Icg Enterprise Trust Plc Gbp · LSE:ICGT
Icg Enterprise Trust Plc Gbp — ICG Enterprise Trust — Investor Presentation (June 2024)
41 slides from Icg Enterprise Trust Plc Gbp's investor presentation, Jun 18, 2024
Slide 1: Shareholder Seminar 2024
Shareholder Seminar 2024 ICG Enterprise Trust TUESDAY 18 JUNE 2024 For professional investors only. Not for onward distribution Note: All data as at 31 January 2024 unless specified PRIVATE AND CONFIDENTIAL
Slide 2: Agenda
Agenda Times Session Speaker Jane Tufnell 09:00 to 09:30 Registration and breakfast Chair, ICG Enterprise Trust 09:30 to 09:35 Welcome Oliver Gardey Oliver Gardey ICG Enterprise Trust 09:35 to 09:40 Chair’s introduction Jane Tufnell 09:40 to 09:50 Private equity landscape Oliver Gardey Colm Walsh IC
Slide 3: Key takeaways from today
Key takeaways from today ICG Enterprise Trust has a focused and differentiated investment strategy Operating performance remains strong and capital structures are well positioned Debt pricing is reducing and debt availability is accelerating Access to the ICG platform provides substantial benefits O
Slide 4: Chair’s introduction
Chair’s introduction Jane Tufnell PRIVATE AND CONFIDENTIAL
Slide 5: How we deliver shareholder value
How we deliver shareholder value Investment strategy Delivering defensive growth through cycles Optimising NAV return Cost base Cap on management fee rate, and change to cost sharing arrangement with ICG plc, saved shareholders approximately £1.9m in FY24 Capital allocation Balancing investment and
Slide 6: Investment strategy: delivering long-term growth
Investment strategy: delivering long-term growth FY241 3 YEARS (ANN.)1 5 YEARS (ANN.)1 PORTFOLIO RETURN ON A LOCAL CURRENCY +5.9% +14.8% +17.1% BASIS NAV PER SHARE TOTAL RETURN +2.1% +13.3% +14.6% SHARE PRICE TOTAL RETURN +9.6% +11.1% +11.2% 1 On an annualised basis, reflecting annualised performanc
Slide 7: Capital allocation: deliberate, nimble approach to shareholder distributions
Capital allocation: deliberate, nimble approach to shareholder distributions TOTAL SHAREHOLDER DISTRIBUTIONS (DIVIDENDS + BUYBACKS) FY25 (to date) £35m1 buybacks of £16m already exceeds full FY24 £21m £22m buybacks of £13m £18m (3) Opportunistic buyback £17m £16m2 (2) Long-term buyback (1) Dividends
Slide 8: Private equity landscape
Private equity landscape Oliver Gardey PRIVATE AND CONFIDENTIAL
Slide 9: Private equity in broader context
Private equity in broader context Value creation Job creation Driving growth and innovation Develop new products and services “Private equity plays a critical role in +7.2% supporting quality, affordable healthcare in the United States.” Job creation in private equity- backed European companies in E
Slide 10: Institutions continue to increase allocations to private equity
Institutions continue to increase allocations to private equity INSTITUTIONAL INVESTORS HAVE INCREASED THEIR ALLOCATIONS TO PRIVATE EQUITY RECENT EXAMPLE INCREASES TO PRIVATE EQUITY TARGET ALLOCATION 12% 10% 10.1% 15% from 10% New York State Common in 2022 Retirement Fund 8% 6.4% 6% 17% from 9% in 2
Slide 11: ICG Enterprise Trust is well positioned to navigate the pressures of today’s environment
ICG Enterprise Trust is well positioned to navigate the pressures of today’s environment Challenging fundraising environment Slowdown in deal activity Few realisations GLOBAL BUYOUT DEAL VALUE Skewed to larger funds Buyout distributions are close to GFC-levels Market observation 51% Top 20 funds rai
Slide 12: Investment strategy
Investment strategy Focused on risk-adjusted returns and defensive growth Buyouts Developed Mid-market and Top-tier markets larger deals managers Defensive More consistent Primarily in North More likely to be Track records of growth returns profile, with America and Europe; resilient and attract inv
Slide 13: Types of companies in our portfolio
Types of companies in our portfolio EXAMPLES FROM TOP 30 COMPANIES Strong market position Mission-critical services Ability to pass on price High margins increases Note: All company names and logos are trademarks are owned by their respective holders. Use of such names or logos herein does not imply
Slide 14: Delivering higher and less volatile growth in EBITDA
Delivering higher and less volatile growth in EBITDA ROLLING FIVE-YEAR AVERAGE EBITDA GROWTH 25% ICGT Portfolio Top 30 EBITDA Growth > European Private Company EBITDA Growth > FTSE All Share EBITDA Growth 20% 20% 19% 18% 18% 17% 15% 15% 14% 12% 12% 12% 12% 10% 5% 0% (5)% (10)% Rolling five years to
Slide 15: Financing in today’s environment
Financing in today’s environment Mark Richmond PRIVATE AND CONFIDENTIAL
Slide 16: Value creation in a buyout
Value creation in a buyout SOURCES OF VALUE 1 Revenue growth Ability to put an appropriate, sustainable capital structure on a company is a key driver of success for private equity 2 Margin improvement Buyouts work best for cash generative, growing businesses 3 Multiple expansion Which can sup
Slide 17: Where does the debt component come from?
