ICG Enterprise Trust Newsletter – August 2024

Looking ahead to the second half of 2024.

August is a good time to reflect on the first half of the year, and to assess some longer-term themes – speaking of which, we came across this article on Interactive Investor in which ICG Enterprise Trust is highlighted as the second best-performing investment trust since 1987 (another election year, and a period that covers a number of economic and political cycles). ICGT has changed since then, as has the investment landscape, but the benefits of the investment trust structure and a nimble approach to investing in private companies has served our shareholders well for many decades.  
 
More near-term, rates clearly remain a focus, and last week the Bank of England decided to lower rates for the first time since March 2020; the US’ decision to hold rates came with strong hints of potential cuts in the autumn. While this may help stimulate further transaction activity within private equity as a whole, we do not view the interest rate cycle as the key driver of long-term value creation within our portfolio companies – instead, we partner with managers who seek to deliver growth by focusing on strategic and operational improvements.

There is evidence that private companies continue to perform well, including from ICG’s Chief Economist Nick Brooks, who has just released ICG’s latest private companies report – a summary is here. Based on data from over 1,500 private companies across Europe and the US, growth in revenue and earnings across 2023 appears to be holding above pre-Covid levels and debt metrics remain sound, and early signs are the trends continue in H1 2024. 
 
A combination of continued growth in profit generation alongside reducing interest rates could bode well for a measured increase in transaction activity in the coming quarters and further value creation within private markets as a whole. We are well positioned to benefit from those opportunities if they arise. In the meantime, we look forward to speaking with many of you later in the year, and we wish our investors in the northern hemisphere a restful summer. 

Oliver & Colm

Past performance is not reliable indicator of future results.
Unsure of some of these terms? See our Glossary