After the strong performance by Intermediate Capital Group (ICG) in the six months to 30 September 2007 the company reported record growth in its loan and investment book of 16.5% to £2.069bn during the three months to 31 December 2007. ICG looks set to be a net beneficiary of the credit crisis, according to analysts.
The last quarter of 2007 generated a significant change in the credit markets in which ICG operates, shifting what it calls the competitive landscape further in its favour as CDOs and credit hedge funds find themselves short of liquidity.
According to the company: “We believe that we are entering a phase in the debt cycle where long term investors with access to permanent capital, such as ourselves, will see considerable opportunities to invest at attractive terms.”
In the last three months of 2007 ICG arranged or provided £566m in 10 new investments, compared with £898m in 21 transactions in the six months to 30 September 2007. Of this £566m, £319m was retained on its balance sheet and 40% comprised assets sold by banks looking to free up their balance sheets of underwriting positions which they have been unable to syndicate following the turn in the credit markets.
In addition to these opportunities in the secondary market, ICG says its core mid-market segment is gradually reopening in Europe and North America and continues to experience good growth in the Asia Pacific Region. Also, mezzanine is increasingly playing a central part in successful LBO financings.
Intermediate Capital Group (ICG) closed its €2.25bn European Fund 2006 in March 2007 which represented €1.25bn of equity interests and €1bn of leverage. Almost 70% of the commitments come from European investors, 19% from Asia and the remainder from North America and the Middle East.
The fund’s focus was devised primarily to make mezzanine investments in the financing of European leveraged buyouts. But it was also set up to make equity co-investments and to purchase senior debt and mezzanine loans in the secondary debt market.
“This is our fourth European Mezzanine Fund, increasing our capacity to offer private equity sponsors optimal financing structures in this dynamic market while providing attractive returns to our Fund investors. Over the years we have developed strong, long-standing relationships with our existing investor base as evidenced by the fact that 78% of commitments come from existing LPs. We are particularly pleased that this Fund has attracted a number of significant new investors thereby supporting ICG’s growth,” says Tom Attwood, managing director of ICG in London.
A selection of deals completed in 2007 show that ICG worked with a broad range of sponsors across many different industry sectors.
ICG fully arranged and underwrote a mezzanine loan and invested in the equity to support The Carlyle Group in the leveraged buyout of Spanish company Applus.
Funds advised by ICG provided and underwrote the senior and junior mezzanine bonds and also invested in the equity in support of Astorg’s acquisition of Ethypharm.
ICG provided mezzanine and equity to back the management-led buyout from 3i in 2007 for UK business services company Marken.
ICG supported Gilde in acquiring the Dutch printing and publishing company Swets with a senior mezzanine loan and equity.
ICG prides its business on having the largest independent mezzanine investment team in Europe with 35 executives operating out of ICG’s head office in London and local offices in Paris, Madrid, Stockholm and a representative office in Frankfurt.