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In our note, Portfolio: 14% EBITDA growth + widening margins, we noted the continued strength of the operating companies, which delivered an average 14% LTM EBITDA growth in 1H’25. EBITDA margins widened by ca.5%, allaying some concerns over the impact of the higher-rate environment. We expect strong underlying company operating performance to continue in 2025. New investment is accelerating, and realisation activity has continued with strong uplifts to carrying values on exit. The five- and 10-year total annualised NAV per share returns (12.5% and 13.2%, respectively, to Jul’24) are a good reflection of what investors are getting from ICGT’s defensive growth strategy.

  • Increased RCF facility: On 23 December 2024, ICGT announced it has increased the size of its revolving credit facility from €240m to €300m to accommodate portfolio growth. Pro forma for this increase, ICGT would have had total available liquidity of £134m, as at 13 December.
  • December newsletter: The key takeaway from the December newsletter, in our view, was “there has been a lot of commentary within private markets about “green shoots” … Credit and capital markets have continued to improve in recent months and that is likely to, over time, support an increase in transaction activity within PE.”
  • Valuation: ICGT’s NAV valuations are conservative (regular realisation uplifts). The ratings are undemanding, and the ongoing carry value against cost is modest. The 33% discount to NAV is anomalous, we believe, with defensive, market-beating returns, and is above the levels seen pre COVID-19. The 2025E yield is 2.7%.
  • Risks: PE’s post-expense returns are consistently market-beating, but this is an above-average cost model. Even though actual experience has been of continued NAV outperformance in economic downturns, sentiment is likely to be adverse. We believe ICGT’s permanent capital structure is right for unquoted and illiquid assets.
  • Investment summary: ICGT has consistently generated superior returns, by adding value in an attractive market, having a strategic focus on defensive growth and exploiting ICG synergies. Valuations appear conservative, and governance is strong. ICGT focuses on delivering resilient, risk-adjusted returns. The risks are primarily sentiment-driven on costs and cyclicality, and on the underlying assets’ liquidity. It seems anomalous to have a consistent record of outperformance and to trade at a 33% discount to NAV.
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