28% 59% 122% Peer group average NAV growth 7% 21% 50% 109% This performance is despite taking lower balance sheet risk than the peer group Short t
Slide 9: The portfolio continued to generate a very high level of realisations
3. Investment activity The portfolio continued to generate a very high level of realisations Proceeds of £73 million are equivalent to 17% of the opening portfolio Full realisations accounted for £44 million of proceeds 1. Excludes proceeds from secondary sales. 2. Disposal proceeds as % of open
Slide 10: Full realisations continue to generate significant uplifts to prior valuations
3. Investment activity Full realisations continue to generate significant uplifts to prior valuations1 Year to Year to Year to 6 months to Jan-13 Jan-14 Jan-15 Jul-15 Valuation uplift 49% 36% 35% 23% Number of full realisations 14 33 39 19 Multiple of original cost 2.7x 2.1x 2.1x 1.7x Investments
Slide 11: Case Study: NFA
Case Study: NFA In April 2015, Graphite Capital sold NFA, generating >2x Multiple of cost of investment achieved proceeds of £11.9 million for Graphite Enterprise on disposal Background The Business Realisation Graphite Capital acquired National Organic turnover growth was The business was ref
Slide 12: New investment was substantially below the exceptionally high level last year
3. Investment activity New investment was substantially below the exceptionally high level last year All types of investment were lower than last year No new Graphite buyouts were completed 1. Discretionary investments includes Graphite fund drawdowns, secondary purchases of fund interests and c
Slide 13: Our investment programme focused on primary commitments in the first half
3. Investment activity Our investment programme focused on primary commitments in the first half Primary commitments £34.6m Secondary purchase £7.1m Co-investments £6.5m More of our preferred managers are raising funds this year than last year An additional primary fund and a co-investment shoul
Slide 14: Alcuin Capital Partners – new primary commitment
Case Study: Alcuin Capital Partners – new primary commitment In June 2015 Graphite Enterprise committed £9 million to The Fourth Alcuin Fund Background Strategy Rationale Founding partners have been £150 million fund focused on UK Investment approach has working together since 1998 at lower mi
Slide 15: Discretionary investments make up 54% of the portfolio
4. Portfolio Discretionary investments make up 54% of the portfolio1 Graphite portfolio Third party porfolio Direct Graphite investments 24% Third party funds 60% (of which secondaries: 14%) co-investments 16% 26 active third party manager relationships 3 Graphite Capital funds, 56 third party f
Slide 16: The portfolio is balanced and well diversified
4. Portfolio The portfolio is balanced and well diversified The portfolio strikes a good balance between diversification and concentration — Exposure to almost 400 underlying companies, across a wide range of geographies and sectors — The top 30 underlying companies represent 48% of the portfolio
Slide 17: The Top 30 companies continue to perform well and are reasonably valued
4. Portfolio The Top 30 companies continue to perform well and are reasonably valued The Top 30 companies grew revenues and EBITDA by 6.1% and 7.7% respectively — Aggregate FTSE All-Share revenues fell by 7.4% and EBITDA fell by 8.5% The Top 30 were valued on average at 9.1x EBITDA and had net d
Slide 18: Six of the top ten holdings are managed directly by Graphite Capital
4. Portfolio Six of the top ten holdings are managed directly by Graphite Capital % of Company Description Country Manager portfolio 1 Distributer and retailer of tyres UK Graphite 5.6% 2 Provider of home care services UK Graphite 3.4% 3 Provider of repair and maintenance services UK Graphite 3.2% 4
Slide 19: The portfolio is valued at 1.5x cost and its average age is 4 years
4. Portfolio The portfolio is valued at 1.5x cost and its average age is 4 years 28% 45% 27% There is potential for considerable value growth as the portfolio matures Almost half of the portfolio is in the vintages we expect to generate the most near-term upside 1. Multiples of cost include amou
Slide 20: Although activity remains high, valuations and leverage appear to have plateaued
5. Market Although activity remains high, valuations and leverage appear to have plateaued European buy-out market Excluding small buy-outs, the market remains active (LTM as at Jun 2015 vs 2014) — Europe ex UK >€50m EV: volumes +15% and value +17% — UK deals >€50m EV: volumes +10% and value +36%
Slide 21: The fundraising and secondary market environments remain positive
5. Market The fundraising and secondary market environments remain positive Fundraising The amount raised by European buy-out funds in H1 2015 was strong — €21bn vs €18bn in H1 2014 and €12bn in H2 2014 The number of funds raised was higher (31 vs 20 in H1 2014 and 24 in H2 2014) Funds of more
Slide 22: Strong portfolio inflows have led to an increase in cash balances
6. Balance sheet Strong portfolio inflows have led to an increase in cash balances Jul-15 Jan-15 Jul-15 Jan-15 £m £m % % Investments 411 432 80% 84% Net current assets 104 85 20% 16% Total assets less current liabilities 515 517 100% 100% Outstanding commitments 249 234 Undrawn bank facility1 94 96
Slide 23: We have announced an interim dividend and share buy-backs will continue
6. Balance sheet We have announced an interim dividend and share buy-backs will continue Realisations are expected to remain high — A number of exits have been completed or announced Secondaries are highly priced and co-investments are in high demand — It is important to maintain pricing discipl
Slide 24: Graphite Enterprise is well positioned to grow further
7. Conclusion Graphite Enterprise is well positioned to grow further The environment for realisations remains favourable and managers will be seeking exits — The post-crisis vintages are expected to drive performance The market for new investment remains challenging — Experienced managers should
Slide 25: The Graphite Enterprise Team
Further Information The Graphite Enterprise Team Rod Richards Andy Gray Emma Osborne Tim Spence Managing Partner, Senior Partner, Senior Partner, Senior Partner, Investment committee member Investment committee member Head of Fund Investment Finance Director 29 years’ PE experience. Joined in 23 yea
Slide 26: Useful information
Useful information Structure: Company registered in England and Wales Ticker: GPE.LN Investment trust tax status ISIN: GB0003292009 Registered company number: 01571089 SEDOL: 0329200 Listing: Premium London listing Website: www.graphite-enterprise.com Broker: J.P.Morgan Cazenove Angus Wilton (sales)
Slide 27: 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