Intermediate Capital Group (ICG) has launched a secondaries platform by securing its first secondaries investment and hiring a specialist team.
The firm has appointed Andrew Hawkins, the founder of NewGlobe Capital, a secondaries advisory firm focused on end-of life funds, to form ICG Strategic secondaries, according to a statement. Christophe Browne and Ricardo Lombardi, both formerly at NewGlobe, have also joined ICS.
In addition to hiring the NewGlobe team, ICG has secured its first-ever secondaries investment, acquiring a substantial portfolio of private equity assets from Diamond Castle IV fund, a vehicle managed by US-based Diamond Castle. As part of the deal, which was co-led by NewGlobe, a new $860 million was created, which will be managed by Diamond Castle.
ICG’s secondaries team will operate from London and New York and will be to Benoît Durteste, a managing director at ICG.
The core focus of ICG’s secondaries division will be to continue leading private equity fund recapitalisations and complex restructuring deals which require a specialist asset-driven investment approach, the firm said.
“We believe that secondary investing at the more structured end of the market is a very attractive proposition for institutional investors in the current market environment. Purchasing mature portfolios mitigates some of the risk associated with private equity and credit investing, it shortens the J-curve, and offers attractive risk-return characteristics. We see a lot of opportunity for this ahead, both in Europe and the US,” Durteste said in a statement.
“We are delighted to partner with the Diamond Castle team to acquire a high quality portfolio of assets and to support the next phase of growth of the companies. The market for complex private equity fund restructurings is now well established as a compelling solution to LPs in older funds, and we believe the opportunity set is growing exponentially as the 2004-2008 vintage funds mature. We estimate that there are around $50 billion in fund vehicles in our target vintages which shows the size of the opportunity we are targeting,” Hawkins added.
Hawkins founded NewGlobe in 2012, prior to which he was a managing partner at Vision Capital where he sat on the global investment committee, and has held senior positions at Palamon Capital Partners, Charterhouse Bank, Hoare Govett, Swiss Bank Corporation and WestLB across a career of more than 20 years in private equity.
Prior to co-founding NewGlobe, Christophe Browne, who is based in New York, was a senior principal at Vision Capital in New York and London, and before this he worked in M&A leveraged finance at Citigroup Global Markets in London, having begun his career at World Bank / IFC in Washington. Ricardo Lombardi is based in London. Prior to NewGlobe he was at Vision Capital for six years, and before this he worked in M&A in the Natural Resources team at Lehman Brothers.
In the aftermath of the global economic downturn, many LPs have had ‘end of life funds’ in their portfolio. Many in the market anticipated there would be an influx of GP restructurings, but in reality there haven’t been that many successful deals because such transactions are challenging to complete.
In June, London-based GMT Communications completed a major restructuring of its €365 million 2000 fund, in which secondaries firms Lexington Partners and Newbury Partners gave the fund a new lease of life. In January, HarbourVest successfully restructured European buyout firm Motion Equity Partners’ when it gave Motion’s Fund II, a €1.25 billion vehicle raised in 2005, a cash injection.