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ICG hits record AUM total

The firm raised €5.2bn in the last financial year – the majority from its established direct lending and European mezz vehicles - raising its total AUM to €21.6bn. But the firm faced challenges raising capital for its CLO and Asia-Pacific funds.

Intermediate Capital Group (ICG) has reported a 20 percent increase in its assets under management (AUM) in the last financial year, driven by strong performances in its European vehicles, but it reported that fundraising for its Asia Pacific and CLO platforms has been slower due to a volatile macroeconomic environment.

Total AUM reached €21.6 billion in the financial year ending 31 March 2016. Overall, the firm raised €5.2 billion – more than half of that raised from commitments to its European focused mezzanine fund and the direct lending fund Senior Debt Partners II – both of which raised €1.2 billion and €1.5 billion respectively.

Both the ICG Europe Fund VI, the mezzanine-focused vehicle, and the Senior Debt Partners II fund completed final closes on €3 billion last year, the former reaching a final close just three months after the first close on the fund. The European fund has so far deployed 10 percent of its fund across three completed transactions.

The rest of the €2.5 billion was raised across 10 of the firm’s strategies, including two CLO funds, the firm’s Asia Pacific focused debt fund, and the US and Japanese mezzanine funds, all of which completed final closes in the recent financial year. In the previous year, the firm raised €6.4 billion across its platforms, but it does not expect to raise as much in the new financial year as the previous two years.

Looking forward, the firm expects to reach a final close on the Intermediate Capital Asia Pacific Mezzanine Fund III later this year. So far, it has raised $484 million for the fund, with $200 million coming from the balance sheet. ICG also announced that it recently launched a European CLO fund targeting a final close in June and is expecting to raise €413 million.

“Demand is growing in the institutional market mostly due to institutions finding it increasingly difficult to achieve their long-term investment objectives through traditional investment strategies such as sovereign bonds and equities, when alternative assets offer high returns over the long term,” the firm said.

The year presents both challenges and opportunities for ICG. Increasing competition from new entrants into the market poses a threat. But the firm said its name and track record of delivering results will ensure it stands out.

It noted that as developing countries increase in wealth, their sovereign wealth funds will seek to invest that capital in new assets, including private debt, and aging populations will drive pension funds to seek higher returns through different asset allocations – factors that ICG said presents opportunities for the firm to expand.

“ICG now has a more diversified business than at any point in our history. The market environment continues to support our strategies: with strong demand from investors for diversified sources of higher yield and attractive investment opportunities for our funds and the development of new strategies,” ICG chief executive Christophe Evain said.