ICG expands its franchise beyond buyouts

Intermediate Capital Group (ICG) expects to see the sponsorless mezzanine market develop across Europe in the coming years. The firm underwrote a €33m loan for strategic buyer Remeha Group’s acquisition of De Dietrich Thermique (DDT).

The loan for the heating equipment company is ICG’s second non-sponsored mezzanine deal in the Netherlands. In October 2003, the firm backed the re-capitalisation of Motip Dupli, a manufacturer of aerosol paints, with a €16m mezzanine tranche.

Rolf Nuijens, a member of the DDT deal team, said the two investments continue a strategy that ICG has been developing over the last few years. The firm offers mezzanine to finance acquisitions and refinancing of privately and publicly owned companies.

“We are keen to support good management teams to acquire their businesses from private equity houses and view this as a valuable alternative exit to a trade sale or an IPO for institutional shareholders,” he said.

The Motip Dupli deal provided a full exit for the institutional shareholder, who had been an investor in the company since 1998. In addition, it presented remaining shareholders with a substantial realisation of their investment in the company.

ICG acknowledged changes in the mezzanine market in its interim results statement. It implied it had passed on larger mezzanine deals arranged by banks because it felt the risk and return equation was out of balance. The new €1bn fund from Park Square Capital further increases competition at the upper end of the sponsored mezzanine market, while GSC Partners has yet to launch a circa €500m fund.

The ICG deal team that worked on DDT comprised Rolf Nuijens and Max Mitchell from the Benelux office and Damien Scaillierez from ICG’s French branch. The new entity, known as De Dietrich Remeha Group, is owned by the Remeha Foundation (Stichting Aandelen Remeha) and management. De Dietrich Remeha Group employs 2,600 people and is expected to generate €450m in turnover this year.