ICG Enterprise Trust Plc: Q3 Update for the three months ended 31 October 2022 (2023)

ICG Enterprise Trust plc

2 February 2023

Q3 Update for the three months ended 31 October 2022

NAV per Share Total Return +3.6% in the third quarter; +19.9% LTM

PERFORMANCE OVERVIEW

ENQUIRIES

Investors and analysts:

Oliver Gardey, Head of Private Equity Fund Investments, ICG: +44 (0) 20 3545 2000

Colm Walsh, Managing Director, Private Equity Fund Investments, ICG

Chris Hunt, Shareholder Relations, ICG

Livia Bridgman Baker, Shareholder Relations, ICG

Media:

Clare Glynn, Corporate Communications, ICG: +44 (0) 20 3545 1395

Website:

www.icg-enterprise.co.uk

EVENTS

A presentation for investors and analysts will be held at 10:30 GMT today. A link for the presentation can be found on the Results & Reports page of the Company website. A recording of the presentation will be made available on the Company website after the event.

Company timetable

Ex-dividend date: 16 February 2023

Record date: 17 February 2023

Payment of dividend: 3 March 2023

ABOUT ICG ENTERPRISE TRUST

ICG Enterprise Trust is a leading listed private equity investor focused on creating long-term growth by delivering consistently strong returns through selectively investing in profitable, cash-generative private companies, primarily in Europe and the US, while offering the added benefit to shareholders of daily liquidity.

We invest in companies directly as well as through funds managed by ICG and other leading private equity managers who focus on creating long-term value and building sustainable growth through active management and strategic change.

We have a long track record of delivering strong returns through a flexible mandate and highly selective approach that strikes the right balance between concentration and diversification, risk and reward.

NOTES

Included in this document are Alternative Performance Measures ("APMs"). APMs have been used if considered by the Board and the Manager to be the most relevant basis for shareholders in assessing the overall performance of the Company, and for comparing the performance of the Company to its peers and its previously reported results. The Glossary in the Company's H1 results includes further details of APMs and reconciliations to International Financial Reporting Standards ("IFRS") measures, where appropriate.

In the Business Review and Supplementary Information, all performance figures are stated on a Total Return basis (i.e., including the effect of re-invested dividends). ICG Alternative Investment Limited, a regulated subsidiary of Intermediate Capital Group plc, acts as the Manager of the Company.

DISCLAIMER

This report may contain forward looking statements. These statements have been made by the directors in good faith based on the information available to them up to the time of their approval of this report and should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward-looking information. These written materials are not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration under the US Securities Act of 1933, as amended, or an exemption therefrom. The issuer has not and does not intend to register any securities under the US Securities Act of 1933, as amended, and does not intend to offer any securities to the public in the United States. No money, securities or other consideration from any person inside the United States is being solicited and, if sent in response to the information contained in these written materials, will not be accepted.

BUSINESS REVIEW

Portfolio composition

We take an active approach to portfolio construction, with a flexible mandate that enables us to deploy capital into primary, secondary and direct investment opportunities. Our portfolio composition as at 31 October 2022 is shown below:

We invest in funds managed by ICG and other leading private equity managers who focus on creating long-term value and building sustainable growth through active management and strategic change. Investments managed by ICG account for 30.3% of the Portfolio as at 31 October 2022.

Our primary investments provide a diversified base to our Portfolio, and through our direct and secondary investments we seek to proactively increase our exposure to companies that particularly align to our investment strategy.

