ICG awaits €240bn in debt refinancings

Many LBOs done in the past five years will have debt maturing in the near future - great news for mezzanine houses, says ICG's Tom Attwood.

More than €240 billion in European buyout-related debt will need to be repaid or refinanced in the next two to six years, creating a wealth of deal flow for mezzanine specialists.

That was the view of Tom Attwood, the long-time chief executive and co-managing director of Intermediate Capital Group, Europe’s largest provider of mezzanine capital to leveraged buyouts.

Attwood and fellow managing director Christophe Evain recently sat down with Private Equity International to discuss such opportunities on the horizon for the mezzanine finance sector, as well as how ICG has confronted the most volatile market environment in its history.

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Among the many issues discussed (read the full article here) was when ICG last year took the unprecedented step of creating a dedicated unit to manage troubled investments and their restructurings. “Typically within our firm, people eat their own cooking: You negotiate a deal, you close a deal, you monitor and exit the deal. If it goes wrong, you have to get it sorted out and that’s been the case for 20 years,” said Evain.

While ICG has weathered past credit and economic crises, and indeed says the most recent crash has similarities to the early 1990s, its leaders felt the scale of what was beginning to happen in 2007 merited a different approach. Watching companies’ early trading numbers post- Lehman Brothers’ collapse convinced the firm that a more concerted restructuring effort would be needed.

“We took a team of some of our best fund investment guys, a team of about 10 people, people who had restructuring experience, people who had seniority and gravitas,” recalled Evain, “and we said these guys from now on are going to focus on one thing, and one thing only and that’s restructuring.”

The deal’s original cook, to use Evain’s metaphor, still lends a hand in the kitchen and maintains existing relationships, but the restructuring team is brought on for added firepower.

Attwood emphasised that most crucial in restructuring situations, “is not looking backwards and playing a blame game … not to worry about whether or not it was a bad investment but to get par back.” Maximising recovery, he said, is simply the most important thing.