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Event | Do you know the value of your business? It’s time you do!

ICGT’s 1Q Update for the period to 30 April 2021 was very positive, stating i) its highest-ever quarterly realisation proceeds, ii) 12 full exits, at a 42% uplift to carrying value, and iii) a portfolio return on a local currency basis of 3.4%, despite a partial correction in the listed Chewy share price. It also reported a substantial pipeline. In June, there was further confirmation of favourable conditions, with the realisation of U-POL generating an estimated 19.8p per share uplift in NAV (1.4%). It was the 13th largest holding, and sold at a 128% uplift to carrying value (again confirming that ICGT’s approach to valuation is conservative). The 25% discount to NAV appears anomalous with the outlook.

  • Manager/director buying: After the end-June AGM, there has been buying by i) Oliver Gardey, Head of Private Equity Fund Investments at ICG – bought 4,755 at £10.67, holding 31,687 shares, and ii) Gerhard Fusenig, NED – bought 2,000 shares at £10.50, taking holdings to 13,000.
  • Recent peer news: ICGT is operating in a favourable market, with recent peer news flow remaining good: i) 3i’s 1QFY’22 NAV total return was 12.2%; ii) PIN’s End-Jun’21 report showed a 2.1% uplift to NAV; iii) NBPE reported 32% dividend growth; iv) HVPE’s NAV rose 5% in June; and iv) OCI sold ACE Education for a ca.27% IRR.
  • Valuation: Valuations are conservative (medium-term uplifts on realisations averaging 35% to the latest book value). Ratings are undemanding, and the carry value against cost is modest. This gives confidence that the accounting date NAV is realistic. The 25% discount to NAV is above pre-COVID-19 levels.
  • Risks: PE is an above-average cost model, but post-expense returns are market-beating. Even though actual experience has been of continued NAV outperformance in economic downturns, sentiment is likely to be adverse. 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, with a defensive growth investment policy, and exploiting synergies from being part of the ICG family. The valuations and governance appear conservative. It has an appropriate balance between risks and opportunities. 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 25% discount to NAV.


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