Slide 1: Full year results presentation
Full year results presentation 24 May 2016
Slide 2: Operational highlights
2 Operational highlights Strong performance and record AUM Total AUM up 20% to a record €21.6bn, with €5.2bn of new money raised Third party fee earning AUM up 28% to €15.8bn Established European strategies – European Mezzanine and Senior Debt Partners – raising a total of €2.7bn Fundraising
Slide 3: Financial highlights
3 Financial highlights Return on equity increases to over 13% on a proforma basis Group profit before tax¹ of £175.6m (2015: £184.1m) Fund Management Company profit £61.2m (2015: £52.0m); Investment Company profit¹ £114.4m (2015: £132.1m) Return on equity of 12.9% (2015: 11.0%) and gearing of
Slide 4: Business priorities
4 Business 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 asset manager Enhance brand and client base Develop a scalable infrastructure Increased fu
Slide 5: Financial Review
Financial Review iCG
Slide 6: Financial highlights
6 Financial highlights Fund management strategy delivering increased FMC profits 12 months to 12 months to 31 March 2016 31 March 2015 Group profit before tax¹ £175.6m £184.1m Fund Management Company profit before tax £61.2m £52.0m Investment Company profit before tax¹ £114.4m £132.1m Earnings per s
Slide 7: Segmental reporting
7 Segmental reporting 12 months to 12 months to £m 31 March 2016 31 March 2015 Fund Third party fee income 108.9 95.8 Management IC management fee 18.4 18.7 Company Other income 18.9 12.8 Operating costs (85.0) (75.3) FMC profit 61.2 52.0 Investment Interest income 126.0 158.6 Company Dividend & oth
Slide 8: Profit mix
8 Profit mix FMC profit growing as a percentage of Group total FMC profit before tax and AUM trend IC profit before tax1 and AUM trend £m €bn £m £bn 70 25 180 3 160 60 20 140 50 120 2 15 40 100 30 61 80 161 10 140 52 132 60 114 1 20 40 108 38 35 40 5 10 20 - - - 0 FY12 FY13 FY14 FY15 FY16 FY12 FY13
Slide 9: Balance sheet and capital strategy
9 Balance sheet and capital strategy Return on equity improving as balance sheet re-gears 31 March 2016 31 March 2016 31 March 2015 £m Proforma Actual Actual Assets Loans and investments 1,798 1,798 1,691 Assets for syndication 183 183 244 Cash 13 113 277 Other 236 236 123 Total assets 2,230 2,330 2
Slide 10: Cash flow
10 Cash flow Highly cash generative operating model 12 months to 12 months to £m 31 March 2016 31 March 2015 Cash in from realisations and recoveries 394.3 505.6 Cash paid to purchase loans and investments (247.1) (359.8) Cash movement in assets held for syndication to funds (35.8) (126.4) Cash in f
Slide 11: Fund Management Company
Fund Management Company iCG
Slide 12: Third party assets under management
12 Third party assets under management Strong fundraising performance increases third party AUM by 23% FY16 AUM inflows/outflows by strategy Total net increase €3.6bn; inflows €5.8bn; outflows €bn €1.6bn and €0.6bn FX and other 2.0 Realisations primarily arising on older funds 1.5 €0.5bn outfl
Slide 13: Fee Income
13 Fee Income Long term, predictable fee streams from closed end funds Current average life of fee earning AUM1 Recent fundraising success has resulted in Years significant levels of long term predictable fee streams 9 - Mezzanine and Secondaries fee 8 streams, typically based on committed capital
Slide 14: Fee income
14 Fee income Fee income increasing as funds in new strategies invested Third party fee income £m 70.0 60.0 9.7 50.0 26.6 40.0 23.4 30.0 14.0 20.0 1.7 2.7 24.7 10.0 21.2 0.5 17.4 15.4 14.6 10.7 11.8 0.9 7.8 1.2 0.4 0.0 FY16 FY15 FY16 FY15 FY16 FY15 FY16 FY15 FY16 FY15 Mezzanine Secondaries Real Esta
Slide 15: Weighted average fee rate
