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

ICGT reported a further, strong quarter of NAV growth to October 2021. One highlight from these results was the indication that ICGT’s secondary fund investments may increase to 20%-25% of ICGT’s portfolio over the next few years. The raised allocation reflects new, highly experienced and well-connected hires, who have a strong track record in this area. Secondary PE fund investments are attractive as they have known underlying investments, they return cash quickly, and do not incur material future commitments, plus they fit ICGT’s overall portfolio management well with good diversification and risk characteristics.

  • 3Q results summary: NAV rose to 1,628p from 1,523p. The portfolio return in 3Q, on a local currency basis, was 8.3%. NAV per share total return was 7.3%, bringing the total return during the past 12 months to 33.2%. Realisation proceeds were £90m, with the average exit uplift of 40% to carrying value.
  • 3Q details: High Conviction investments (48.9% of the portfolio) generated local currency returns of 9.3% during the quarter. Third-party funds (51.1% of the portfolio) generated local currency returns of 7.3% during the quarter. The 27 full exits were at 4.2x multiple to cost. £75m new investments were made.
  • Valuation: NAV valuations are conservative (uplifts on realisations averaging 35% long term). The ratings are undemanding, and the carry value against cost modest. The 32% discount to NAV is anomalous, we believe, with defensive market-beating returns, and is above the levels seen pre COVID-19. The yield is 2.1%.
  • 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. 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, 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 32% discount to (Oct) NAV.
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