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ICGT reported the following results to April 2022 at end-June: “NAV per Share of 1,761p (31 January 2022: 1,690p), NAV per Share Total Return of 4.5% during the quarter; 27.9% during the last twelve months. Portfolio Return on a Local Currency Basis during the quarter of 2.0% (Sterling return: 5.2%); 30.2% during the last twelve months. New Investments of £59.1m and Realisation Proceeds of £48.8m during the quarter, including 17 Full Exits executed at an average of 23% Uplift to Carrying Value and 2.7x Multiple to Cost. First quarter dividend of 7p per share”. ICGT’s business, with a proven track record of delivering sustained returns across cycles through its “defensive growth” thesis, may be especially appealing to investors.

  • Market news flow: Valuation is the issue of the moment. Listed PE news flow continues to give confidence that NAVs are real, with rising values (e.g. APEO. 3i), investor days with explanations of methodologies (APAX), investee company growth (AUGM), director buying and realisations above book (OCI).
  • Chewy share price recovery: Since the end of April, the Chewy share has risen from $29 to its current level of $45. While we do not have the exact split, we know that the majority of the 3.5% Petsmart/Chewy holding was in the listed entity – so the near doubling in its share price this quarter is likely to add around 1% to NAV.
  • Valuation: NAV valuations are conservative (uplifts on realisations averaging 35% long term), the ratings are undemanding and the carry value against cost is modest. The 35% discount to NAV is anomalous, we believe, with defensive market-beating returns, and is greater than the pre-COVID-19 levels. The yield is 2.0%.
  • 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 consistently generates superior returns, by adding value in an attractive market. ICGT’s focus on identifying companies with defensive characteristics means it is well-positioned to deliver resilient growth. It leverages ICG family synergies. Valuations/governance appear conservative. Risks are primarily sentiment-driven on costs and cyclicality, as well as the underlying assets’ liquidity. It seems anomalous that a business with a consistent record of outperformance is trading at a 35% discount to (April 2022) NAV.
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