# ICG Enterprise Trust FY’22: you couldn’t ask for more

- Link: https://www.directorstalkinterviews.com/icg-enterprise-trust-fy%e2%80%9922-you-couldn%e2%80%99t-ask-for-more/4121067808
- Published: 2022-06-08T07:42:45+01:00
- Author: Amilia Stone

**ICG Enterprise Trust plc **(LON:ICGT) reported another strong year, with an NAV
per share total return of 24.4%, its 13th consecutive year of double-digit NAV growth.
It materially outperformed the UK public market index, with a five-year CAGR of 
16.4% (post all fees), three times the FTSE All-Share index total return. The portfolio
generated a 29.4% return on a local currency basis to January 2022. Total proceeds
and new investments were a record £342.9m and £303.7m, respectively, generating 
net proceeds of £39.2m. ICGT’s 36% uplift on exits is in line with historical averages.
Investment is focused on businesses with good risk-adjusted returns and defensive
growth characteristics.

 * **Defensive growth, long-term-value:** ICG Enterprise Trust’s strategic approach
   has given investors market-beating returns and just two down quarters out of 
   24 since the manager was appointed. In both good and bad years, the model has
   consistently proved that it can deliver resilient returns, driven by underlying
   company growth.
 * **Underlying company metrics:** The 30 largest companies’ annual revenue growth
   was 27.1%, and LTM EBITDA growth was 29.6%. The average EV/EBITDA of these companies
   was 14.6x (31 January 2021: 14.0x), with PEG halving. The net debt/EBITDA of 
   these companies was 4.3x (31 January 2021: 4.3x).
 * **Valuation:** ICGT’s NAV valuations are conservative (realisation uplifts average
   35%+ long term). The ratings are undemanding, and the ongoing carry value against
   cost is modest. The 36% discount to NAV is anomalous, we believe, with defensive
   market-beating returns, and is above the levels seen pre-COVID-19. The yield 
   is 2.1%.
 * **Risks:** Private equity (PE) is an above-average cost model, but post-expense
   returns have consistently beaten listed markets. Actual experience has been of
   continued NAV outperformance in economic downturns, but sentiment may be adverse.
   ICGT’s permanent capital structure is right for unquoted/illiquid assets
 * **Investment summary:** ICG Enterprise Trust has consistently generated superior
   returns, by adding value in an attractive market, having a strategic focus on
   defensive growth and exploiting synergies from being part of ICG since 2016. 
   Valuations and governance appear conservative. ICGT focuses on delivering resilient
   risk-adjusted returns, and balancing risk and reward. The risks are primarily
   sentiment-driven on costs and cyclicality, and on the underlying assets’ liquidity.
   As noted, it seems anomalous to have a consistent record of outperformance and
   to trade at a 36% discount to NAV.

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