ICG draws up LBO watch list

Intermediate Capital Group (ICG), the UK mezzanine and leveraged loan investor, has drawn up a watch list of portfolio assets which have suffered marked deterioration in their operating performance since the end of September.

Releasing its interim management statement for the three months to 31 December 2008, ICG explained on 27 January that over two thirds of its portfolio companies were performing at, or above, the prior year level and close to half were on, or above, budget.

“However, since the end of September we have seen a marked deterioration in the operating performance of a limited number of weaker assets as economic conditions have worsened. Our watch list consists of 13 percent of our portfolio by value reflecting the impact of deteriorating economic conditions and the heightened level of vigilance necessary in the current climate.”

ICG added that it expected to make noticeably higher provisions in the second half of its year “due to the impact of the worsening economic environment on our weaker assets and the strength of the Euro against Sterling.”

On the positive side, ICG believes that while the primary leveraged buyout market remains shut, there “continue to be very attractive investment opportunities in the secondary market for senior leveraged loans.”