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Interim results: Intermediate Capital Group reports a broadly resilient performance. Specialist asset manager, Intermediate Capital Group which operates within two business segments, a Fund Management Company (FMC) and an Investment Company (IC) announced an overall group profit of £39.6 million in the six months to 30 September compared to £108.8 million in the first half of last year. This comprised of profit before tax at the FMC of £17.2 million compared to £17.1 million in the prior year, and profit before tax at the IC of £22.4 million compared to £91.7 million a year earlier. The decrease in Group and IC profit for the period was due in part to a higher level of impairments in the current period. Intermediate Capital Group said the challenging environment provided a difficult backdrop for its portfolio companies. Meanwhile, whilst the performance of its investment portfolio had been "broadly resilient", the group took material provisions for two large assets which are undergoing restructurings.
Company overview Intermediate Capital Group plc is an independent mezzanine provider with investment portfolios in Europe, Asia Pacific and the United States. Just at the mezzanine lies between two conventional floors in a building, so mezzanine finance fills the gap between senior bank loans (which normally have first right of repayment in the event of financial difficulty) and equity capital. The company operates through two business groups: The Fund Management Company (FMC) and The Investment Company (IC). FMC is the operating vehicle of ICG plc that sources and manages investments on behalf of the Investment Company (IC) and its third-party funds. IC is the investment unit of ICG plc and co-invests alongside its third party funds.
The performance of the Investment Company's investment portfolio remains "solid" and provisions for the full year should be broadly in line with market expectations. However, provisions for the first half are expected to be higher than in the second half as two assets are currently undergoing restructuring. On the Fund Management side of the business, assets under management as at September 27th stood at €12bn, up from €11.8bn as at July 9th. The increase was largely due to additional investments to the ICG Europe Fund V. This fund has received commitments of €1.5bn to date and is on track to reach the group's €2bn target in the fourth quarter of 2012. "We have also launched our Total Credit Fund which combines investments in high yield bonds, senior loans and CLO [collateralised loan obligation] debt. The fund is off to a strong start with a 4% return since inception on July 13th," the group said.
Intermediate Capital Group, the specialist investment firm and asset manager, said it lent more than it received in repayments in the first half of its financial year. The provider of mezzanine finance and leveraged credit said its Investment Company unit saw realisations in the April to September period run at a lower level than in the corresponding period of last year. A total of £70m of principal repayments have been received in the April to September period, while £12m of rolled up interest has been crystallised and there have been realised capital gains of £10m. A number of Intermediate Capital's investments are currently in active exit processes but visibility on timing remains unclear as transactions are often delayed in the current volatile environment. "This will have a positive impact on our overall return on investments as our mezzanine financing runs for longer than historical averages, but it leads to low levels of realisations in the short term," the firm explained. The Investment Company unit deployed £140m in the reporting period on five new assets. Undrawn debt facilities at September 30th will be £440m, the group revealed.
Positive Points Assets under management rose, with the board again highlighting a resilient portfolio performance. Management previously noted that "longer term trends are favourable to specialist lenders. The imbalance between demand and supply of credit will continue to provide opportunities to generate superior returns." Following a three year extension of its main banking facilities in the summer, the group has raised another £80 million through a retail bond issuance, further strengthening its balance sheet. A progressive dividend policy continues to be pursued. A total dividend for the last financial year of 19 pence was announced, up from 18 pence in 2011.
Negative Points At its Investment Company division, provisions for the first half are expected to be higher than in the second half. Management has taken significant provisions against two assets undergoing restructurings. Pre-tax profit for the current year is forecast to decline compared to the last financial year.
