ICG grows AUM to €41bn but group profits fall

The group saw strong deployment of its European funds and said it is well protected from short-term market movements.

London-based Intermediate Capital Group has raised more than €4 billion of capital in the first half of its financial year but group profits have fallen.

For the six months ending 30 September 2019, ICG reported its total managed assets grew by 11 percent to €41.1 billion after it raised €4.6 billion across 14 strategies. The firm saw its fund management company profits grow by 32 percent to £85 million ($110 million;  €99 million) but investment company profits dropped 43 percent to £66 million bringing total group profit before tax to £151 million, a 16 percent fall from the same period in 2018.

ICG said its principal profit metric is its fund management company profit which benefits from increased assets under management, more fee income and a slower increase in operating costs. It added that investment company profits are lower as the prior period benefited from a high net investment return driven by a revaluation of a legacy asset.

The firm’s assets under management consists of €18.5 billion of corporate investments, which saw inflows of €1.98 billion over the first half of the financial year, including €0.8 billion for the firm’s European Mid-Market strategy and €0.9 billion of senior debt mandates.

Capital Markets investments increased by more than €1.5 billion to €13.1 billion which included €763 million raised across two CLOs in Europe and US. Real assets investment grew more than €500 million, or 12 percent, to €4 billion over the period, with most of the capital being raised for the firm’s real estate senior debt strategy.

ICG’s Senior Debt Partners III was the most active fund in the period, completing nine deals and increasing the proportion of the fund invested from 43 percent to 65 percent. The ICG Europe Fund VII increased its proportion invested from 38 percent to 48 percent with a single deal. Deployment outside Europe was slower, with North American Private Debt Fund II completing one deal worth 2 percent of its value, while Asia Pacific Fund III completed no deals and remains 93 percent deployed.

Commenting on the results, Benoît Durteste, chief executive of ICG, said: “We are well-positioned to deliver sustainable growth. Unlike traditional asset managers, we do not suffer short term outflows as a consequence of the movement in financial markets; we are maintaining or increasing average fee rates on an underlying fund basis. Our long fund life-cycles are designed to withstand economic cycles. This is underpinned by a disciplined attitude to the deployment of funds and proactive approach to realisations.”

ICG’s board has increased the fund management company’s operating margin target to above 50 percent and the firm said it will provide further updates on its approach to responsible investing and maintaining its corporate culture in its 30 January 2020 update.