ICG Enterprise Trust Q4 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 8, 2025

There are 3 speakers on the call.

Operator

Good morning. Welcome to ICG Enterprise Trust's full year results for the twelve months to 01/31/2025. I'm joined today by Oliver Gardy and Colin Walsh, who will discuss our investment performance and activity in more detail over the course of this presentation. The slides for the presentation, along with the accompanying results announcement, are available on our website. We will have time for Q and A at the end

Operator

So if you'd like to submit questions, please do so through the online portal at any point in the Q and A box on your screens. We will then aim to answer those at the end of the session. With that, Oliver, over to you.

Speaker 1

Thank you, Martin, and good morning, everyone. We're very pleased to announce today our full year results for the twelve months to 01/31/2025. ICG Enterprise Trust recorded an NAV per share total return of 10.5% and a share price total return of 12.5%. As a reminder, all our performance figures are reported net of fees and costs. We're pleased with the strong performance over the year on an absolute basis and also relative to the peer set as our portfolio companies continue to display resilience despite macroeconomic and geopolitical uncertainty.

Speaker 1

Whilst that uncertainty has increased recently in the post period end, we remain very confident that our sector our sector positioning, strong origination network, and robust balance sheet position and strong balance sheet positions us well for the current market environment. In addition, private equity is a long term asset class, and therefore, we hold ourselves accountable to deliver long term returns for our shareholders. And over the past five years, we have recorded NAV per share total return of 97% and a share price total return of 59%. Looking back even further, we're pleased to be featured on the a a AIC's list of ISA millionaires. This is a list where head investors invested their full ISA allowance in annually from 1999 when ISAs were launched until 2024 into ICG Enterprise Trust and reinvested the dividends, it would have resulted in a savings pot now of over £1,200,000.

Speaker 1

We were own one of only a handful to be featured on the list. And whilst our portfolio and strategy has evolved over the twenty five year period in question, it speaks to our selection and focus on delivering long term consistent returns for our shareholders. Moving on to the next slide. As a reminder for those less familiar with us, ICG Enterprise Trust has a very clear investment strategy. We invest in profitable, cash generative private companies in North America and Europe with the aim of generating resilient growth over the long term.

Speaker 1

As you know, private equity has a long term track record of outperforming public markets, and our strategy has outlined our strategy has outlined on the slide is about maximizing our returns while simultaneously managing risk. So how do we do this? First of all, we only invest in buyouts, more mature companies which have a more consistent return profile, and we do not invest in venture capital or growth equity, which can have loss raise loss rates of 60 to 75%. Whereas for buyouts, it is around 10%, so it is a completely different risk profile. And then we only invest in developed markets.

Speaker 1

We do not target Asia or emerging markets, only North America and Europe. These geographies have a more mature PE market with very deep knowledge, expertise, and a strong pipeline of quality managers and deals. The next filter is that we only focus on mid market and larger deals. Funds over 1,000,000,000 typically have the necessary investment experience, team, and resources to deliver what makes private equity perform better than other asset classes. That proactive operational management is key to generate good returns.

Speaker 1

So we look for funds that have the resources and the operational capacity to source good companies and then to transform them to better companies. Now how do we generate returns is, by investing focusing on top tier managers. If you look at the dispersion between a top quartile fund and a bottom quartile fund, it's much larger in private equity than in any other asset class. Therefore, picking the right managers and funds is especially important in private equity. And lastly, we look at, we look for resilient companies, companies and sectors where performance is not cyclical or seasonal.

Speaker 1

Turning on to the next slide, we believe our actively constructed portfolio positions us well for the current environment. By geography, we aim for a fifty-fifty split between North America and Europe, and we have very little exposure to Asia and emerging markets. By sector, whilst we do not pursue a sector specific investment strategy, our top three sectors in our portfolio are well spread across technology, consumer, and business services. We focus on asset light, resilient businesses and sectors and do not have significant exposure to manufacturing. And finally, we have multiple routes to market, each of these routes being something specific to building a portfolio that delivers on ICG's investment strategy.

Speaker 1

Primaries allow us to access a deep pool of sector specialist managers, and then the secondaries reduce risk whilst enhancing the liquidity profile. And then finally, direct investments allow us to increase our exposure to the companies we really like or the best of ideas generated from our managers. Combined, we believe we are positioned well for risk adjusted returns. And I think this is very well underpinned by our slogan you can see on the screen, investing in resilience and delivering growth. And as our chair said in her chair statement, we have welcomed several new shareholders to our register over the last twelve months.

Speaker 1

And so to explain in practice what this means for those new to us, this means we invest in companies which display the following characteristics, such as having an established market position, being a provider of mission critical services, thirdly, having pricing power, And lastly, with a high margin business model. We believe our unique portfolio of private companies is an attractive proposition and can play a valuable role in many shareholders' portfolios. So we think the numbers speak for themselves, but let's turn specifically now to our full year results. There are four observations we can take away. Number one, the portfolio is attractive and consists of resilient private companies, which should continue to grow earnings and continue to be sold at an uplift on exit.

Speaker 1

Secondly, this translates to a strong portfolio and NAV returns for our shareholders. Thirdly, we're active. We're proactive in regards to our portfolio management, evolving our medium term portfolio construction targets towards more secondary and direct investments during the year, and and we have access access the secondary market for sale post period end. We also have a shareholder focused approach to capital allocation, returning 5% of opening NAV to shareholders through dividends or buybacks, which puts us on the upper end of our peers. Now let's put the numbers in, the year into numbers.

Speaker 1

Our portfolio grew on a local currency basis by 10.2% and on a sterling basis by 10.6%. This translated to an NEV per share total return of 10.5% and a share price total return of 12.5% in the twelve months to January 2025. As you can see on the top right of the slide, 59,000,000 was returned to shareholders in the period equivalent of about 5% of opening NAV, split approximately one third in dividends and two thirds in buybacks. And this is a significant increase on the £34,000,000 in fiscal year twenty twenty four. So we've been very active in our capital allocation strategy.

Speaker 1

Finally, the twelve month period saw the net investment by 30,000,000, and with investments above a hundred and 81,000,000 and proceeds a hundred and 50 1 million, which we'll call them talk about in more detail later. Next slide outlines some of the key operational and financial metrics for our underlying portfolio. Looking through to over two thirds of our portfolio, our resilient portfolio companies recorded 11.2% revenue growth and 15.3% LTM EBITDA growth. This compares to single digit private company earnings growth as measured by ICG's private company database of over 1,700 private companies and negative FTSE all share earnings growth. I think you could see by these numbers that we have our proactive management and our focus on top tier managers have delivered, high quality assets.

Speaker 1

Our net debt multiple decreased slightly to 4.4 x, whilst our EVEBITDA multiple rose slightly to 15.2 x. We are comfortable with these valuation metrics, and it reflects the quality of the underlying portfolio and the prudent debt levels. With that, I'll pass to Colm to dive a little bit deeper into our fiscal year twenty twenty five activity.

Speaker 2

Fantastic. Thanks, Oliver, and good morning, everyone. In the next few slides, we'll take a look at what happened over the last twelve months in the portfolio. As a reminder, we break down the investment life cycle into four phases, and I'm going to update you on each aspect of that cycle. Firstly, making commitments to new funds of our North American and European relationships, then being called for capital or investing directly into portfolio companies, then typically between years four and eight in the fund life cycle, getting to work and adding value and finally, most importantly, selling the businesses, typically to strategic buyers or to other financial buyers.

Speaker 2

And the cycle repeats. As realizations come in, our cash balance goes up, and we can redeploy that into new commitments and investments. I said twelve months ago at our fiscal year twenty twenty four results, so that broadly reflects the calendar year 2023, that these cogs in the machine, if you like, were turning a little slower. And FY 2025, which, conveniently, roughly reflects calendar year 2024, was a little different, certainly compared to the higher volumes we saw in 2021 and 2022. So despite the fact that the climax, the macroeconomic climax is changing, there have been opportunities recently.

Speaker 2

We generated over £100,000,000 worth of proceeds in the last month That's following the period end. That's from a secondary sale and from the realization of Minimax, our largest portfolio holding at the January 31. And I'm going to go into a bit more detail on that later on. So moving on to the next slide, and turning firstly to commitments in the year. So during the year, ICG Enterprise Trust made 83,000,000 worth of new fund commitments.

Speaker 2

The largest of those commitments was to ICG Strategic Equity V. Now ICG are pioneers in what is known as GP led secondaries. And this $25,000,000 commitment aligns with our target allocation for secondaries. We also committed to Leeds Equity, Invest Industrial, Oak Hill and Terma Bravo. These are all well established managers with whom we have long standing pre existing relationships.

