News & Analysis

ICG Enterprise Trust increases ‘high-conviction’ investments

The listed fund manager made secondaries investments in Oak Hill Capital Partners and backed a restructuring, according to its preliminary annual results.

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ICG Enterprise Trust, a London-listed investment manager, has increased the types of investments it makes based on underlying companies, including through secondaries deals.

In the year to 31 January it invested £59.6 million ($83.2 million; €68.1 million) in its “high conviction” portfolio compared with £47.9 million the year before, according to its preliminary annual results released on Monday.

This portfolio consists of investments made by parent Intermediate Capital Group, third-party secondaries investments and third-party co-investments, which it believes will outperform through the cycle.

“The common theme in our high-conviction portfolio is that ICG has made the decision to invest in the underlying company, unlike in a conventional fund of funds model where the third-party managers make all of the underlying investment decisions,” the firm noted.

The high-conviction portfolio accounts for 42 percent of ICG Enterprise Trust’s portfolio and has generated constant currency returns of 18.6 percent per year over the past five years, the results noted.

Secondaries investments account for 12 percent of the Trust’s total portfolio.

Last year ICG Enterprise Trust made a £5 million secondaries investment in two funds managed by mid-market manager Oak Hill Capital Partners, the results noted. It also invested €12 million in the restructuring of ICG’s 2010-vintage European mezzanine fund in June. Landmark Partners was the main buyer, Secondaries Investor revealed.

During the year to 31 January the Trust committed the equivalent of £7.6 million to Hollyport Secondary Opportunities VI, a tail-end-focused secondaries fund, which raised $500 million in October.

It also raised its commitment to the 2016-vintage, $1 billion ICG Strategic Secondaries II by £8 million, bringing its total investment to £24 million. “To date, the fund has completed six transactions at highly attractive valuations of 6x to 7x EBITDA,” the results noted.

ICG acquired the contract to manage ICG Enterprise Trust in 2015. Before that the vehicle was known as Graphite Enterprise Trust and owned by Graphite Capital.