ICG Enterprise

ICGT continues to deliver consistently strong returns…

Add to watchlist Request a meeting Download View key data

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by ICG Enterprise. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

ICG Enterprise

ICG Enterprise (ICGT) trust celebrates its 40th birthday this year, and five years since the move to ICG. In other ways too, 2021 is shaping up to be a banner year. Realisation activity is running at record levels, with £100m of cash received by the trust during Q1. Realisations have come at a 42% uplift to carrying value (35% average for past five years) and puts ICGT on track to deliver its 13th consecutive financial year of double-digit portfolio growth (net of management fees, but not including the effects of cash drag or FX changes).

ICGT sits in a unique place as regards the listed private equity (LPE) peer group in taking a hybrid approach to investing. The team describe their ‘secret sauce’ as blending the third-party funds portfolio (c. 50% of investments) with the ‘high-conviction’ portfolio. This represents investments over which the ICG team make a conscious decision to invest through ICG funds or through co-investments. Investments with third party managers drive co-investment opportunities, and enable diversification within the portfolio, without it becoming too concentrated.

Over time, ICG’s team have added value through selecting top-tier managers in the fund portfolio, or through good company selection in the high-conviction portfolio. The combination has meant that ICGT has delivered consistently strong value creation for shareholders and, as we demonstrate in Performance, ICGT has outperformed UK and Global equities over five years on a NAV and share price basis.

ICGT’s board aims to pay a total dividend (funded from capital) of at least 27p per share for the year ending 31 January 2022. This represents a 12.5% increase over the previous year, equivalent to a prospective yield of 2.5% on the current share price.

Kepler View

As we highlight in Performance, ICGT has produced strong and consistent NAV returns, and the Discount of 24% remains tantalisingly wide. We wonder what will draw more investors into what we view is an underappreciated niche. Large, successful institutions such as the Yale Endowment have long espoused significant allocations to private equity. We wonder when other investors might catch on? Even a slight move from generalist investors towards a ‘Yale model’ allocation could narrow discounts dramatically.

It is worth noting that ICGT’s NAV returns have been achieved net of all management fees and other Charges, which to some look prohibitively high. There are no guarantees that historic outperformance will continue over the next five years. However, those who avoided ICGT five years ago because of the ‘cost’, have found the real cost has been missing out on what has been a strong period of outperformance of global equities.

We continue to believe that private equity-backed companies are in a better position than many of their listed comparators to deal with the aftermath of the pandemic and therefore justify a place in investment portfolios. Now that ICG have been at the helm for five years, their stamp on the portfolio is evident. ICGT offers a differentiated proposition, which over time as we discuss in Discount, could lead to the discount narrowing and justify a premium relative to peers.

bull bear
Portfolio benefitting from being in 'sweet spot' un terms of concentration vs diversification, having delivered strong historic returns Private equity valuations lag markets, so precise level of discount is hard to determine
Benefits of ICG starting to be felt in underlying portfolio (now 25% of total), with trust in good position re: deal flow and access to investments Gearing in underlying companies will magnify valuation movements
ICGT carving out its own niche in the LPE sector offers the potential for a sustained discount narrowing relative to peers If sentiment towards risk assets changes, the discount may widen, potentially dramatically
William Heathcoat Amory
William Heathcoat Amory is a co-founding partner of Kepler Partners LLP and leads the Kepler investment trust research team. William has 18 years of experience as an investment company analyst. Prior to co-founding Kepler Partners in 2008, he was part of the Extel number 1 rated research team at JPMorgan Cazenove.

Fund History

Disclaimer

This report has been issued by Kepler Partners LLP.  The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

Kepler Partners is not authorised to make recommendations to retail clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.

The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. In particular, this website is exclusively for non-US Persons. Persons who access this information are required to inform themselves and to comply with any such restrictions.

The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.

This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.  

Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm’s internal rules. A copy of the firm’s Conflict of Interest policy is available on request.

PLEASE SEE ALSO OUR TERMS AND CONDITIONS

Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 480590), registered in England and Wales at 70 Conduit Street, London W1S 2GF with registered number OC334771.



Welcome to Kepler Trust Intelligence

Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority.
Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority. To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
?
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
{{item.msg}}
Please select an option
{{item.msg}}
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
How will this information be used? Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase.
Our Website uses Cookies Cookies are small text files held on your computer. They allow us to give you the best browsing experience possible and mean we can understand how you use our site. Some cookies have already been set. You can delete and block cookies, but parts of our site won’t work without them. By using our website you accept our use of cookies. For further information please refer to the Kepler Privacy Notice.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.