Good morning. Welcome to ICG Enterprise Trust's Q1 trading update for the three months to the 30th of April 2025. I'm joined today by Colm Walsh, who will discuss our investment performance and activity in more detail over the course of this presentation. The slides for the presentation, along with the accompanying results announcement, are available on our website. We will have time for Q&A at the end of this presentation, so if you'd like to submit a question, please do so through the online portal at any point in the Q&A box on your screens. We will then aim to answer those at the end of the session. With that, Colm, over to you.
Thank you very much, Martin, and good morning to everybody. Thank you for joining us. To begin and just some commentary before we dive into the numbers, I think there's a whole heap of factors at the moment that make this particular investment landscape especially interesting, especially as we look ahead to the next 12 months. Firstly, fundraising remains tough, particularly for new managers launching first-time funds. We partner with highly experienced top-tier managers who benefit not just from our primary commitments, but also they benefit from our strategic partnership in terms of providing capital for co-investment. The relevance I think here is that, put simply, it remains very much a buyer's market, a market that's favorable to investors like ourselves with permanent evergreen capital. Secondly, whilst there's still a wide range of potential outcomes with regard to transaction activity, the fundamentals remain strong. Credit remains available.
Liquidity is a key focus for our managers. As a result, exit activity is progressing relatively well. That, combined with our nimble investment program and our shareholder-focused capital allocation policy, we think that positions us well for the current environment. Finally, the geopolitical landscape is never boring at the moment. It means that many investors I speak to are looking for that balanced exposure to the two large global buyout markets in North America and Europe. Our portfolio is around 50/50 across both geographies, which means we're tapping into the two largest and best-established markets for private equity. Just moving on to the next slide, this will be a slide that I think is very familiar to any of those of you who follow us regularly. I won't labor on it for too long, but I think it's just worth summarizing our key areas of focus.
First of all, we only invest in buyouts. That's to say mature companies, companies with a more consistent return profile. We don't invest in venture capital or growth equity. Venture capital, I think the average loss rate is around 50%. The top-tier buyouts are much, much lower. For many of our managers, less than 10%. We think that indicates a very different risk profile. We only invest, as I mentioned earlier, in the core developed markets of North America and Europe. It's roughly, depending on how you measure it, 85%-90% of the global buyout market is centered on these two geographies. They have a much more mature PE market, deep knowledge, expertise, and it's where you get the real concentration of the best quality managers, and we believe deals as well. We invest in mid-market and larger deals.
Funds over $1 billion, EUR 1 billion, typically have that. Typically, it indicates that they're experienced investors. They have the team and the resources to deliver the private equity model. We look for funds that have those operational capacity to originate good investments and then transform those investments into global market leaders. We have plenty of good examples of those in the portfolio. We focus on top-tier managers. It might seem very obvious, but the dispersion between top quartile and bottom quartile fund managers in private equity, the difference is much greater than in other asset classes. Picking the right managers is especially important in this asset class. Finally, but very importantly, we look for resilient companies. Companies and sectors which show resilience in bad times, grow strongly in good times.
Typically that's because the growth trajectory of these companies is propelled by underlying secular growth factors. That means they can grow even when GDP is much more volatile. Moving on to the next slide, just to review our Q1 performance. For the three months to the 30th of April 2025, our portfolio grew on a local currency basis by 0.6%. Unfortunately, that was offset by FX headwinds in the quarter. The portfolio return on a sterling basis was a fall of 2.4%. That gave rise to a NAV per share total return over the period of - 2.6%. Over the last 12 months, our share price total return, that's to close of business last Friday, was 12.4%. That's based on a closing share price of GBP GBP 13.72. We continue to focus on shareholder distributions.
We do this, as many of you will be aware, through both dividends and buybacks. The board announced yesterday a Q1 FY2026 dividend of GBP 0.09 per share with the intention to pay total dividends of at least GBP 0.38. We also returned around GBP 38 million in buybacks in the last 12 months. Our buyback policy has been one of the most shareholder-friendly of our peer group as a percentage of the opening share account. Change of activity, we continue to demonstrate a disciplined approach to investment activity over the quarter. We had GBP 76 million worth of new fund commitments across five of our long-standing manager partnerships. One of these was Integrum, which I will expand on in a moment. New investments totaled GBP 48 million in the quarter. In terms of exit activity, we received total proceeds of GBP 149 million during the quarter.
