ICG Enterprise bucks private equity slowdown with bumper cash haul

The private equity trust was hit by a weakening dollar but its cash generation is bucking the slowdown in private markets.

ICG Enterprise (ICGT ) isn’t feeling the impact of a slow private equity transaction market, generating more cash in the first six months of the year than it did in the whole of 2024.

The £1.2bn portfolio of both unquoted and private equity funds run by its own manager Intermediate Capital Growth and third parties may have been hit by a weakening dollar, but it has bucked the trend in realisations.

In the six months to end of July, the net asset value (NAV) total return declined 0.7% as sterling strengthened against a falling greenback. This slide was not reflected in the share price, which jumped 12.6% over the period

Chair of ICGT Jane Tufnell said the private equity industry is ‘experiencing a prolonged period of low realisation activity’ but the fund had ‘bucked this trend’.

It boasted total proceeds of £222m in the six months period, greater than the £151m total in the entire previous financial year.

‘This reflects some larger portfolio company exits, such as fire protection systems group Minimax, virtual data room provider Datasite, and European Camping Group, as well as our manager’s active approach to portfolio management in the secondary market,’ she said.

Minimax generated the biggest proceeds of £48.8m, followed by Datasite at £22.5m, and European Camping Group at £18.8m.

Manager Oliver Gardey said the fund was performing strongly from a ‘fundamental perspective’ and delivered earnings growth of 15% over the past 12 months ‘despite a complex and shifting macroeconomic landscape’.

In the first quarter of the year, Gardey noticed that ‘secondaries were offering some compelling opportunities’ – secondaries are when existing stakes in private equity funds or private companies are purchased rather than new commitments being made.

ICGT invested £18m in a secondaries portfolio in the first three months of the period, and invested a total of £42m over the whole reporting period. Secondaries now represent 17% of the portfolio.

‘We are well positioned to continue to invest in the portfolio, maintain the progressive dividend policy, and execute our share buyback programmes,’ said Gardey.

‘While the volume of investments this period is broadly in line with the first half of [the previous year], the number and quality of opportunities we are seeing is growing, and we are optimistic about the current investment environment.’

The board returned £28m to investors over the six months, £12m through dividends and £16m through buyback. Since 2022, the fund has bought back over 8% of the opening share count, one of the highest in its peer group, at an average discount of 37.4%.

Tufnell said it has increased the NAV by 65p or 3.3p.

While the tear in the share price saw the discount to NAV narrow from 35% To 27% over the period, Tufnell said it remains ‘wide in absolute terms’.

‘I believe continued portfolio performance, continuing to realise investments at or above carrying values, prudent balance sheet management, and effective implementation of capital allocation policy will be supportive of future shareholder returns,’ she said.

Jefferies analyst Matthew Hose said ‘cash is king’ at ICGT, and the cash generation is ‘the standout feature of the results’.

‘This positions the fund to make further use of share buybacks, as well as taking advantage of any compelling investment opportunities,’ he said.