ICG Enterprise Trust PLC GBP · LSE:ICGT
ICG Enterprise Trust PLC GBP — Graphite Enterprise Trust — Shareholder Meeting (June 2012)
55 slides from ICG Enterprise Trust PLC GBP's shareholder meeting presentation, Jun 11, 2012
Slide 1: Graphite Enterprise Trust PLC 31st Annual General Meeting
Graphite Enterprise Trust PLC Investing in long term growth 31st Annual General Meeting 11 June 2012
Slide 2: Agenda
31st Annual General Meeting Agenda 1. Introduction 2. Results 3. Investment activity 4. The portfolio 5. Share price and discount 6. Dividend 7. Outlook and conclusions Page 1
Slide 3: 1. Introduction
1. Introduction Graphite Capital
Slide 4: Graphite Enterprise – Overview
1. Introduction Graphite Enterprise – Overview Hybrid fund and direct investor Focused strategy – European buy-outs Highly experienced team with direct investment backgrounds Consistently strong performance record Conservative approach to balance sheet management Well capitalised to take advantage o
Slide 5: 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: − Founded in 1981 and wholly owned by its partners since 2001 ● Assets under management total £1.2 billion − Direct buy-out funds investing in the UK mid-market −
Slide 6: 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, rather than by t
Slide 7: Portfolio combines Graphite Capital and third party investments
1. Introduction The portfolio combines Graphite Capital investments and third party investments Graphite portfolio Third party portfolio Direct co- 22% Funds 72% invests 6% Note All figures as at 30 April 2012 Page 6
Slide 8: Fund and direct investment experience gives a broad perspective
1. Introduction The combination of fund and direct investment experience gives a broad perspective ● The funds team has extensive direct investing experience − Well positioned to judge other private equity managers − Able to respond quickly to co-investment opportunities ● We benefit from the market
Slide 9: 2. Results
2. Results Graphite Capital
Slide 10: NAV per share increased by 6.6% in the year to Jan 2012
2. Results The net asset value per share increased by 6.6% in the year to Jan 2012 ● The share price and NAV per share both strongly outperformed a weak index: Jan Jan Change 2012 2011 Net asset value per share 569.4p 534.0p +6.6% Share price 357.0p 308.0p +15.9% FTSE All-Share Index 2,933 3,044 -3.
Slide 11: Portfolio continued to perform strongly in the quarter to Apr 2012
2. Results The portfolio has continued to perform strongly in the quarter to Apr 2012 Apr Jan Change Change 2012 2012 3 months 15 months Net asset value per share 584.2p 569.4p +2.6% +9.4% Share price 407.0p 357.0p +14.0% +32.1% FTSE All-Share Index 2,985 2,933 +1.8% -1.9% ● Realisations have contin
Slide 12: Long term net asset value performance is also strong
2. Results Long term net asset value performance is also strong Years to Apr 2012 3 5 10 Net asset value per share +37% +30% +135% Share price +152% +5% +115% FTSE All-Share Index +67% +9% +65% ● The NAV per share has outperformed the Index in 17 of the last 20 years – Tends to underperform when the
Slide 13: NAV has outperformed the peer group over all periods
2. Results The net asset value has outperformed the peer group over all periods Year to April 2012 1 3 5 10 Graphite Enterprise NAV +5% +37% +30% +135% Peer group average NAV +3% +14% +20% +123% ● This outperformance is despite taking lower balance sheet risk than the peer group ● At April 2012 Grap
Slide 14: The balance sheet remains strong
2. Results The balance sheet remains strong Apr 2012 Jan 2012 Change Apr 2012 Jan 2012 £m £m £m % % Investments 391 378 13 90% 89% Cash and liquid assets 43 44 (1) 10% 11% Other net current assets 2 2 - - - Total assets 436 424 12 100% 100% Outstanding commitments 126 143 (17) Undrawn bank facility
Slide 15: 3. Investment activity
3. Investment activity Page 14
Slide 16: Disposal proceeds recovered strongly in the year to Jan 2012
3. Investment activity Disposal proceeds recovered strongly in the year to Jan 2012 ● This year has started positively but we expect proceeds to be lower than last year Note: Excludes proceeds from secondary sales Page 15
Slide 17: Realisations generate significant uplifts over prior valuations
3. Investment activity Realisations continue to generate significant uplifts over prior valuations Gross Gross valn. Year to Jan 2012 Number multiple uplift on of cost exit1 13 months to Jan 2011 2 9 2.5x 92% Year to Jan 2012 15 2.5x 51% Quarter to Apr 2012 4 2.9x 66% Total 28 2.5x 69% ● Of the 28 d
Slide 18: Example – realisation of Phadia by Cinven
3. Investment activity Example – realisation of Phadia by Cinven Background ● Phadia is a global market leader in in-vitro allergy testing ● Cinven acquired Phadia for €1.3 billion in a secondary buy-out in Jan 2007 ● The entry multiple was 13 times EBITDA Performance ● Cinven helped Phadia to: – De
Slide 19: Significantly increased secondary fund purchases and co-investments
3. Investment activity We have significantly increased secondary fund purchases and co-investments Page 18
Slide 20: Example – Project Blackfriars (secondary purchase of three funds)
3. Investment activity Example – Project Blackfriars (secondary purchase of three funds) Background ● Introduced in Aug 2011 to a portfolio of 19 funds being sold by a German Bank ● We bid initially on four funds, reduced to three after due diligence Secondary transaction ● Graphite Enterprise acqui
