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Fund Profile


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.

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Market volatility, concerns around a trade war and worries over a slowing global economy have led to falls in markets during the latter half of 2018. Market sentiment has clearly changed since the summer. In the world of investment trusts this has led to discounts widening. The listed private equity sector has shared in this, but no-where has this de-rating been more heavily felt than in the fund of fund sub-sector. Discounts have widened considerably this year, but most especially from the position in May 2018. As the graph below shows, the average discount for the five fund of fund private equity trusts has widened by 9% since May.

Listed Private Equity Trusts: average discount changes

Source: Morningstar, Kepler Partners

In the case of ICG Enterprise, the discount has widened from 9% in May 2018 to 21% at the end of December 2018 – yet the portfolio continues to perform and fundamentals of the drivers of ICG Enterprise’s returns remain unchanged. With an approach that has produced strong returns through the cycle, we take a closer look at the strategy, portfolio and benefits of the move to ICG three years ago.

The investment team believe the trust’s strategy provides shareholders with the “best of both worlds” in terms of having a relatively concentrated investment portfolio, with the diversification benefits of a third-party funds portfolio.

The managers choice of ICG as a home nearly three years ago is relevant at the current stage in the economic cycle. ICG’s flagship funds are aiming for private equity type returns, but with lower volatility. The team aims to increase what they term “high conviction” investments - co-investments and ICG originated deals - where they (or the wider ICG investment team) has made the investment decision to invest in the underlying company.

Indeed, the team have increased their deployment rate into co-investments to c. 2.5% of NAV per investment (versus c.1% whilst at Graphite). We expect the top 30 holdings to increase to perhaps 55-60% of NAV (currently 47%). Over the past 12 months 39% of all capital deployed has been invested in and alongside ICG as the team take advantage of the proprietary deal flow the trust now benefits from.

Given the backdrop of the past year or so, the team believe that a highly selective approach is key and remain cautious. As such, and across the portfolio and the recent investments, three themes dominate. The team have been investing in companies which in their view exhibit defensive growth (recurring revenue, quality earnings, barriers to entry), structural downside protection (including investing in the debt and equity of deals), and relative value (where deal dynamics has facilitated investment at very attractive valuations).

Kepler View

ICG Enterprise has delivered strong returns in the past and there is nothing to suggest strong earnings growth from the underlying companies shouldn’t continue to deliver strong NAV growth. We believe that the discount narrowing over the past two years has been a reflection of this strong performance, the favourable realisation environment and a growing awareness that the move to ICG has been transformational. Nothing in these fundamentals has changed, and as such, the discount widening back past 20% could represent something of an opportunity.

Outperformance of public markets delivered over long term, through cycles
Private equity valuations lag markets, so discounts may not be as wide as we think
Move to ICG is steadily shifting the portfolio toward highly differentiated approach
Gearing in underlying companies will magnify valuation movements
Discount widened, and company buying back shares
Sentiment towards risk assets and in particular LPE may remain tepid, meaning the discount may not narrow in the short term