15 Fee income Fee rates remain well supported Weighted average fee rates1 Fee rates have remained broadly 1.00% Over £3.5bn of new flat over the last three years AUM in mezzanine and real estate Senior debt funds strategies invested in FY16 drive slightly lower Significant credit overall fee rate
Slide 16: FMC operating margin
16 FMC operating margin Operating margin exceeds 40% target £m Operating m argin 160 50% 45% 140 Target margin 40% 120 35% 100 30% 80 25% 20% 60 15% 40 10% 20 5% 0 0% FY12 FY13 FY14 FY15 FY16 Costs (lhs) Income (lhs) Operating margin (rhs)
Slide 17: FMC operating costs
17 FMC operating costs Investment in new strategies increasing costs 12 months to 12 months to £m 31 March 2016 31 March 2015 Investment team salaries 19.7 18.0 Marketing salaries 4.0 4.0 Infrastructure salaries 6.7 5.4 Salaries 30.4 27.4 Cash incentives 10.9 6.5 Deferred aw ards 13.6 12.5 Incentive
Slide 18: Investment Company
Investment Company iCG 18
Slide 19: Return on assets
19 Return on assets Loan book heavily weighted to higher returning assets Average loan book and ROA by product type Average loan book by asset type £m ROA 31 March 31 March 2016 2015 1,400 18.0% £m % £m % Senior mezzanine and senior debt 410 24% 594 33% 16.5% 16.0% Junior mezzanine 175 10% 149 8% 1,
Slide 20: Capital gains
20 Capital gains Robust portfolio performance driving unrealised gains Capital gains by type 12 months to 12 months to £m 31 March 2016 31 March 2015 Realised gains 1.4 6.8 Realised gains recycled from AFS 22.6 18.0 Unrealised gains 104.6 86.8 Total 128.6 111.6 Unrealised gains on the mezzanine po
Slide 21: Investment Company costs
21 Investment Company costs Performance driving increase in incentive costs 12 months to 12 months to £m 31 March 2016 31 March 2015 Salaries 8.8 9.3 Cash incentives 21.9 13.1 Deferred aw ards 17.8 17.4 Incentive schem es 39.7 30.5 Other non staff costs 9.4 10.1 Total 57.9 49.9 Business development
Slide 22: FY17 guidance – tax rate updated
22 FY17 guidance – tax rate updated Fundraising – average €4bn per annum over fundraising cycle. FY17 likely to be lower FMC operating margin – 40% Performance fees to average £15-20m per annum Net impairments – long term average of 2.5% of opening book Balance sheet portfolio – average c£
Slide 23: Operating Review
Operating Review iCG
Slide 24: ICG operating model
24 ICG operating model INVESTING FUNDRAISING • Fund deployment • Gross fundraising to average • Fund performance and track €4bn per annum record • Maintain fee level • Impairment target of less • Selective product expansion than 2.5% of opening book Investment in new funds IC PROFITABILITY FMC PROFI
Slide 25: Fundraising
Fundraising iCG 25
Slide 26: Fundraising market
26 Fundraising market Strong growth in alternative asset classes $tn 18 16 14 5.0 12 4.6 10 2.9 8 2.5 6 3.6 4 2.0 1.4 7.4 0.8 6.5 2 1.0 2.5 2.9 1.0 0 2004 2007 2013 2020F 2020F (Base case) (High case) Private Equity Real Assets Hedge Funds Source: PwC Market Research Centre analysis based on Preqin,
Slide 27: Fundraising market
27 Fundraising market Ageing populations and wealth creation driving asset pools Pension Fund assets Sovereign Wealth Fund assets $tn $tn 60 18 16 50 14 40 12 6.4 10 30 4.6 56.6 8 20 6 37.1 29.4 4 2.2 8.9 10 6.7 2 3.3 0 0 2007 2013 2020F 2007 2013 2020F Sovereign Wealth Fund Public Pension Reserve F
Slide 28: Fundraising
28 Fundraising Excellent market opportunity for fundraising €bn Funds raised in FY16 by strategy (€m) 154 Secondaries 7.0 73 Japan Mezzanine 6.0 1,191 European Mezzanine 5.0 141 US Mezzanine 192 Fundraising expectations c€4bn pa Asia Pacific Mezzanine 753 4.0 144 Longbow Real Estate Funds 6.4 3.0 Lo
Slide 29: Fundraising success
