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Innovation, deep tech and scale-up EIS investing: CPD webinar on-demand

Recently, ICGT hosted two seminars to answer questions submitted by Hardman & Co readers (see here). In the first episode, the manager discussed the trust’s approach to PE investing, and its positioning in uncertain times via its defensive growth strategy. He also reviewed recent market challenges, the outlook for transaction activity/exit uplifts, AI opportunities and risks (including the impact on software). The second covered ICGT’s gearing and interest-rate sensitivity, dividend policy, share buybacks and the sector-wide persistent discounts to NAV, the sustainability of shareholder returns and demand for shares.

  • Company insights:  ICGT’s website has industry and company-specific insights.  The August managers’ newsletter focused on private market fundamentals and portfolio resilience theses we have explored in multiple previous notes. It referred to the market report on recent strong private company performance.
  • Share purchases:  Recent months have seen multiple directors buying in the market (see announcements on 19 August, 30 July and 1 July) a clear sign of confidence. Additionally, at this level of discount, buybacks by the trust have accelerated and been seen nearly every day in September (see RNSs here).
  • Valuation: ICGT’s NAV valuations are conservative (regular realisation uplifts), the ratings undemanding, and the ongoing carry value against cost is modest. The 32% discount to NAV is anomalous, we believe, with defensive, market-beating returns, and is above pre-COVID-19 levels. The 2027E yield is 3.0%.
  • Risks: PE’s post-expense returns are market-beating, but it is an above-average cost model. Experience has been of continued NAV outperformance in economic downturns, but 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 identifying managers and investments where value can be added, with a strategic focus on defensive growth and exploiting ICG synergies. Valuations appear conservative, and governance is strong. It seems anomalous, in our view, to have this record of outperformance and to trade at a discount to NAV.
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