# ICG Enterprise Trust: FY results proving the market-beating model again

- Link: https://www.directorstalkinterviews.com/icg-enterprise-trust-fy-results-proving-the-market-beating-model-again-2/4121121123
- Published: 2023-06-06T13:52:12+01:00
- Author: Amilia Stone

**ICG Enterprise Trust plc** (LON:ICGT) reported another strong year to end-January
2023. The NAV per share was 1,903p, up from 1,690p in January 2022. The NAV total
return was 14.5%, driven by the local-currency portfolio return of 10.5%, its 14th
consecutive year of double-digit growth. Realisations and new investments were in
line with historical averages. On exit, ICGT saw an average 24% uplift, despite 
the challenging market conditions. It has a progressive dividend policy (up 11%),
is doing share buybacks (£5.2m), and has a new, reduced management fee. ICGT’s investee
companies offer good risk-adjusted returns and defensive characteristics, giving
investors both growth and resilience.

 * **Defensive growth, long-term-value:** ICG Enterprise Trust’s strategic approach
   has given investors market-beating returns and just three down quarters out of
   28 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 EBITDA growth.
 * **Management fee and cost reduction:** ICGT has negotiated a tiered cap to management
   fee, effective from 1 February 2023. If this had been effective over the last
   year, it would have saved over £1m. In addition, the manager is now absorbing
   various costs, saving 25%-30% (we estimate £0.5m p.a.) of ICGT’s other expenses.
 * **Valuation:** ICGT’s NAV valuations are conservative, demonstrated by continued
   realisations above reported book values. The ratings are undemanding. The 40%
   discount to NAV is anomalous, we believe, with defensive, market-beating returns,
   and is above the levels seen pre-COVID-19. The 2024E yield is 2.9%.
 * **Risks:** Private equity (PE) is an above-average cost model, but post-expense
   returns have consistently beaten public 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 leveraging synergies from being part of ICG since 2016. 
   Valuations appear conservative, and governance is strong. ICGT focuses on delivering
   resilient, risk-adjusted returns, and balancing risk and reward. The risks are
   primarily sentiment-driven on costs, cyclicality and the underlying assets’ liquidity.
   A 40% discount to NAV appears anomalous with ICGT’s performance.

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