Intermediate Capital Trading Statement For Q3 For The Period To 31 December 2017

 
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                                                                                                [phone] 
 
 
   Ian Stanlake, Investor Relations, ICG                                                                              [phone] 
 
 
 
 
   Media enquiries: 
 
   Neil Bennett, Tom Eckersley, Maitland                                                                            [phone] Helen Gustard, Corporate Communications, ICG                                                                      [phone] 
 
 
   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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