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23 January 2019
ICG Enterprise Trust plc
Quarterly Update
For the three months to 31 October 2018
Highlights
NAV per share of 1,046.2p; total return of 2.5% in the quarter and 10.8% over the nine months Continued strong performance across the portfolio Portfolio remains highly cash generative; realisations at significant uplifts to carrying value and cost Selective investment into a number of compelling high conviction investment opportunities NAV and share price continue to outperform FTSE All-Share over one, three, five and 10 years Continued strong performance across the portfolio
Investment portfolio valued at £681.8m1 3.4% portfolio return for the quarter; 3.0% on a constant currency basis 14.1% portfolio return for the nine months; 11.2% on a constant currency basis Portfolio remains highly cash generative
15 full realisations in the quarter; £33.6m of proceeds received Realisations at a 29% uplift2 to carrying value; 2.1x multiple of cost 49 full realisations in the nine months; £118.5m of proceeds Realisations at a 30% uplift2 to carrying value; 2.3x multiple of cost Selective investment into a number of compelling high conviction investment opportunities
High conviction investments (ICG directly controlled investments, third-party co-investments and secondary investments) 44% of investment portfolio £38.3m of new investment in the quarter; £114.8m in the nine months High conviction investments 38% of capital deployed in quarter; 53% in nine months £11.8m secondary investment in Resolute Fund II (managed by The Jordan Company) completed in the quarter Focus remains on defensive growth, structural downside protection and relative value US exposure increased to 26% of the portfolio
£7.7m new primary commitment to US mid-market manager Five Arrows Capital Partners in the quarter; £109.5m of commitments to seven funds in the nine months New relationship with Five Arrows, a European and US mid-market private equity manager Further realisations and strong investment pipeline of co-investments and funds since quarter end
- Further £43.1m of proceeds received since the quarter end3; realisations continue at uplifts to carrying value
- £34.8m of new investment, including $15m (£11.7m) co-investment in IRI, a market leading provider of mission-critical data and predictive analytics to consumer goods manufacturers, alongside New Mountain
- $40m (£31.3m) committed to ICG Strategic Equity Fund III; also committed $25.0m (£19.6m) alongside Strategic Equity team, backing the spin-out of Standard Chartered's private equity team in Asia
- £21.4m further fund commitments to two funds; Bowmark VI (£12.5m) and €10m (£8.9m) commitment to Five Arrows Principal Investments III
Strong balance sheet
Closing net asset value of £724.6m; investment portfolio represents 94.1% of net asset value
Cash balance of £62.6m; uncalled commitments of £381.0m - £167.3m total liquidity (including £104.7m undrawn bank facility)
Dividend
Third quarter dividend of 5p declared, taking dividends for the nine months to 15p Third quarter dividend will be paid on 1 March 2019 The ex-dividend date will be 7 February 2019 and the record date 8 February 2019 Board changes
Andrew Pomfret will not stand for re-election as a Director at the Annual General Meeting of the Company to be held on 27 June 2019 and will retire from the Board from that date, having served for over eight years. Alastair Bruce will succeed Andrew Pomfret as Chairman of the Audit Committee from 1 February 2019. These changes are part of the Board's succession planning.
Consistent strong performance
The performance of the Company remains strong over the short, medium and long term, with the NAV and share price outperforming the FTSE All-Share Index over one, three, five and 10 years.
Performance to 31 October 2018 3 months 9 months 1 year 3 years 5 years 10* years
Net asset value per share +2.5 % +10.8 % +14.2 % +59.3 % +71.5 % +136.1 %
Share price -2.2 % +3.2 % +1.9 % +44.9 % +70.0 % +180.2 %
FTSE All-Share Index -7.2 % -2.5 % -1.5 % +25.4 % +30.5 % +126.1 %
* As the Company changed its year end in 2010, the ten-year figures are for the 121 month period to 31 October 2018.
