ICG reports strong fundraising amid 25% profit fall

A widening range of provisions for bad loans coupled with a low level of realisations hurt ICG’s full-year profit performance, but it was a record year for fundraising and AUM growth.

Mezzanine powerhouse Intermediate Capital Group this week reported a 25 percent fall in profits for the fiscal year ended in March 2013 as compared to the same period a year ago, attributing it in part to a low level of realisations and repayments stemming from macroeconomic factors beyond its control. Those factors include a “lack of available senior debt in the early part of the financial year” and the “continuing valuation gap between sellers and buyers”, according to the company’s results.

ICG’s adjusted profit before tax fell to £148.3 million ($224.6 million: €140 million) for the year ended March 31, from £198.8 million last year. Meanwhile, gross provisions increased 69 percent to £141.1 million, due to a higher-than-expected level of provisions in the first half, mainly arising from two large assets: waste management firm Biffa and Spanish travel agency Orizonia.

But a series of successful fundraisings, an investment portfolio that remains “broadly resilient” to economic pressures and record growth in AUM (up 13 percent to £12.9 billion for the year) have positioned the firm well for future growth, it said.

“The momentum for mezzanine fundraising has been strong across all our funds,” ICG chief executive Christophe Evain said in a statement. The firm closed its flagship mezzanine fund, ‘ICG Europe Fund 5’, in December on its hard-cap of €2.5 billion, which was “well above our target of €2 billion and the largest fund raised of its kind since 2007”. ICG anticipates a final close next week on its third ‘Longbow’ real estate debt fund on its £700 million hard-cap. And the firm is also poised to raise a new CLO, its first in five years, and has a US debt fund in development as well as plans to raise a successor to its ‘Asia Pacific Fund II’, which it said is currently 55 percent invested.

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