ICG Enterprise Trust Plc : Statement re Quarterly Update for the Quarter to 30 April 2018

| Source: ICG Enterprise Trust Plc ICG Enterprise Trust Plc

Quarterly Update
For the three months to 30 April 2018

Highlights

  • NAV per share of 970p; a total return of 1.6% over the quarter
  • Continued strong exit activity; realisations at significant uplifts to carrying value and cost
  • £64.6m of new commitments and selective deployment into compelling investment opportunities
  • Quarterly dividend of 5.0p declared - to be paid in September 2018
  • NAV and share price continue to outperform FTSE All-Share over one, three, five and 10 years

Realisations and IPOs the key driver of growth

  • Investment portfolio valued at £611.8m[1], 91.1% of net assets
  • 2.3% return for the quarter; 1.7% on a constant currency basis
  • Portfolio continues to be highly cash generative
  • 16 full realisations in the quarter; £25.2m of realisation proceeds
  • Realisations at a 31% uplift[2] to carrying value; 2.2x multiple of cost
  • Continued exit activity since the quarter end
  • A further £24.2m of proceeds received in May 2018
  • £10.7m from the sale of The Laine Pub Company; a 2.0x multiple to cost
  • Year to date, realisations continue to outweigh new investments[3]

New commitments and selective investment into compelling opportunities

  • £64.6m of new primary commitments
  • €40m (£34.6m) to ICG Europe Fund VII
    • Flexible strategy targeting gross annualised returns of 15-20% with low downside risk
    • Investing in European companies with experienced management, typically in non-cyclical industries
  • £30m to Graphite IX
    • Focus on mid-market buyouts in the UK
    • Companies valued at between £30 million and £150 million
       
  • £22.3m of new investment - 47% deployed into high conviction investments
  • Focus remains on defensive growth, structural downside protection and relative value
  • High conviction investments (ICG directly controlled investments, third-party co-investments and secondary investments) increased to 43% of investment portfolio
  • £7.1m co-investment completed in Endeavor Schools, a school operator based in the USA, alongside Leeds Equity Partners
  • Defensive business with strong underlying growth trends and stable cash flows
  • £5.1m invested since the quarter end
  • Strong pipeline of co-investments and new funds

Dividend
-  Final dividend of 6p to be paid on 13 July 2018[4]
- Quarterly dividend of 5.0p declared
-     Will be paid on 7 September 2018 for shareholders on the register on 17 August 2018

Strong balance sheet
- Closing net asset value of £672m
-  Cash balance of £74.8m at 30 April 2018
- Uncalled commitments of £376.3m
-     £179.0m total liquidity (including £104.2m undrawn bank line)

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 30 April 2018 3 months 1 year 3 years 5 years 10* years  
Net asset value per share +1.6% +13.7% +49.8% +69.5% +108.5%  
Share price +5.0% +19.4% +62.1% +97.2% +134.6%  
FTSE All-Share Index +1.1% +8.2% +22.5% +45.6% +102.8%  

 


* As the Company changed its year end in 2010, the ten-year figures are for the 121 month period to 30 April 2018.

 

 

Emma Osborne, Head of Private Equity Fund Investments, ICG, commented:


"The portfolio continues to perform well, and we are pleased with the progress made in a quarter in which managers tend not to revalue the unrealised investments significantly.  The portfolio remains highly cash generative as our managers continue to take advantage of the strong exit environment to sell portfolio companies. Against this, we are redeploying capital selectively into high quality defensive businesses and in special situations where we can achieve relative value. We have a strong pipeline of new opportunities and the portfolio is well positioned to continue to generate shareholder value."

 


 

Enquiries


Analyst / Investor enquiries:  +44 (0) 20 3201 7700

Emma Osborne, Head of Private Equity Fund Investments, ICG 
Nikki Edgar, Finance and Investor Relations, ICG 

 

Media:
Helen Gustard, Co-Head of Corporate Communications, ICG  +44 (0) 20 3201 7917
Alicia Wyllie, Co-Head of Corporate Communications, ICG
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 30 April 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 3.4%
2 DomusVi+        
  Operator of retirement homes ICG 2017 France 2.9%
3 Visma+        
  Provider of accounting software and accounting outsourcing services ICG & Cinven 2014 & 2017 Europe 2.5%
4 David Lloyd Leisure+        
  Operator of premium health clubs TDR Capital 2013 UK 2.3%
5 Education Personnel+^        
  Provider of temporary staff for the education sector ICG 2014 UK 2.2%
6 Roompot+        
  Operator and developer of holiday parks PAI Partners 2016 Netherlands 2.0%
7 nGAGE        
  Provider of recruitment services Graphite Capital 2014 UK 2.0%
8 Gerflor^        
  Manufacturer of vinyl flooring ICG 2011 France 2.0%
9 PetSmart+        
  Retailer of pet products and services BC Partners 2015 USA 1.8%
10 Ceridian+        
  Provider of payment processing services Thomas H Lee Partners 2007 USA 1.8%
11 The Laine Pub Company+        
  Operator of pubs and bars Graphite Capital 2014 UK 1.8%
12 ICR Group        
  Provider of repair and maintenance services to the energy industry Graphite Capital 2014 UK 1.7%
13 Froneri+^        
  Manufacturer and distributor of ice cream products PAI Partners 2013 UK 1.6%
14 Cambium^        
  Provider of educational solutions and services ICG 2016 USA 1.6%
15 System One+        
  Provider of specialty workforce solutions Thomas H Lee Partners 2016 USA 1.6%

