An introduction. May 2018

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Silas Lester
6 years ago
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1 An introduction May 2018

2 Our strategy To grow our specialist asset management activities 2 Invest selectively Grow assets under management Manage portfolios to maximise value Generate strong shareholder returns to invest in growth and pay sustainable dividends

3 INVESTMENT IN NEW FUNDS Operating model 3 INVESTING Fund deployment Fund performance and track record FUNDRAISING Gross fundraising to average 6.0bn on a 3 year rolling basis Maintain fee level Selective product expansion IC PROFITABILITY IC gross return on assets Manage risk across all portfolios FMC PROFITABILITY FMC operating margin above 43% Manage risk across all portfolios CAPITAL ALLOCATION Return on equity above 13% Gearing x BUSINESS GROWTH Reinvest to drive returns Optimise co-investment ratio for each strategy SHAREHOLDER RETURNS Dividend policy targets paying out 80%-100% of FMC post tax profits Return surplus cash

4 Strategic priorities 4 FY10 FY18 Strategic transition FY19 FY23 Recognised as the leading European specialist asset manager Enhanced brand and client base Developed new strategies to deliver gross fundraising target Developed a scalable infrastructure platform Established an in-house distribution platform Achieved greater capital efficiency Optimising co-investment ratio Increased FMC operating margin Increased fundraising target of three year rolling average 6.0bn per annum FMC becomes dominant profit contributor FMC operating margin to exceed 43% Selectively expand number of strategies, and optimise profit from existing strategies Optimise balance sheet to drive growth in the fund manager Maintain an efficient capital base Dividends linked to FMC profit

5 Diverse product offering Accelerated growth across our four strategic asset classes 5 Corporate Investments Senior direct lending, subordinated debt & equity investments 15.3bn AUM AUM ( bn) Capital Markets Investments Multi-asset credit, syndicated loans, CLOs and structured credit strategies bn AUM Real Asset Investments Real estate investment in senior debt, subordinated debt & equity 3.6bn AUM Secondary Investments Private equity fund restructuring and private equity fund of funds 1.7bn AUM - FY10 FY12 FY14 FY16 FY18 Secondary Investments Real Asset Investments Capital Market Investments Corporate Investments

6 Maturity of existing strategies Significant, foreseeable growth from existing strategies 6 Mature investment strategy Europe CLOs Europe Mezzanine ICG Enterprise Trust European Senior Debt UK Real Estate Mezzanine US CLOs Asia Pacific Mezzanine Real Estate Senior Debt Strategic Equity North America Private Debt Japan Mezzanine Real Estate Development Australia Senior Loans European Loans Total Credit Alternative Credit Sale and Leaseback Global Loans New investment strategy Time

7 Potential new strategies Proven ability to add complementary strategies strategies strategies 2010 to date 18 strategies Potential new strategies European Mezzanine European Mezzanine Asia Pacific Mezzanine ICG Enterprise Trust Real Estate Europe Real Estate PRS European CLOs European CLOs European Mezzanine Real Estate Senior Debt Private Equity Solutions Asia Real Estate Opportunities Fund Asia Pacific Mezzanine European Loan Fund European CLOs European Loans US Private Debt Total Credit Private Debt Latin America European Mezzanine Small Cap Fund of Funds Secondaries US CLOs Real Estate Development North America Separate Account Global Senior Debt Strategic Equity Alternative Credit Real Estate Asia Infrastructure Japan Mezzanine European Senior Debt Australian Senior Debt Real Estate Mezzanine Global Loans Sale and Leaseback

8 Strength of closed end funds Long term value creation and market downside protection 8 Increased multi-year fundraising target Visibility of fundraising Long term predictable fee streams Protection in a market downturn Increasing operating leverage Capital available for deployment Increased operating margin target Protection in a market downturn