That included GBP 62 million worth of net cash proceeds from a secondary sale executed in April and GBP 48 million of cash proceeds from the realization of Minimax, our largest portfolio company holding at the 31st of January 2025. Now, we continue to realize exits at an uplift to carrying value. In the last 12 months, we have executed 45 full exits at a weighted average uplift to carrying value of 15%. The average return on those investments was three times cost. Moving on to the next slide, I did mention that we would spend some time just looking at one of those fund commitments. I wanted to highlight our recent $15 million commitment to Integrum too. Now, like all good rules, we often say we do not invest in first-time funds. We made an exception.
It was a good exception for Integrum because despite being a first-time fund, it had an especially experienced senior management team. The firm is led by a gentleman called Tagar Olson, who spent 25 years of his career at KKR, ending there as a senior partner and leaving just to form to do private equity the way he wanted to do it. We've had success with the first fund, the 2022 Vintage, already a top quartile performer. What's the secret sauce here? Integrum focuses on high-quality, resilient businesses in less cyclical sectors, very much that focus that we outlined within financial services. These are areas like insurance brokerage, wealth management, payments, professional services.
We love these businesses because they've got very strong, consistent business models, very high net revenue retention, and organic growth, which is fueled, as I mentioned earlier, like it's supported by very strong secular growth tailwinds. That is a really good alignment with our strategy. As I said, fund one's performing well. Integrum is also a manager that offers co-investment opportunities. A very good example of the kind of manager we're seeking to partner with. Also critically, I think we're trying to ensure that we're also identifying new managers as they come through to sort of add to the overall caliber of our portfolio. Moving now on to just, I wanted to spend a little bit of time just discussing our balance sheet.
Just to highlight that at the 30th of April 2025, the end of this quarter, we had total available liquidity of just over GBP 200 million. Net debt was GBP 45 million, and that gives rise to a gearing ratio of 3%. Our overall commitment ratio is 26%. I think that those core metrics indicate that we manage our balance sheet prudently. That is important because it positions us well to navigate the current environment, gives us more flexibility, and allows us to take advantage of compelling opportunities we see, particularly in the secondaries market and also for directs or co-investments. Mentioned earlier some of the liquidity events in the quarter. We announced two large liquidity events in April, a secondary sale of some of our existing portfolio, and the realization of Minimax, which was the largest portfolio company at the 31st of January 2025.
Firstly, on the secondary sale, we have an approach of active portfolio management. As a result, we tapped into the secondaries market, taking advantage of our secondaries platform, which gives us really strong market intelligence and awareness of pricing, and also the ability to execute these often quite complex transactions. We executed a sale of eight mature primary fund investments. It was a very highly competitive process, from leading secondary investors, and that ensured, obviously, best execution. As we announced in April, these funds have delivered very strong historical performance. We believed, when we analyzed the future prospects, that they had limited future potential relative to other uses of capital, and that we could therefore redeploy the cash into other opportunities that we believe will generate additional long-term value for our shareholders. We think these sales are accretive.
We executed the transaction at a 5.5% discount blended across the funds. That is significantly lower, as you will all be aware, than the share price discount of ICG Enterprise Trust. We also think that this is another source of validation for our NAV. As I mentioned earlier, this transaction generated GBP 62 million worth of net cash proceeds. Secondly, last but not least, we also received GBP 48 million of cash proceeds from the realization of Minimax. We first invested in Minimax, a company that supplies fire protection systems, components, and related services, in 2018. It was our largest portfolio company at the 31st of January, so it is about 3.1% of the portfolio.
I think when we look at these two different transactions, one generated by our own active portfolio management and one sort of organically from the portfolio, if you like, we believe that these transactions underscore the benefits of our approach, and they validate the quality of the businesses we invest in and the broader portfolio. Turning now to shareholder distributions, we have executed GBP 60 million worth of share buybacks since we launched our program in October 2022. As a percentage of the opening share account, that makes us one of the most active and therefore shareholder-friendly amongst our peers in listed private equity. It has added 3% in NAV per share total return, and it has been done across two programs, a long-term program and what we label an opportunistic program. Secondly, we have a progressive dividend policy, which has been in place since 2017.
For Q1 FY26, as I mentioned earlier, the board is proposing a dividend of GBP 0.09 per share, and it's indicated its intention to pay total dividends of at least GBP 0.38 per share for FY 2026. That's going to be a 6% increase on the previous financial year's, so FY 2025's total dividends of GBP 0.36 per share. Moving on now to our long-term track record. What, as all of this, the portfolio management, shareholder distributions, what does it mean in terms of performance? Over the last five years, we have delivered 15% NAV per share total return, and that translates to 13% share price total return on an annualized basis.
