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Event | Tax Advantaged Online Forum: Four distinct approaches to EIS investing

In our report Doubling realisations: sustainability and impact, we noted the key message from ICGT’s 3QFY’26 update was strong realisations (9MFY’26 run-rate double that seen through FY’24-FY’25). We explored diverse buyer and seller dynamics and ICGT-specific factors driving higher realisations. The breadth of these drivers bodes well. Uplifts on exit are expected to continue, potentially at a slightly higher rate than 3QFY’26. Continued operating company EBITDA growth and uplifts on exits should drive NAV growth closer to historical levels. The realisations allow new investment, capital returns to shareholders (buybacks and dividends) and support a strong balance sheet. ICGT’s 2026 outlook is here.

  • Key buyer drivers: We see increased appetite for ICGT investee companies from i) near-record dry powder, much of it raised in 2022, ii) confidence inspired by record equity market levels, iii) a more favourable interest rate environment, iv) good access to financing, and v) AI opportunities for incremental value creation.
  • Key GP seller considerations include: i) maturing portfolios with more businesses at an exit-able stage, ii) GPs wanting cash returns, iii) rising markets supporting higher valuations, iv) evolving exit options such as continuation funds, and v) operating companies growing to a point where new owners may add more value.
  • Valuation: ICGT’s NAV valuations are conservative (regular realisation uplifts). The ratings are undemanding, and the ongoing carry value against cost is modest. The 27% discount to NAV is anomalous, we believe, with defensive, market-beating returns, and is above the levels seen pre COVID-19. The 2026E yield is 2.6%.
  • 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 liquidity of the underlying assets. It seems anomalous, in our view, to have a consistent record of outperformance and to trade at a 27% discount to NAV.
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