×

Register now for 16 April -

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

We reviewed ICGT’s results in our note 1HFY’24: defensive growth/disciplined approach. They confirmed the robust nature of its strategy and portfolio with LTM NAV per share total return of 4.1%. The 1HFY’24 portfolio return, on a constant currency basis, was 4.6% and the long-term, ongoing buyback programme enhanced NAV. The minimum 32p FY’24 expected dividend was reconfirmed. Realisations were £94m, new investments £64m and new commitments £110m; activity that is slower than the recent past but still ongoing. Exits were at an average 18% premium to carrying value, demonstrating the conservative approach to accounting. ICGT’s defensive growth is delivering in challenging markets.

  • ICGT’s investment approach: We detail below how ICGT’s defensive growth strategy works in practice and why this has delivered long-term EBITDA outperformance. Consistency in performance greatly enhances compounding effects. This has led to share price outperformance (five-year TSR 15.2% annualised).
  • Interest rate sensitivity: With below-PE average gearing (4.7x debt/EBITDA), over half the portfolio fixed rate debt (most not refinancing until 2026/later), and opportunities for bolt-on deals and passing on price increases, investee companies appear relatively well-positioned for a higher-rate environment.
  • Valuation: ICGT’s NAV valuations are conservative (realisation uplifts). The ratings are undemanding, and the ongoing carry value against cost is modest. The 41% discount to NAV is anomalous, we believe, with defensive, market-beating returns, and is above the levels seen pre-COVID-19. The 2024E yield is 2.9%.
  • 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 41% discount to NAV.
Download the full report

Request a meeting

If you'd like to be introduced to the team at ICG Enterprise Trust, get in touch.

Request a meeting
Download the full report