ICG Enterprise Trust plc (LON:ICGT) is the topic of conversation when Hardman & Co’s Analyst Mark Thomas caught up with DirectorsTalk for an exclusive interview.
Q1: Now, we are talking about ICG Enterprise Trust today, but before we do, your latest report on the company, it sits behind a disclaimer. Why is that?
A1: It’s a very standard disclaimer that many investment companies have. In essence, for regulatory reasons, there are some countries, like the US, where the report should not be read. In the UK, because private equity is not seen as being a simple asset class, it should be looked at by professional, qualified investors. It’s a very standard disclaimer. Page two gives all the details and nothing to be worried about.
Q2: So, your report ‘Shareholder Seminar 2026, Resilience and Growth’, could you just give us a summary of that?
A2: The key messages from ICGT’s 2026 Shareholder Seminar were firstly, a very robust 2025 portfolio performance with double-digit EBITDA growth and strong realisation activity. Secondly, the trust is proactively managed, inter alia, in the origination network of GPs, co-investments, secondary sales, buybacks and dividends. Third, it is a strong balance sheet with low debt and significant available liquidity. Fourth, it is well positioned for future growth with good diversification.
The presentation also covered the benefit of having ICG as the manager. Now, ICGT gives investors a unique portfolio of private companies which have delivered superior long-term compounding growth compared with public markets.
Q3: Following the presentation, what do you think is ICGT’s core objective?
A3: ICG Enterprise Trust aims for private equity levels of returns, but with less risk and providing investors with much better liquidity. So, a very good risk-reward balance there. Risk is reduced by its niche focus. It focuses on buyouts over venture, developed markets over emerging ones, mid and large companies over smaller ones, with alpha being generated from its top-tier GP partners and company selection.
The way it goes about this objective gives investors access to a private company portfolio that simply cannot be replicated in public markets. Its approach has given investors market-beating, consistent, compounding growth in EBITDA in the underlying companies.
To us, that is the key drive to long-term value creation and sell-out performance.
Q4: What did they say about capital allocation with new investments, dividends, and buybacks?
A4: Capital allocation is a hot topic in investment companies at the minute. In previous notes, we’ve highlighted ICGT’s unique approach to returning cash to shareholders. The balance between new investment to generate long-term, further compounding, superior growth, immediate returns to shareholders through dividends and two buyback programmes, one of which is ongoing at any discount level, and the other is more opportunistic.
Now that balance between new investment, dividends and two buyback programmes is unique. To give it a bit more flavour, it is a progressive dividend policy, with growth having been seen in each of the past 13 years and 10% CAGR growth over the past five years. The buybacks mean that ICGT has the highest percentage of shares amongst the peers being bought back over three years.
Q5: What do they say about the benefits of having ICG as a manager?
A5: ICG funds have delivered, firstly, better than average returns. Secondly, they offer good and better than average co-investment opportunities. Thirdly, ICG is typically investing with the current owners of the business who want to grow their business, rather than with owners that are wanting to sell out. So, there’s more commitment from existing management.
ICG’s heritage builds in downside protection. We’ve written in several reports on why having ICG as a manager brings origination, portfolio management, and risk control benefits, most notably, in our note, Intermediate Capital Group. The close relationship brings access to ICG-managed funds and related co-investments, which now account for nearly a third of the ICGT portfolio. This is split 5% in primary funds, 9% in secondaries, and 16% in co-investments.
Now, in the recent seminar, ICGT did a deep dive into one of those commitments, ICGT European mid-market strategy, just to illustrate all of the factors that we had outlined in previous notes.
Q6: Now, your note details the proactive management of the trust. What can you tell us about that?
A6: Our note gives multiple examples demonstrating how the trust is actively managed to optimise shareholders’ return. Despite often making long-term commitments, its churn rate of managers is over 10% a year, with a very structured approach when not to reinvest with existing managers and also in the selection of new managers. That’s the origination network I mentioned earlier.
In 2025, ICGT made five co-investments alongside its existing GPs, but it declined 25, so a selection rate of just 17% and we understand that’s a typical turnaround rate over several years. Now, when ICG has been the general partner, the selection rates are much higher, and with other GPs, it’s lower. The key thing is ICGT does not take every deal offered, even from its most trusted partners.
Now, ICGT has also been active in managing its portfolio in the secondary market. It does both secondary sales as well as purchases, with four out of the past five years having seen some exits in this way. It is continually assessing whether it is best to hold or sell, bearing in mind all the uses of the capital in order to optimise go-forward returns.
Q7: Can you tell me about the risks here?
A7: All investments carry risks. Most of the private equity sector is trading at a discount, as investors have been worried about the realism of the NAV, the prospects of private equity in a rising rate environment, in a recessionary environment. We’ve addressed those concerns directly in previous notes, believing that the NAV is realistic and resilient, and explaining how the model adds value through all economic conditions.
Private equity is an above-average cost model, but post-expense returns have consistently beaten public markets, and ICG Enterprise Trust’s permanent capital structure is the right one for unquoted and illiquid assets.
