Intermediate Capital Group are rising on the FTSE following their full year results after capital gains came in at £98.8m whilst writebacks/repayments of £224m overwhelmed new investments to make the group a £106m profit.
ICP, a mezzanine lender, also said that it had a good credit quality amongst its portfolio as companies were performing well rose 6 pct since September.
"We see an opportunity to take portfolio of loans as banks realise they are too highly geared, and that there are further losses that they have to absorb," said Chief Executive Christophe Evain who sees an opportunity with €200 bn worth of debt needing to be refinanced.
Fund management, which the group has also undertaken is expected to broaden and deepen geographical coverage as the company does not expect banks and capital markets alone to 'grow the balance sheet'.
Buyout lending - where ICP finances buyouts for others - is also an important part of the strategy as market volatility increases opportunities:
"I am delighted to report that ICG has returned to profitability and delivered a solid set of
results in what remained a challenging environment. Over the last twelve months we have
focused our efforts to first preserve and, as conditions improved, realise the value of our
portfolio. Increased levels of realisations have resulted in an increase in our investment
capacity. There are encouraging signs of attractive investments in the refinancing of existing
buyouts, in growth capital and a growing pipeline of transactions in Asia Pacific and North
America. However, against a still uncertain economic background, we continue to proceed
with caution." said Chairman John Manser.
"I will retire as Chairman of the Board at our Annual General Meeting. I'm pleased to say that
our plans for succession have been successfully implemented. I am confident that under
Christophe Evain and Justin Dowley's leadership, ICG will go from strength to strength as it
accelerates the growth of its fund management business."
Nitin Arora, analyst with Execution Noble offers a 'buy' rating on the company with the following comment:
"Overall, the performance of the portfolio is improving, environment for exits remains benign and there are significant investment opportunities for ICG."
"ICG has got a strong balance sheet with £729m of headroom in its funding facilities." he added.
"At 270p, ICP is trading at a 11% discount to its NAV. With performance of the portfolio improving, NAV having troughed in Sep 2009 and a dividend yield of 6% implies that the discount is unjustified. Our SOTP valuation model implies a fair value of 381p per share." he says.
Shares in the group closed up slightly at 271.60p (+0.74 pct) today.