Where does the debt component come from? LEVERAGE TAILORED TO EACH COMPANY FROM VARIOUS SOURCES 10.0x 9.0x Banks 8.0x 7.0x 2x Holdco PIK 6.0x 1000-1200bps 5.0x Equity Debt Public markets (leveraged loans or high-yield bonds) 4.0x 3.0x 2.0x Private markets 1.0x 0.0x (direct lending) Low leverage Stre
Slide 18: Debt market perspectives
Debt market perspectives Reopening of public markets; the technical backdrop remains strong Private credit has established itself as a through-cycle source of debt for private equity sponsors Credit quality remains high Lower loan to values + record PE dry powder = lower default rates for buyouts Pa
Slide 19: Availability of debt from public markets is increasing
Availability of debt from public markets is increasing EUROPEAN INSTITUTIONAL LOAN ISSUANCE VOLUME (€BN) ROLLING-3M INSTITUTIONAL MARKET NET SUPPLY VS. CLO ISSUANCE (€BN) €40 €15bn M&A Refinancing European market net supply CLO issuance €35 Other €30 €10bn €25 €20 €5bn €15 €10 €0bn €5 €0 -€5bn Dec-2
Slide 20: Debt pricing is improving
Debt pricing is improving EUROPEAN SUB-INVESTMENT GRADE CREDIT PERFORMANCE US SUB-INVESTMENT GRADE CREDIT PERFORMANCE 1800 European HY B (HE20) 1800 US HY B (HUC2) European leveraged loan index B 3Y DM US leveraged loan index B 3Y DM European CLO BB US CLO BB 1600 1600 1400 1400 1200 1200 1000 1000
Slide 21: Private credit has increased through-cycle availability of debt
Private credit has increased through-cycle availability of debt DEAL SIZE OF EUROPEAN DIRECT LENDING DEALS BY COUNT NUMBER OF LBOS FINANCED VIA BSL VS DIRECT LENDING (EUROPE)2 100% 30 Syndicated Direct lending 90% 25 80% 70% 20 60% €99M or less €100-349M 15 50% €350-499M €500-999M 40% €1B or more 10
Slide 22: Transactions have a substantial equity component
Transactions have a substantial equity component AVERAGE EQUITY CONTRIBUTION TO US LEVERAGED BUYOUTS AVERAGE EQUITY CONTRIBUTION TO EUROPEAN LEVERAGED BUYOUTS 60% 60% 52% 50% 50% 47% 40% 40% 33% 34% 30% 30% 20% 20% 10% 10% 0% 0% 2006-2007 2008-2012 2013-2019 2020-2022 2023 2006-2007 2008-2012 2013-2
Slide 23: Strong balance sheets leave corporates well positioned as the cost of capital comes down
Strong balance sheets leave corporates well positioned as the cost of capital comes down GFC DEFAULT RATES SHOW PE-BACKED COMPANIES ARE MORE RESILIENT EUROPEAN PRIVATE COMPANY LEVERAGE AND INTEREST COVERAGE X X 6.0 4.0 6.2% 3.5 5.0 3.0 4.0 2.5 3.0 2.0 2.8% 1.5 2.0 1.0 1.0 0.5 0.0 0.0 08 09 10 11 12
Slide 24: Benefit to ICGT of in-house debt expertise
Benefit to ICGT of in-house debt expertise SENIOR DEBT PARTNERS ICG SDP is the largest European direct lender focussed purely on senior secured debt Providing sector expertise 34 years of managing credit across cycles Deep knowledge of credit SDP-dedicated investment 21 professionals with local Mark
Slide 25: The ICGT portfolio companies have appropriate capital structures
The ICGT portfolio companies have appropriate capital structures Appropriate capital structures Minimal near-term refinancings Comfortable interest coverage ratios Net leverage dispersion Maturity dispersion Interest coverage dispersion 50% 25% 40% 23% 23% 37% 45% 44% 21% 33% 40% 20% 30% 35% 30% 15%
Slide 26: ICGT portfolio recap
ICGT portfolio recap Colm Walsh and Liza Lee Marchal PRIVATE AND CONFIDENTIAL
Slide 27: Recap on how we access the market
Recap on how we access the market Primary Secondary Direct co-investment Deep pool of sector-specialist managers; PE-style returns with less risk and enhanced Backing the best portfolio companies; multi-year timeframe liquidity profile more fee-efficient EXAMPLE EXAMPLE EXAMPLE ~$20M ~$60M Developer
Slide 28: Our Portfolio construction delivers attractive risk-adjusted returns
Our Portfolio construction delivers attractive risk-adjusted returns ICG ENTERPRISE TRUST AVERAGE PORTFOLIO RETURN1,2 1yr 3yr 5yr 10yr 25% Attractive risk-adjusted returns 20% 20% 19% 19% 19% 19% 20% 18% 18% 16% 16% 15% 14% 11% 10% 8% 7% 7% 7% 5% 0% Primary Direct Secondary Total Highly diversified
