ICG Enterprise Trust Plc: Q1 Update for the per...

ICG Enterprise Trust plc

21 June 2021

Q1 Update f or the period to 30 April 2021

Highest ever quarter of R ealisation Proceeds ; twelve Full Exits executed at 42% U plift to C arrying Value

Highlights

• NAV per Share of 1, 402 p, NAV per Share Total Return during the quarter of 1.6 % ¹
• P ortfolio Return on a Local Currency Basis during the quarter of 3.4% ¹ ( Sterling return: 2.2%)
• R ecord R ealisation Proceeds of £100m in the quarter , representing approximately 70% of the average annual Realisation Proceeds for the last five years
• Twelve Full Exits generated 42 % ¹ u plift to Carrying Value and 3.9 x ¹ Multiple to Cost
• £32m of investments made during the period, 63% into High Conviction I nvestments including t wo Direct Investments
• Substantial pipeline of further investment opportunitie s with a number expected to close in the coming months , anticipating a very strong year for High Conviction Investments
• Recent realisation activity has resulted in expanded capacity to execute on investment opportunities . A vailable liquidity of £ 290 m , comprising £ 116 m o f cash and £ 174 m undrawn revolving credit facilit y
• First quarter dividend of 6p per share for the quarter ended 30 April 2021, an increase of 1p compared to the quarter ended 30 April 2020. In the absence of any unforeseen circumstances it is the Board’s current intention to declare total dividends of at least 27p per share for the financial year ended 31 January 2022, an increase of 3p (12.5%) per share compared to the financial year ended 31 January 2021

Comparison to prior periods

Performance to 30 April 2021	3 months	1 year	3 years	5 years	10 years
NAV per Share Total Return	+1.6%	+29.8%	+53.1%	+108.7%	+199.9%
Share Price Total Return	+12.8%	+51.4%	+37.0%	+129.0%	+265.9%
FTSE All-Share Index Total Return	+10.6%	+25.9%	+7.7%	+39.9%	+81.0%

	12 months to 30 April 2021	12 months to 30 April 202 0	Quarter ended 3 0 April 2021	Quarter ended 31 January 202 1
Portfolio Return on a Local Currency Basis	37.0%	6.1%	3.4%	17.1%
NAV per Share	1,402.2p	1,100.2p	1,402.2p	1,384.4p
NAV per Share Total Return	29.8%	5.0%	1.6%	11.8%
Realisation Proceeds	£208m	£142m	£100m	£43m
Total New Investment	£139m	£170m	£32m	£57m

Oliver Gardey, Head of Private Equity Fund Investments, ICG, commented:

“We were pleased with the performance delivered by the Portfolio in this quarter, generating a 3.4% Return on a Local Currency Basis. This is despite the reduction in Chewy’s share price during the quarter which impacted the value of our largest single investment. The performance of our Portfolio builds on the strong track record of our investments, which over the last twelve months have generated a Portfolio Return on a Local Currency Basis of 37.0%.

“In particular, I would highlight that the value of our Portfolio was underpinned during the quarter by a record level of realisations, generating £100m of proceeds. Twelve Full Exits occurred and were executed at an average 42% Uplift to Carrying Value, significantly above our five year historical average of 35%. I believe that our long term track record of realising investments at a material Uplift to Carrying Value underlines the substantial value within our Portfolio.

“We expect to invest these proceeds in the coming quarters into a number of exciting opportunities. Our long-standing relationships in the sector and the opportunities we get by being managed by ICG plc are strategic advantages in originating a large number of investment opportunities. We remain selective and disciplined in our investment approach as we navigate the current market conditions.

“Looking ahead, we believe the quality and breadth of investment opportunities we are seeing will lead to a very strong year of deployment for our High Conviction Investments. Our Portfolio is balanced by sector, geography and investment type, and we are well positioned to continue executing our investment strategy. This is an exciting time for ICG Enterprise Trust and I believe we are well placed to continue to deliver significant long-term shareholder value.”

