Release Date: October 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ICG Enterprise Trust PLC (LSE:ICGT, Financial) reported a strong LTM NAV per share total return of 4% as of July 31, 2024, outperforming the FTSE All-Share Index over three, five, and ten-year periods.
- The company has a diversified portfolio with a 50/50 split between fund investments and direct investments, focusing on defensive growth sectors like technology, consumer, and business services.
- ICG Enterprise Trust PLC (LSE:ICGT) achieved a weighted average uplift of 26% on nine full exits during the period, demonstrating strong value realization.
- The company has a long-standing progressive dividend policy and a share buyback program, returning GBP33 million to shareholders in the period.
- The portfolio companies showed robust growth with LTM revenue growth of 9.4% and EBITDA growth of 13.9%, reflecting strong operational performance.
Negative Points
- The investment environment remains challenging with continued market adjustments and heightened geopolitical risks impacting transaction volumes.
- The portfolio's growth was modest, with a local currency basis increase of 3.8% and a sterling basis increase of 2.6%, indicating slower growth compared to previous periods.
- There were foreign exchange headwinds due to the appreciation of Sterling against USD and Euro, affecting the portfolio's value.
- The company experienced relatively low investment volume, consistent with broader market trends, which could impact future growth potential.
- Despite efforts to improve trading liquidity and reduce share price volatility, the market environment remains uncertain, potentially affecting shareholder returns.
Q & A Highlights
Q: Can you elaborate on the investment strategy and how it aims to provide top-tier private equity returns with less risk and more liquidity?
A: Oliver Gardey, Head of Private Equity Fund Investments, explained that the strategy focuses on investing in buyouts of mature companies in developed markets like North America and Europe. This approach minimizes risk compared to venture capital or growth equity. The company invests in mid-market and larger deals, typically over 1 billion in size, and only with top-tier managers. The strategy also includes a 50/50 split between fund investments and direct investments, allowing for active portfolio construction and diversification.
Q: How has the portfolio performed in the first half of 2024, and what are the key financial metrics?
A: Colm Walsh, Managing Director, reported that the portfolio grew by 3.8% on a local currency basis and 2.6% on a sterling basis. The NAV per share total return was 2.8%, and the share price total return was 10.3% for the six months ending July 31, 2024. The portfolio's LTM revenue growth was 9.4%, and EBITDA growth was 13.9%. The weighted average EBITDA multiple increased to 14.9x, reflecting the quality of the underlying portfolio companies.
Q: What is the current status of transaction activity, and how does it compare to previous years?
A: Oliver Gardey noted that the start of 2024 reflects a period of normalization in transaction activity after contrasting years of high activity in 2021 and low activity in 2023. The company is experiencing increased transaction activity, with nine full exits in the period realized at a weighted average uplift of 26% to carrying value.
Q: Can you provide details on new investments and commitments made during the period?
A: Colm Walsh highlighted that GBP72 million worth of new fund commitments were made, including a significant commitment to ICG's strategic equity. Notable new investments include GBP25 million in Data Site and a co-investment in Visma alongside HG Capital. These investments align with the company's focus on defensive growth businesses with strong market positions.
Q: How is the company addressing shareholder returns and capital allocation?
A: Colm Walsh stated that the company maintains a progressive dividend policy and a long-term share buyback program. During the period, GBP33 million was returned to shareholders, split between dividends and buybacks. The Board also introduced an opportunistic buyback program to capitalize on current trading and discount levels, aiming to optimize shareholder returns and reduce share price volatility.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