9 Performance

10 Financial highlights FMC profits exceed those of the IC for the first time months to 12 months to m 31 March March 2017 Fund Third party fee income Management IC management fee Company Other income Operating costs (114.8) (105.7) FMC profit Investment Interest income Company Other income Net capital gains Impairments (25.2) (48.0) Net investment returns Interest expense (56.6) (53.9) Operating costs (86.2) (77.3) IC management fee (17.8) (18.1) IC profit Group Profit before tax Management fees are charged on either a committed or invested capital basis, depending on the fund Performance fees are earned on direct lending funds, subject to meeting the performance hurdle All costs associated with the raising and investing of funds, including central infrastructure, are incurred by the Fund Management Company Investment returns are earned either as interest income or capital gains, depending on the instrument, less Impairments incurred on underperforming assets All costs associated with being a listed company are incurred by the Investment Company, plus the FMC charges for managing these assets ¹These are non IFRS GAAP alternative performance measures and represent internally reported numbers excluding the impact of fair value movements on derivatives (FY18: 6.5m; FY17: 1.3m). Internally reported numbers exclude the impact of the consolidation of 14 credit funds following the adoption of IFRS 10

11 Balance sheet and capital strategy Balance sheet flexibility supports growth 11 m 31 March March 2017 Assets Loans and investments 1,899 1,712 Assets for syndication Cash Other Total assets 2,527 2,501 Liabilities Borrowings 1,021 1,119 Other metrics Other Shareholders funds 1,318 1,173 Total liabilities 2,527 2,501 Gearing ratio 0.77x 0.95x Debt facilities 1,503 1,600 Available headroom Cash flows from operating activities (49) 710 Balance sheet portfolio comprising of investments made either alongside funds as co-investment or as seed capital Generally shorter term investments. Utilised to support fundraising activities or the development of new strategies Total drawn debt facilities with diversified sources and maturities of financing. Provided by relationship banks and private placements. ICG s target range is x. It is expected that gearing will return to this range over the course of the year with investment in new strategies Internally reported numbers exclude the impact of the consolidation of 14 credit funds following the adoption of IFRS 10

12 Balance sheet Supporter of fundraising and development of new strategies 12 Mature investment strategy Supports Accelerates Develops Time New investment strategy Enabler and accelerator of growth = competitive advantage

13 Balance sheet returns A reflection of historic investment decisions 13 Net investment return trend m 2,500 2,000 1,980 1,958 1,891 1,903 1,500 1, % 12.1% 13.7%* 12.6% FY15 FY16 FY17 FY18 Average Balance Sheet Portfolio (inc. AFS) Net Investment Return * Net Investment return in FY17 disclosed excluding realised gains recycled from AFS

14 Performance drivers

15 Fundraising market Long term, structural trend towards alternatives 15 Available capital for investment by asset class $bn 1,800 1,600 1,400 1,200 1, Private equity Real Estate Infrastructure Private debt Natural resources Source: Preqin 2018, assets under management by asset class

16 Fundraising success Record fundraising year driven by Senior Debt Partners 16 bn Fundraising expectations c 6bn pa* Funds raised in FY18 by strategy ( m) Non US strategies 5.1bn ,053 Australian Senior Loans European CLOs Real Estate Funds 5 Credit Funds ,003 SDP - Europe sleeve Secondaries US Private Debt 1 0 FY14 FY15 FY16 FY17 FY18 US strategies 2.7bn 716 1,222 US CLOs SDP - Non Europe sleeve * Average on a three year rolling basis

17 Client base Sticky institutional investor base and new client wins 17 Investors by Geography 2012 Investors by Geography 2018* 16% 13% 69 investors 51% EMEA (excl.uk & Ireland) Americas UK & Ireland 21% 331 investors 38% EMEA (excl. UK & Ireland) Americas UK & Ireland Asia Pacific 20% Asia Pacific 20% 21% Investors by Type 2012 Investors by Type 2018* 10% 7% 6% 2% 2% 26% Pension 69 investors Fund of Funds (FoF) Insurance Company Asset Manager Bank 5% 3% 6% 8% 5% 3% 34% Pension 331 investors Fund of Funds (FoF) Insurance Company Asset Manager Bank Other 10% 19% Other Sovereign Wealth Fund Endowment/Foundation 11% 6% Sovereign Wealth Fund Endowment/Foundation Family Office 18% Family Office 20% Consultant *As at 31 March 2018

