Embargoed until 7.00am on
Tuesday 16 March 2010
INTERMEDIATE CAPITAL GROUP PLC -
STRATEGY UPDATE ON FUND MANAGEMENT BUSINESS
AND BOARD SUCCESSION
Intermediate Capital Group PLC ("ICG" or "the Company") today announces its
strategy to grow its fund management business and changes to the Board to
support this growth.
Strategy to grow the fund management business
Over the past ten years, ICG has materially grown both its balance sheet funded
investment portfolio and its third party fund management business generating
strong investment returns over the cycle and building a dependable fee income
stream. As a result of this growth in assets under management, we currently
manage approximately €12 billion, comprising €3 billion of balance sheet
portfolio investments and €9 billion of third party funds.
Changes in the competitive landscape as a consequence of the recent banking
crisis and global recession have resulted in much improved investment
opportunities for investors with access to capital. ICG's investment expertise
and local network positions us well to take advantage of these opportunities.
However the banking crisis has reduced the attractiveness of debt capital
available to businesses, thereby constraining the growth of ICG's balance sheet
in the medium term. Therefore future growth in assets under management will be
primarily derived from growth in third party funds under management.
It is now our ambition to double assets under management over the next five
years through a greater focus on our fund management operation and enhanced
marketing capabilities. We aim to be a leading global alternative asset manager
specialising in mezzanine capital, growth capital, buyout debt and related asset
classes.
Investment expertise will continue to be the backbone of our operation and the
Company will maintain its core investment philosophy based on in-depth credit
analysis and stringent asset selection, underpinned by an extensive local
network of investment professionals.
ICG will continue to co-invest using its balance sheet alongside ICG's third
party funds and this will of course be an important contributor to group
earnings.
Given the new strategic focus on growing the fund management business and the
expected increased contribution to group earnings from this business over time,
we will report the profit of this unit separately from the profits generated by
the balance sheet in the segmental note, starting with the preliminary results
for the twelve months to 31 March 2010 to be released on 2 June 2010.
Board succession
We are delighted to announce the appointment of Christophe Evain as Chief
Executive Officer ("CEO") as successor to Tom Attwood, who will remain on the
Board of the Company and will focus on fund investors. Tom will continue to
chair the Executive Committee. This appointment will take immediate effect.
Christophe Evain has been with ICG for 16 years and a Managing Director since
2005. He was responsible for the establishment of ICG's international franchise,
opening the company's Paris office in 1995, Hong Kong office in 2001 and New
York office in 2007. In addition to his strategic remit as Chief Executive
Officer, Christophe will chair the Company's Investment Committees.
ICG also announces that John Manser, Chairman of ICG PLC, will not be standing
for re-election at the forthcoming Annual General Meeting on 13 July 2010 having
completed his term of office. Justin Dowley will succeed John Manser as
Chairman. Justin has been on the Board of ICG PLC and Chairman of the Audit
Committee since March 2006, and is Vice Chairman of Investment Banking at Nomura
International plc.
The Board of ICG PLC has decided to appoint Peter Gibbs to the Board as
Non-Executive Director. His appointment will become effective on 25 March 2010.
Peter brings a wealth of asset management experience to the Board. He was until
2005 Chief Investment Officer of Merrill Lynch's Investment Management
activities outside the US. His appointment adds considerably to the Board's
experience and knowledge of the asset management industry.
Tom Attwood said:
"Having worked closely with Christophe for over 13 years, I am particularly
pleased that he has agreed to take the role of CEO. He is my natural successor
and will make an excellent Chief Executive. He has been instrumental in the
geographic expansion of ICG's franchise. As the Company enters its next phase of
growth Christophe is uniquely placed to spearhead the strategic development of
this company and its fund management business. I am confident he will do very
well.
I will continue to be a member of the Executive Committee alongside Christophe,
Philip Keller and François de Mitry. Philip will continue to be responsible for
finance and infrastructure, while François is taking responsibility for our core
mezzanine business.