Slide 21: The current year has started positively
3. Investment activity The current year has started positively ● There has been a good level of realisation activity: – Data Explorers Full disposal to trade buyer − CPA Global Full disposal to private equity − Starbev Full disposal to trade buyer − Weetabix Majority disposal to trade buyer − F1 Par
Slide 22: 4. Portfolio
4. Portfolio Graphite Capital
Slide 23: The portfolio is balanced and well diversified
4. Portfolio The portfolio is balanced and well diversified ● The portfolio comprised 48 funds and 24 direct investments at Apr 2012 – It provided exposure to 315 underlying companies ● The largest 30 companies represented 40% of the portfolio value Note Geography denotes where a company is headquar
Slide 24: Graphite Capital directly managed 6 of the top 10 holdings
4. Portfolio Graphite Capital directly managed 6 of the top 10 holdings at Apr 2012 Company Country Manager % of portfolio 1 Distributer and retailer of tyres UK Graphite 3.7% 2 Provider of recruitment services UK Graphite 2.2% 3 Provider of foster care services UK Graphite 2.2% 4 Operator of carava
Slide 25: Top 30 companies performed strongly in the year to Dec 2011
4. Portfolio The Top 30 companies performed strongly in the year to Dec 2011 ● Revenues grew by an average of 14% and EBITDA by an average of 13% ● These companies were valued on a weighted average EBITDA multiple of 9.2x ● Net debt represented 3.9x EBITDA Note Data excludes two development capital
Slide 26: Portfolio valued at 1.3x cost with average maturity over 4 years
4. Portfolio The portfolio was valued at 1.3x cost and had an average maturity of over 4 years ● The portfolio has considerable upside potential as it matures Note Multiples of cost include amounts realised by current portfolio companies Page 25
Slide 27: 5. Share price and discount
5. Share price and discount Page 26
Slide 28: Share price has strongly outperformed the All-Share Index
5. Share price and discount The share price has strongly outperformed the All-Share Index since Jan 2011 • The share price: – outperformed the Index by 19.6% in the year to Jan 2012 (+15.9% vs -3.7%) – outperformed the Index by 9.9% since the year end (+6.1% vs -3.8%) – outperformed the Index by 30.
Slide 29: Discount on listed private equity is out of line with the sector
5. Share price and discount The discount on listed private equity is out of line with the investment trust sector Page 28
Slide 30: Discount closely correlated with listed private equity sector
5. Share price and discount Graphite Enterprise’s discount is closely correlated with the listed private equity sector • At 8 June the discount was 35.1% (share price 379p) – The average discount in the 17 years prior to the financial crisis was 14% – The average discount in the 3 years since Q4 200
Slide 31: Discount is in line with the sector average
5. Share price and discount The Graphite Enterprise discount is in line with the sector average ● A number of listed private equity companies are returning cash to shareholders ● There is no strong evidence that this materially reduces discounts Page 30
Slide 32: Discounts are principally driven by sentiment towards the sector
5. Share price and discount Discounts are principally driven by sentiment towards the sector ● Sentiment towards the sector has not fully recovered following the concerns of 2008/9 ● These concerns have, in the main, been addressed: – Overcommitment Balance sheets have been significantly strengthe
Slide 33: 6. Dividend
6. Dividend Graphite Capital
Slide 34: Board recommending dividend increased to 5.0p per share
6. Dividend The Board is recommending that the dividend should be increased to 5.0p per share ● The proposed dividend is more than twice the 2.25p per share paid last year ● Net revenue per share increased from 1.51p to 6.33p in the year to Jan 2012 ● This was driven by an increase in realisations –
Slide 35: Investment trusts can now pay dividends from capital reserves
6. Dividend Investment trusts are now able to pay dividends from capital reserves ● The Board proposes to change the Company’s Articles to allow such payments − This gives increased flexibility to adapt to changes ● Some observers have suggested higher dividends could help close discounts: − Could c
Slide 36: No evidence yield materially impacts discounts
6. Dividend So far there is no evidence that yield is having a material impact on discounts Page 35
Slide 37: 7. Outlook and conclusions
7. Outlook and conclusions Page 36
Slide 38: Economic uncertainty is likely to create opportunities
7. Outlook and conclusions The current economic uncertainty is likely to create opportunities ● European economies are likely to remain depressed for some time – They continue to be affected by uncertainty over the euro and the banking sector ● Over 50% of the portfolio has been acquired since Jan 2
Slide 39: Graphite Enterprise is well positioned to grow further
7. Outlook and conclusions Graphite Enterprise is well positioned to grow further ● The portfolio is growing strongly – The top 30 investments have been performing particularly well – The portfolio has increased in value by 65% since Dec 2008 ● The Company’s portfolio has continued to generate subst
Slide 40: Questions?
