Strong income growth for fundraising ICG

Intermediate Capital Group, which in January launched a new E750m mezzanine fund, has reported an 18 per cent increase in core income on the back of strong buyout dealflow in Europe.

UK-listed mezzanine capital specialist Intermediate Capital Group has reported a steady increase in pre-tax profits in its annual results for the year ended 31 January as it embarks on fundraising for its Mezzanine Fund 2003.


The firm reported a 28 per cent increase in pre-tax profit to £53.5m, the result of an increase in both core income and capital gains. Core income, the key element of ICG’s profits which is defined as net interest income plus fee income less related administrative expenses, increased by 18 per cent to £45.9m. 


ICG arranged financing of £523m during the financial year, the highest ever completed by the firm. In total, the firm made 22 loans including a £40m participation in Charterhouse’s £1.2bn acquisition of Coral Eurobet. The firm also invested in the buyout of Elis, the French textile rental company, for which it arranged a junior facility of E70m and underwrote E60m of the senior mezzanine for the secondary buyout led by PAI Management from BC Partners.


“Although M&A activity has continued to decline, the buyout market has remained relatively strong, which […] has helped to produce an attractive environment for mezzanine in general and for ICG in particular,” said John Manser, chairman of ICG.


ICG is currently in fundraising mode. In January the firm launched Mezzanine Fund 2003, a E750m successor to the E475m Mezzanine Fund raised in 2000. “Based on discussions with a select group of prospective investors, it is expected that there will be a closing of the fund in the first half of our financial year,” said Manser.


The firm is also raising an Asian mezzanine fund, which was launched in 2002.


Tom Attwood, managing director at ICG, said that despite the decline of the European economy, the firm’s portfolio continued to do well. “We have made new provisions on three underperforming loans although the remainder of the portfolio is doing well,” said Attwood. “On the whole, it’s been a strong couple of years for mezzanine and we’re hopeful that 2003 will be the same.”