Fund Profile

Disclaimer

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.

Overview
ICGT continues to progress towards its target of 60% ‘high-conviction’ investments…
Overview

The managers of ICG Enterprise (ICGT) aim to give shareholders access to the best risk-adjusted returns available within the private equity industry. They do so by employing a unique strategy, harnessing the deep experience and significant network of the individuals within the dedicated ICGT team.

High conviction investments now represent c. 50% of the portfolio, and the team continue to progress towards the long-term target of c. 60%. A particular development this financial year has been a significant increase in exposure to secondary investments, a particular specialism for Oliver Gardey, who took over as lead manager in 2019, which now represents 17% of the Portfolio.

Oliver aims to make secondary investments that offer prospective returns of ‘high-teens’ IRRs, which compares favourably to the trust’s other potential investment avenues, particularly on a risk-adjusted basis. Because secondary investments are in mature portfolios, they tend to start returning cash quickly and are therefore complementary to primary commitments to third party funds, which tend to tie up capital for much longer. The managers believe they also enhance the quality of the portfolio by removing some ‘blind-pool’ risk inherent within primaries, without reducing diversification.

ICGT has a strong and consistent long term track record. The recent Q3 NAV suggests the trust is on track to deliver 13 consecutive years of double-digit portfolio growth (i.e. including management fees, but not including the effects of cash drag or FX changes).

Over the last five years, shareholders have seen a substantial increase in the level of Dividends being paid. The board have recently reaffirmed a full-year dividend target of at least 27p per share, which would represent a 12.5% year-on-year increase and a yield at the current share price of 2.4%.

Analyst's View

ICGT sits in a unique place in the listed private equity (LPE) peer group in taking a hybrid approach to investing – with a majority of investments made directly by the team, complemented by a diversified portfolio of third-party fund investments.

The ICGT team have the ambition to continue to generate double-digit portfolio returns on a consistent basis, which, if achieved, would be well in excess of the historic long term returns from the UK stock market. As we discuss in Performance, NAV total returns over the past five years have been impressive.

ICGT represents a very active exposure to private equity, which has the potential to deliver higher returns than highly diversified or passive exposures to private equity. The evolution towards a majority of the Portfolio representing high conviction investments should ensure ICGT’s ‘growth engine’ continues to fire.

We believe investors should focus on potential NAV growth rather than invest based on the hope that a discount will narrow. Having said that, if ICGT’s discount of 31% was to narrow on a sustained basis, it would provide a strong tailwind to returns. As ICGT continues to differentiate itself from the peer group, this could be a catalyst for the market to justify a premium rating relative to peers. ICGT’s current discount could therefore be viewed as an attractive entry point for investors seeking exposure to a truly actively managed exposure to private equity.

BULL BEAR
Portfolio increasingly tilted towards high-conviction investments
Private equity valuations lag markets, so precise level of discount is hard to determine
Benefits of move to ICG over five years ago increasingly showing
Gearing in underlying companies will magnify valuation movements
As ICGT increasingly differentiates itself, the higher the potential for a sustained discount narrowing relative to peers
If sentiment towards risk assets changes, the discount may widen, potentially dramatically
Continue to Portfolio

Fund History

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 Now that's what I call a discount 2021!
For the second year running we examine trusts on discounts which, in our view, don't make sense...
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?
14 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 private equity investing...
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...
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...
15 Aug 2018 The income edge
Last year saw investment trusts soar in popularity among both retail investors and wealth managers. We examine why this has happened, as well as the structural advantages of investment trusts for income-hungry investors...
22 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...
22 Feb 2018 Fund Analysis
ICG Enterprise aims to deliver better than equity market growth over the cycle, through investing in private unlisted companies.
05 Jul 2017 Searching for value
We look at how investment trusts are seeking value in the booming listed private equity sector...
04 Jul 2017 Fund Analysis
A private equity trust that has witnessed a reversal in fortunes following recent management changes...
View all

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