Intermediate Capital Group Plc (LON:ICG) has announced its final results for the year ended 31 March 2024.
Highlights
- AUM of $98bn1; fee-earning AUM of $70bn, up 11%2 compared to FY23 and five-year annualised growth of 17%2
- Fundraising of $13.0bn, including 31% from North America and 11% from Wealth channel. LP Secondaries held its final close at the hard cap of $1.0bn
- Record management fees of £505m, up 5% compared to FY23 (+11% excluding catch-up fees)
- Performance fees of £74m
- Fund Management profit before tax of £375m, up 21% compared to FY23
- Net Investment Returns of £379m (13%); Investment Company profit before tax of £223m; NAV per share of 801p
- Total ordinary dividend per share for FY24 of 79p, representing the 14th consecutive annual increase
- Revised medium-term guidance, including fundraising target of at least $55bn in aggregate in the next four years (see page 2)
Note: unless otherwise stated the financial results discussed herein are on the basis of Alternative Performance Measures (APM) – see page 3.
1 See page 6 for details of a methodology change to AUM; 2 On a constant currency basis.
William Rucke, Intermediate Capital Group Chair “ICG’s performance over the year adds to an already-strong track record of delivering growth across cycles.
In a fast-moving environment, we remained focused on executing our strategy to serve our clients and to grow our business.
During the year, the Board has worked closely with the executive team to ensure that ICG has the right strategy, financial and human capital resources to continue to succeed in the coming decades.
The strength of the ICG platform and the benefits of our breadth at increasing scale are evermore visible in our results.”
Benoît Durteste CEO and CIO “The entire ICG team should be proud of the results we are reporting today, in the 30th year since we listed.
We are a manager of choice for our clients, in a global market that will increasingly reward those with strong track records and resilient business models. We have a number of large, globally-relevant flagship strategies; an exciting set of scaling products; and in FY24 we secured client commitments of almost $1.5bn across three first-time funds.
Our broad waterfront of products enables us to react to the needs of our clients and portfolio companies. In the current market we are benefiting from an environment in which strategies that invest in credit, structured transactions, and which provide liquidity solutions are particularly attractive.
We are demonstrating long-term financial growth. Our management fee income has reached over half a billion pounds for the first time ever; our FMC profits have grown for the 10th consecutive year; and our balance sheet has proven its strategic and financial value.
Our strategy of scaling up and scaling out is delivering multiple levers of growth as we continue to build ICG for further success in the years ahead.”
PERFORMANCE OVERVIEW
Historical performance
Unless stated otherwise, the financial results discussed herein are on the basis of alternative performance measures (APM), which the Board believes assists shareholders in assessing the financial performance of the Group. See page 3 for further information.
Financial performance
| Year ended31 March 2023 | Year ended 31 March 2024 | Year-on-year growth1 | Last five years CAGR1,2 | |
| AUM | $80.2bn | $98.4bn | 23% | 20% |
| Fee-earning AUM | $62.8bn | $69.7bn | 11% | 17% |
| Management fee income | £481.4m | £505.4m | 5% | 21% |
| Performance fee income | £19.6m | £73.7m | 276% | 28% |
| Annualised Net Investment Return % | 4% | 13% | 11%3 | |
| Fund Management Company profit before tax | £310.7m | £374.5m | 21% | 21% |
| Group profit before tax | £258.1m | £597.8m | 132% | 17% |
| Group earnings per share | 80p | 182p | 126% | 14% |
| NAV per share | 694p | 801p | 15% | 10% |
| Dividend per share | 77.5p | 79.0p | 2% | 12% |
1 AUM on constant currency basis; 2 AUM and per share calculations based on 31 March 2019 to 31 March 2024. Dividend includes FY24 declared dividend; 3 Five year average.
Business activity
| Year ended 31 March 2024 | Fundraising | Deployment1 | Realisations1,2 |
| Structured and Private Equity | $5.4bn | $1.7bn | $0.8bn |
| Private Debt | $4.8bn | $3.8bn | $1.8bn |
| Real Assets | $1.0bn | $2.2bn | $0.9bn |
| Credit | $1.8bn | ||
| Total | $13.0bn | $7.7bn | $3.5bn |
1 Direct investment funds; 2 Realisations of fee-earning AUM.
| Medium-term financial guidance | |||||
| Fundraising | FMC Operating margin | Investment performance | |||
| Fundraising of at least $55bn in aggregate between 1 April 2024 and 31 March 20281 | In excess of 52% | Performance fees to represent c. 10 – 15% of total fee income | Balance sheet investment portfolio to generate low double digit % returns | ||
1 Assuming fundraising environment normalises in FY26.
COMPANY PRESENTATION
A presentation for shareholders, debtholders and analysts will be held at 09:00 BST today: join via the link on our website. A recording and transcript of the presentation will be available on demand from the same location in the coming days.
