Intermediate Capital Trading Statement For Q3 For The Period To 31 December 2017
01 February 2018 - 6:00PM
UK Regulatory
TIDMICP
Highlights
-- Inflows in the third quarter were EUR0.6bn and in line with expectations
following the record levels of inflows in the first half of the financial
year. Year to date inflows amount to EUR6.3bn
-- Total AUM 1% higher at EUR27.4bn and third party fee earning AUM 7%
higher at EUR19.9bn
-- Strong fund deployment for our larger strategies maintained; Fund
portfolios continue to perform well
-- Strategic momentum supports the fundraising target being increased from
an average of EUR4.0bn to EUR6.0bn per annum on a three year rolling
basis, and the fund management company operating margin target being
increased from above 40% to above 43%
Commenting, Benoit Durteste, CEO, said:
"I am delighted that the ongoing success of building specialist asset
management strategies and the strength of our client relationships allow
us to increase our fundraising target and fund management company
operating margin target. Our 28 year track record has enabled us to
capitalise on the long term investor trend towards alternative asset
classes and establish ourselves as a leading specialist asset manager to
institutional clients.
"ICG's third quarter trading is in line with our expectations. Total
assets under management grew further in the third quarter to EUR27.4bn.
Capital deployment for our larger strategies remains ahead of plan
giving us good visibility of strong fundraising momentum through the
next 12 months."
Strategic update
It remains our strategy and operational focus to grow our specialist
asset management franchise. We will do this by growing our existing
strategies whilst at the same time continuing to innovate and pioneer
new strategies that increase diversification by asset class and
geography.
With 95% of our AUM in closed end funds, our inflows are strongly
dependent on the funds that are currently being marketed in any
particular year resulting in fluctuating inflows year on year. This
characteristic is more than offset by the benefit of 'locked in'
investor commitments and related fee streams. The growth of our
specialist asset management franchise has resulted in an increase in the
number and size of strategies since our original fundraising target of
EUR4bn per annum was set. We have therefore decided to increase our
target to an average of EUR6.0bn per annum over a rolling three year
period. In any one year inflows may exceed, or be lower than, our target
depending on the size of strategies being marketed in that year. For
FY19 we have a strong fundraising pipeline that includes Europe Fund VII
and North American Private Debt Fund II.
The development of new strategies underpins the future growth potential
of the Group. Significant investment in new teams is often required
before a strategy can raise its first fund and begin generating fees. As
these strategies raise successor funds with their existing teams,
operating leverage increases. Since we set our fund management company
operating margin target of above 40%, a number of existing strategies
have raised larger funds and are now contributing to fund management
company profits. We have therefore decided to increase our target to
above 43%, to reflect the maturing of existing strategies whilst
maintaining the capacity to invest in new strategies that will underpin
the continued long term growth of the Group.
Our balance sheet capital is an enabler and accelerator of growth and
now invests solely to support the growth of our specialist asset
management franchise. As we invest alongside third party clients in our
strategies our interest and the aggregate return on investment is
aligned with that of our fund investors. Therefore the net returns of
our fund investments are the relevant indicator of performance which
reflects the total performance of the investments in the funds. This is
how our fund investors assess their investment and from the financial
year beginning 1 April 2018 will be how we report our Investment Company
income, thereby removing asset specific impairments as a key performance
indicator.
Aside from the updated targets above, our guidance remains as set out on
14 November 2017.
Trading update
Total assets under management have increased 1% over the three months to
31 December 2017 to EUR27.4bn with, as expected and previously indicated,
the level of fundraising in the second half of the financial year likely
to be more aligned to our previous long term fundraising target of
EUR4bn, after a record EUR5.7bn of inflows in the first half of the
financial year. Third party AUM by strategic asset class at 31 December
2017 was as follows:
Capital Market Total
Corporate Investments Investments Real Asset Investments Secondary Investments Third Party AUM
EURm EURm EURm EURm EURm
At 30
September
2017 13,839 6,558 3,393 1,530 25,320
Additions 50 522 - - 572
Realisations (420) (10) - (43) (473)
FX and other (60) 117 (66) (17) (26)
At 31
December
2017 13,409 7,187 3,327 1,470 25,393
Fee earning
AUM - at 31
December
2017 8,772 7,145 2,671 1,290 19,878
Fundraising in the quarter included closing EUR392m for one European CLO
and EUR130m across Capital Market strategies European Loans and
Alternative Credit.