18 Investing our direct investment funds Capital deployment strong for all our larger strategies 18 Direct investment funds¹ m 5,000 4,500 4,000 3,500 3, , , Fund invested at 31 March % 100% North America I SDP II Longbow IV 3,000 1,064 80% Europe Fund VI Asia Pac III 2,500 60% Strategic Secondaries II 2,000 3,787 Japan 1,500 3,327 40% 1, ,424 20% SDP III 0 FY16 FY17 FY18 0% 0% 20% 40% 60% 80% 100% 120% Investment period Corporate Investments Real Asset Investments Secondary Investments ¹ Amounts invested include third party and balance sheet capital Size of bubble indicates third party AUM

19 Global platform Strong deployment whilst retaining investment discipline 19 Nordics US/ Canada UK France Spain Benelux Germany Japan Hong Kong Singapore Key: Corporate Investments Capital Market Investments Real Asset Investments Secondary Investments Australia Single investment framework Long term relationships Local access Highly selective Proprietary information database

20 Fund performance Portfolio performance provides track record for fundraising 20 Fund Target MM Realised MM ICG Europe Fund IV 2006 (fully realised March 2015) 1.5x 1.6x IRR on realised assets ICG Minority Partners Fund 2008 (fully realised January 2016) 1.9x 2.0x ICG Recovery Fund 2008 (fully realised March 2017) 2.0x 1.9x Longbow UK Real Estate Debt Investments II (fully realised April 2017) 1.4x 1.6x ICG Mezzanine Fund III x 1.9x ICG Europe Fund V 1.6x 1.8x Senior Debt Partners I n/a 1.2x Senior Debt Partners II n/a 1.2x Asia Pacific Mezzanine Fund I x 1.9x Asia Pacific Fund II x 1.9x Intermediate Capital Asia Pacific Fund III 1.7x 1.5x Nomura ICG Fund 1.3x 1.1x North America Private Debt Fund n/a 1.4x ICG-Longbow UK Real Estate Debt Investments III n/a 1.3x ICG-Longbow UK Real Estate Debt Investments IV n/a 1.2x 0% 10% 20% 30% 40% Performance hurdle Performance above hurdle

21 Profitability Fee rates maintained across asset classes 21 Weighted average fee rate¹ by strategy FY % 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% Corporate Investments - Private Debt Corporate Investments - SDP Capital Market Investments Real Asset Investments Secondary Investments Group FY16 FY17 FY18 ¹ Weighted average fee rates based on average fee earning AUM during the year and excludes any performance fees and catch-up fees

22 FMC operating margin Operating margin above target with increased scalability 22 m Target Operating m argin 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0 FY14 FY15 FY16 FY17 FY18 Costs (lhs) Income (lhs) Operating margin (rhs) 0%

23 Summary and conclusion

24 Investment case Well positioned for growth and increased shareholder value 24 Excellent fundamentals Fundraising supported by long term trend towards alternatives AUM and fee streams replenished with recent fundraising activity Plentiful third party capital, supported by a strong balance sheet, available for investment Locked in value Earnings are underpinned by long term, predictable and highly cash generative fee income streams Proven through the cycle investment performance over 29 years AUM growth Sticky institutional investor base and new client wins Extensive product pipeline Operating and capital efficiency Investment in our platform has positioned us for growth Commitment to enhance operating and capital efficiency

25 Appendix 25

26 Fee profile Private Debt & Secondaries PE Funds Fees earned on committed capital 26 Management fees are charged on commitments from first closing of the fund Fee profile Management fees are charged on invested capital after end of investment period and run-off over years 5-12 as assets are realised Investment period end Visibility of locked-in management fee income stream over total fund life of years Performance fees are available in later years of fund life, subject to performance conditions Private Debt & Secondaries PE funds are raised sequentially with a typical fundraising cycle of 4-5 years Typical fee rates: Management fee of 1.5% on commitments during investment period; 1.25% of invested capital thereafter Performance fee is 20% of 20% profit, subject to 8% net IRR cash hurdle Year Management fees Performance fees AUM