Emma Osborne, Head of Private Equity Fund Investments, ICG, commented:
'The portfolio has continued to deliver strong returns in the third quarter and remains highly cash generative. Over the last few years, we have focused on companies with strong defensive characteristics in sectors with non-cyclical growth drivers and increased our weighting to international markets. In an environment of rising volatility and economic uncertainty, we believe our focus on defensive growth and our flexible mandate positions the portfolio well to weather uncertainty and continue to generate value for shareholders.'
Enquiries
Analyst / Investor enquiries: +44 (0) 20 3201 7700
Emma Osborne, Head of Private Equity Fund Investments, ICG
Ian Stanlake, Finance and Investor Relations, ICG
Media:
Alicia Wyllie, Co-Head of Corporate Communications, ICG: +44 (0) 20 3201 7994
Vikki Kosmalska, Associate Partner, Maitland: +44 (0) 20 7379 5151
Disclaimer
This report may contain forward looking statements. These statements have been made by the Directors in good faith based on the information available to them up to the time of their approval of this report and should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward-looking information. These written materials are not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration under the US Securities Act of 1933, as amended, or an exemption therefrom. The issuer has not and does not intend to register any securities under the US Securities Act of 1933, as amended, and does not intend to offer any securities to the public in the United States. No money, securities or other consideration from any person inside the United States is being solicited and, if sent in response to the information contained in these written materials, will not be accepted. This report contains information which, prior to this announcement, was inside information.
Supplementary information
The 30 largest underlying investments
The table below presents the 30 companies in which ICG Enterprise had the largest investments by value at 31 October 2018. These investments may be held directly or through funds, or in some cases in both ways. The valuations are gross and are shown as a percentage of the total investment Portfolio.
Company Manager Year of investment Country Value as a % of Portfolio
1 City & County Healthcare Group
Provider of home care services Graphite Capital 2013 UK 3.5 %
2 DomusVi+
Operator of retirement homes ICG 2017 France 3.2 %
3 Minimax+
Supplier of fire protection systems and services ICG 2018 Germany 2.6 %
4 Visma+
Provider of accounting software and accounting outsourcing services Cinven & ICG 2014
& 2017 Europe 2.5 %
5 Roompot+
Operator and developer of holiday parks PAI Partners 2016 Netherlands 2.2 %
6 Yudo+
Designer and manufacturer of hot runner systems ICG 2018 South Korea 2.2 %
7 Ceridian+
Provider of payroll and human capital software Thomas H Lee Partners 2007 USA 2.1 %
8 Froneri+^
Manufacturer and distributor of ice cream products PAI Partners 2013 UK 2.0 %
9 nGAGE
Provider of recruitment services Graphite Capital 2014 UK 1.9 %
10 System One+
Provider of specialty workforce solutions Thomas H Lee Partners 2016 USA 1.8 %
11 Education Personnel+^
Provider of temporary staff for the education sector ICG 2014 UK 1.8 %
12 Gerflor^
Manufacturer of vinyl flooring ICG 2011 France 1.7 %
13 Cambium^
Provider of educational solutions and services ICG 2016 USA 1.7 %
14 Beck & Pollitzer
Provider of industrial machinery installation and relocation Graphite Capital 2016 UK 1.7 %
15 ICR Group
Provider of repair and maintenance services to the energy industry Graphite Capital 2014 UK 1.5 %
16 PetSmart+
Retailer of pet products and services BC Partners 2015 USA 1.5 %
17 Skillsoft+
Provider of off the shelf e-learning content Charterhouse 2014 USA 1.3 %
18 Frontier Medical+
Manufacturer of medical devices Kester Capital 2013 UK 1.3 %
19 Endeavor Schools+
Operator of schools Leeds Equity Partners 2018 USA 1.2 %
20 PSB Academy+
Provider of private tertiary education ICG 2018 Singapore 1.2 %
21 YSC
Provider of leadership consulting and management assessment services Graphite Capital 2017 UK 1.0 %
22 New World Trading Company
Operator of pub restaurants Graphite Capital 2016 UK 0.9 %
23 U-POL^
Manufacturer and distributor of automotive refinishing products Graphite Capital 2010 UK 0.9 %
24 Cognito+
Supplier of communications equipment, software & services Graphite Capital 2002 UK 0.8 %
25 Abode Healthcare+
Provider of hospice and healthcare services Tailwind Capital 2018 USA 0.8 %
26 Compass Community
Provider of fostering services and children's residential care Graphite Capital 2017 UK 0.8 %
27 Random42
Provider of medical animation and digital media services Graphite Capital 2017 UK 0.8 %
28 Alerian^
Provider of data and investment products focused on natural resources ICG 2018 USA 0.7 %
29 David Lloyd Leisure+
Operator of premium health clubs TDR Capital 2013 UK 0.7 %
30 LeafFilter
Provider of gutter protection solutions Gridiron 2016 USA 0.6 %
Total of the 30 largest underlying investments 46.9 %
⁺ All or part of this investment is held directly as a co-investment or other direct investment.
