Slide 1: Full year results presentation
Full year results presentation 25 May 2017
Slide 2: Operational highlights
2 Operational highlights Strong performance from new and existing strategies Total AUM up 10% to €23.8bn, with €4.0bn of new money raised; third party fee earning AUM up 19% to €18.7bn Fundraising performance driven by our newer, diversifying strategies: Strategic Secondaries and Australian Seni
Slide 3: Financial highlights
3 Financial highlights Financial performance driven by strong capital gains Fund Management Company profits up 21% to £74.0m (2016: £61.2m), with third party fee income 1 up 27% Investment Company profits1 higher at £163.5m (2016: £114.4m) Group profit before tax1 was £237.5m (2016: £175.6m)
Slide 4: Dividends and dividend policy
4 Dividends and dividend policy Dividend rebased and commitment to progressive policy Closer alignment of dividend to the growth of the Fund Management Company Board intends to recommend an annual dividend which represents a pay-out of 80-100% of that year’s post-tax profits of the FMC We will
Slide 5: Strategic priorities
5 Strategic priorities FY10 - FY15 FY16 - FY19 Building the platform Profit maturity By FY20 Manage pre global financial crisis Deliver gross fundraising target Recognised as a diversified portfolio specialist asset manager Enhance brand and client base Develop a scalable infrastructure
Slide 6: Financial Review
Financial Review iCG
Slide 7: Financial highlights
7 Financial highlights Fund Management profits up 21% in the year 12 months to 12 months to £m 31 March 2017 31 March 2016 Fund Third party fee income 138.6 108.9 Management IC management fee 18.1 18.4 Company Other income 23.0 18.9 Operating costs (105.7) (85.0) FMC profit 74.0 61.2 Investment Inte
Slide 8: Balance sheet and capital strategy
8 Balance sheet and capital strategy Balance sheet efficiency achieved 31 March 2017 31 March 2016 £m Assets Loans and investments 1,712 1,798 Assets for syndication 90 183 Cash 490 113 Other 209 236 Total assets 2,501 2,330 Liabilities Borrowings 1,119 866 Other 209 223 Shareholders funds 1,173 1,2
Slide 9: Cash flow
9 Cash flow Operating cash inflows higher due to realisations 12 months to 12 months to £m 31 March 2017 31 March 2016 Cash in from realisations and recoveries 716.5 394.3 Cash paid to purchase loans and investments (366.0) (247.1) Cash movement in assets held for syndication to funds 153.7 (35.8) C
Slide 10: Fund Management Company
Fund Management Company iCG
Slide 11: Third party assets under management
11 Third party assets under management Fundraising of €4bn increases AUM to €21.8bn FY17 AUM inflows/outflows by strategy Third party AUM up 13% and fee earning AUM increased 19% since FY16 €bn 2.0 Total net increase €2.5bn; inflows €4.0bn; outflows €1.7bn and €0.2bn FX and other 1.5 1.0 Reali
Slide 12: Management fee income
12 Management fee income Management fee income increasing across all asset classes Third party management fee income £m 80.0 Thousands 70.0 60.0 33.6 50.0 40.0 33.0 30.0 20.0 36.1 24.7 23.7 6.4 10.0 20.9 0.9 17.7 17.4 1.2 8.1 0.0 FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 Corporate Investments Capital
Slide 13: Fee income
13 Fee income Fee rates maintained across asset classes Weighted average fee rate¹ by strategy – FY17 Fee rates have remained broadly flat over the last four years 1.40% Fee rates continue to be maintained with lower fee rates in capital markets strategies supported 1.20% by higher fee rates fro
Slide 14: FMC operating margin
14 FMC operating margin Operating margin exceeds 40% target £m Operating m argin 200 50% 180 45% Target margin 160 40% 140 35% 120 30% 100 25% 80 20% 60 15% 40 10% 20 5% 0 0% FY13 FY14 FY15 FY16 FY17 Costs (lhs) Income (lhs) Operating margin (rhs)