Geographically we focus on the developed markets of North America and Europe, including the UK, which have deep and mature private equity markets supported by a robust corporate governance framework. The geographic profile of the Portfolio is shown below:

Portfolio performance

• Portfolio valued at £1,407.9m on 31 October 2022, with 87.2% of the Portfolio having a Valuation Date of 30 September 2022 or later (October 2021: 88.9%)
• The Portfolio Return on a Local Currency Basis of 0.2% during the quarter represents modest declines within our Primary funds of (0.5)%; an increase of 0.3% within Secondaries; and an increase of 1.7% within Direct investments
• Due to the geographic diversification of our Portfolio, the reported value is impacted by changes in foreign exchange rates. During the third quarter, the Portfolio increased by £53.6m (4.0%) due to FX movements, driven primarily by US Dollar strengthening against Sterling. The Portfolio return on a reported currency basis was therefore 4.2% during the period

Realisation activity

• Total Realisation proceeds of £62.6m during the third quarter
• 11 Full Exits completed in the quarter, at a weighted average Uplift to Carrying Value of 33.0% and 1.8x Multiple to Cost

Investment activity

• Total New Investment of £59.9m in the third quarter. New investment by category was as follows:

• Total New Investment in the third quarter included three new direct investments for a combined total of £25.9m, as outlined below:

New Commitments

• We made one new fund Commitment of £17.2m during the third quarter:

Quoted Companies

• We do not actively invest in publicly quoted companies but gain listed investment exposure when IPOs are used as a route to exit an investment. In these cases, exit timing typically lies with the third party manager alongside whom we are invested
• At 31 October 2022, quoted companies representing 8.0% of the Portfolio were valued by reference to the latest market price (31 July 2022; 8.8%)
• Only one quoted investment individually accounted for 0.5% or more of the Portfolio value:

Balance sheet and financing

• Total available liquidity of £174.2m, comprising £22.7m cash and £151.5m undrawn bank facility

• At 31 October 2022 the Portfolio represented 107.2% of net assets and the Company had net debt of £32.7m

• Undrawn commitments of £528.5m, of which 18.8% (£99.1m) were to funds outside of their investment period

Dividend and share buyback

• Progressive dividend policy maintained: third quarter dividend of 7p per share, bringing total dividends for the financial year-to-date to 21p
• In the absence of any unforeseen circumstances, it is the Board's current intention to declare total dividends of at least 30p per share for the financial year ended 31 January 2023. This would represent an increase of 3p (11.1%) per share compared to the financial year ended 31 January 2022
• Long-term share buyback program initiated in October 2022, with 30,000 shares repurchased during the third quarter for a total consideration of £0.3m at an estimated weighted-average discount of 45.9% to last reported NAV per Share
• In aggregate, £2.1m invested in share buybacks since the program was initiated, up to and including 31 January 2023, with a total of 191,480 shares having been repurchased at an estimated weighted-average discount of 40.0% to the last reported NAV per Share

Changes to management fees and costs

• The ICG Enterprise Trust Board and the Manager have agreed a revised management fee rate, effective from 1 February 2023
• While the management fee arrangement will remain unchanged, a tiered cap as a proportion of NAV has been introduced at the following thresholds:

• The Board believes that this arrangement fairly compensates the Manager, and ensures that ICG Enterprise Trust shareholders benefit from the economies of scale generated from growth in the Company's NAV
• The management fees for the twelve months to Q3 FY23 were 1.34% of NAV. As an illustration, had the revised agreement been in place during this period, management fees would have been capped at 1.25%. This would have reduced the management fee by approximately 6% (approximately £1.1m)
• The Manager has also agreed to absorb a number of ongoing costs previously paid for by ICG Enterprise Trust, in particular a material share of Sales and Marketing costs. The Board estimates that these are equivalent to approximately 25-30% of the General Expenses (which exclude management fees and finance costs) that would have been paid by ICG Enterprise Trust prior to this agreement being reached

Notable activity since the period end¹

• One new Primary Commitment of £12.5m
• New investments of £44.5m
• Total Proceeds of £46.3m

Top 30 companies
The table below presents the 30 companies in which ICG Enterprise Trust had the largest investments by value at 31 October 2022.

Portfolio at 31 October 2022
All data is presented on a look-through basis to the investment portfolio held by the Company, consistent with the commentary in previous annual and interim reports

¹ Unless otherwise stated, values in this section refer to the period up to 31 December 2022