Speaker 2

We committed, in addition to this, to two new managers who've been tracking for a while. And interestingly, there are two very types different types of primary opportunity. The American Securities is a very long established U. S. Manager with whom we've built a strong relationship across the ICG platform over the years.

Speaker 2

Valais is a slightly different opportunity. It's a new manager, but with a very experienced team of founders who came out of Helman and Friedman and Golden Gate Capital, so two very well regarded U. S. Buyout firms. And this opportunity involved investing in a fund, which was already more than 50% invested in a well performing portfolio.

Speaker 2

Moving on to the next slide and to discuss performance. Sorry, my apologies. Turning now to new investments, the second phase. We invested GBP 181,000,000 in the period. That was an increase on the year before, but still below the five year trend.

Speaker 2

Just going to highlight one of those new investments, AudioTonics, which was our largest investment in the year, and that's a co investment alongside PAI, one of our longest established manager relationships. It's a global leader in the design and manufacture of professional audio mixing consoles. These are used in live concerts and broadcasts. So think the sort of big concerts like Taylor Swift or War to My Taste Oasis. It's a very attractive high quality business with many of the characteristics we like, Oliver alluded to earlier.

Speaker 2

It is a very a long established market position. It provides mission critical services. It has significant pricing power, and its business model has inherently high margins. It's a really good exemplar of the kinds of characteristics we look for in the companies we invest in. So moving on to the next slide to discuss performance.

Speaker 2

Oliver has already mentioned that during the year, our portfolio grew by 10.2% on a local currency basis, and that translates into 10.6% on a sterling basis. All of our primary ways of accessing investments, the primary, secondaries and directs, performed well. Performance, though, was driven in particular by some strongly performing direct investments. The companies that did particularly well included Surcana, which those of you who've been tracking us for a while may know as IRI, so it had a recent name change, and Davis Group, which is an outsourced supplier to of business services to insurance companies. These are examples of companies that are not household names, but have very strong positions in their sectors, and they were able to demonstrate that with their performance over the year.

Speaker 2

It was a small FX adjustment, and we ended the period with a portfolio value of a little over £1,500,000,000 at the 01/31/2025. Moving on now to exit activity. Realization from the period totaled £151,000,000 And it was another year, like previous year FY 'twenty four, of realizations being below the long term trend as a percentage of NAV. This is not specific to ICG Enterprise Trust. It's a trend you will see reflected in overall global M and A volumes.

Speaker 2

Following the period end, though, we did announce £45,000,000 worth of proceeds for Minimax, which we mentioned earlier. The transaction was signed in FY 'twenty five, but the proceeds were received in the first quarter of FY 'twenty six. Some of the exits this period are shown by the logos on the right. Just highlight one, Vetify. It's a provider of financial indices and data.

Speaker 2

It was an investment alongside ICG's strategic equity strategy, the GP led secretary strategy, and we realized a little over 10,000,000 from that transaction. Moving on to the next slide. We've talked about Minimax a few times, but I just wanted to spend a little bit of time discussing an investment, which those of you who are long term holders will be quite familiar with the name. We first invested GBP 17,000,000 in the company in 2018. So it's been in the portfolio for around seven years.

Speaker 2

And as I mentioned earlier, it was our largest company exposure at the January 31, accounting for a little over 3% of portfolio value. It's a leading provider of fire protection systems and services. It has a very resilient business model underpinned by high levels of recurring revenue from that service provision. And it's also a mission critical product, which in many cases most cases is mandated by increasingly complex regulation. It's a company which is a really good example of where we benefit from significant ICG institutional knowledge.

Speaker 2

ICG actually first invested in the company in 02/2006. So we have a very strong institutional familiarity with both the company and the sector. And we were really pleased to announce last month that receipts, 45,000,000 or €53,000,000 of proceeds. We reinvested around €10,000,000 of those proceeds to allow ICG Enterprise to continue to benefit from the next stage of the company's growth. Moving on to the next slide.

Speaker 2

Very important to note, obviously, that valuations continue to be an important focus of investors in private markets. We believe that one of the best proof points for any valuation is what a company ultimately sells for upon exits. On a weighted average basis, we are pleased to report of the 40 full exits in FY twenty twenty five, they were executed as an average 19% uplift to their previous carry value. And this continues a long term trend of realizing exits at a material premium and also crystallized a strong return, so on average, 2.9 times cost. We believe that this demonstrates the quality of our underlying companies, and it's an especially strong validator of our net asset value.