COMPANY TIMETABLE
| Ex-dividend date | 13 June 2024 |
| Record date | 14 June 2024 |
| Last date to elect for dividend reinvestment | 12 July 2024 |
| AGM and Q1 trading statement | 16 July 2024 |
| Payment of ordinary dividend | 2 August 2024 |
| Half year results announcement | 13 November 2024 |
This results 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.
USE OF ALTERNATIVE PERFORMANCE MEASURES
The Board and management monitor the financial performance of the Group on the basis of Alternative Performance Measures (APM), which are non-UK-adopted IAS measures. The APM form the basis of the financial results discussed in this review, which the Board believes assist shareholders in assessing their investment and the delivery of the Group’s strategy through its financial performance.
The substantive difference between APM and UK-adopted IAS is the consolidation of funds, including seeded strategies, and related entities deemed to be controlled by the Group, which are included in the UK-adopted IAS consolidated financial statements at fair value but excluded for the APM in which the Group’s economic exposure to the assets is reported.
Under IFRS 10, the Group is deemed to control (and therefore consolidate) entities where it can make significant decisions that can substantially affect the variable returns of investors. This has the impact of including the assets and liabilities of these entities in the consolidated statement of financial position and recognising the related income and expenses of these entities in the consolidated income statement.
The Group’s profit before tax on a UK-adopted IAS basis was above prior period at £530.8m (FY23: £251.0m). On the APM basis it was above the prior period at £597.8m (FY23: £258.1m).
The Group’s APM Net Investment Returns in FY24 include £60m of gains that had previously been recognised under UK-adopted IAS but not under APM. This is due to a change in classification of one asset that was originally expected to be transferred to a fund managed by ICG and that is now expected to be sold to third parties.
Detail of these adjustments can be found in note 4 to the consolidated financial statements on pages 29 to 85.
CHIEF EXECUTIVE OFFICER’S REVIEW
Marking 30 years since IPO
2024 is our 30th anniversary of being listed on the London Stock Exchange, and the entire Intermediate Capital Group team is proud to mark this milestone with the results we are reporting today. Since our IPO, we have generated a total shareholder return of 85.8x – substantially more than both the FTSE 100 and the S&P 500. Our total shareholder return has also outperformed both those indices over the last five and ten years1. Today we are a truly global business managing almost $100bn of AUM on behalf of over 680 clients across a wide range of private markets strategies, and we have demonstrated a consistent ability to scale up and to scale out – both strategically and financially.
The challenging environment over the last last twelve months – indeed, the last two years – has shown that we are a manager of choice for clients, who have continued to commit capital to our funds. The investment performance of our products has delivered significant value and as a firm we have scaled and broadened our capabilities and our platform – all of which positions us well to capture future growth opportunities.
Our focus on sustainability remains strong. During the past year, we have continued making progress towards our science-based decarbonisation targets and have further enhanced our approach to integrating sustainability factors in our investment decisions and engagement efforts. We were pleased that ICG retained its recognition as a leader in our field in a range of external sustainability ratings; for the third consecutive year we received the top AAA rating from MSCI and retained membership in the Dow Jones Sustainability Index (Europe)2, to name a few. I encourage you to read our Sustainability and People Report, which will be published in the coming weeks, for a more in-depth review of our progress.
Navigating today’s environment
The investment landscape across the industry during FY24 was nuanced. For more equity-focused strategies, transaction velocity reduced substantially across the market, with 2023 marking the second consecutive year that buyout volumes globally reduced3. By contrast, deployment in private debt strategies held up, taking advantage of the funding gap created by the leveraged loan and high yield bond markets being generally closed – over 80% of LBOs in Europe during 2023 were backed by direct lending strategies3. For many LPs, the level of realisations has been a significant challenge over the last 24 months and a differentiator as they select managers. DPI has been described as “the new IRR”, this has become a competitive advantage for ICG. Consistently crystallising performance has long been an expressly avowed feature of our investment approach, and we are reaping the benefits today, with a number of our strategies having a proven track record of being top decile.
