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ICG boosts AUM, looks to deploy dry powder

Intermediate Capital Group is preparing to deploy €5.2bn of capital into a competitive market.

Intermediate Capital Group (ICG) has increased its assets under management by 14 percent over the past six months following significant fundraising activity.

In its half-year results statement, the company revealed it has €5.2 billion of available dry powder to deploy having raised its third vintage fund with €4.2 billion of new commitments meaning it reached a final close on €5.2 billion. This brings its total new money raised this year to €5.7 billion and assets under management as of 31 September 2017 to €27.2 billion, up 14 percent from €21.8 billion at 31 March 2017.

ICG’s fund management company saw its profits jump 30 percent compared with the six months to end of September 2016, reaching £44.3 million, largely due to third-party fee income rising 24 percent. However, this was offset by a significant fall in investment company profits, which dropped from £92.2 million to £51.2 million over the same period. This brought group profit before tax down 24 percent to £95.5 million.

The board has recommended an interim dividend of 9.0p, a 20 percent increase on the prior year.

Benoit Durteste, CEO of ICG, said: “ICG’s diversified investor base underpins our ability to scale proven, successful strategies, such as Senior Debt Partners. This fundraising success, now our largest single strategy, makes us one of the few asset managers with the scale, reputation, origination network and track record to take full advantage of the attractive European direct lending market.”

“We have seen investors become more selective and sophisticated, with a flight to quality managers and far greater emphasis on performance and experience in deploying capital.” – Max Mitchell, head of senior direct lending Europe at ICG

The firm said that despite the highly competitive investment market for debt providers, its focus on local teams and sector specialists will help it continue to source deal flow and early access to new opportunities.

ICG added it expects full-year 2018 to be a record fundraising year and its fundraising pipeline means full-year 2019 will meet or exceed its long-term fundraising target.

The firm is now looking to deploy its Senior Debt Partners fund predominantly in directly originated senior secured loans to European mid-market corporates, focusing on a diversified portfolio of loans in the UK and Europe.

The third fund was oversubscribed and received support from new and existing investors, especially European and UK pension funds. Due to increased levels of commitment, ICG said it will be able to access larger deals not currently served by other market players.

Max Mitchell, head of senior direct lending Europe at ICG, said: “We have seen investors become more selective and sophisticated, with a flight to quality managers and far greater emphasis on performance and experience in deploying capital.”

“An important part of our approach is in ensuring we size the fund to meet the investment opportunities available. This same rigour has supported our ability to deploy the previous funds despite some challenging market dynamics.”