Looking ahead: ICG Enterprise Trust Newsletter – September 2023

Blue jigsaw puzzle pieces
In September's monthly newsletter, Oliver and Colm consider exits in the portfolio and discounts in the PE sector.

I hope you managed to get a break over the Summer and spend some enjoyable time relaxing with loved ones. With Autumn having arrived after a changeable Summer here in Britain, the ICGT team is all back and we are looking forward to the months ahead. 

What will they hold? Despite August typically being quieter, we and our Managers continued to see some investment opportunities, and the green shoots within private markets that we mentioned last month do not appear to have withered. There seems to be a slowly-growing sense of confidence that markets could continue to re-open as the months progress.

One area we have continued to think about over the Summer is the discount within the listed private equity space in the UK. It is materially out of kilter with where we see secondary transactions clear in the private market (~10% for buyout portfolios). We remain confident in the value of our Portfolio, and I’d flag two things (both of which we will discuss in more detail in our H1 results in October). 

Firstly, we have historically seen uplifts in valuations at the point of sale. And while transaction activity has slowed down in recent quarters, it has not completely stopped for us: in our Q1, for example (available here), our total realisation proceeds amounted to 19% of the Opening Portfolio on an annualised basis. And in that quarter we completed 10 Full Exits at a weighted average Uplift to Carrying Value of 20% and a 4.2x Multiple to Cost1.

Secondly, our willingness to buy our own shares as part of our capital allocation policy. We were an early adopter of a long-term share buyback programme (announced in October 2022). At the time we said that “[t]he Board believes the buyback programme demonstrates the Manager’s discipline around capital allocation; underlines the Board’s confidence in the long-term prospects of the Company, its cashflows and NAV; will enhance the NAV per share; and, over time, may positively influence the volatility of the Company’s discount and its trading liquidity.” Since then, we have bought shares on ~60 separate days and have returned a total of ~£10m at a weighted-average discount of  ~41% to last reported NAV per Share. 

In the coming months we have a busy marketing and shareholder relations schedule around the UK. If you are an institutional investor, endowment, charity, wealth manager, fund manager or other professional investor, we would be delighted to speak – please don’t hesitate to reach out at [email protected]2.

1Past performance cannot be relied on as a guide to future performance

2Note we are unable to speak directly to private shareholders; please speak to your financial adviser or, for those shareholders that hold shares through Columbia Threadneedle savings plans, please contact the Columbia Threadneedle Investor Services team. Details available here.