Financial Highlights: Assets Under Management rise to €12 billion. A second retail bond issue results in an additional £80 million of debt finance
Half year trading update: Intermediate Capital highlights a resilient performance. At its Fund Management division, assets under management rose to €12 billion from €11.8 billion as of Q1, with the board highlighting "resilience" across its funds. In addition, moves to further strengthen distribution had been implemented. At its Investment Company division, the group benefited from strong deal flows across geographies, with the business investing in five new assets deploying £140 million. Provisions for the first half are expected to be higher than in the second half, although still broadly in line with current analyst expectations. Finally, management highlighted a successful second retail bond issue during the period, with the company having raised an additional £80 million in debt finance
Intermediate Capital Group plc is an independent mezzanine provider with investment portfolios in Europe, Asia Pacific and the United States. Just at the mezzanine lies between two conventional floors in a building, so mezzanine finance fills the gap between senior bank loans (which normally have first right of repayment in the event of financial difficulty) and equity capital. The company operates through two business groups: The Fund Management Company (FMC) and The Investment Company (IC). FMC is the operating vehicle of ICG plc that sources and manages investments on behalf of the Investment Company (IC) and its third-party funds. IC is the investment unit of ICG plc and co-invests alongside its third party funds.
Admittedly, bonds remain fairly exotic instruments for many UK investors and it's best to think of them as actively traded assets, rather than comparing them directly with returns on deposit accounts. But the trading opportunity in this instance looks compelling - buying so close to par leaves realistic room for capital appreciation before the bond slides down the yield curve as maturity approaches, and also offers the prospect of as a decent income stream....but as always dyor and good luck...
The closeness to par also means the income yield sits well ahead of inflation, with a further boost if the bond is held within a tax-free wrapper. It's also yielding something similar to the dividend yield on the company's shares - but without the corresponding price volatility. What's more, the attractions of the coupon on the group's earlier bond hasn't gone unnoticed and demand there has pushed its price out to 104p - which bodes well for the group's latest bond. True, coupons generally have been more keenly priced in recent months. That's because yields in the gilt market, which remains the reference index for corporate bonds, have been depressed as investors scrambled out of the eurozone. Inevitably, increased investor interest has also played a role as companies, and their advisors, have become more savvy about what coupons will attract retail buyers. Despite that, if the choice comes down to negative real returns or a decent coupon, income investors should choose the latter. Operationally, the group looks sound enough, too. Pre-tax profit, for instance, grew 31 per cent last year to £244m, with mezzanine finance seeing robust demand as traditional lenders retire to repair their balance sheets. However, the group is in an intrinsically risky line of business and bond investors would be directly exposed to any default, albeit with some security from being higher up the creditor ladder. That's reflected in the sub-investment grade rating - from both Standard & Poor's and Fitch - although Fitch does have a stable outlook for the company's debt.
Asset manager and mezzanine investment specialist Intermediate Capital (ICG) is another beneficiary of retail investors' hunt for yield after it launched a fully subscribed £80m bond issue this month. Its new senior unsecured bond represents the group's second big capital raising in a year and follows on from its well-received 7 per cent 2018 issue - although, at 6.25 per cent, the coupon is lower than on that earlier bond. Some investors may have missed the initial subscription but, with the price still trading near par, it remains a good opportunity. However a key consideration will be whether the London Stock Exchange's trading platform (ORB) proves liquid enough to allow holders to cash out when necessary. Progress so far, however, looks good with roughly £4m - or about 5 per cent of the total issue - having been traded on the market since launch. That's positive and means the average retail order of £10,000 should have little trouble finding a matching buyer. The performance of the earlier 7 per cent issue is also a good guide to liquidity. The average monthly trading value there, which has been trading on ORB for nine months, is close to £2m - allowing for big variations during Isa season and the traditional summer lull.
Mezzanine finance specialist Intermediate Capital Group is testing the water over a possible fund raising in the bond markets. The company has appointed broker Canaccord Genuity to arrange meetings with retail stockbrokers and wealth managers to discuss a possible sterling denominated retail bond issue. An offer of bonds may follow, subject to market conditions, the company revealed. The group said in its July interim management statement that it had untapped bank lines of £449m as at 30th June 2012. If any bonds are offered, they will not be registered under the US Securities Act of 1933 and, subject to certain exceptions, may not be offered, sold or delivered within the United States.