Slide 29: Case study: Fund commitments made in FY22
Primary Case study: Fund commitments made in FY22 Seeds we sowed in 2021 (FY22) are showing early signs of performing well £190M COMMITTED ACROSS 8 MANAGERS PERCENT CALLED AS AT 31 JANUARY 2024 70%+ Called in line with deploying over 3-5 years RETURNS BASED ON CURRENT VALUATION 1.35x 23% MOIC IRR DI
Slide 30: Case study: Direct co-investments made in last two years
Direct Case study: Direct co-investments made in last two years All ‘defensive growth’ businesses backed by managers with strong relevant sector experience 11 DIVERSIFIED ACROSS SECTOR AND GEOGRAPHY (BY COUNT) CO-INVESTMENTS IN LAST TWO YEARS TOTALLING £91M Leisure Consumer Business services Europe
Slide 31: Growing our secondaries programme
Second- Growing our secondaries programme aries WHY SECONDARIES? WE ARE INCREASING OUR EXPOSURE 13% 18% Buying investments in a portfolio that is typically 25% already 5-7 years old Enhances portfolio liquidity Private equity-type returns with less risk and J-curve mitigation FY 2019 FY 2024 Target
Slide 32: Spotlight on… Secondaries
Spotlight on… Secondaries Oliver Gardey PRIVATE AND CONFIDENTIAL
Slide 33: We invest via two specialised ICG investment strategies
We invest via two specialised ICG investment strategies Specialisation facilitates enhanced underwriting and returns Enhanced access to deal flow and "go-to" investor status Secondaries Landscape Larger Funds Secondary Fund Size STRATEGIC EQUITY Smaller Funds LP SECONDARIES LP Focus GP Focus Seconda
Slide 34: Why does ICGT invest in LP Secondaries?
Why does ICGT invest in LP Secondaries? Quicker liquidity LP Secondaries PE return Lower risk profile Investment Period Operational Enhancement & Harvest Mode LP Secondaries Entry Point • Visibility to performance and cash flows • Reduced blind pool risk Illustrative Fund IRR • Accelerated distribut
Slide 35: LP Secondaries asset class leads private markets in risk-adjusted returns
LP Secondaries asset class leads private markets in risk-adjusted returns Time to Return Investor Capital2 Return vs. Risk for Private Market Strategies, Funds of Vintage Years 1980-20181 Average Time Median Time Strategy (Years) (Years) LP-led Secondaries 4.5 4.3 LP-led 1.55 Private Credit 5.8 5.9
Slide 36: Our LP Secondaries programme has generated value for shareholders
Second- Our LP Secondaries programme has aries generated value for shareholders ICGT HAS COMMITTED ~£135M TO LP SECONDARIES GIVING DIVERSIFIED AND ATTRACTIVE GENERATING ATTRACTIVE RETURNS OVER LAST THREE YEARS ACROSS: EXPOSURE AT CURRENT VALUATIONS ONE FUND COMMITMENT Top five $60M 62 1. Stone Point
Slide 37: Conclusion and Q&A
Conclusion and Q&A For follow-up questions after the event, please email: icg-enterprise@icgam.com PRIVATE AND CONFIDENTIAL
Slide 38: Key takeaways from today
Key takeaways from today ICG Enterprise Trust has a focused and differentiated investment strategy Operating performance remains strong and capital structures are well positioned Debt pricing is reducing and debt availability is accelerating Access to the ICG platform provides substantial benefits O
Slide 39: Appendix
Appendix PRIVATE AND CONFIDENTIAL
Slide 40: Performance figures
Performance figures Performance for 12 months ending: 31 January 2024 31 January 2023 31 January 2022 31 January 2021 31 January 2020 NAV per Share Total Return 2.1% 14.5% 24.4% 22.5% 11.2% Share Price Total Return 9.6% (2.3)% 27.1% 2.8% 20.5% FTSE All-Share Index Total Return 1.9% 5.2% 18.9% (7.5)%
Slide 41: Legal notice
Legal notice What this document is for This material is communicated by ICG Enterprise Trust plc (the "ICG Enterprise"). ICG Enterprise is managed by ICG Alternative Investment Limited ("ICG AIL") which is authorised and regulated by the UK Financial Conduct Authority. This material is provided for
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