From a deployment perspective, strategies that invest in credit, structured transactions and liquidity solutions are attractive in today’s environment. Our broad waterfront of products has enabled us to capitalise on these conditions for our clients, which is particularly notable in the business activity during the year within our flagship Direct Lending strategy, and in our families of secondary4 and corporate5 strategies.
Looking ahead, we do not see signs of a notable, imminent and sustained increase in traditional buyout volumes. However, we do believe that companies will continue to seek to raise capital to support their growth and ownership ambitions, and ICG’s range of products enables us to provide flexible solutions across the capital structure that we expect to continue to be attractive in this environment. Further reflections on trends and our outlook relative to our principal areas of risk can be found on pages 19 – 27.
Building for growth
Our focus on building the Intermediate Capital Group platform to have breadth at scale across our investment strategies and our client base; our reputation for investment excellence; and our human and financial capital, all combine to create a powerful and growing ecosystem that positions us for long-term success and enables us to proactively manage through market cycles. In a strong market, the vast majority of managers appear to flourish; in more challenging environments, the benefits of strong investment discipline and a sustainable, long-term business model become more apparent.
That we are in an attractive position in this respect is clear in our financial performance: in FY24 we raised $13.0bn, exceeding our accelerated fundraising guidance; our fee-earning AUM grew, closing the year at $69.7bn; management fees of £505m surpassed half a billion pounds for the first time ever; portfolio company performance and transaction visibility led to performance fees of £74m being recognised and NIR of 13%; and FMC PBT reached £375m, growing for the tenth consecutive year.
Supporting this growth, we have continued to invest in our platform – we now have 635 employees6 globally and operate out of 19 locations. During the year we opened an office in Canada, grew our presence in Poland and India, and made a number of hires across the firm, in particular within our marketing and CBS teams. While we expect to continue to welcome more colleagues in FY25 at all levels, we have already made substantial investments to position the business and platform for further future growth.
Meeting client demand
Of the $13.0bn fundraising during the year, 31% came from the US and 11% came from the Wealth channel – both areas of focus that we have previously highlighted. We enjoyed strong demand for the two flagship strategies we had in the market, Strategic Equity (which raised $3.5bn) and European Direct Lending (Senior Debt Partners, which raised $3.7bn), as well as for a number of scaling strategies including Europe Mid-Market II and North America Credit Partners III. All four of these funds are already larger than their predecessor vintages and are continuing to raise.
The current fundraising backdrop is especially difficult for first time funds, and against that backdrop we are extremely pleased with three notable successes: ICG Life Sciences was selected as an Investment Partner for the UK Government-backed Long-term Investment for Technology and Science (LIFTS) initiative; we raised $0.5bn for our Real Estate Equity’s “Metropolitan” fund family; and we had the final close for the first vintage of ICG LP Secondaries, with a materially oversubscribed fundraise for the strategy closing at $1.0bn. These successes build on our differentiated ability to broaden our waterfront of products organically; underline the trust our clients are willing to place in us; and have opened up new asset classes for ICG in which to grow our AUM in the coming years.
Since 1 April 2021 we have attracted more capital more quickly than we anticipated, raising $46bn over three years. During this time we have grown our client base by 43%, from 476 to 681, and these new clients contributed 35% of our fundraising in the period. This is a material step-up in our scale globally, and as more of our strategies get incrementally larger, we expect to see further benefits of our growing client franchise across our platform.
Looking ahead
Today our waterfront of products is broad and attractive. We have a number of globally relevant, large, flagship strategies that have considerable runway for further growth; and an exciting group of scaling strategies that provide multiple levers to expand and diversify our business globally in the coming years.
We are working on a number of promising first-time funds – including Real Estate Asia and Infrastructure Asia – and we are launching our first wealth-focused product, ICG Core Private Equity. This is an institutional-quality US evergreen fund giving clients differentiated access to private equity through the secondary market.
I remain very confident of the market’s ongoing evolution and innovation. Since we listed 30 years ago ICG has been growing and investing successfully for the benefit of our clients and our shareholders, and today we have the market opportunity combined with the strategic and financial resources that position us for decades of growth to come.
Thank you for your continued support.
Benoît Durteste
- Source: Bloomberg as of 31 March 2024.
- MSCI and S&P Global.
- Source: Bain & Company, Global Private Equity Report 2024.
- Strategic Equity and LP Secondaries.
- European Corporate, Europe Mid Market and Asia Corporate.
- Full Time Equivalent basis.