Positive Points Assets under management rose, with the board highlighting a resilient portfolio performance. Management previously noted that “longer term trends are favourable to specialist lenders. The imbalance between demand and supply of credit will continue to provide opportunities to generate superior returns.” The group again highlighted that it was making good progress towards raising its next European mezzanine fund. A group debt extension has been agreed, with the board highlighting a ‘strong balance sheet.’ A total of £449 million of unutilised bank lines was available as of 30 June 2012. A progressive dividend policy continues to be pursued. A total dividend for the last financial year of 19 pence was announced, up from 18 pence in 2011.
Negative Points Concerns regarding customer defaults on financing it provides persist. Although management pointed to a resilient performance at its Investment Company, it also noted that the general economic conditions were impacting a small number of its weaker assets. Pre-tax profit for the current year is forecast to decline compared to the last financial year.
Financial Highlights: Assets under management increased by 3.5% to €11.8 billion New investments totalling £88 million were made An extension of £640 million of the company’s own debt was agreed
First quarter trading: The update was well received by investors. The share price showed a rise of over 2% come late morning trading. Management highlighted both a resilient investment portfolio performance along with a strong pipeline of investment opportunities. Intermediate closed on three deals during the quarter and remains in exclusive talks on a fourth. A second transaction was completed in Australia, whilst a £256 million portfolio of performing loans was acquired from a European bank on what management saw as attractive terms. Good progress on fund raising and fund launches was highlighted, while a debt extension for Intermediate Capital itself was completed, extending loan maturities to 2016.
Intermediate Capital Group plc is an independent mezzanine provider with investment portfolios in Europe, Asia Pacific and the United States. Just at the mezzanine lies between two conventional floors in a building, so mezzanine finance fills the gap between senior bank loans (which normally have first right of repayment in the event of financial difficulty) and equity capital. The company operates through two business groups: The Fund Management Company (FMC) and The Investment Company (IC). FMC is the operating vehicle of ICG plc that sources and manages investments on behalf of the Investment Company (IC) and its third-party funds. IC is the investment unit of ICG plc and co-invests alongside its third party funds.
Mezzanine Funds Our mezzanine portfolio performance continues to be resilient underpinning a solid performance for our mezzanine funds. We have a strong pipeline of investment opportunities, closing three deals in the quarter and, are in exclusivity on a fourth. Our Asia Pacific 2008 Fund supported the acquisition of SCF, a leading provider of specialist containers in the Australian market, in the quarter and is now 55% invested. This is our second ICG-sponsored transaction in Australia, following the acquisition of Ventura in the final quarter of last year. Our European Fund V supported a management led secondary buy out of Symington's, a UK food business with a focus on value and convenience products. In addition, we acquired a £256 million portfolio of performing loans from a European bank on attractive terms. We are making progress towards the €2bn target for European Fund V and the launch of a Longbow successor fund. Credit Funds Our credit portfolios have been defensively positioned and are showing resilience in the current market. As a result, our loan funds continue to deliver a strong performance, with default rates remaining minimal. During the quarter we have continued to invest the expanded segregated mandate to manage a €350 million portfolio of senior loans on behalf of a European institution. We are making good progress towards expanding our investment product range with the launch of two new credit fund products, ICG Senior Debt Partners and Total Credit. Investment Company The Investment Company's portfolio performance remains resilient, although, the general economic conditions are impacting a small number of our weaker assets. A total of £41 million of principal repayments have been received in the quarter and £10 million of rolled up interest has been crystallised. New investments totalling £88 million were made during the quarter. These primarily comprise the SCF and Symington transactions and the acquisition of the loan portfolio mentioned above. Balance Sheet Funding We have successfully completed the legal documentation for the extension of £640 million of debt that was maturing in May 2013 for a further three years. The balance sheet remains strong with unutilised bank lines of £449 million at 30 June 2012.