We have a long track record of delivering for shareholders, and all of this combined with a clear investment strategy, progressive dividend policy, that long-term share buyback program, and our opportunistic share buyback program, it's all designed to deliver long-term strong performance for our shareholders. With that, I'm going to pass back to Martin for the Q&A.
Great. Thanks, Colm. We now have about 10 minutes or so for Q&A. As a reminder, please feel free to submit questions via the Q&A box on the webinar platform. A few have come in already, so taking them in turn, if I combine two, there's one question on what are we hearing from the U.S., and then there's a second question on what are we hearing from Europe. If I broaden that and combine it, Colm, broadly, what are we hearing from our managers generally?
What's the sentiment like with the current environment? We heard from Gridiron Capital last week at our Investor Day. Maybe if you could summarize a little bit their key takeaways. You spent a couple of weeks in the U.S. You also went to Super Return. What is the general sentiment across the manager landscape at the minute?
You know what they say, 20 different managers, 40 different opinions. I would say there are some common themes and perhaps more consistency than you might appreciate between the two geographies. I don't know, I think it was well represented actually by, and I would encourage shareholders to listen to our, we'll shortly be publishing our shareholder seminar recording if you weren't able to attend. We had a partner from one of our U.S. firms who spoke live at the event.
I think they remain, even in the U.S., quietly confident because if you back high-quality companies, what we found is the kinds of companies that we like, just as they were resilient through COVID, something we did not envisage happening. Similarly, I would be lying if I said we had a master plan in place for tariffs. The kinds of businesses which are asset-light, recurring revenues, focused on areas like tech-enabled business services, technology, actually have proved to be very resilient to tariffs because they have relatively inelastic demand, because their growth is fueled by these secular tailwinds, as we call them. They remain well insulated. We have also seen these managers are always telling us as well that many transaction processes, they are still assuming will be going ahead because these companies continue to trade well. We have very much seen that high-quality companies can still transact in this market.
I think the European perspective is similar, perhaps a bit more nervous of what's playing out domestically in the U.S. I think to some degree, there's a little difference in how Americans are more used to their own political system. I think in Europe, perhaps people find the volatility somewhat potentially more concerning. In Europe, it's the same thing. We have businesses that aren't hugely impacted by it and managers that know that they have quality businesses, there's still very much a market for those kind of assets. We've actually seen quite a bit recently. Quite a lot of our recent realizations have been to strategics who I think many of our managers are very good at building up companies that have strategic value.
A recent realization has been in the public domain from one of our U.S. managers where a company was sold at a significant multiple uplift to its original value for a period of six years and was sold to a big U.S. strategic. That's really emblematic of a lot of what we're seeing at the moment. Yeah, but lots of different perspectives.
Super. Thanks, Colm. There's just a factual question that's come in, which was what are the valuation dates used for this April portfolio? To direct to the line in the R&S, 86% of the portfolio is valued using 31 March 2025 valuations for later, so 86%.
Those of you, you may be wondering sometimes why we have our balance sheet dates being January, April, July, and so on. That's to allow us to have that high coverage.
It means that we can capture the most current valuations of each of our quarter ends.
Yeah. There is another factual question as well, which is, what is the outstanding commitments or unfunded commitments at April, and how do they compare with January? In the R&S we released in April yesterday, the total undrawn commitments is GBP 538 million. It has come down slightly versus January, which is GBP 553 million, which, as Colm says, means the overcommitment ratio in January was 31%, and now in April is 26%. That has come down in the three months as well. A question maybe on the robust balance sheet, Colm. Gearing in January was 10%, and now it has dropped to 3% at April. You mentioned it positions us well for the current environment, and it allows us to take advantage of current opportunities. Is it more one or the other? Is it both?
What are those current opportunities? You mentioned secondary as direct co-investments that we're seeing.
I think put simply, not having high levels of leverage just gives you more room for maneuver. I think we've tried to be, I think, compared to our peers. We have significantly lower gearing than many of our peers. Obviously, they have their own approaches, but from my perspective as a portfolio manager, I like going into this cycle to be able to have the flexibility. We think that balance sheet management is an important part of managing the portfolio well on a risk-adjusted basis. Yes, I think for me, Martin, the key thing is just having that additional capacity to be able to potentially take advantage of, and we mentioned in the R&S, which came out yesterday, we're seeing particularly interesting opportunities in the secondary market.