I'd also like to take this opportunity, on behalf of ICG, to thank John Manser
for his enormous contribution to the Company having served as Chairman for 9
years. I am delighted too that Justin has agreed to take on the role of
Chairman. He brings a deep understanding of financial services. I am confident
that he and Christophe will work well together in delivering the Company's
strategy."
Christophe Evain said:
"Tom has made a tremendous contribution to ICG during his tenure as CEO. Under
his leadership ICG has doubled assets under management and is now recognised as
the leading global independent mezzanine provider and one of the leading credit
funds managers in Europe. He has transformed ICG and established a strong
platform for further growth. ICG will continue to benefit from his insights and
wisdom. I am excited about leading the business through its next phase of growth
as we aim to be a global leader in alternative asset management."
ICG will hold a seminar for institutional equity investors and analysts today at
3.00 pm (by invitation only). An on demand video webcast of the event will be
available on ICG's website (www.icgplc.com <
http://www.icgplc.com/>) from
12.00pm on 17 March 2010.
Please note no update will be provided on current trading at the seminar.
Investor/Analyst enquiries:
Christophe Evain, Chief Executive Officer, ICG
PLC (020) 7628 9898
Tom Attwood, Managing Director, ICG
PLC (020) 7628 9898
Philip Keller, Finance Director, ICG
PLC (020) 7628 9898
Jean-Christophe Rey, Investor Relations, ICG
PLC (020) 7448 5876
Media enquiries:
Amanda Fong, Corporate Communications, ICG
(020) 7448 4156
Charlotte Kirkham, Tim Draper, M: Communications
(020) 7920 2331
The statements contained therein 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.
The written materials therein are not intended as an offer or solicitation with
respect to any security, are not intended for distribution to, or use by, any
person or entity in any jurisdiction or country where such distribution or use
would be contrary to local law or regulation, and 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 there from. 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.
About ICG
Founded in 1989 Intermediate Capital Group PLC ("ICG") is an alternative fund
manager specialising in credit risks. It is a leader in the management of
investments in mezzanine, minority equity, buyout debt and related assets. It
has approximately €12 billion under management in proprietary capital and third
party funds. ICG has a large and experienced investment team of investment
executives operating from its head office in London and offices in Paris,
Madrid, Stockholm, Frankfurt, Amsterdam, Hong Kong, Sydney and New York. Its
stock (ticker symbol: ICP) is listed on the London Stock Exchange. Further
information is available at: www.icgplc.com.
Appendix 1: Intragroup services and segmental reporting
The Fund Management Company will be the operating unit. As such it will carry
the bulk of the group's costs including the cost of the investment network, i.e.
the investment executives and the local offices, as well as the costs of most
support functions, principally Information Technology, Human Resources and
Marketing.
The Investment Company will be charged a management fee of 1% of the carrying
value of the investment portfolio by the Fund Management Company.
The cost of the finance, treasury and portfolio administration teams as well as
the cost attached to being a listed entity, will be allocated to the Investment
Company.
The cost of the Medium Term Incentive Scheme (MTIS) will be charged to the
Investment Company.
The remuneration of the Managing Directors (ex-share of MTIS) will be allocated
half to the Fund Management Company and half to the Investment Company.
By way of illustration:
Table 1 below shows the split of administrative expenses for the year to 31
March 2009 based on the above principles.
Table 2 below shows the future segmental reporting applied to the results for
the first half of the current year and to the results of the two prior years
based on the above principles.
Table 1: Future segmental reporting applied to administrative expenses for the
twelve months ended 31 March 2009.
+------------------------+-----------------------+
|12 months ended 31 March| 12 months ended 31 |
| 2009 (as reported) | March 2009 (new |
| £m | segmental split) |
| | £m |
| +----+------------------+
| | FM | BS |
+-----------------------------+------------------------+----+------------------+
|Staff costs | 42.4 |37.7| 4.7 |
| | | | |
|MTIS (PIK) | 23.4 | - | 23.4 |
| | | | |
|MTIS (Capital Gains) | 6.1 | - | 6.1 |
| | | | |
|Other administrative costs | 20.3 |17.6| 2.7 |
| | | | |
|Total administrative expenses| 92.2 |55.3| 36.9 |
+-----------------------------+------------------------+----+------------------+
Table 2: Future segmental reporting applied to the results for the six months
ended 30 September 2009, the results for the twelve months ended 31 March 2009
and the results for the twelve months ended 31 March 2008.
