# ICG Enterprise Trust: Unique approach to capital allocation

- Link: https://www.directorstalkinterviews.com/icg-enterprise-trust-unique-approach-to-capital-allocation/4121185123
- Published: 2025-01-29T08:27:31+00:00
- Author: Amilia Stone

In this note we examine how shareholders benefit from **ICG Enterprise Trust PLC**(
LON:ICGT) unique approach to capital allocation (first discussed on page 11 of our
16 May 2024 note ‘FY’24: portfolio companies performing strongly’). We have in previous
notes highlighted how ICGT’s defensive growth strategy in practice differentiates
itself from peers (see Appendix 1) and the capital allocation policy is also a differentiator.
ICGT’s approach rewards investors with immediate income through a progressive dividend,
long-term compounding capital growth through new PE investments, ongoing NAV accretion
through a long-term buyback programme and further NAV accretion with an opportunistic
buyback programme when the discount is high.

 * **Shareholder returns:** The FY’25 intention of a minimum 35p dividend has been
   reiterated (current yield 2.7%, five-year annual growth 9%+). 3Q new investment
   was £35m (further £23m to end December). Buybacks of £50m (average discount 37.6%)
   have been executed since Oct’22 (+47p to the NAV).
 * **3Q results:** NAV per share was 1,997p (31 July 2024: 1,946p) with a NAV per
   share total return of 3.0% in 3Q (five-year annual 13.8%). The 12 full exits 
   were at an average uplift to carrying value of 18%, yet again showing the conservatism
   in the accounting. The 3Q dividend was 8.5p.
 * **Valuation:** ICG Enterprise Trust’s NAV valuations are conservative, demonstrated
   by continued realisations above reported book values. The ratings are undemanding.
   The 34% discount to NAV is anomalous, we believe, with defensive, market-beating
   returns, and twice the levels seen pre-COVID-19. The 2025E yield is 2.6%.
 * **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 34% discount to NAV appears anomalous with ICGT’s performance.

[250128-Hardman-ICG-Enterprise-Trust-plc-ICGT-Unique-approach-to-capital-allocation](https://www.directorstalkinterviews.com/wp-content/uploads/2025/01/250128-Hardman-ICG-Enterprise-Trust-plc-ICGT-Unique-approach-to-capital-allocation.pdf)
[Download](https://www.directorstalkinterviews.com/wp-content/uploads/2025/01/250128-Hardman-ICG-Enterprise-Trust-plc-ICGT-Unique-approach-to-capital-allocation.pdf)

Share on: