Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Intermediate Capital Group PLC (ICGUF, Financial) reported near-record fundraising, with total assets under management (AUM) reaching $106 billion.
- Management fee income increased by 23% year-on-year, reflecting strong financial performance.
- The company has reinforced its leading positions in European direct lending and GP-led secondaries, with significant progress in scaling strategies.
- ICGUF's SDP V strategy direct lending fund raised just under $17 billion, marking the largest ever European direct lending fundraise.
- The company has seen a strong increase in client numbers, now close to 750, indicating growing market interest and client base expansion.
Negative Points
- The private equity market is experiencing a disconnect between perception and reality, with global private equity deployment and realizations running lower than previous years.
- Total fundraising volumes in the sector are down again in 2024, continuing a downward trend since 2021.
- Private debt deployment remains lower than recent periods, partially due to dependency on buyout market activity levels.
- The company faces challenges in maintaining fee-earning AUM due to a wave of realizations as debt markets reopen.
- There is increased competition in the GP-led secondaries market, with traditional secondary players and private equity funds entering the space.
Q & A Highlights
Q: Can you provide more details on the timing and sizing of Europe IX?
A: Benoît Durteste, CEO, mentioned that the timing and sizing of Europe IX depend on the deployment of Europe VIII. There has been a significant increase in deployment activity, with over EUR7 billion deployed in European corporate strategies. The first close for Europe IX is expected by the end of this financial year, indicating strong interest from clients.
Q: What guidance can you provide on the cost base for FY25?
A: David Bicarregui, CFO, stated that while specific cost guidance isn't provided, the company aims to bring down the rate of growth in costs. The long-term average for FMC expenses is expected to be closer to 12%.
Q: How should we think about FY25 management fees or catch-up fees, particularly for Strategic Equity V and Mid-market II?
A: David Bicarregui explained that GBP27 million of catch-up fees were recorded in the period. For Strategic Equity V, approximately GBP20 million of total fees could be generated per $1 billion raised, with half being catch-up fees.
Q: Are there any concerns about credit quality or defaults in your portfolio?
A: Benoît Durteste assured that there is no deterioration in credit quality. The company has not seen any new watch list deals in the past 18 months, and the average EBITDA growth for portfolio companies was 13% over the past 12 months.
Q: What is the outlook for private credit deployment and realizations in 2025?
A: Benoît Durteste noted that while private equity deal activity remains slow, a backlog is building, which could lead to increased financing opportunities when the market reopens. The wave of realizations seen recently is expected to stabilize.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
