Green shoots? ICG Enterprise Trust Newsletter – August 2023

Oliver and Colm in conversation
In their fourth monthly email, Oliver and Colm ask if we are in the early stages of an uptick in transaction activity?

Green shoots? The early stages of an uptick in transaction activity? At or near peak interest rates? Maybe. There has certainly been positive commentary from some private equity managers and other market participants in recent weeks. 

We are of the view that, to see a sustained recovery in transaction volumes, markets need to have confidence about where interest rates are likely to peak. We are closer to that situation than a year ago – particularly in certain countries – but it feels early to call anything definitively, particularly as we enter the typically slower month of August.

That said, it was pleasing last week to see Apollo announce that they have invested in PetSmart alongside BC Partners, affirming PetSmart’s “strong fundamentals and continued growth opportunity”. Apollo are a top-tier alternative asset manager with deep expertise in the Consumer segment. We do not believe there is any material and immediate cash or valuation impact for our Portfolio given the transaction structure – but good to see the investment and we will no doubt discuss this more in our H1 results in October. As you will know, our combined investments in PetSmart and the online retailer Chewy represent ICG Enterprise Trust’s largest investment (for details of our Top 30 investments, see here). 

So where that does leave us as we head into August? Confident in our portfolio, and very disciplined on investment selection, maintaining our focus on businesses demonstrating defensive growth characteristics (such as our recent investment into Archer alongside Cinven: see here). We’ve also continued to execute our share buyback programme as part of our capital allocation strategy, seeking to generate long-term growth for our shareholders.

On behalf of the entire ICG Enterprise Trust team, we hope you are able to take some time off this summer with friends and loved ones to recharge and rest, and we look forward to seeing you in September.

P.S. some of you may remember ICG’s chief economist Nick Brook from our investor day. He’s just released a short video summary of his recent paper reviewing the outlook for H2… you can watch it here