ICG buys remaining ICG-Longbow stake

The London-headquartered credit manager will make an initial payment of £13m to the eight partners at its real estate arm.

Asset manager Intermediate Capital Group has exercised its option to purchase the remaining 49 percent of its real estate arm, Longbow Real Estate Capital (ICG-Longbow). Completion of the deal is expected in October, the firms said in a joint statement.

An initial payment totalling approximately £13 million (€16.3 million; $21.1 million) will be made to the eight partners at ICG-Longbow upon completion. A further deferred consideration payable to the partners in 2016 and linked to the performance of the business is estimated to be around £24 million (€30.1 million; $38.9 million), and could see the partners make £37 million (€46.4 million; $60 million) from the sale.

ICG has put in place an incentive plan for ICG-Longbow’s management and portfolio team, as part of the agreement. The second payment is linked to the performance of the business, Martin Wheeler, joint managing partner of ICG-Lowgbow, told Private Debt Investor.

ICG first acquired its 51 percent stake in UK commercial property debt provider Longbow in March 2011. Since then, ICG-Longbow has raised more than £1.3 billion (€1.6 billion; $2.1 billion) of discretionary capital across four funds, invested more than £1.1 billion of fund capital in UK real estate financing transactions and established a senior debt strategy, which accounts for more than one third of fund commitments. The team has also expanded from 10 to 22 people. In that time, ICG has invested or committed more than £150 million of balance sheet capital as co-investments in ICG-Longbow’s funds.

At present, ICG-Longbow has £1 billion invested across its funds and more than £200 million of transactions in closing. Around 50 percent from the firm’s senior debt vehicle is now invested, Wheeler said. Successors to its senior debt and whole loan / mezzanine funds are expected to be launched within six months.

Christophe Evain, chief executive at ICG, said in a statement: “ICG’s business model is underpinned by launching and developing new strategies that utilise the best of our investment expertise, specialist local knowledge and relationships. The 51 percent acquisition of ICG-Longbow in 2011 initiated the acceleration of this strategy. I am delighted to be completing the acquisition of the balance of ICG-Longbow now, as the potential of the business is even greater today than it was in 2011. I am sure that the ambitions, depth of specialist knowledge and expertise of the committed and incentivised ICG-Longbow team will allow this potential to be fully realised.”

Kevin Cooper, joint managing partner of ICG-Longbow, commented: “The acquisition validates the strength of the business that has been built, the depth of talent in the team and the scale of the opportunity going forward. We remain excited by the market opportunity and the potential for ICG-Longbow to continue to grow its reputation, amongst investors and sponsors, as a leading provider of real estate capital in the Europe”

Martin Wheeler, joint managing partner of ICG-Longbow added: “We look forward to continuing and strengthening our existing close working relationship with ICG and its team over the coming years.”