The key message from ICG Enterprise Trust Plc (LON:ICGT) FY’25 results (to January) is the continued strength of the operating companies, which delivered, on average, 15% LTM EBITDA growth. Margins have widened by ca.4% (average revenue growth 11%), which should help allay some concerns over the impact of the challenging environment. New investment is accelerating, and realisation activity continued with an average 19% uplift to carrying values on exit. A degree of short-term volatility is to be expected, and the five- and 10-year total annualised NAV per share return (14.5% and 13.8%, respectively) are a good reflection of what investors are getting from ICGT’s defensive growth strategy. ICGT has a balanced capital return policy.
- FY’25 numbers: ICG Enterprise Trust’s constant-currency portfolio return was 10.2%, and the NAV per share total return 10.5%. A narrowing discount saw a share price return of 12.5%. Investee company saw EBITDA growth of 15.3% and their leverage fell. New investments totalled £181m and realisation proceeds were £151m.
- Long term: On a five-year view, ICGT’s constant-currency CAGR portfolio return was 15.8%, and NAV p/sh total return 14.5%. The return consistency generates compounding benefits. The shareholder return is 9.6% (wider discount) and ICGT is one of ca.10% ITs that are “ISA-millionaire” investments.
- Valuation: ICGT’s NAV valuations are conservative, demonstrated by continued realisations above reported book values. The ratings are undemanding. The 39% discount to NAV is anomalous, we believe, with defensive, market-beating returns, and twice the levels seen pre-COVID-19. The 2026E yield is 3.1%.
- Risks: 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 39% discount to NAV appears anomalous with ICGT’s performance.