Speaker 2

So moving on to next slide, the importance of active portfolio management. So that approach of actively managing the portfolio saw us tap into the secondaries market for the fourth time in five years. We executed a sale of eight mature primary fund investments, and this was part of a very competitive bidding process where leading third party managers bid on this portfolio. As we announced last month, these funds, which have delivered strong historical performance, these funds will be they have delivered strong historical performance, but we believed that they had limited future upside potential relative to other new investment opportunities. And that, therefore, we could deploy the cash into other opportunities where we believe we can generate additional long term value for our shareholders.

Speaker 2

So we executed this transaction at a 5.5 discount, significantly lower than the share price discount of IT Enterprise Trust of the open market today. And we believe that this transaction, as I say, of funds where we believe have less go forward return potential than the remaining portfolio, we believe this provides further validation of our net asset value. The transaction was signed during the year ended 01/31/2025, but the £62,000,000 worth of net proceeds were received post period end. I'm now going to hand back to Oliver to conclude the presentation with the final few slides.

Speaker 1

Thank you, Colm. Well, Colm has gone through our investment activity, our investment program, and it's clearly our most important part of how we think about capital allocation and how it delivers long term share, returns for our shareholders. But we also enhance returns through a progressive dividend policy and share buybacks, and I wanna spend some time on going through those numbers because we've been very active. Combining both dividends and buybacks, we returned £59,000,000 to shareholders in fiscal year twenty five, which is equivalent of 5% of opening NAB. And we believe that, those measures demonstrate our holistic approach to optimizing returns for our shareholders.

Speaker 1

The ordinary dividend per share has increased for twelve consecutive years now. And today, the board announces a fourth quarter dividend of 10.5p per share, bringing the fiscal year twenty five dividends to 36p per share. Now regards to buybacks, we were early movers in our sector, and we announced our long term buyback program in October 2022. And combined with the opportunistic buyback program we announced last year, we've bought back 7% of our opening share count, which I will talk in more detail on the next slide. So that, the 7% of opening share count bought back has been one of our highest amongst our peer group and is delivering on the aims we set out.

Speaker 1

It's been accretive to NAV per share, adding 54p and has also delivered on its aims of reducing volatility in the share price and improving trading liquidity. All three of these benefits are important. So enhancing immediate NAV per share should feed through the share price over time. Increasing liquidity and reducing volatility of our shares should also allow for greater market stability and investor confidence in the trading of our shares. Turning quickly to the financials.

Speaker 1

We believe we have a robust balance sheet and to withstand whatever the coming quarters are has in store at the January 31 and pro form a for the additional proceeds we announced from the secondary sale in MINIMAX, we had a total liquidity of £232,000,000. Pro form a, we also have one of the lowest gearing ratios and overcommitment ratios of our peers. And we believe this leaves us in a very good place going forward to also benefit if and when activity returns. So let's wrap up and get to our to some q and a. And the three key takeaways as we look ahead are, number one, there is obviously more uncertainty in the market, and we think, particularly, the secondaries market of which ICG has a substantial experience in could present actually some compelling opportunities.

Speaker 1

And regardless of activity levels, ICG Enterprise Trust is well positioned. I think you have a good feel for today, with our sector positioning, our strong origination network, and our robust balance sheet that we're in a very good place. And we also have a proven track record. There's significant long term track records of the managers we we back, of ICG Enterprise Trust, and of the ICG Enterprise Trust Investment Committee. Combined with the breadth of our portfolio, our vintage diversification, and our focus on investing in high quality resilient businesses, we believe this underpins our ability to generate long term returns for our shareholders.

Speaker 1

And with that, I'll, over to you, Martin, for some q and a.

Operator

Great. Thanks, Oliver. Thanks, Colin. We now have about ten minutes or so for q and a. So as a reminder, please feel free to submit questions via the q and a box on the webinar platform.

Operator

A few have come in already, so taking them in turn. One, just to elaborate on the directs outperformance. So as we've noted, the portfolio grew strongly across primary, secondaries and directs, but in particular, from some of the directs. Were there just any recurring themes from those direct investments which drove performance to to particularly highlight?

Speaker 1

I think the highlight is really about and the importance of picking high quality assets in our co investment program being selective, identifying high quality assets and get the best ideas from our managers plays well. And if you pick up some high quality managers and high quality assets, the managers invested in as co investments, you can find liquidity even in more difficult environment. So good quality strategic assets always find a buyer.

