ICG posts record gains

Intermediate Capital Group (ICG) announced a 21% increase in core income to £75.1m fuelled by a rise in funds under management to £2.4bn. Announcing its preliminary results for the year ended January 31, the mezzanine specialist also said it had accrued record capital gains of £62.9m, a 48% rise in pre-tax profits to £95.5m and an 8% rise in the value of its loan book to £1.18bn.

ICG’s results were achieved against the backdrop of a strong performance for the mezzanine market itself. Increased demand was more than matched by increased supply, not only from traditional sources such as banks and independent mezzanine funds, but also from new sources in the form of hedge funds and other structured debt funds. This led to increased competition for mezzanine assets, particularly at the larger end of the market, which saw ICG turn down more mezzanine opportunities in 2004 than during the previous year.

“In what was a very active but competitive mezzanine market, we produced a further increase in our loan book, despite higher levels of repayments. Our fund management division grew further with the raising of a new fund and continues to have good growth potential,” said John Manser, chairman of ICG.

ICG arranged and provided financing worth a record £778m. Arrangement and agency fees increased slightly to £10.1m and fund management fees rose by 56% to £17.3m, while administrative expenses increased by 21% to £27.4m.

Gross capital gains were derived from the realisation of 19 different investments, of which five were from IPOs and 14 from trade sales and secondary buyouts.

Loan repayment levels were particularly high last year, with 23 mezzanine investments totalling £315m being repaid, nearly double the level of repayments experienced in the previous year. Some £215m in repayments stemmed from exits, with the unusually high level of prepayments amounting to £100m.

The portfolio of warrants and quoted shares was valued at £146m, up from £82m the previous year. The board is recommending a final dividend of 28.2p net per share to be paid on May 27. With the interim dividend of 11.8p net per share, this brings the total for the year to 40p net per share, an increase of 16% over last year’s dividend.