Enquiries

Analyst / Investor enquiries: [phone]
Oliver Gardey, Head of Private Equity Fund Investments, ICG        
Colm Walsh, Managing Director, ICG                
James Caddy, Investor Relations, ICG                                

Media:
Clare Glynn, Corporate Communications, ICG: [phone]
Ed Gascoigne Pees, Eddie Livingstone-Learmonth, Camarco: [phone]

Website:
www.icg-enterprise.co.uk

Company timetable

Ex-dividend date: 12 August 2021
Record date: 13 August 2021
Payment of dividend: 3 September 2021

About ICG Enterprise Trust

ICG Enterprise Trust is a leading listed private equity investor focused on creating long-term growth by delivering consistently strong returns through selectively investing in profitable private companies, primarily in Europe and the US.

As a listed private equity investor, our purpose is to provide shareholders with access to the attractive long-term returns generated by investing in private companies, with the added benefit of daily liquidity.

We invest in companies directly and through funds managed by ICG and other leading private equity managers who focus on creating long-term value and building sustainable growth through active management and strategic change.

We have a long track record of delivering strong returns through a flexible mandate and highly selective approach that strikes the right balance between concentration and diversification, risk and reward.

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.

Business review

Solid performance across the P ortfolio

• Investment portfolio valued at £893m

• Underlying Portfolio gains of £32m, comprising gains of £53m and losses of £21m, resulting in a Portfolio Return on a Local Currency Basis of 3.4%

• High Conviction Investments (48% of the Portfolio) experienced local currency returns of 0.5% during the quarter, or 4.3% when excluding the decrease in value of our investment in in PetSmart/Chewy

• Third Party Funds (52% of the Portfolio) generated 6.3% local currency returns

• Gains of £53m in the quarter were broad-based across our High Conviction and Third Party Fund investments

• The main driver of the £21m losses was the reduction in the share price of Chewy, which is reflected in the valuation of the PetSmart/Chewy investment. The decrease in Chewy’s share price from $102 to $80 during the period reduced the Portfolio value by circa £16m on a Local Currency Basis and circa £17m on a Sterling basis. Excluding the impact of PetSmart/Chewy on this quarter’s performance, we estimate the Portfolio Return on Local Currency Basis would have been circa 5.6%. ICG Enterprise Trust’s investment in PetSmart/Chewy has generated a mid-to-high single digit multiple on cost at current valuations and therefore significant value for our shareholders

• Sterling’s appreciation against the USD and EUR during the period resulted in a £11m reduction in the Portfolio value on a Sterling basis and therefore a Portfolio Return on a Sterling basis of 2.2%

Record R ealisation Proceeds and at significant U plift to C arrying V alue

• Total Proceeds of £109m over the quarter, our most active quarter for realisations on record
  • Realisation Proceeds of £100m, of which £77m was generated from 12 Full Exits that were executed at an average of 42% Uplift to Carrying Value and 3.9x Multiple to Cost, materially above our five year historical average of 35% and 2.4x respectively
  • Fund Disposals generated £9m proceeds and released £10m of Undrawn Commitments

Investment opportunities across High Conviction Investments and Third Party Fund s

• £32m of Total New Investment in the quarter; 63% (£20m) invested into High Conviction Investments with the remaining £12m being drawdowns on commitments to Third Party Funds

• Within our High Conviction Investments we invested £6m in two new Direct Investments during the quarter:

Company	Manager	Company sector / description	ICG Enterprise Trust investment during the quarter
Ivanti	Charlesbank	Provider of enterprise IT software	£6m
AMEOS Group	ICG	Private hospital operator in the DACH region	n/a1

¹ Commitment made in April 2021 but not funded until after the quarter end

• Third Party Funds are important to our strategy of having an appropriately balanced portfolio and to sourcing High Conviction Investments. During the quarter we committed £83m in aggregate to two ICG funds and two third party managers:

Fund	Focus	ICG Enterprise Trust C ommitment during the quarter
Resolute V	North American mid-market buyouts	$15m (£11m)
Bregal Unternehmerkapital III	European mid-market buyouts	€10m (£9m)
ICG Europe Fund VIII	Mezzanine and equity in mid-market buy-outs	€40m (£35m)
ICG Strategic Equity IV	Secondary fund restructurings	$40m (£29m)

Quoted Companies

• We do not invest in publicly quoted companies but gain listed investment exposure when IPOs are used to exit an investment

• At 30 April 2021, we had 42 investments in quoted companies, representing 14.3% of the Portfolio value compared to 20.4% at 31 January 2021. The reduction was largely driven by the sale of our entire stake in Telos during February, as well as by the reduction in Chewy’s share price