Operator

Great. Thanks, Oliver. There's a few questions on our views on secondaries. So obviously, in the RNS, we said secondaries could present some compelling opportunities. A few questions in terms of can we elaborate a little bit more on our secondary strategy.

Operator

We increased the target to 25% to 30% announced earlier this year. How are we planning to increase that weighting over the medium term and what what are our views on secondaries both from the buying perspective and selling perspective?

Speaker 1

Yeah. So this secondaries market is continues to grow strongly and has already over the last three years as liquidity in the market is has been lagging historical averages. In general, private equity investors, particularly the large private equity investors, are looking into their portfolio to prune their portfolio, to create some liquidity so that they can continue to invest in private equity. I think you saw some headlines in regards to that the current market volatility and uncertainty clearly means that the liquidity is going to continue to be difficult. And therefore, bigger pension funds, endowments such as Yale, for example, and Harvard, you see and saw in the press, are looking into continuing to manage their portfolio.

Speaker 1

And therefore, we do believe that the secondaries market continues to be attractive over the next, call it, twenty four to thirty six months, and that will provide some good opportunities. And it will allow us, hopefully, over the next, call it, two to three years to get to the medium term allocation. So we think it's a very attractive timing, and that's why we've also increased our allocation.

Operator

Great. Thanks, Oliver. Just building on our new manager relationships, the question has come in, just giving some more details on the new manager relationships column that you mentioned, what attracted us in particular to those new managers? How do we think about our manager relationships?

Speaker 2

Sure. So, yeah, and as I mentioned on the call, the two new relationships that we have over the period were American Securities and Valais. They're quite different. So in the case of American Securities, a very long established, very well known name in U. S.

Speaker 2

Private equity. We've got to know them in a sort of classic case study of how we get to know our managers well ahead of fundraisings. And often, during previous fundraisings, we don't necessarily always invest the first time we meet them. So that's a very well respected name. We know them across our platform, debt, credit, secondaries.

Speaker 2

So we feel we have a very strong relationship going into that commitment. Valeo is slightly different. It's more analogous to those of you that follow us to Integra. As you know, we don't typically invest in first time funds. This is a first time fund, but it is differentiated by having a very experienced founding team who came out as a very long established and respected USP houses.

Speaker 2

This is an example a bit like Integra, where one of the key attractions was a very attractive transaction dynamic. And in particular, this was because it's a difficult fundraising market for first time funds. They've been raising for perhaps longer than they thought they would be, and that meant they had already deployed over 50% of the fund. We were able then to look at the opportunity almost like a secondary. We were able to diligence the underlying assets.

Speaker 2

And of course, relative to other first time fund opportunities, that means you've got a lot less blind pool risk as well. So it's a very strongly performing portfolio of companies that exhibit many of the characteristics that Oliver has outlined that we look for, and also where there was an uplift available. And what happens is when you invest in a new primary, even if the assets have been revalued, you effectively invest at cost. So you're investing already at a discount to what the fair value of the companies are. And we thought that was an attractive entry point, and we think that continues to be proven.

Speaker 2

So a strongly performing portfolio continues to do well and a future relationship we're excited about.

Operator

Great. Thanks, Colm. A question's coming essentially on the opposite. So that was new manager relationships. Oliver, you mentioned and Colm, the secondary sale we recently executed post period end.

Operator

Can you elaborate a little bit more in terms of the thought process for themes, talking generically, themes of the funds that we sold? Is there particular examples? What would what would be the catalyst? And and what are the themes of the funds that we sold?

Speaker 1

Yeah. No. I think, let's start off that, we are constantly evaluating our portfolio, vis a vis market pricing. And as you've seen over the years, particularly over the last three to four years, we've been very actively managing the portfolio and particularly identifying and this is the same theme, this secondary sale as in previous years, is that we look for assets which we have, which have performed well, and some might not have performed quite to our expectations. But where we do see that the forward looking returns are not as strong as the kind of locked in as as the sale price we could lock in as of today, I.

Speaker 1

E, that we can so on this portfolio, for example, we locked in a 1.6 x, so a very, decent return. And, at the same time, we believe that this portfolio was getting quite mature. And therefore, going forward, we didn't see the same IRRs and multiples we can achieve with that capital at at risk than if we would deploy it into new managers such as Valiers or do new co investments and secondaries. So we did basically pruning the portfolio and reallocating it to higher generating returns and investments.

