UK specialist private debt house says corporate debt vacuum creating yield opportunity for Australian institutional investors
Intermediate Capital Group launches Australian debt fund for institutional investors
London, Sydney – Intermediate Capital Group (ICG), the specialist asset manager, said unmet demand for debt from private equity firms and mid-sized corporates is creating a strong investment opportunity for Australian institutional investors. To help institutional investors capitalise on this demand, ICG has launched an Australian debt fund, the ICG Australia Senior Loan Fund.
Ryan Shelswell, who leads ICG’s Mezzanine business in Australia and New Zealand, said ICG had a strong track record in achieving above market returns for institutional investors and that the vacuum created by banks leaving local corporate debt markets, was leading to a strong opportunity for income-seeking investors.
“ICG has been operating since 1989 and has had a presence in Australia since 2006. ICG has achieved significant success locally in corporate mezzanine, executing in excess of $800 million in debt programs for brands such as Hoyts, Veda, Link Market Services and Ventura bus lines. We are now expanding our Australian business with a dedicated senior debt investment program.”
ICG is establishing the Australia Senior Loan Fund (the “Fund”) to provide investors with an opportunity to access the Australian senior secured loan market, by lending to established, cash-generative companies with market leading positions and strong management teams.
Matthew Turner, manager of the Fund, said “In Australia, the corporate loan market has been impacted by the withdrawal of overseas lending banks, particularly the UK banks, following the global financial crisis. This has reduced the overall lending capacity available to corporates and private equity sponsor-backed businesses. But coupled with the need for Australian banks to more conservatively manage their balance sheets, this vacuum has presented a unique opportunity for an experienced lender like ICG to offer institutional investors a low risk debt investment, with a target yield of seven to nine per cent, for a full credit cycle.”
“ICG believes that these lending conditions will persist for the medium term and will enable us to generate investment opportunities with highly attractive risk adjusted returns,” Mr Turner said.
The launch of the Fund is an important step in ICG’s long-term strategy to cement its position in the Australian market. Over the past four years, ICG has significantly grown its local team with three senior appointments. Ryan Shelswell was recruited in July 2010 to lead the mezzanine and minority equity business in Australia and New Zealand. Mr Shelswell joined from Pacific Equity Partners (PEP), Australia’s largest domestic control buyout fund, where he was a Director and led acquisition and financing transactions. Matthew Turner was recruited in January 2013 to lead the new senior loans business in Australia. Mr Turner joined from National Australia Bank (NAB) where he was Director of Acquisition Finance and led significant senior secured debt transactions.
Additionally, in June of this year Greg Fendler joined ICG in Sydney from UBS Global Asset Management where he was Executive Director of institutional sales since 2010. Mr Fendler started his career with UBS in 1998; working in equity research sales in New York, followed by time in the UBS Zurich headquarters working in UBS Private Bank corporate sales strategy team before joining the UBS business in Australia.
Mr Turner said ICG was marketing the Fund to Australian institutions who are seeking access to investments outside of traditional equities and bonds.
“Debt investments such as this have traditionally been seen as a good diversification tool, given the low correlation to equity and bond returns.”
About the ICG Australian Senior Loan Fund
ICG believes that Australian senior secured loans, which are an established asset class, offer a compelling investment opportunity in the current market environment due to a number of benefits available to investors, such as:
• minimal interest rate risk due to the floating-rate nature of the investments;
• attractive cash yields;
• conservative leverage structures;
• minimal duration risk; and
• strong capital preservation mechanics
The objective of the Fund is to provide investors with a total gross return in the range of 7% – 9% per annum on drawn capital, of which the majority is expected to be paid quarterly in the form of cash income, with a low risk of capital loss.
The Fund will yield current cash income on a quarterly basis and will have an open-ended structure. The Fund will ramp up to a maximum A$1 billion size over 3-5 years.
Notes to Editors:
Founded in 1989, ICG is a specialist investment firm and asset manager providing mezzanine finance, leveraged credit and partnership equity, managing over €12 billion of assets in proprietary capital and third party funds. ICG has a large and experienced investment team operating from its offices in London, Paris, Madrid, Singapore, Stockholm, Frankfurt, Amsterdam, Hong Kong, Sydney, Tokyo and New York. Its stock (ticker symbol: ICP) is listed on the London Stock Exchange. For more information, please visit: www.icgplc.com.
For further information please contact:
This document is issued by Intermediate Capital Managers Limited. Intermediate Capital Managers Limited does not hold an Australian financial services licence (AFSL) and is exempt from the requirement to hold an AFSL under ASIC Class Order 03/1099 in respect of the financial services it provides. Intermediate Capital Managers Limited is regulated by the Financial Conduct Authority under UK laws, which differ from Australian laws.