ICG seventh subordinated debt fund oversubscribed – exclusive

The London-based manager has a stated goal of €4bn, the largest fund in its series to date.

Intermediate Capital Group has drummed up more investor interest for its latest subordinated debt fund than the vehicle’s initial goal, according to a source familiar with the situation.

The London-based firm’s ICG Europe Fund VII is oversubscribed and will likely hit its €4 billion on a first close or shortly thereafter, this person said. The total would put a significant dent in the firm’s fundraising goal of a €6 billion three-year rolling average.

ICG could not be reached for comment.

So far, limited partners committing to the fund include the Teachers’ Retirement System of Louisiana (€75 million), the Pennsylvania Public School Employees’ Retirement System (€150 million) and the Tennessee Consolidated Retirement System (€150 million).

This vintage would be ICG’s largest fund in the series yet. Fund V rounded up €2.5 billion and Fund V collected €3 billion. The former is fully invested, and the latter was 77 percent deployed as of 31 December. Fund VI has invested in 13 different assets.

For Fund VII, ICG would contribute €500 million, according to a PSERS investment recommendation. In addition, each investment professional will be expected to invest €12 million-€15 million. The fund has five-year investment and harvest periods and will not use leverage at the fund level.

The vehicle will invest in 15 to 25 companies and will target family-owned businesses as well as leveraged buyouts. It will also make opportunistic investments in businesses that are performing well but find themselves “impeded by their capital structure”, the papers read. It may also invest in senior debt and preferred equity.

ICG’s fund is in market with a plethora of other subordinated and mezzanine debt vehicles, according to PDI data. In the first quarter, credit managers were seeking $85.4 billion for the strategy. Fund VII is the fifth largest vehicle currently raising capital.

One of the largest closes in the first three months of the year was KKR’s $2.24 billion KKR Private Credit Opportunities Partners II. The vehicle, a successor to the $1 billion KKR Mezzanine Partners, will invest in subordinated debt and mezzanine debt as well as asset-based loans and specialty finance investments.