Quoted mezzanine provider and alternative asset manager, Intermediate Capital Group has closed its second CDO fund, Promus II at €340 million, exceeding its original target. Institutional investors spanning the UK and continental Europe provided €40 million of equity.
Promus II will invest primarily in European leveraged loans (senior secured debt), but will also have the flexibility to invest in some mezzanine and high yield bonds. Like Promus I, it is expected that the fund will, over the next two to three years, create over 50 loans with an average size of €6 million to €7 million. ICG will be able to invest in leveraged loans throughout Europe denominated in multiple currencies.
Tom Attwood, managing director of ICG, said: “Promus II differentiates itself from other CDOs by reducing market risk dramatically. This fund, together with Promus I, gives us nearly €500 million of uninvested liquidity, and as a result we will be excellently positioned to take advantage of the growing institutional loan market in Europe.”
The fund is capable of applying leverage to grow to a total of €340 million over the expected accumulation period of two to four years. Leverage is initially provided by a ten-year €70 million revolving credit facility provided by a small syndicate of banks. Over time, the facility can be refinanced through the issuance of investment grade term notes, then redrawn and refinanced until the fund is fully invested.
Promus II was raised by JP Morgan and rated by Fitch and Standard & Poor’s. Ashurst Morris Crisp provided legal advice. The fund represents the fourth structured debt and loan fund raised by ICG over the last three years.