+------------------+------------------+------------------+
| Six months ended | 12 months ended | 12 months ended |
| 30 Sept. 2009 | 31 March 2009 | 31 March 2008 |
| (unaudited) | (unaudited) | (unaudited) |
| £m | £m | £m |
+---------------------+------------------+------------------+------------------+
|Fund Management | | | |
|Company | | | |
| | | | |
| | | | |
| | | | |
| Fee income | 41.5 | 80.2 | 72.6 |
| | | | |
| Third party | | | |
|funds | 27.3| 53.5| 49.5|
| | | | |
| Investment | | | |
|Company fee | 14.2| 26.7| 23.1|
| | | | |
| Other income | 1.1 | 6.0 | 5.9 |
| | | | |
| Administrative | | | |
|expenses | (19.8) | (55.3) | (54.8) |
| | | | |
| Fund Management| | | |
| Profit| 22.8 | 30.9 | 23.7 |
| | | | |
| | | | |
+---------------------+ | | |
|Investment Company | | | |
| | | | |
| | | | |
| | | | |
| Net Interest | | | |
|Income | 102.6 | 193.9 | 156.5 |
| | | | |
| Other income | 0.8 | 6.0 | 7.5 |
| | | | |
| Administrative | | | |
|expenses(1) | (17.8) | (30.8) | (28.2) |
| | | | |
| FMC charge | (14.2) | (26.7) | (23.1) |
| | | | |
| Impairments | (97.1) | (273.1) | (46.0) |
| | | | |
| Net capital | | | |
|gains(2) | 3.5 | 24.8 | 102.9 |
| | | | |
| FVM derivatives | 7.6 | 8.3 | 36.2 |
| | | | |
| Investment Profit| (14.6) | (97.6) | 205.8 |
| | | | |
| | | | |
+---------------------+------------------+------------------+------------------+
|Group | | | |
| | | | |
| Profit before tax| 8.2 | (66.7) | 229.5 |
+---------------------+------------------+------------------+------------------+
1. Administrative expenses include staff costs, MTIS on PIK and other
administrative costs as listed in Table1
2. MTIS on capital gains (included in administrative expenses in Table 1 has
been netted off capital gains in Table 2)
Appendix 2: Justin Dowley's biography
Justin Dowley is Chairman of the ICG Audit Committee. He is currently Vice
Chairman of Investment Banking at Nomura International plc, and a Non Executive
Director of Ascot Authority (Holdings) Ltd. He was previously a founder partner
of Tricorn Partners LLP, head of investment banking at Merrill Lynch Europe and
a Director of Morgan Grenfell, and is a Chartered Accountant.
Appendix 3: Peter Gibbs's biography
Peter Gibbs has a wealth of financial services experience in the Asset
Management sector. Having begun his career at Brown Shipley, he joined Bankers
Trust in 1985 as a Senior Portfolio Manager. In 1989 he joined Mercury Asset
Management (MAM) where he rose to become Head of the International Equities
Division. Following the acquisition of MAM by Merrill Lynch he was appointed
Co-Head of Equity Assets worldwide. In 2003 he became Chief Investment Officer
for Merrill Lynch's Investment Management activities outside the US.
Peter retired from Merrill Lynch at the end of 2005. He currently serves as
a Non-Executive Director of Evolution Group plc the financial services group,
Non-Executive Director of Impax Asset Management Group plc the environmental
asset manager, Director of Merrill Lynch (UK) Pension Plan Trustees Ltd and as a
Director of UKFI, the body set up by the UK Government to manage its investments
in financial institutions. He has also been a Non-Executive Director of
Bridgewell Group plc and was Chairman of Turquoise until it was acquired by the
London Stock Exchange plc.
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