Questions? EME Page 39 Graphite Capital
Slide 41: Results of proxy votes
Results of proxy votes Page 40
Slide 42: Resolution 1: Approval of the annual report and accounts
Resolution 1 Approval of the annual report and accounts For: 24,298,683 99.55% Chairman’s discretion: 11,094 0.04% Against: 99,476 0.41% Withheld: 36,355 Page 41
Slide 43: Resolution 2: Approval of the final dividend of 5.0p per share
Resolution 2 Approval of the final dividend of 5.0p per share For: 24,380,012 99.69% Chairman’s discretion: 11,094 0.04% Against: 65,006 0.27% Withheld: 11,225 Page 42
Slide 44: Resolution 3: Election of Lucinda Riches
Resolution 3 Election of Lucinda Riches For: 24,042,351 98.99% Chairman’s discretion: 25,142 0.10% Against: 219,838 0.91% Withheld: 153,258 Page 43
Slide 45: Resolution 4: Re-election of Peter Dicks
Resolution 4 Re-election of Peter Dicks For: 23,689,346 98.65% Chairman’s discretion: 25,142 0.11% Against: 298,190 1.24% Withheld: 437,197 Page 44
Slide 46: Resolution 5: Re-election of Michael Cumming
Resolution 5 Re-election of Michael Cumming For: 23,961,095 98.60% Chairman’s discretion: 25,142 0.10% Against: 316,222 1.30% Withheld: 143,470 Page 45
Slide 47: Resolution 6: Re-election of Mark Fane
Resolution 6 Re-election of Mark Fane For: 24,025,622 98.84% Chairman’s discretion: 25,142 0.10% Against: 256,822 1.06% Withheld: 141,152 Page 46
Slide 48: Resolution 7: Re-appointment of PwC as auditors
Resolution 7 Re-appointment of PwC as auditors For: 23,981,510 98.72% Chairman’s discretion: 25,142 0.10% Against: 285,740 1.18% Withheld: 163,322 Page 47
Slide 49: Resolution 8: Directors' Remuneration Report
Resolution 8 Directors’ Remuneration Report For: 23,501,754 97.51% Chairman’s discretion: 11,094 0.05% Against: 588,133 2.44% Withheld: 330,648 Page 48
Slide 50: Resolution 9: Authority to allot shares
Resolution 9 Authority to allot shares For: 23,917,286 98.25% Chairman’s discretion: 28,002 0.12% Against: 397,683 1.63% Withheld: 112,635 Page 49
Slide 51: Resolution 10: Disapplication of pre-emption rights
Resolution 10 (special resolution) Disapplication of pre-emption rights For: 23,547,145 97.57% Chairman’s discretion: 12,824 0.05% Against: 573,864 2.38% Withheld: 238,736 Page 50
Slide 52: Resolution 11: Share buy-backs
Resolution 11 (special resolution) Share buy-backs For: 23,991,860 98.79% Chairman’s discretion: 14,094 0.05% Against: 280,628 1.16% Withheld: 96,102 Page 51
Slide 53: Resolution 12: Notice for general meetings
Resolution 12 (special resolution) Notice for general meetings For: 23,926,973 98.52% Chairman’s discretion: 11,094 0.05% Against: 347,435 1.43% Withheld: 89,865 Page 52
Slide 54: Resolution 13: Changes to the Articles to allow dividends from capital
Resolution 13 (special resolution) Changes to the Articles to allow dividends to be paid from capital For: 23,983,089 98.69% Chairman’s discretion: 11,094 0.05% Against: 306,114 1.26% Withheld: 55,111 Page 53
Slide 55: Graphite Enterprise
Graphite Enterprise
Graphite Enterprise Trust — Shareholder Meeting (June 2012) on 6ix