Intermediate Capital Group plc (ICG) releases its Interim Management Statement for the period to 9 July 2012 Highlights AUM rises 3.5% to €11.8 billion since beginning of the financial year Resilient portfolio and strong pipeline of investment opportunities Good progress on fund raising and fund launches Debt extension completed; maturities extended to 2016 Fund Management Company Assets under management have increased 3.5% since the start of the financial year to €11.8 billion.
http://www.investegate.co.uk/Article.aspx?id=20120710070025H5369
INTERMEDIATE IN TALKS ON SYMINGTON’S STAKE, SUNDAY TIMES SAYS Intermediate Capital Group Plc (ICP) is in talks to buy a stake in Symington’s, a U.K. food producer which is seeking capital to buy new brands, the Sunday Times reported, without saying how it got the information. Symington’s, owned by Bridgepoint Development Capital, may be looking to buy Premier Foods Plc (PFD)’s Angel Delight and Birds Custard brands, the newspaper reported, and has been exploring ways to raise cash. Intermediate Capital may purchase a “big” stake, the Sunday Times said, without further details. Source: http://www.businessweek.com/news/2012-05-27/intermediate-in-talks-on-symington-s-stake-sunday-times-says
PROFITS SOAR AT INTERMEDIATE CAPITAL Intermediate Capital, the mezzanine financing company, has hiked its dividend and grown profits despite strong Eurozone headwinds. Adjusted profits before tax in the 12 months to the end of March were £198.8m compared to £190.1m in the prior year. Earnings per share increased from 32.6p to 47.7p leaving the company headroom to announce a final dividend of 13p per share, bringing the total to 19p, up from 18p in 2010/2011. Third party assets under management declined 3% to €11.4bn, which Intermediate claims is due to the run off of old funds exceeding funds raised. It’s quite easy to understand why, with the Eurozone debt crisis making investors panicky about putting their money anywhere - although Intermediate Capital argues its model of providing different forms of credit at a time when credit from orthodox sources, like banks, is drying up, ought to stand it in good stead. Commenting on the results, Christophe Evain, the Chief Executive Officer said:: "Our portfolio has shown resilience in uncertain economic times and our investment pace has picked up in recent months. “We have recently acquired our third portfolio of discounted senior loans from a European bank and we have made our second sponsorless investment in Australia. In addition, we are at advanced stages in a number of new transactions. The economic outlook remains uncertain and we will continue to be extremely vigilant when making investment decisions.” The market was clearly impressed, Intermediate Capital shares were 7.3% up at 08:27. Source: http://www.sharecast.com/cgi-bin/sharecast/story.cgi?story_id=20113240 See also F.T. - ICG soars 16% as it steals a march on banks http://www.google.com/url?sa=t&rct=j&q=ICG%20soars%2016%25%20as%20it%20steals%20a%20march%20on%20banks%20%20%20%20By%20Stanley%20Pignal%20%20%20%20Fresh%20financing%20and%20the%20prospect%20of%20capitalising%20on%20European%20banks%E2%80%99&source=web&cd=1&ved=0CC0QFjAA&url=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fa7e9a8ec-a429-11e1-84b1-00144feabdc0.html&ei=kYzCT-HKLqa50QXf4uGfCg&usg=AFQjCNF-UtegbrQ7_pGMaw8faqpswgI9lg P.S. Here's a couple of links about SCLP, one of the hottest stocks at the moment: http://www.euroinvestor.com/community/discussionthread.aspx?threadid=252803 http://www.euroinvestor.com/community/discussionthread.aspx?threadid=253089
Cking - howdy - yes I have some sort of OCD issue! it does interest me though very much as to how shares perform or not as the case may be - It takes some understanding at times!
Intermediate Capital Group has signed a deal to sell CPA, its patent business, to private equity firm Cinven for £950m. CPA, which looks after the intellectual property of anything from software to cereal recipes, was bought by ICG just two years ago for £440m. The trend has seen CPA's value and earnings more than double since ICG's investment. CPA's last set of reported accounts showed earnings before interest, tax, depreciation and amortisation of £77m. Cinven beat rival BC Partners in a hotly contested auction that saw the asking price for Jersey-based CPA shoot up almost £300m from original estimates. Shares in ICG, known predominantly for its junior debt funds that back buy-out deals, edged up 3.8p to 250.7p, The Telegraph reports.