29 Fundraising success 5 year rolling fundraising total up 95% in 2015 2009 - 2014 2010 - 2015 2014 2015 Firm Fundraising Firm Fundraising total Rank Rank total ($m) ($m) 1 Lone Star Funds 28,000 1 Oaktree Capital Management 38,107 2 Oaktree Capital Management 23,037 2 Lone Star Funds 36,500 3 Apoll
Slide 30: Expansion of ICG’s client franchise
30 Expansion of ICG’s client franchise ICG’s client base has diversified over the past 4 years Investors by Geography 2012 Investors by Geography 2016* 13% 21% 51% 37% EMEA EMEA (excl. UK & Ireland) 16% (excl.UK & Ireland) Americas 69 Americas 261 investors investors UK & Ireland UK & Ireland 19% As
Slide 31: Fundraising outlook
31 Fundraising outlook Fundraising focus turns to newer strategies FY17 FY18 Asia Pacific Fund III US Debt Fund II Corporate strategies Senior Debt Partners III UK RE Mezzanine Fund IV UK RE Mezzanine Fund V Real Asset strategies UK RE Senior Debt Fund III UK RE Development Fund II Strategic Seconda
Slide 32: ICG Enterprise Trust
32 ICG Enterprise Trust Growth through complementary acquisition Graphite Capital Management LLP’s private equity fund of funds investment business acquired in February 2016 The business manages ICG Enterprise Trust which invests in primary and secondary fund investments and co-investments Div
Slide 33: Investing
Investing iCG 33
Slide 34: Investment market
34 Investment market Differentiation in approach and strong origination critical Corporate Capital markets Real Asset Secondary investments investments investments investments Buyout markets are down on Leverage loan and high yield Significant competition for Volumes & underwritten last year markets
Slide 35: Investing our direct investment funds
35 Investing our direct investment funds Investment pace maintained across funds Direct investment funds Fund £m invested at 31 March 3,000 2016¹ SDP I 100% Longbow III 2,606 Europe V 2,433 46 90% 2,500 87 80% 2,000 663 1,127 70% 1,737 60% 1,500 524 50% North America 915 Longbow IV 40% 1,000 320 781
Slide 36: Managing Investments
Managing Investments iCG 36
Slide 37: Fund performance
37 Fund performance Funds consistently performing above target Target Realised Fund IRR on realised assets MM MM ICG Mezzanine Fund I 1998 (fully realised at 1 April 2015) n/a 1.5x ICG Mezzanine Fund II 2000 (fully realised at 1 April 2015) n/a 1.7x ICG Europe Fund IV 2006 (fully realised at 24 Marc
Slide 38: Case study - Parkeon
38 Case study - Parkeon Active portfolio management generates long term value Parkeon EBITDA trend from initial ICG investment Leading manufacturer of parking meters Portfolio 50 ICG exits company Significant market share in Europe (65%) and North America (90%) 40 Constructive approach to supp
Slide 39: Impairments
39 Impairments Impairments below average; portfolio performance robust Percentage of portfolio performing above prior year Net impairments as a percentage of opening book 80% 5% 70% 4% 60% 50% 3% Historic average 40% 2% 30% 20% 1% 10% 0% 0% Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar-
Slide 40: Capital Allocation & Wrap Up
40 Capital Allocation & Wrap Up
Slide 41: Capital allocation
41 Capital allocation Balancing business growth and shareholder returns INVESTING FUNDRAISING • Fund deployment • Gross fundraising to • Fund performance and average €4bn per annum track record • Maintain fee level • Impairment target of less • Selective product Investment in new funds than 2.5% of
Slide 42: Business priorities
42 Business priorities FY10 - FY15 FY16 - FY19 Building the platform Profit maturity By FY20 Manage pre global financial crisis Deliver gross fundraising Recognised as a diversified portfolio target asset manager Develop a scalable infrastructure Enhance brand and client Increased fundra
Slide 43: Q&A
Q&A iCG
Slide 44: Disclaimer
44 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