27 Fee profile - Real Estate Funds Fees earned on invested capital basis 27 Management fees are charged on invested capital Fee profile Management fees are earned as fund invests over a 2-3 year investment period Fees run-off over years 3-8 as assets are realised Investment period end Visibility of locked-in fee income stream over total fund life of 6-8 years Performance fees are available in later years of fund life, subject to performance conditions Real estate funds are raised sequentially with a typical fundraising cycle of 2-3 years Typical fee rates: Management fee of % on invested capital for Private Debt and Development funds; 0.4% for Senior Debt Certain funds pay performance fee, subject to cash IRR hurdles (no catch up) Year Management fees Performance fees AUM

28 Fee profile - Credit Funds Fees earned on invested capital basis 28 Management fees are charged on invested capital Fee profile Management fees are earned as fund invests over a c.3 year investment period Fees run-off over years 3-8 as assets are realised Investment period end Visibility of locked-in fee income stream over total fund life of 6-8 years Performance fees are available in later years of fund life, subject to performance conditions Credit funds are raised sequentially with a typical fundraising cycle of c.3 years Typical fee rates: Management fee of 0.75% on invested capital Certain funds pay performance fee, subject to cash IRR hurdles Year Management fees Performance fees AUM

29 Fee profile - CLO Funds Fees earned on invested capital and fully invested from close 29 Management fees are charged on invested capital Management fees are earned on fully invested portfolio from close which remains fully invested for 4 year re-investment period Fee profile Investment period end Fees run-off over years 4-8 as assets are realised Visibility of locked-in fee income stream over total fund life of up to 8 years CLO platform is highly scalable and funds can be raised sequentially (multiple funds per year) Typical fee rates: Management fee of c.0.5% on invested capital No performance fee Year Management fees AUM

