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

ICGT’s latest results showed an annual NAV per share total return of 27.9%. In the latest quarter, its 17 full exits were executed at an average of 23% uplift to carrying value (and 2.7x multiple to cost) which, in our view, proves a conservative approach to valuation. By the end of July (the valuation date on which ICGT will shortly report its NAV), the NASDAQ had fully recovered its summer losses and was at the same level as end-April, ICGT’s last reporting date. Looking forward, ICGT’s business, with a proven track record of sustained returns across cycles, through its “defensive growth” thesis, and which has delivered just two, very modest, down quarters in over five years, appears likely to be especially appealing to investors.

  • Market news flow: Inter alia, results from PIN, APAX, and PEY give confidence in current NAVs and a resilient outlook. We note uplifts on exits, strong revenue/EBITDA beats against listed companies, low PEG ratios, and robust valuation verification methodologies, all of which also are relevant to ICGT.
  • Chewy share price recovery: Since the end of April, the Chewy share has risen from $29 to its current level of ca.$43. While we do not have the exact split, we know that the majority of the 3.5% Petsmart/Chewy holding is in the listed entity – so the near doubling in its share price this quarter is likely to add ca.1% to NAV.
  • Valuation: NAV valuations are conservative (uplifts on realisations averaging 35% long term), the ratings are undemanding and the carry value against cost is modest. The 39% discount to NAV is anomalous, we believe, with defensive market-beating returns, and is greater than the pre-COVID-19 levels. The yield is 2.1%.
  • 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 consistently generates superior returns, by adding value in an attractive market. ICGT’s focus on identifying companies with defensive characteristics means it is well-positioned to deliver resilient growth. It leverages ICG family synergies. Valuations/governance appear conservative. 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 39% discount to (April 2022) NAV.
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