 

 

 
  Company Manager Year of investment Country Value as a % of Portfolio
16 Beck & Pollitzer        
  Provider of industrial machinery installation and relocation Graphite Capital 2016 UK 1.6%
17 Skillsoft+        
  Provider of off the shelf e-learning content Charterhouse 2014 USA 1.5%
18 Frontier Medical+        
  Manufacturer of medical devices Kester Capital 2013 UK 1.5%
19 TMF^        
  Provider of management and accounting outsourcing services Doughty Hanson 2008 Netherlands 1.5%
20 Yudo+        
  Designer and manufacturer of hot runner systems ICG 2018 South Korea 1.4%
21 Endeavor Schools+        
  Operator of schools Leeds Equity Partners 2018 USA 1.2%
22 YSC        
  Provider of leadership consulting and management assessment services Graphite Capital 2017 UK 1.1%
23 Swiss Education+        
  Provider of hospitality training Invision Capital 2015 Switzerland 1.1%
24 New World Trading Company        
  Operator of distinctive pub restaurants Graphite Capital 2016 UK 1.1%
25 U-POL^        
  Manufacturer and distributor of automotive refinishing products Graphite Capital 2010 UK 1.0%
26 Cognito+        
  Supplier of communications equipment, software & services Graphite Capital 2002 UK 0.9%
27 Compass Community        
  Provider of fostering services and children residential care Graphite Capital 2017 UK 0.9%
28 Random42        
  Provider of high-quality medical animation and digital media services to the healthcare and pharmaceutical industry Graphite Capital 2017 UK 0.8%
29 Intervias        
  Operator of petrol station forecourts TDR Capital 2014 UK 0.7%
30 Odgers+        
  Provider of recruitment services Graphite Capital 2009 UK 0.6%
  Total of the 30 largest underlying investments     48.1%
           
  + 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 30 April 2018 are:

  Fund Year of commitment Country/ region Value £m Outstanding commitment £m
1 Graphite Capital Partners VIII *      
  Mid-market buy-outs 2013 UK 74.3 26.6
2 ICG Europe VI **        
  Mezzanine and equity in mid-market buy-outs 2015  Europe 24.0 2.3
3 BC European Capital IX **        
  Large buy-outs 2011 Europe/USA 19.5 0.8
4 CVC European Equity Partners VI      
  Large buy-outs 2013 Europe/USA 14.9 2.2
5 CVC European Equity Partners V **      
  Large buy-outs 2008 Europe/USA 12.8 0.4
6 Graphite Capital Partners VII * / **      
  Mid-market buy-outs 2007  UK 12.6 4.7
7 One Equity Partners VI        
  Mid-market buy-outs 2016  USA/Western Europe 12.3 1.0
8 Fifth Cinven Fund        
  Large buy-outs 2012  Europe 12.1 1.2
9 Thomas H Lee Equity Fund VII        
  Mid-market and large buy-outs 2015  USA 12.0 4.5
10 ICG Strategic Secondaries Fund II      
  Secondary fund restructurings 2016 Europe/USA 11.2 18.8
11 ICG Velocity Partners Co-Investor **      
  Mid-market buy-outs 2016  USA 10.7 1.0
12 Permira V        
  Large buy-outs 2013 Europe/USA 10.1 0.6
13 Activa Capital Fund III        
  Mid-market buy-outs 2013  France 10.1 3.8
14 TDR Capital III        
  Mid-market and large buy-outs 2013  Europe 9.6 3.1
15 PAI Europe VI        
  Mid-market and large buy-outs 2013  Europe 9.5 6.7
16 Nordic Capital Partners VIII        
  Mid-market and large buy-outs 2013 Europe 9.2 1.6
17 Thomas H Lee Parallel Fund VI      
  Large buy-outs 2007  USA 8.7 1.0
18 Doughty Hanson & Co V **        
  Mid-market and large buy-outs 2006  Europe 8.7 6.7
19 IK VII        
  Mid-market buy-outs 2013  Europe 8.3 0.4
20 Hollyport Secondary Opportunities V      
  Tail-end secondary portfolios