Operator

Super. Thanks, Oliver. A question on uplifts. Obviously, we reported a 19% uplift on the weighted average plus 40 foot exits this period. That obviously ranges really from about 20% to 30% over the last few years.

Operator

A question just in terms of what do we think is a reasonable number to expect for uplift. The long term trend is the 20% to 30%. This period, it was 19%. Do we have a view in terms of the medium term view in terms of uplift going forward?

Speaker 2

Yes. So I would say, obviously, that's lower end of the range, but we continue to believe that, that historical evidence suggests that's an appropriate range to think about. What I would say is that the number you come out with is sometimes a function of the mix of realizations that you get. So, for example, if we sell things that are listed, there's obviously limited uplift structurally because it's quoted on a public market. Sometimes, we have investments in deals that have contractual return, and therefore, you don't get uplifts on those investments as well.

Speaker 2

We think that in the context of current trading where the discount is close to 40%, that these uplifts provide, as we mentioned in the presentation, further validation of the NAV, particularly when you look at that historical trend. So

Speaker 1

I think just to add to that, you should still expect 20% to 30%. This year, we were on the lower end of that range, But that's a good number to anticipate, 20% to 30%. And as we said before, I think the secondary was a very good valuation of conservative valuation in our portfolio. So we received a 5.5% discount on, you know, mature assets. And so I think that, speaks well for the NAV where we, the holding values as well as the conservative valuations the NAVs are being held at.

Operator

Great. Thanks, Swayf. There's a question on the underlying portfolio company metrics that we reported. So LTM revenue growth, we reported 11.2% across our enlarged perimeter and LTM EBITDA growth, we reported 15.3%. So there's a question that the EBITDA growth has essentially grown faster, if you like, than the revenue growth of 15.3%, greater than 11.2% suggests potentially margins widening.

Operator

Is there a story here? Is it just mix driven views?

Speaker 1

Yes. So, a lot of the assets we own, in particular in the top 30, are very high quality assets, market leaders in sectors which are growing and where they are also active in m and a. So add on acquisitions on the platform, they often pick up less profitable, let's say, obviously, profitable business, but not quite the same profit margins. But bringing in onto the platform makes them much more profitable, particularly see that in tech enabled business services and software. And as our overall portfolio mix has gone more towards that direction, that's that's what you're picking up here.

Operator

Great. Thanks, Oliver. A question on capital allocation. So some of our peers adopt a formulaic approach to buybacks, for example, a certain percentage of realizations. Don't.

Operator

Readers can see from this release this morning that we distributed back about 39% of realization proceeds in FY twenty five or as Oliver said 5% of opening NAV via dividends and buybacks. But formally, we do not link it to the percent of realization methods. Can we just explain how us and the boards think about that?

Speaker 2

Yes. So I would say that, you know, we believe quite strongly that it's often important the buybacks are if we think about the aim of the buyback program being to add additional shareholder value and also but also to limit the volatility of the discount as well, We actually think it's important to be active in the market even when there are a limited number of realizations in our underlying portfolio. And actually, to some degree, it's a little prototypical to only do buybacks when you actually receive realizations. So we philosophically believe that that consistency is important and that, therefore, it's better not to link the two things explicitly, but to be able to execute buybacks when it makes sense for the objectives of the buyback program.

Operator

Great. Thanks, Colm. There's been a follow-up question on the revenue and EBITDA growth question that we just had. What do we think revenue and EBITDA growth for the enlarged perimeter would be on an organic basis, pre M and A, if there's any rough?

Speaker 2

I think that's very difficult for us to be able to give an accurate answer. We do look we analyze each company. We do a detailed analysis of where the EBITDA growth has come from. Now the person asking the question is correct. There are elements of both acquired and organic growth.

Speaker 2

I'd say most of the companies in the top 30 have healthy levels of organic growth because of their market positioning, but I don't think we would be able to put, certainly for for at this point in time for public consumption, a precise level of organic growth. But, you know, the big the the strong performers, what I would say is IRI, Davies, the companies that we cited, that's substantially an organic growth story amongst our stronger performance.

Speaker 1

Yeah. And when we look for and the top 30 is mainly the co investments, direct investments. When we do underwrite and look at for co investments, we're looking for double digit growth in EBITDA levels. So that is gives you a good a good indicator in terms of what we're looking for and what the companies usually start off from. And then but to Colm's point, very difficult to assess as a average on the portfolio to kind of adjust for organic versus m and a buy and build.

