ICG readies €1.5bn mezzanine pool

Intermediate Capital Group has announced an imminent final closing of its latest mezzanine fund as year end results show an increase in pre-tax profits of 21 percent with core income up to £62.2m.

ICG, the listed UK-based provider of mezzanine finance is to hold a final closing of its new mezzanine fund, ICG Mezzanine Fund 2003, with equity commitments of over €650 million ($793.8 million).

In a press release, ICG revealed its intention “to gear up this fund to not less than 1:1”. The company expects the fund to have cash resources of up to €1.5 billion, an increase of more than three times its previous mezzanine fund.

The size of ICG’s new fund reflects recent trends in the European mezzanine marketplace, with subordinated debt funding increasing to €4.03 billion in 2003. More and more mezzanine funds are being dedicated to Europe and the increased size of funds demonstrates a serious commitment to this sector.

Last year, Goldman Sachs closed the largest mezzanine fund ever raised, GS Mezzanine Partners III, with $2.7 billion of available capital, targeting investments in Europe and North America.

Today, ICG announced a 21 percent increase in profits in its annual results. The company posted record level pre-tax profits of £64.6 million (€97 million; $120 million), compared to £51 million in 2003, helped by buoyant conditions in the European mezzanine market, where the company maintains 70 per cent of its portfolio.

ICG’s core income (net interest income plus fee income less related administrative expenses) increased by 36 percent to £62.2 million on the back of significant increases in the loan portfolio, together with the increasing use of rolled-up interest in the structure of mezzanine.

John Manser, chairman of ICG said that he was delighted with the results and stated that the closing of the new mezzanine fund “will lead to substantially increased profitability from this part of our business”.