Slide 15: FMC operating costs
15 FMC operating costs Investment in new strategies increasing costs 12 months to 12 months to £m 31 March 2017 31 March 2016 Investment team salaries 25.7 19.7 Marketing salaries 4.6 4.0 Infrastructure salaries 8.7 6.7 Salaries 39.0 30.4 Cash incentives 15.0 10.9 Deferred aw ards 18.8 13.6 Incentiv
Slide 16: FMC profit trend
16 FMC profit trend Strategic delivery as profits growing year on year FMC profit before tax and AUM trend £m €bn 80 25 70 20 60 50 15 40 74 61 10 30 52 20 38 38 40 36 35 31 5 24 10 - - FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FMC PBT Third party AUM
Slide 17: Investment Company
Investment Company iCG 17
Slide 18: Return on assets
18 Return on assets Loan book heavily weighted to higher returning assets Average loan book and ROA by product type Average ROA is 17%, up from 13% in FY16, due to the strong level of capital £m ROA gains in the current period 1,400 25% Majority of investment book is invested in 1,200 Corporate
Slide 19: Return on assets
19 Return on assets Portfolio performance aligned to fund investors Example: Corporate Investments NAV Bridge £m 1,800 1,600 £231m net investment return gives an ROA of 19.1% against the average loan 1,400 289 book (NAV) for the year 1,200 (750) 49 1,000 231 800 1,301 600 1,120 400 200 - Opening NAV
Slide 20: Capital gains
20 Capital gains Unrealised capital gains remain in line with recent trend Composition of capital gains by type Post 2011 equity assets are fair valued through the £m P&L. A diminishing balance of pre 2011 equity assets are fair valued through reserves and 220.0 recycled to the P&L on disposal 201
Slide 21: Investment Company costs
21 Investment Company costs Performance driving increase in incentive costs 12 months to 12 months to £m 31 March 2017 31 March 2016 Salaries 14.4 8.8 Cash incentives 27.6 21.9 Deferred aw ards 26.6 17.8 Incentive schem es 54.2 39.7 Amortisation 2.3 0.3 Other non staff costs 6.4 9.1 Total 77.3 57.9
Slide 22: FY18 guidance
22 FY18 guidance Fundraising – average €4bn per annum over fundraising cycle; FY18 expected to meet or exceed this FMC operating margin – at least 40% Performance fees to average £15-20m per annum Net impairments – long term average of 2.5% of opening book Balance sheet portfolio – average
Slide 23: Operating Review
Operating Review iCG
Slide 24: ICG operating model
24 ICG operating model INVESTING FUNDRAISING • Fund deployment • Gross fundraising to average €4bn per annum • Fund performance and track record • Maintain fee level • Impairment target of less than 2.5% of opening book • Selective product expansion INVESTMENT IN NEW FUNDS IC PROFITABILITY FMC PROFI
Slide 25: Fundraising
Fundraising iCG 25
Slide 26: Fundraising market: traditional asset returns expected to be lower
26 Fundraising market Traditional asset returns expected to be lower Traditional asset return projections % returns 9% Assumed average annual return 8% of US state pension administrators 7% 6% 5% 4% 3% 2% 1% 0% US equities Euro equities US bonds Euro bonds Last 30 years Next 20 years Source: McKinse
Slide 27: Fundraising market: private markets expected to outperform
27 Fundraising market Private markets expected to outperform other asset classes Blackrock 5 year expected returns % returns 9% Assumed average annual return 8% of US state pension administrators 7% 6% 5% 4% 3% 2% 1% 0% Corporate Bonds High Yield Bonds Equities Real Estate Private Equity Source: Bla
Slide 28: Fundraising momentum
28 Fundraising momentum Fundraising in line with our ‘through the cycle’ target €bn Funds raised in FY17 by strategy (€m) 7 283 Australian Senior Loans 6 638 European Mezzanine 5 189 Asia Pacific Mezzanine Fundraising 345 expectations c€4bn pa Real Estate Funds 4 783 6.4 European CLOs 3 5.2 351 Seni