 

 

 

 

 

 

  		2015 Europe/USA 8.1 2.3

 

 

 
  Fund Year of commitment Country/ region Value £m Outstanding commitment £m
21 ICG Europe V **        
  Mezzanine and equity in mid-market buy-outs 2012  Europe 7.9 0.8
22 Deutsche Beteiligungs Fund VI      
  Mid-market buy-outs 2012  Germany 7.4 1.2
23 Bowmark Capital Partners IV        
  Mid-market buy-outs 2007  UK 6.8 0
24 Egeria Private Equity Fund IV        
  Mid-market buy-outs 2012 Netherlands 6.6 1.6
25 Graphite Capital Partners VI **        
  Mid-market buy-outs 2003  UK 6.3 0.0
26 ICG European Fund 2006 B**        
  Mezzanine and equity in mid-market buy-outs 2014  Europe 6.2 2.1
27 Advent Global Private Equity VIII      
  Large buy-outs 2016 Europe/USA 6.1 6.7
28 ICG Asia Pacific Fund III        
  Mezzanine 2016  Asia Pacific 6.1 5.6
29 Gridiron Capital Fund III        
  Mid-market buy-outs 2016   North America  5.9 5.6
30 Activa Capital Fund II        
  Mid-market buy-outs 2007  France 5.0 1.9
  Total of the largest 30 fund investments   363.0 115.2
  Percentage of total investment Portfolio   59.3%  
  * Includes the associated Top Up funds.      
  ** All or part of an interest acquired through a secondary fund purchase.  

Portfolio analysis1

Investment category % of portfolio
High conviction portfolio
ICG 		 

18.1%
Third party co-investments 19.1%
Third party secondary investments 6.0%
Total High Conviction investments 43.2%

 
Third party funds' portfolio
Graphite Capital primary funds  		 

14.6%
Third party primary funds
Total diversified fund investments 		42.2%
56.8%
Total 100.0%

Portfolio by investment type   % of value of underlying investments
Large buyouts   42.4%
Mid-market buyouts   48.1%
Small buyouts   7.9%
Other   1.6%
Total   100.0%
 

Portfolio by calendar year of investment 		   

% of value of underlying investments
2018     4.8%
2017     19.5%
2016     20.5%
2015     12.3%
2014     17.1%
2013     11.8%
2012     3.1%
2011     2.0%
2010     2.1%
2009     1.2%
2008     1.8%
2007     2.0%
2006 and before     1.8%
Total     100.0%

Portfolio by sector   % of value of underlying investments
Healthcare and education   21.8%
Industrials   16.7%
Business services   15.9%
Consumer goods and services   15.2%
Leisure   12.6%
TMT   10.2%
Financials   4.9%
Other   2.7%
Total   100.0%

 

Portfolio by geographic distribution based on location of Company headquarters 		   

% of value of underlying investments
UK   35.3%
North America   23.0%
Europe   38.7%
Rest of world   3.0%
Total   100.0%

Footnote

  1. 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.

Balance sheet information

The summary balance sheet at 30 April 2018 is set out below.

  30 April 2018 % of net assets 31 January 2018 % of net assets
  £m £m
Total portfolio 611.8 91.1% 600.7 90.4%
Cash and liquid assets 74.8 11.1% 78.4 11.8%
Other net current liabilities (14.8) (2.2%) (14.8) (2.2)%
Net assets 671.8 100.0% 664.3 100.0%

Movement in liquid assets  
£m 3 months
30 April 18
Additions2   (22.9)
Cash proceeds generated by the portfolio (including income)   25.2
Net cash generated by the investment portfolio   2.3
Non-investment cash flows   (2.6)
Effect of changes in foreign exchange rates   0.2
Cash inflow before shareholder distributions   (0.1)
Dividends paid to shareholders   (3.5)
Net cash movement   (3.6)
Opening cash and liquid assets   78.4
Closing cash and liquid assets   74.8

Footnote

  1. Additions cash figure for quarter to 30 April includes £0.6m of drawdowns paid which were accrued at the prior quarter end.
Uncalled commitment coverage    
  30 April
2018 		31 January 2018
  £m £m
Cash and liquid assets 74.8 78.4
Undrawn bank facility 104.2 104.0
Total liquidity 179.0 182.4
     
Outstanding commitments 376.3 321.2
Less: Total liquidity (179.0) (182.4)
Over-commitment 197.3 138.8
Over-commitment as % of net assets 29.4% 20.9%


[1] 49% of the Portfolio is valued using 31 March 2018 (or later) valuations.

[2] Uplift figure excludes publically listed companies that were exited via sell downs of their shares

[3] At 31 May 2018

[4] To shareholders on the register on 22 June 2018