30 Disclaimer 30 THE MATERIALS BEING PROVIDED TO YOU ARE INTENDED ONLY FOR INFORMATIONAL PURPOSES AND CONVENIENT REFERENCE AND MAY NOT BE RELIED UPON FOR ANY PURPOSE. THIS INFORMATION IS NOT INTENDED TO PROVIDE, AND SHOULD NOT BE RELIED UPON, FOR ACCOUNTING, LEGAL, TAX ADVICE OR INVESTMENT RECOMMENDATIONS ALTHOUGH INFORMATION HAS BEEN OBTAINED FROM AND IS BASED UPON SOURCES THAT INTERMEDIATE CAPITAL GROUP PLC ("ICG PLC") CONSIDERS RELIABLE, WE DO NOT GUARANTEE ITS ACCURACY AND IT MAY BE INCOMPLETE OR CONDENSED. ALL OPINIONS, PROJECTIONS AND ESTIMATES CONSTITUTE THE JUDGMENT OF ICG PLC AS OF THE DATE OF THE MATERIALS AND ARE SUBJECT TO CHANGE WITHOUT NOTICE. ICG PLC DISCLAIMS AND HEREBY EXCLUDES ALL LIABILITY AND THEREFORE ACCEPTS NO RESPONSIBILITY FOR ANY LOSS (WHETHER DIRECT OR INDIRECT) ARISING FOR ANY ACTION TAKEN OR NOT TAKEN BY ANYONE USING THE INFORMATION CONTAINED THEREIN. THESE MATERIALS ARE NOT INTENDED AS AN OFFER OR SOLICITATION WITH RESPECT TO THE PURCHASE OR SALE OF ANY SECURITY OR INVESTMENT INTEREST AND MAY NOT BE RELIED UPON IN EVALUATING THE MERITS OF INVESTING IN ANY INVESTMENT INTERESTS. THESE MATERIALS 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. NEITHER ICG PLC OR ANY OF ITS AFFILIATES MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED HEREIN, AND NOTHING CONTAINED HEREIN SHALL BE RELIED UPON AS A PROMISE OR REPRESENTATION WHETHER AS TO PAST OR FUTURE PERFORMANCE. THESE MATERIALS (INCLUDING THEIR CONTENTS) ARE CONFIDENTIAL, BEING FOR USE ONLY BY THE PERSONS TO WHOM THEY ARE ISSUED. DISTRIBUTION OF THESE MATERIALS TO ANY PERSON OTHER THAN THE PERSON TO WHOM THIS INFORMATION WAS ORIGINALLY DELIVERED AND TO SUCH PERSON S ADVISORS IS UNAUTHORISED AND ANY REPRODUCTION OF THESE MATERIALS, IN WHOLE OR IN PART, OR THE DISCLOSURE OF ANY OF THEIR CONTENTS, WITHOUT THE PRIOR CONSENT OF ICG PLC OR ITS AFFILIATES IS PROHIBITED. THIS COMMUNICATION IS LIMITED TO AND DIRECTED TO THOSE PERSONS INVITED TO THE PRESENTATION. IT IS THEREFORE ONLY DIRECTED AT PROFESSIONAL CLIENTS, AS DEFINED BY THE FINANCIAL CONDUCT AUTHORITY. ANY OTHER PERSONS SHOULD NOT SEEK TO RELY UPON THE INFORMATION CONTAINED HEREIN. COLLECTIVE INVESTMENT SCHEMES REFERRED TO HEREIN ARE NOT REGULATED FOR THE PURPOSES OF THE UK S FINANCIAL SERVICES AND MARKETS ACT 2000 AND ARE NOT AVAILABLE TO MEMBERS OF THE GENERAL PUBLIC. ICG PLC IS AUTHORISED AND REGULATED IN THE UNITED KINGDOM BY THE FINANCIAL CONDUCT AUTHORITY. THESE MATERIALS ARE NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION IN AND MAY NOT BE TAKEN OR TRANSMITTED INTO THE UNITED STATES OF AMERICA, CANADA, JAPAN, SOUTH AFRICA OR AUSTRALIA AND MAY NOT BE COPIED, FORWARDED, DISTRIBUTED OR TRANSMITTED IN OR INTO THE UNITED STATES OF AMERICA, CANADA, JAPAN OR AUSTRALIA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD BE UNLAWFUL. THE DISTRIBUTION OF THESE MATERIALS IN ANY OTHER JURISDICTIONS MAY BE RESTRICTED BY LAW AND PERSONS INTO WHOSE POSSESSION THESE MATERIALS COME SHOULD INFORM THEMSELVES ABOUT, AND OBSERVE ANY SUCH RESTRICTIONS. ANY FAILURE TO COMPLY WITH SUCH RESTRICTIONS MAY CONSTITUTE A VIOLATION OF THE LAWS OF THE UNITED STATES, CANADA, JAPAN OR AUSTRALIA OR ANY OTHER SUCH JURISDICTION. THESE MATERIALS DO NOT AND ARE NOT INTENDED TO CONSTITUTE, AND SHOULD NOT BE CONSTRUED AS, AN OFFER, INDUCEMENT, INVITATION OR COMMITMENT TO PURCHASE, SUBSCRIBE TO, PROVIDE OR SELL ANY SECURITIES, SERVICES OR PRODUCTS OF INTERMEDIATE CAPITAL GROUP PLC ( ICG PLC ) IN ANY JURISDICTION OR TO PROVIDE ANY RECOMMENDATIONS FOR FINANCIAL, SECURITIES, INVESTMENT OR OTHER ADVICE OR TO TAKE ANY DECISION.

Full year results presentation. 22 May 2018

Full year results presentation 22 May 2018 Operational highlights Fundraising and capital deployment at record levels 2 Total AUM up 20% to 28.7bn, with 7.8bn of new money raised Fundraising driven by