ICG Enterprise (ICGT)

ICG Enterprise (ICGT) offers exposure to a diversified portfolio of buyouts, private equity backed businesses. ICGT currently has over 500 underlying companies, sourced through primary commitments, secondary fund investments and through co-investing. The highly flexible mandate seeks to benefit from the best deals and managers available in the buyout universe, increasingly on a global basis.

For a while now, ICG has focused on generating consistent and resilient total returns across economic cycles by targeting buyouts with defensive growth characteristics, both in terms of the managers and businesses they select to invest in. The portfolio offers exposure to businesses in a range of very different niches than one might find in quoted markets, but with low specific risk. In view of the strong earnings growth for the portfolio that ICG continues to report (see Performance section), ICGT’s underlying spread of investments offers clear diversification to traditional equity portfolios.

Within the listed private equity peer group, ICGT is also increasingly differentiated. ICGT’s management team are making good strides towards achieving the board’s strategic objectives for the portfolio (see Portfolio section), which are anticipated to further improve returns over the long term. Alongside this, the board contributes further positives, such as a progressive dividend, a management fee reduction which is already contributing savings this year, and a long-term share buyback programme.

As we discuss in the Discount section, at 39% ICGT’s discount to NAV is around 1 standard deviation wider than the five-year average. The more active use of buybacks may help to limit the downside in terms of rating, but as an activity, it is also highly accretive to the NAV.