^ All or part of this investment was acquired as part of a secondary purchase.
The 30 largest fund investments
The 30 largest funds by value at 31 October 2018 are:
Fund Year of commitment Country/ region Value £m Outstanding commitment £m
1 Graphite Capital Partners VIII *
Mid-market buyouts 2013 UK 83.8 21.1
2 ICG Europe VI **
Mezzanine and equity in mid-market buyouts 2015 Europe 22.9 3.3
3 BC European Capital IX **
Large buyouts 2011 Europe/USA 19.6 0.6
4 CVC European Equity Partners VI
Large buyouts 2013 Europe/USA 15.2 2.3
5 ICG Strategic Secondaries Fund II
Secondary fund restructurings 2016 Europe/USA 14.2 13.2
6 One Equity Partners VI
Mid-market buyouts 2016 Europe/USA 14.0 0.5
7 PAI Europe VI
Mid-market and large buyouts 2013 Europe 13.9 3.4
8 Thomas H Lee Equity Fund VII
Mid-market and large buyouts 2015 USA 12.8 4.3
9 Graphite Capital Partners VII * / **
Mid-market buyouts 2007 UK 12.5 4.7
10 CVC European Equity Partners V **
Large buyouts 2008 Europe/USA 12.5 0.5
11 ICG Velocity Partners Co-Investor **
Mid-market buyouts 2016 USA 11.8 0.9
12 Resolute II **
Mid-market buyouts 2018 USA 11.6 2.6
13 Activa Capital Fund III
Mid-market buyouts 2013 France 11.4 3.9
14 Gridiron Capital Fund III
Mid-market buyouts 2016 USA 11.1 3.6
15 IK VII
Mid-market buyouts 2013 Europe 10.5 0.4
16 Nordic Capital Partners VIII
Mid-market and large buyouts 2013 Europe 10.0 1.6
17 Permira V
Large buyouts 2013 Europe/USA 10.0 1.4
18 Fifth Cinven Fund
Large buyouts 2012 Europe 9.7 1.4
19 Advent Global Private Equity VIII
Large buyouts 2016 Europe/USA 9.7 4.7
20 ICG Asia Pacific Fund III
Mezzanine 2016 Asia Pacific 8.8 4.8
21 Hollyport Secondary Opportunities V
Tail-end secondary portfolios 2015 Global 8.1 2.3
22 Deutsche Beteiligungs Fund VI
Mid-market buyouts 2012 Germany 7.9 1.0
23 TDR Capital III
Mid-market and large buyouts 2013 Europe 7.3 3.1
24 Bowmark Capital Partners IV
Mid-market buyouts 2007 UK 7.1 0
25 Egeria Private Equity Fund IV
Mid-market buyouts 2012 Netherlands 7.1 1.0
26 ICG European Fund 2006 B **
Mezzanine and equity in mid-market buyouts 2014 Europe 6.9 2.2
27 Silverfleet II
Mid-market buyouts 2014 Europe 6.9 5.8
28 Thomas H Lee Parallel Fund VI
Mid-market and large buyouts 2007 USA 6.6 1.0
29 Sixth Cinven Fund
Large buyouts 2016 Europe 6.2 11.2
30 Charterhouse Capital Partners X
Large buyouts 2015 Europe 6.1 8.2
Total of the largest 30 fund investments 396.2 115.0
Percentage of total investment Portfolio 58.1 %
* Includes the associated Top Up funds.