Continue to Portfolio

Fund History

19 Oct 2023 Fund Analysis
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18 May 2023 Treasure hunters
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13 Apr 2023 Far from the madding crowd
Smaller nimble companies, both public and private, may be best placed to navigate the current environment…
21 Feb 2023 Fund Analysis
ICGT’s continued portfolio resilience means it looks potentially attractive…
30 Nov 2022 Cry havoc!
Lessons from a year in which an already troubled world was savaged by the dogs of war...
16 Nov 2022 Fund Analysis
ICGT continues to differentiate itself from the peer group…
03 Aug 2022 Diverging fortunes in listed private equity
Growth capital and buyout trusts now trade at similar wide discounts. In our view, this belies very different prospects for underlying earnings and for valuations...
25 Mar 2022 Slides and Audio: ICG Enterprise
Download the presentation and listen to the audio from our 'Ideas for your ISA' virtual Spring event on 17 March...
23 Mar 2022 Fifteen ideas for your ISA
Slides and audio from our event last week, featuring fund managers running money in every major market in the world...
17 Mar 2022 It's the end of the world as we know it
We examine five potential themes for investors seeking long-term returns in a troubled and uncertain world...
01 Mar 2022 Fund Analysis
ICGT continues to progress towards its target of 60% ‘high-conviction’ investments…
02 Feb 2022 Getting in on the act: Private markets
Private markets could be the next big opportunity for investors…
06 Oct 2021 Slides and Audio: ICG Enterprise
Download the presentation and listen to the audio from our 'Now that's what I call a discount!' Autumn conference on 30 September...
23 Sep 2021 Even better than the real thing
We explain private equity and examine why tweaks to listed private equity trusts give the sector an advantage over the direct route...
04 Aug 2021 60/40 and other dinosaurs
A simple practical step to take your portfolio from the 1990s into the 2020s...
08 Jul 2021 Fund Analysis
ICGT continues to deliver consistently strong returns…
19 May 2021 The complexity premium
We examine the idea that extra returns can be obtained from buying investments which are perceived to be more complex by most investors...
10 Mar 2021 Spring Conference '21
Audio and presentations from 21 of the UK’s leading investment trust managers…
04 Mar 2021 Slides and Audio: ICG Enterprise
Download the presentation and listen to the audio from our 'Ideas for your ISA' Spring Conference on 04 March...
03 Mar 2021 Fund Analysis
With momentum behind ICGT, we anticipate further NAV progress into the financial year end...
05 Nov 2020 The haves and have nots
With listed private equity trust discounts widening, are investors mistakenly assuming that underlying portfolios will perform worse than public market indices?...
17 Jul 2020 Active ownership of private equity in a crisis
An active approach is an effective means to minimise risks and maximise returns.
25 Jun 2020 Selling the family silver
Is there something fishy about a trust paying dividends from capital?
04 Jun 2020 Fund Analysis
With its focus on defensive growth, ICGT’s current discount feels unwarranted...
03 Jun 2020 Price is what you pay, value is what you get
The listed private equity sector has seen discounts widen markedly, but does this present an opportunity?
13 Nov 2019 Results analysis: ICG Enterprise
In its interim results, ICG Enterprise celebrates its promotion to a new index and continued success...
13 Nov 2019 The parallel worlds of listed private equity
Some private equity trusts are on an average premium of 18%, whilst others trade on discounts of 15%. Are we missing something!?
05 Sep 2019 Fund Analysis
ICG Enterprise Trust gives investors access to outperforming private equities...
24 Jul 2019 Fool's gold?
We examine the relationship between how much a fund costs and how it performs, with surprising results...
18 Jun 2019 Going private: Why should investors consider adding private equity to portfolios?
ICG Enterprise Trust busts some key myths surrounding 'risky' private equity...
13 Jun 2019 Real growth in a world of fake news
Presentations and audio from our event at the London Stock Exchange, where six fund managers set out their stall for an exciting future...
15 Apr 2019 Results analysis: ICG Enterprise
Brief review of ICG Enterprise's 31st January Final results, announced 15 April 2019...
10 Apr 2019 Because they're worth it
With the rise of the passives putting more pressure on fees than ever before, we argue that performance fees could be the key to encouraging truly active investment trust managers...
03 Apr 2019 Nice guys finish first
We review the rise of ESG, its impact on investment trusts, and the various ways ESG has evolved in the trust world...
03 Apr 2019 ESG: Impact
27 Feb 2019 A marathon not a sprint
Our research shows that investment trusts' structural advantages give them a significant edge for investors seeking long term capital growth...
16 Jan 2019 Fund Analysis
Differentiated access to an asset class that continues to outperform...
17 Oct 2018 Missing something?
As more and more of the world's most exciting companies delay listing, the opportunity in private companies has become too large to ignore...
16 Oct 2018 Results analysis: ICG Enterprise
Brief review of ICG Enterprise's 31st July interim results, announced 4 October 2018...
22 Aug 2018 Reassuringly expensive?
Some investment trust premiums have been stretched to eye-watering levels. Have investors been enjoying themselves in the sun too much? We try to rationalise current levels and suggest alternatives...
21 Feb 2018 Fund Analysis
ICG Enterprise aims to deliver better than equity market growth over the cycle, through investing in private unlisted companies.
21 Feb 2018 Once bitten, twice shy...
Fearful memories of 2008 mean discounts remain wide in the listed private equity sector, despite excellent returns from some of the trusts it contains...
28 Jun 2017 Fund Analysis
28 Jun 2017 Searching for value
We identify pockets of value in the booming listed private equity sector...
View all

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