Slide 29: Long term fundraising success
29 Long term fundraising success Private debt fundraising over the past five years Total Funds Raised Total Funds Rank Firm in Last 5 years Headquarters Rank Firm Raised in Last 5 Headquarters ($bn) years ($bn) 1 Lone Star Funds 42.5 US 16 Bain Capital Credit 10.7 US 2 Blackstone/GSO 36.3 US 17 Star
Slide 30: Current ICG strategies
30 Current ICG strategies Significant growth potential from existing strategies Mature investment strategy Europe CLOs Europe Mezzanine ICG Enterprise Trust Real Estate Mezzanine Asia Pacific Mezzanine Europe Senior Debt US CLOs North America Mezzanine Real Estate Senior Debt Real Estate Development
Slide 31: Expansion of ICG's client franchise
31 Expansion of ICG’s client franchise Investors by Geography 2017* 37% 23% EMEA (excl. UK & Ireland) 19% 285 investors Americas UK & Ireland Asia Pacific 39 new investors in 2017 vs 69 total investors in 2012 21% Investors by Type 2017* 7% 3% 5% 5% 34% Pension Fund of Funds (FoF) Insurance Company
Slide 32: Fundraising outlook
32 Fundraising outlook Pipeline healthy as larger strategies expect to fundraise FY18 FY19 Australian Senior Loans Corporate Investments US Private Debt Fund II Senior Debt Partners III CLOs Capital Market Loan & Opportunity funds Investments Mandates UK RE Mezzanine Fund V Real Asset Investments UK
Slide 33: Investing
Investing iCG 33
Slide 34: Investment markets
34 Investment markets Differentiation in approach and strong origination model Corporate Capital Market Real Asset Secondary Investments Investments Investments Investments Buyout markets are up on last Leverage loan and high yield Commercial real estate Strong opportunity to year markets in the US
Slide 35: Investing our direct investment funds
35 Investing our direct investment funds Investment pace maintained in a competitive market Direct investment funds £m Fund invested at 31 March 2017¹ 4,000 100% 3,500 3,403 90% 118 80% 3,000 487 ICG Longbow IV 2,606 70% 2,433 46 North America SDP II 2,500 87 60% 781 2,000 50% Japan 915 Asia Pac III
Slide 36: Managing Portfolios
Managing Portfolios iCG
Slide 37: Fund performance
37 Fund performance Funds consistently performing above target Performance Target Realised Fund hurdle met / on IRR on realised assets MM MM track ICG Mezzanine Fund I 1998 (fully realised April 2015) n/a 1.5x ICG Mezzanine Fund II 2000 (fully realised April 2015) n/a 1.7x ICG Europe Fund IV 200
Slide 38: Fund performance: realising assets locks in returns
38 Fund performance Realising assets locks in investment returns and track record Percentage of realised assets exceeding hurdle rate ¹ FY17 realised assets; performance against hurdle 100% 98% 60 92% 5 +20% above hurdle 90% 53 80% 50 80% Number of assets realised in year 9 70% 70% 10-20% above hurd
Slide 39: Portfolio performance
39 Portfolio performance Portfolio performance robust Percentage of portfolio performing above prior year Net impairments as a percentage of opening book 90% 5% 80% 70% 4% 60% 3% 50% Historic average 40% 2% 30% 20% 1% 10% 0% 0% Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Ju
Slide 40: Capital Allocation & Wrap Up
40 Capital Allocation & Wrap Up
Slide 41: ICG operating model
41 ICG operating model INVESTING FUNDRAISING • Fund deployment • Gross fundraising to average €4bn per annum • Fund performance and track record • Maintain fee level • Impairment target of less than 2.5% of opening book • Selective product expansion INVESTMENT IN NEW FUNDS IC PROFITABILITY FMC PROFI
Slide 42: Q&A
Q&A iCG
Slide 43: Disclaimer
43 Disclaimer 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 RECOMMENDATI