ICG-Longbow poised to hit £700m fund cap

The real estate debt arm of Intermediate Capital Group (ICG) is poised to close its third real estate debt fund at its £700m hard cap.

ICG-Longbow is anticipating a final close of its Real Estate Debt Investments Fund III by the end of this week.

After eight months on the road, the fund will close at its hard cap of £700 million ($1 billion; €815 million), making it nearly triple the size of its predecessor fund, according to sources with knowledge of the fundraising.

Threadmark acted as placement agent for the fundraising.

The fund will target returns of 14 percent, and will invest across senior, mezzanine, and whole loans used in Britain’s commercial real estate sector.

The fund is jointly led by managing partners Kevin Cooper and Martin Wheeler – both founding members of GMAC’s UK Commercial Mortgage business, which was established in 2002, but was subsequently sold off in 2010.

Earlier this year, ICG closed its Senior Secured UK Property Debt Investments Limited debt fund on £105 million, having targeted £100 million. The firm had raised Fund III simultaneously with that fund.
Fund II closed in late 2011 on £242 million.

ICG-Longbow is 51 percent owned by Intermediate Capital Group, the London-listed credit specialist.

“Our investment in ICG-Longbow continues to deliver ahead of expectations,” Christopher Evain, chief executive of ICG told Private Debt Investor. “In both European corporate and real estate lending activities traditional lenders, mainly banks, remain constrained and unwilling to engage actively.”

Consequently, Evain believes conditions and potential yields in real estate debt remain attractive.

The firm is set to begin pre-marketing its fourth real estate fund at the end of the year and will hold a formal launch in the first quarter of 2014, a source suggested.