Intermediate Capital Group, the UK-based provider of mezzanine finance has announced a 28 per cent fall in profits in its annual results. The company posted pre-tax profits of £41.7m compared to £58m in 2001, although the fall was in line with company expectations due to the weak market for realisations.
ICG’s core income (net interest income plus fee income less related administrative expense) rose to £39m, an increase of 16 per cent, on the back of growth in both net interest income and fund management fee income.
Mezzanine financing is expected to continue its steady growth over the coming year, with analysts predicting that it will form a larger percentage of total funding in the LBO market. 2002 New Issuance Data published by Fitch shows that 55 per cent of deals this year have incorporated a mezzanine element of around 15 per cent.
ICG completed 16 deals totalling £308m in 2001, including the provision of finance for Candover’s acquisition of Swissport for E393m and Henderson Private Equity’s £230m purchase of Leisure Link. The firm also closed a E450m leverage loan fund, Primus I, in late 2001 increasing ICG’s funds under management to £1.2bn, a 20 per cent increase on the previous year.
Tom Attwood, managing director at ICG said he was pleased with the firm’s 2001 results. “The results were roughly in line with expectations in a difficult market. We’re reasonably confident that our core income will continue to grow in 2002 and we have already seen an increase in activity in the past two months.”
“We are currently looking at a number of deals in France, as well as deals in the UK, Germany and Scandinavia. Although the UK is still an important market, we are now doing two-thirds of our work in Continental Europe. I think that 2002 will see growth in our loan book as well as higher fees, which should improve ICG’s figures for this year, although it is very difficult to gauge capital gains in an uncertain market.”
“The current conservative approach by the banks should lead to relatively good demand for mezzanine and a reasonable number of attractive opportunities from which ICG is well placed to benefit.”