** All or part of an interest acquired through a secondary fund purchase.
Portfolio analysis
All balance sheet data is presented on a look-through basis to the investment portfolio held by the Company, which is consistent with the commentary in previous annual and interim reports
Investment category % of portfolio
High conviction portfolio
ICG
21.5
%
Third party co-investments 15.5 %
Third party secondary investments 6.7 %
Total High Conviction investments 43.7
%
Third party funds' portfolio
Graphite Capital primary funds
14.4
%
Third party primary funds
Total diversified fund investments 41.9%
56.3%
Total 100.0 %
Portfolio by investment type % of value of underlying investments
Large buyouts 43.8 %
Mid-market buyouts 48.4 %
Small buyouts 4.6 %
Other 3.2 %
Total 100.0 %
Portfolio by calendar year of investment
% of value of underlying investments
2018 16.5 %
2017 19.9 %
2016 19.4 %
2015 10.1 %
2014 13.0 %
2013 10.0 %
2012 3.0 %
2011 1.6 %
2010 1.7 %
2009 1.0 %
2008 0.3 %
2007 2.7 %
2006 and before 0.8 %
Total 100.0 %
Portfolio by sector % of value of underlying investments
Healthcare and education 21.2 %
Industrials 20.6 %
Business services 15.2 %
Consumer goods and services 15.4 %
Leisure 9.0 %
TMT 9.9 %
Financials 5.4 %
Other 3.3 %
Total 100.0 %
Portfolio by geographic distribution based on location of Company headquarters
% of value of underlying investments
UK 30.3 %
North America 26.3 %
Europe 38.8 %
Rest of world 4.6 %
Total 100.0 %
Balance sheet information
The summary balance sheet at 31 October 2018 is set out below.
31 October 2018 % of net assets 31 January 2018 % of net assets
£m £m
Total portfolio 681.8 94.1 % 600.7 90.4 %
Cash and liquid assets 62.6 8.6 % 78.4 11.8 %
Other net current liabilities (19.8 ) (2.7 %) (14.8 ) (2.2 )%
Net assets 724.6 100.0 % 664.3 100.0 %
Movement in the portfolio 9 months
£m 31 October 18
Opening Portfolio* 600.7
Third-party funds portfolio drawdowns 53.6
High conviction investments – ICG funds, secondary
investments and co-investments 61.2
Total new investment 114.8
Realisation Proceeds (118.5 )
Net cash (inflow)/outflow (3.7 )
Underlying Valuation Movement** 67.4
Currency movement 17.4
Closing Portfolio* 681.8
% underlying Portfolio growth (local currency) 11.2 %
% currency movement 2.9 %
% underlying Portfolio growth (Sterling) 14.1 %
** 87% of the Portfolio is valued using 30 September 2018 (or later) valuations (31 Jan 18: 94%).
Movement in liquid assets
£m 9 months
31 October 18
Additions2 (115.2 )
Cash proceeds generated by the portfolio (including income) 118.5
Net cash generated by the investment portfolio 3.3
Non-investment cash flows (9.2 )
Effect of changes in foreign exchange rates 1.2
Cash inflow before shareholder distributions (4.7 )
Dividends paid to shareholders (11.1 )
Net cash movement (15.8 )
Opening cash and liquid assets 78.4
Closing cash and liquid assets 62.6
Additions cash figure for 9 months to 31 October includes £0.6m of drawdowns paid which were accrued at the prior year-end
Uncalled commitment coverage
31 October
2018 31 January 2018
£m £m
Cash and liquid assets 62.6 78.4
Undrawn bank facility 104.8 104.0
Total liquidity 167.4 182.4
Outstanding commitments 381.0 321.2
Less: Total liquidity (167.3 ) (182.4 )
Over-commitment 213.7 138.8
Over-commitment as % of net assets 29.5 % 20.9
%
1 87% of the Portfolio is valued using 30 September 2018 (or later) valuations.
2 Uplift figure reflects private valuations only (i.e. excludes publicly listed companies that were exited via sell downs of their shares)
3 As at 31 December 2018
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