Speaker 2

And also and spinning the question around, I think it's worth noting that when we have periods, like at the moment, have heightened volatility in certain sectors, actually, it creates a really attractive environment for accretive m and a. So those of you who have been following us for a while will remember our successful co investment in Endeavour, which is a schools business, benefited hugely from the sector actually being relatively as a as an acquirer of choice, it was able to acquire lots of schools in the period following the COVID pandemic at very attractive valuations. We've another similar example in the portfolio at the moment. We have a US business called Class Valuations. It supplies mortgage appraisal services.

Speaker 2

Well, at the moment, as many of you will read, new house purchases and therefore mortgage approvals in The US are at historically low levels, which you might think would be a bad thing for that company. And to some degree, it is. But it allows it allows it a unique opportunity to be able to consolidate the sector, very, you know, very fragmented sector at a very at a very accretive point in the valuation cycle. So so it it does, you know, it's not I would I would guide against people thinking that organic growth is is great and there's something wrong with the acquired growth. It's actually a very significant source of value accretion in the portfolio.

Operator

Great. Thanks, both. I see one final question, which is going back to the direct investments outperforming primaries and secondaries. Was this driven by ICG managed direct investments? And more broadly, to broaden the question, what are the advantages of the ICG being part of the ICG platform?

Speaker 2

Should I take the first one, Oliver, and you cover the Yes. In terms of the I think we noted the key contributors this period were actually mostly third party direct investments, but that ebbs and flows. We've had very strong performance from our ICG portfolio. And obviously, in terms of liquidity, the ICG portfolio, the largest realization last year was Vetify, which came out of an ICG managed portfolio, and obviously, Minimax more recently as well. But the big performers were, as I mentioned, Surcana, data side that is ICG, but the class valuation, David Lloyd.

Speaker 2

So mostly third parties. But there's no particular I would say, I would there's no particular trend in that. It's just the mix of companies that have performed particularly well in the year. And then as as for the platform, Oliver, do you want to just cover how we see as an investment team that platform working for us?

Speaker 1

Yeah. I think there's two good examples to use. One is the secondary. We have a we're one of the larger secondary managers on the market through the strategic equity, the GP led secondary strategy and LP secondaries, the LP focused strategy. So we're, constantly in the market evaluating secondary asset sourcing, evaluating underwriting.

Speaker 1

So we have a good sense of where pricing is and market pricing is at any given time, and that allowed us to put a particularly good, packaged portfolio together for enterprise trust and find the and have the right process and the right intermediaries working for us to kind of maximize pricing. And that's why we got a particularly attractive pricing and because we identified and we had the right process in place. So that's, I think, a great example for what how the how we benefit from the platform. The other part, which is related to the first question, is we have a higher, a higher percentage of, co investments per fund investment coming from the ICG funds. And so that allows us, so from a sourcing perspective and being offered co investments, it's particularly attractive to be invested in some of the ICG funds because they are a constant source of attractive co investments.

Operator

Great. Thanks, Oliver and Colm. We're close to time. If there are any follow-up questions after this webinar, please feel free to contact the email address you see on your screens. And as a reminder, a recording of this event will be available on our website in the coming days.

Operator

With that, Oliver, Colin, thank you very much, and thank you all for joining today.

Powered by Quartr

Key Takeaways

  • ICG Enterprise Trust delivered a 10.5% NAV per share total return and 12.5% share price total return in the year to January 31 2025, with a five-year NAV return of 97% and share return of 59%.
  • The trust targets mid-market buyouts in North America and Europe only, investing in top-quartile managers and resilient, asset-light companies with mission-critical services and pricing power.
  • Its actively constructed portfolio is split roughly 50/50 between North America and Europe, with top sectors of technology, consumer and business services delivering 11.2% revenue growth and 15.3% EBITDA growth.
  • ICG Enterprise Trust returned £59 million (≈5% of opening NAV) to shareholders via dividends (36p per share) and share buybacks (7% of share capital), which have added 54p to NAV per share.
  • Active portfolio management included a post-period £62 million secondary sale at a 5.5% discount, 40 exits at a 19% uplift (2.9× cost) and €53 million from the long-held Minimax investment.
AI Generated. May Contain Errors.
Earnings Conference Call
ICG Enterprise Trust Q4 2025
00:00 / 00:00