ICG quietly upbeat after first half results

Besides a modest profit rise and a more substantive increase in core income, the mezzanine house is also planning a new mezz fund and may increase its debt facilities too.

Intermediate Capital Group [ICG], the London-based mezzanine finance provider has announced its interim results for the half year ending 31 July 2002 as well as advising that Paul Piper, head of the UK mezzanine team and with the company since its inception in 1989, has joined the main ICG board.

Besides revealing a four per cent increase in profits to £26m [£25m in 2001] and an increase in core income for the period of 12 per cent to £22m [£19m in 2001], the company also said that it intends to raise a new mezzanine fund and is considering raising further debt on top of current borrowing facilities of £768m.

In a statement chairman John Manser said the company was expecting an unusually high level of lending activity in the second half of the year, revealing that ICG had since the end of July already made 5 new loans totalling £92m. The company provided £148m in financing in eight transactions in the first half of the year.

ICG closed a new £220m senior loan fund earlier this year, bringing total funds under management to £1.35bn. Up to 31 July, the firm had invested £260m of its mezzanine funds, a small increase over the period and prompting the firm to say that it intended to grow the level of funds invested in this second half as well as to start raising a successor fund to its Mezzanine Fund 2000.  

Despite European buyout deal activity falling by 59 per cent to £12bn compared to the same period in 2001, Manser said that 'there continue to be relatively few banks who have a significant appetite for mezzanine. When there is the need for substantial amounts of mezzanine, debt arrangers are often nervous of taking on significant underwriting risk and ICG are very often approached.' He added that 'on a small number of very large transactions we have seen some higher than desirable levels of leverage being proposed but elsewhere in the market financial structures have been more moderate.'

The company also said that it has signed it's first Asia Pacific mezzanine deal in its Hong Kong office and that it remained 'cautiously optimistic about the long term potential of the region.'