Capital deployment in the quarter has remained strong despite a
competitive investment market. The total amount of capital deployed on
behalf of our direct investment funds was GBP1,253m in the quarter
(three months to 31 December 2016: GBP730m). The direct investment funds
are investing as follows, based on third party funds raised at 31
December 2017:
Strategic % invested at % invested at Assets in fund at Deals completed
asset class Fund 31 December 2017 30 September 2017 31 December 2017 in Q3
Corporate ICG Europe
Investments Fund VI 77% 65% 13 1
North
American
Corporate Private
Investments Debt Fund 82% 72% 17 3
Senior Debt
Corporate Partners
Investments II 93% 87% 32 4
Corporate Asia Pacific
Investments Fund III 62% 44% 5 1
ICG Longbow
Real Asset Real Estate
Investments Fund IV 97% 87% 28 2
Secondary Strategic
Investments Secondaries 50% 50% 6 0
In closed end funds outflows occur with the realisation of the
underlying portfolio companies. The pace of realisations remained
healthy in the quarter as investors continue to take advantage of the
market liquidity to sell assets and lock in performance.
The balance sheet investment portfolio increased 9% in the period to
GBP1,822m at 31 December 2017 (30 September 2017: GBP1,668m), as
investments exceeded realisation in the period.
The balance sheet remains well funded with available cash and unutilised
bank lines of GBP616.5m at 31 December 2017 (30 September 2017:
GBP627.0m). The refinancing of the Group's undrawn committed bank
facilities, some of which mature in mid-2018, is underway and is
expected to be completed ahead of their maturity.
Capital Markets Update
Later this morning we will be holding a Capital Markets Update which
will be an opportunity for management to present and discuss the Group's
strategy and business model. The Chairman and Committee Chairmen will
also be present and available for meetings. For those unable to attend
in person the Update will be recorded and available on our website. No
further update on trading and no new material information will be
provided during the event.
Enquiries
Analyst / Investor enquiries:
Philip Keller, CFOO, ICG +44 (0) 20 3201 7700
Ian Stanlake, Investor Relations, ICG +44 (0) 20 3201 7880
Media enquiries:
Neil Bennett, Tom Eckersley, Maitland +44 (0) 20 7379 5151 Helen Gustard, Corporate Communications, ICG +44 (0) 20 3201 7760
This trading statement has been prepared solely to provide additional
information to shareholders and meets the relevant requirements of the
UK Listing Authority's Disclosure and Transparency Rules. The trading
statement should not be relied on by any other party or for any other
purpose.
This trading statement may contain forward looking statements. These
statements have been made by the Directors in good faith based on the
information available to them up to the time of their approval of this
report and should be treated with caution due to the inherent
uncertainties, including both economic and business risk factors,
underlying such forward looking information.
These written materials are not an offer of securities for sale in the
United States. Securities may not be offered or sold in the United
States absent registration under the US Securities Act of 1933, as
amended, or an exemption therefrom. The issuer has not and does not
intend to register any securities under the US Securities Act of 1933,
as amended, and does not intend to offer any securities to the public in
the United States. No money, securities or other consideration from any
person inside the United States is being solicited and, if sent in
response to the information contained in these written materials, will
not be accepted.
This Trading Statement contains information which prior to this
announcement was insider information.
About ICG
ICG is a specialist asset manager with over 28 years' history. We manage
EUR27.4bn of assets in third party funds and proprietary capital,
principally in closed end funds. Our strategy is to grow our specialist
asset management activities to deliver increased shareholder value. Our
goal is to generate income and consistently high returns whilst
protecting against investment downside for our fund investors. We seek
to achieve this through our expertise in investing across the capital
structure. We combine flexible capital solutions, local access and
insight with an entrepreneurial approach to give us a competitive edge
in our markets. We operate across four asset classes - corporate,
capital market, real asset and secondary investments. In addition to
growing existing strategies, we are committed to innovation and
pioneering new strategies across these asset classes where the market
opportunity exists to deliver value to our fund investors and increase
shareholder value.
We are listed on the London Stock Exchange (ticker symbol: ICP) and
provide investment management and advisory services in support of our
strategy and goal through a number of regulated subsidiaries, further
details of which are available at: www.icgam.com.
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Intermediate Capital Group plc via Globenewswire
http://www.icgplc.com/
(END) Dow Jones Newswires
February 01, 2018 02:00 ET (07:00 GMT)
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