• During the quarter Signify Health listed on the NYSE and therefore became a quoted company within our Portfolio. It now represents 0.5% of our Portfolio by value. The company provides technology-enabled healthcare payor services, and we have exposure through our investment via New Mountain V

• At 30 April 2021 there were three quoted investments that individually accounted for 0.5% or more of the Portfolio value:

		Company	Ticker	% value of Portfolio
1		Chewy (part of PetSmart)1	CHWY-US	8.2%
2		Allegro	ALE-PL	0.9%
3		Signify Health	SGFY-US	0.5%
Other				4.7 %
Total				14.3 %
	1 % value of Portfolio includes entire holding of PetSmart and Chewy. This investment is referred to generally within this announcement as PetSmart/Chewy. Most of the value in this investment is within Chewy

Robust balance sheet

• Closing NAV of £964m; investment portfolio represents 93% of NAV

• Strong liquidity position of £290m, comprising £116m cash and £174m undrawn bank facility

• Uncalled commitments of £473m (£87m of which are to funds outside of their investment period)

Dividend

• Continued commitment to progressive dividend in line with current policy

• First quarter dividend of 6p per share for the quarter ended 30 April 2021, an increase of 1p compared to the quarter ended 30 April 2020. The Board’s current intention is to declare quarterly dividends of at least 6p per share, and a final dividend of at least 9p per share for the financial year ended 31 January 2022

• In the absence of any unforeseen circumstances, it is therefore the Board’s current intention to declare total dividends of at least 27p per share for the financial year ended 31 January 2022. This would represent an increase of 3p (12.5%) per share compared to the financial year ended 31 January 2021

Board

• Lucinda Riches retires from the Board today having served for ten years. We would like to thank Lucinda for her contributions to ICG Enterprise Trust

• David Warnock will replace Lucinda as the Senior Independent Director, subject to his election at the forthcoming AGM

Activity since the period end (to 31 May 2021)

• Total Proceeds

Proceeds of £5m received

• Deployment

Invested £26m, 70% into High Conviction Investments

• New Fund Commitments

Hellman & Friedman X, focused on large buyouts in North America: $10m (£7m)
Thomas H. Lee Partners IX, focused on mid-market buyouts in North America: $20m (£14m)

S upplementary information

The 30 largest underlying investments

The table below presents the 30 companies in which ICG Enterprise Trust had the largest investments by value at 30 April 2021. 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 Portfolio.

	Company	Manager	Year of investment	Country	Value as a % of Portfolio
1	PetSmart /Chewy +^
	Retailer of pet products and services	BC Partners	2015	United States	8.2%
2	DomusVi+
	Operator of retirement homes	ICG	2017	France	4.1%
3	Minimax+
	Supplier of fire protection systems and services	ICG	2018	Germany	3.5%
4	IRI+
	Provider of mission-critical data and predictive analytics to consumer goods manufacturers	New Mountain Capital	2018	United States	2.4%
5	Leaf Home Solutions
	Provider of gutter protection solutions	Gridiron Capital	2016	United States	2.2%
6	Visma+
	Provider of business management software and outsourcing services	ICG / HgCapital	2017 / 2020	Norway	2.2%
7	DOC Generici+
	Retailer of pharmaceutical products	ICG	2019	Italy	2.2%
8	Yudo+
	Manufacturer of components for injection moulding	ICG	2017	Hong Kong	2.0%
9	Supporting Education Group+^
	Provider of temporary staff for the education sector	ICG	2014	United Kingdom	1.9%
10	Froneri^
	Manufacturer and distributor of ice cream products	PAI Partners	2019	United Kingdom	1.8%
11	Berlin Packaging+
	Provider of global packaging services and supplies	Oak Hill Capital	2018	United States	1.7%
12	Endeavor Schools+
	Provider of paid private schooling	Leeds Equity Partners	2018	United States	1.5%
13	U-POL^
	Manufacturer and distributor of automotive refinishing products	Graphite Capital	2010	United Kingdom	1.3%
14	PSB Academy+
	Provider of private tertiary education	ICG	2018	Singapore	1.1%
15	Curium Pharma+
	Supplier of nuclear medicine diagnostic pharmaceuticals	ICG	2020	United Kingdom	1.0%
16	Allegro
	Operator of an online marketplace and price comparison website	Cinven / Permira Advisers	2017	Poland	0.9%
17	VitalSmarts+
	Provider of corporate training courses focused on communication skills and leadership development	Leeds Equity Partners	2019	United States	0.9%
18	AML RightSource+
	Provider of compliance and regulatory services and solutions	Gridiron Capital	2020	United States	0.8%
19	David Lloyd Leisure+
	Operator of premium health clubs	TDR Capital	2013 / 2020	United Kingdom	0.7%
20	RegEd+
	Provider of SaaS-based governance, risk and compliance enterprise software solutions	Gryphon Investors	2018	United States	0.6%
21	Ivanti+
	Provider of IT management solutions	Charlesbank Capital Partners	2021	United States	0.6%
22	IRIS Accountancy Solutions
	Provider of business-critical software and services for the accountancy and payroll sectors	ICG	2018	United Kingdom	0.6%
23	EG Group
	Operator of petrol station forecourts	TDR Capital	2014	United Kingdom	0.6%
24	Compass Community
	Provider of fostering services and children residential care	Graphite Capital	2017	United Kingdom	0.6%
25	CCC Information Services
	Provider of auto collision software and service	Advent International / Oak Hill Capital	2017	United States	0.5%
26	WCT^
	Drug development services	The Jordan Company	2007	United States	0.5%
27	Trust Holding
	Distributor of branded consumer electronics accessories in the value-for-money segment	Egeria	2018	Netherlands	0.5%
28	proALPHA
	Developer and vendor of resource planning software	ICG	2017	Germany	0.5%
29	Springer^
	Publisher of professional and academic media	BC Partners	2013	Germany	0.5%
30	Synlab
	Operator of medical diagnostic laboratories	Cinven	2015	Germany	0.5%
	Total of the 30 largest underlying investments				46.4%
	⁺ 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 30 April 2021 are:

	Fund	Year of commitment		Country/ region	Value £m	Outstanding commitment £m
1	BC European Capital IX **
	Large buyouts	2011		Europe/North America	39.8	2.0
2	ICG Europe VII
	Mezzanine and equity in mid-market buyouts	2018		Europe	30.7	11.9
3	Gridiron Capital Fund III
	Mid-market buyouts	2016		North America	26.4	4.0
4	Graphite Capital Partners VIII *
	Mid-market buyouts	2013		UK	24.7	4.4
5	ICG Strategic Equities Fund III
	Secondary fund restructurings	2018		Global	23.6	11.3
6	Sixth Cinven Fund
	Large buyouts	2016		Europe	23.6	2.1
7	Advent Global Private Equity VIII
	Large buyouts	2016		Europe/North America	21.5	0.6
8	ICG Europe VI **
	Mezzanine and equity in mid-market buyouts	2015		Europe	20.9	4.5
9	CVC European Equity Partners VI
	Large buyouts	2013		Europe/North America	20.7	2.6
10	CVC European Equity Partners VII
	Large buyouts	2017		Europe/North America	16.3	7.5
11	BC European Capital X
	Large buyouts	2016		Europe	16.3	1.6
12	PAI Strategic Partnerships **
	Mid-market and large buyouts	2019		Europe	15.7	0.6
13	One Equity Partners VI
	Mid-market buyouts	2016		Europe/North America	15.4	0.6
14	Graphite Capital Partners VII * / **
	Mid-market buyouts	2007		UK	15.1	2.8
15	PAI Europe VI
	Mid-market and large buyouts	2013		Europe	14.9	1.4
16	Resolute IV
	Mid-market buyouts	2018		North America	14.3	1.9
17	New Mountain Partners V
	Mid-market buyouts	2017		North America	14.2	1.3
18	Thomas H Lee Equity Fund VIII
	Mid-market and large buyouts	2017		North America	13.2	7.5
19	Permira V
	Large buyouts	2013		Europe/North America	12.7	0.5
20	Permira VI
	Large buyouts	2016		Europe	12.0	2.0
21	Gryphon V
	Mid-market buyouts	2019		North America	12.0	1.4
22	ICG Asia Pacific Fund III
	Mezzanine and equity in mid-market buyouts	2016		Asia Pacific	11.5	2.8
23	Charterhouse Capital Partners X
	Large buyouts	2015		Europe	10.9	3.9
24	TDR Capital III
	Mid-market and large buyouts	2013		Europe	10.8	1.6
25	Leeds Equity Partners VI
	Mid-market buyouts	2017		North America	10.5	0.7
26	Resolute II **
	Mid-market buyouts	2018		North America	10.3	1.6
27	PAI Europe VII
	Mid-market and large buyouts	2017		Europe	10.1	12.1
28	Egeria Private Equity Fund IV
	Mid-market buyouts	2012		Netherlands	9.2	1.1
29	Thomas H Lee Equity Fund VII
	Mid-market and large buyouts	2015		North America	8.9	1.6
30	Oak Hill Capital Partners IV
	Mid-market buyouts	2017		North America	8.3	0.7
	Total of the largest 30 fund i nvestments				494.6	98.6
	Percentage of total investment Portfolio				55.4%
	* Includes the associated Top Up funds
	** All or part of an interest acquired through a secondary fund purchase