Just to give the context behind that, we've had a long period of slow realizations over the last two or three years, and that's meant that many large investors are tapping that market for liquidity. It's just creating a dynamic where we think there's potentially, we took advantage of what we thought was a very good seller's market earlier in the year with our secondary sale, which we discussed. We think that that pendulum might be swinging back to being more of a buyer's market. It's good to have capacity to be able to participate in that.
Super. Thanks, Colm. Question on FX and FX hedging. Obviously, this quarter, dollar has impacted our returns. What's the view on FX hedging? Obviously, it is just one single short-term quarter, but how does the manager and the board think about FX hedging?
I was certain I would get this question, and I've not been disappointed. Listen, this is one of those things we get asked quite a bit. Obviously, when people see the potential for currency to convert a positive number on a local currency basis into a negative number in sterling, it can be concerning. I would say, to your point, Martin, it is, of course, over a short time period. We've had an especially pronounced movement in the dollar against sterling, which has just generated that movement. The thing about FX hedging is it's for private equity, for a diversified private equity portfolio. It sounds great in theory, but it's very difficult to do in practice. You will see that none of our peers, as far as I'm aware, hedge FX either.
Now, I don't fall by the, well, no one else is doing it, so we must all be correct. The reason for that is we don't know the precise timing of our cash flows. We don't know how, so that makes it very difficult to hedge outstanding currency exposure. Also, it's very difficult to construct an effective hedge. If you take some of our larger companies, like say Froneri, Froneri is a British company headquartered in Yorkshire. The reality is that its operations are global, and therefore its own currency exposure is especially complex. If you think about companies like Froneri being across our portfolio, that precise currency delta that you need to be able to construct an effective hedge is, in practice, almost impossible to calculate.
We think that any attempt to hedge foreign currency would end up being costly because we probably have to buy options, which are expensive during periods of high volatility. Of course, they would introduce some volatility into our earnings as well because, again, the value of the derivatives may not necessarily move in sync with what we're trying to hedge. I would say, in summary, we've examined it extensively. It's something we discussed with our board. We've concluded consistently that it would not be a good idea to hedge, and actually that the best protection for investors is to have this diversified portfolio balanced across the U.S. and Europe and strong companies. We think over time that value creation will dominate any short-term currency impact.
Super. Thanks, Colm. The final question I see is on Minimax.
As most people are noting, it's been in our portfolio since 2018. Do we want to just explain how it's done for us over the seven years? People have noticed it's no longer our top portfolio company holding, but just any more color on how well that investment has done for us.
Yeah. Minimax, whenever I'm sorry to see it, it's still going to, we will still have some exposure, but I'm sorry in a way that it's going out of our top five because it's a really good example of defensive growth or our focus on resilient companies. What it does is it's fundamentally a service that is mandated by regulation. It's not tied to the levels of activity in its customer base.
In really simple terms, if Minimax supplies an airport with a fire protection system during COVID when commercial aviation was down 95% or whatever it was, from Minimax's perspective, the airport still had to have a fire protection system. It still had to have it certified and serviced, and therefore it is an incredibly inelastic demand profile. It is also a market leader. The business itself is diversified. It has it across the U.S., Europe, and actually globally. It has elements. It gets growth from new builds, but also recurring revenue from that sort of embedded plant needing to be serviced and certified. Over our investment, it really did perform to plan. If you think about over that cycle, we had COVID. There was a decline in construction for a period. It was able to weather through all of those storms.
Ultimately, it made a return of around 2.8x cost on a gross basis. Really good investment, a sort of seven-year hold period, but ultimately, still a very, very good IRR over that time period. Very, very happy. Incidentally, a deal that we had access to because of being on the ICG platform, and obviously, especially good intelligence on that company, it was one where we had very strong alignment with our manager, for whom it was also a very significant investment. Yeah, always bittersweet to see these great companies get realized to some degree. Again, we think it really does demonstrate the strength of our portfolio and approach.
Great. Thanks, Colm. I see no further questions online. If there are any follow-up questions after this webinar, please feel free to contact the email address you see on screens.
As a reminder, a recording of this event will be available on our website in the coming days. With that, Colm, thank you very much, and thank you all for joining today.
Thank you, everyone. Have a great.