ICG reports strong profits and welcomes Kershaw

Intermediate Capital Group (ICG), last week reported a 33% increase in first-half pre-tax profits and is expecting to benefit strongly from the new risk environment.

Reporting a hefty rise in profits last week, ICG said that the new market environment had improved the firm’s prospects for next year. Managing director, Tom Attwood, said the credit crunch would create opportunities for the firm by improving the balance between risk and reward. “Competition has been reduced, prices and structures are more investor-friendly and the wave of repayments has stopped,” he said.

The strength of the results sparked a 13.8% rally in ICG’s share price in London last Friday. Pre-tax profits were £142m, compared with £106.9m for the same period in the previous year, with earnings per share also up 33% to 132.6p.

ICG’s management has welcomed the widening spreads and more conservative structures now being seen in the leveraged finance market. In fact, the results reflect income at a time when European debt investors were adversely affected by prices and structures associated with periods of illiquidity in the debt market.

“The principal risk is that the credit crisis impacts adversely the economy both in the US and then Europe,” said ICG chairman John Manser. He added that, although there were as yet no signs of credits being affected, ICG was now investing on the assumption that the economy would be adversely affected, and was buying into the strongest borrowers with good defensive characteristics.

Dagmar Kent Kershaw is also joining the mezzanine investor. She left M&G Pru, where she was head of structured credit products. Her appointment came as ICG revealed that Sara Halbard would be retiring in June 2008 from her position as senior portfolio manager for fund management subsidiary ICML. The unit invests in European high-yield credit markets and currently manages eight CDOs and several institutional mandates, with a team of 12 portfolio managers and research analysts (see IFR Buyouts issue 72).

Kershaw joined M&G Pru in 1998 and was responsible for starting its CDO activities in 2000. She previously worked at NatWest and Scotiabank in European high-grade and high-yield credit.