Portfolio analysis

All data is presented on a look-through basis to the investment portfolio held by the Company, consistent with the commentary in previous annual and interim reports

Investment category	% of portfolio
High Conviction Investments
ICG funds and co-investments	26.8%
Third party co-investments	14.4%
Third party secondary investments	6.7%
Total High Conviction Investments	4 7.9 %
Third Party F unds	52.1 %
Total	100.0%

Portfolio by investment type	% of value of underlying investments
Large buyouts	53.9%
Mid-market buyouts	35.2%
Small buyouts	10.9%
Total	100.0%

Portfolio by calendar year of investment			% of value of underlying investments
2021			2.6%
2020			11.8%
2019			19.5%
2018			20.9%
2017			17.0%
2016			8.5%
2015			10.0%
2014 and older			9.7%
Total			100.0%

Portfolio by sector		% of value of underlying investments
Consumer goods and services		25.0%
Healthcare		18.9%
TMT		16.8%
Business services		12.1%
Industrials		8.1%
Education		6.7%
Financials		5.2%
Other		4.5%
Leisure		2.7%
Total		100.0%

Portfolio by geographic distribution based on location of Company headquarters		% of value of underlying investments
North America		39.7%
Europe		34.7%
UK		17.7%
Rest of world		7.9%
Total		100.0%

Summary b alance sheet information

£m	3 0 April 2 1	% of net assets	31 January 2 1	% of net assets
Portfolio	892.8	92. 6 %	949.2	99.7 %
Cash and liquid assets	116.0	12.0 %	45.2	4.7 %
Other net current liabilities	(44.6)	( 4. 6 %)	(42.4)	( 4 .4 )%
Net assets	964.2	100.0%	952.0	100.0%

Movement in the P ortfolio		3 months
£m		3 0 April 2 1
Opening Portfolio (31 January 2021)		949.2
Total New Investment		31.8
Total Proceeds		(109.4)
Net cash (inflow) / outflow		(77.6)
Underlying Valuation Movement*		31.9
Currency movement		(10.7)
Closing Portfolio		8 92.8
% underlying Portfolio growth (local currency)		3.4 %
% currency movement		(1.2%)
% underlying Portfolio growth (Sterling)		2.2 %
Expenses and other		(0.6)%
NAV per S hare Total Return		1.6%
* 82 % of the Portfolio i s valued using 31 March 202 1 (or later) valuations . T he remaining 18% is valued using 31 December 2020 valuations.
Movement in liquid assets £m			3 months 30 April 2 1
Net cash inflow / (outflow) generated by movement in Portfolio			77.6
Non-investment cash flows			(2.1)
Effect of changes in foreign exchange rates			(1.3)
Cash inflow before shareholder distributions			74.2
Dividends paid to shareholders			(3.4)
Share buy backs			-
Net cash movement			70.8
Opening cash and liquid assets			45.2
Closing cash and liquid assets			116.0

Uncalled commitment coverage
£m	3 0 April 2 1	31 January 21
Cash and liquid assets	116.0	45.2
Undrawn bank facility	174.0	155.9
Total liquidity	290 .0	201.1
Outstanding commitments	473.3	418.5
Less: Total liquidity	(290.0)	(201.1)
Over-commitment	183.3	217.4
Over-commitment as % of net assets	19.0%	22.8%

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¹ Alternative Performance Measure

Attachment

• 210621_ICGT Q1 FY22 RNS_FINAL