Slide 1: Full year results presentation
Full year results presentation 20 May 2015
Slide 2: Operational highlights
2 Operational highlights Excellent fundraising resulting in record AUM Record AUM of €18.0bn, up 39% on March 2014, following a record €6.4bn of new money raised Third party fee earning AUM increased 39% to €12.3bn Our European funds – European Mezzanine, Senior Debt Partners and UK Real Estat
Slide 3: Financial highlights
3 Financial highlights Strong performance in line with our expectations Profit before tax £184.1m¹ (2014: £175.1m included realisation of largest balance sheet investment) Fund Management Company profit £52.0m (2014: £35.1m); Investment Company profit1 £132.1m (2014: £140.0m) Continued momentu
Slide 4: Business transition
4 Business transition FY10 - FY15 Priorities for the next FY17 - FY18 Building the platform Profit maturity 12 months Manage pre global Consolidate and broaden Deliver gross fundraising financial crisis portfolio existing strategies target Develop a scalable Maximising profitability on E
Slide 5: Financial Review
Financial Review iCG
Slide 6: Financial highlights
6 Financial highlights Record FMC profits driven by performance fees 12 months to 12 months to 31 March 2015 31 March 2014 Group profit before tax¹ £184.1m £175.1m Fund Management Company profit before tax £52.0m £35.1m Investment Company profit before tax¹ £132.1m £140.0m Earnings per share 50.3p 3
Slide 7: Segmental reporting
7 Segmental reporting 12 months to 12 months to £m 31 March 2015 31 March 2014 Fund Third party fee income 95.8 79.0 Management IC management fee 18.7 20.7 Company Other income 12.8 0.9 Operating costs (75.3) (65.5) FMC profit 52.0 35.1 Investment Net interest income 118.8 149.0 Company Dividend & o
Slide 8: Balance sheet and capital strategy
8 Balance sheet and capital strategy Return on equity improving as balance sheet re-gears 31 March 2015 31 March 2015 31 March 2014 £m Proforma Actual Actual Assets Loans and investments 1,691 1,691 1,908 Assets for syndication 244 244 116 Cash 133 277 115 Other 123 123 102 Total assets 2,191 2,335
Slide 9: Cash flow
9 Cash flow Highly cash generative operating model 12 months to 12 months to £m 31 March 2015 31 March 2014 Cash in from realisations and recoveries 505.6 903.0 Cash paid to purchase loans and investments (359.8) (393.5) Cash movement in assets held for syndication to funds (126.4) (81.4) Cash in fr
Slide 10: Fund Management Company
Fund Management Company iCG
Slide 11: Third Party Assets under management
11 Third Party Assets under management Third party AUM increases 47% with record fundraising FY15 AUM inflows/outflows by strategy Record fundraising led by our European Funds €bn 2.5 Total net increase €5.0bn; inflows €6.4bn; outflows €2.1bn and €0.7m FX and other 2.0 1.5 Realisations primari
Slide 12: AUM outflows
12 AUM outflows Net AUM increasing as pace of realisations slows Record period of realisations in FY14 are a AUM in invested funds catch up from earlier periods delayed by €bn 18.0 economic downturn Pace of realisations slowed with 19% of 16.0 15.7 opening AUM realised vs. 30% in FY14 14.0 Inc
Slide 13: Fee Income
13 Fee Income Fee income to increase as funds in new strategies invested Fee income by fee profile Fee Incom e Com m itted Invested Perform ance Total fee £m basis basis fees incom e Outlook for fees Mezzanine 21.2 14.0 26.6 61.8 European Fund VI full year impact North America I to increase as inves
Slide 14: FMC operating margin
14 FMC operating margin Operating margin benefitting from performance fees £m Operating margin 140 45% 40% 120 35% 100 30% 80 25% 60 20% 15% 40 10% 20 Expand into US and Japan 5% Build in house marketing team 0 0% FY11 FY12 FY13 FY14 FY15 Costs (lhs) Fees (lhs) Operating margin (rhs)
Slide 15: FMC operating costs
15 FMC operating costs Investment in new strategies contributing to increased costs 12 months to 12 months to £m 31 March 2015 31 March 2014 Investment team salaries 19.0 15.7 Marketing salaries 4.0 2.8 Infrastructure salaries 4.4 5.0 Salaries 27.4 23.5 Cash bonus 6.5 4.0 Deferred aw ards 12.5 9.6 I
Slide 16: Investment Company
Investment Company iCG 16
Slide 17: Return on assets
17 Return on assets Portfolio stabilised in H2 after a period of record realisations Average investment book and return on assets Average loan book by asset type 31 March 2015 31 March 2014 First time adoption of £m % £m % policy of fair valuing Mezzanine and senior debt 743 41% 1,277 56% equity por
Slide 18: Balance Sheet
18 Balance Sheet Capital used to hold assets for funds being raised Current assets for syndication by strategy (£m) Current assets held for syndication means we can source attractive deals whilst fundraising TOTAL: £244m 17 Hold period on average less than 12 months, during 23 which IC generates
Slide 19: Capital gains
19 Capital gains Portfolio performance improving, driving unrealised gains 12 months to 12 months to £m 31 March 2015 31 March 2014 Realised gains/(losses) 6.8 (3.6) Realised gains recycled from AFS 18.0 125.7 Unrealised gains 86.8 12.0 Total 111.6 134.1
Slide 20: Investment Company costs
20 Investment Company costs Strong cash generation driving incentive costs 12 months to 12 months to £m 31 March 2015 31 March 2014 Salaries 9.3 6.8 Cash Bonus 13.1 8.0 Deferred aw ards 17.4 14.6 Incentive schem es 30.5 22.6 Other non staff costs 10.1 7.2 Total 49.9 36.6 Average headcount 36 35
Slide 21: FY16 guidance
21 FY16 guidance Fundraising – Average €4bn over fundraising cycle. FY16 likely to be higher FMC operating margin – over 40% Performance fees to average £15-20m per annum Net Impairments – less than long term average of 2.5% of opening book Balance sheet portfolio – Average c£2bn with co i
Slide 22: Operating Review
Operating Review iCG
Slide 23: ICG operating model
23 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 24: Fundraising
Fundraising iCG 24
Slide 25: Fundraising market: Alternatives outgrowing traditional assets
25 Fundraising market Alternatives are outgrowing traditional assets Traditional investments ($tns) Alternative Investments ($tns) 60 8 CAGR 10.7% CAGR 5.4% 7 50 6 40 5 30 4 3 20 2 10 1 0 0 2005 2010 2013 2005 2010 2013 Source: McKinsey: Capturing the Next Wave of Growth in Alternative Investments 2
Slide 26: Investors want to diversify away from traditional assets
26 Fundraising market Investors want to diversify away from traditional assets Alternative assets have outperformed traditional asset classes over the long term1 400 350 300 250 200 150 100 50 0 May-01 Oct-01 Aug-02 Jan-03 Jun-03 May-06 Oct-06 Aug-07 May-11 Oct-11 Aug-12 Dec-00 Apr-04 Sep-04 Jan-0
Slide 27: Opportunity as multi-boutiques increase market share
27 Fundraising market Opportunity as multi-boutiques increase market share Percentage share of Alternative Investments $5.0tn $7.2tn 100% 90% 25% 25% 80% 70% 20% 19% 60% 50% 10% 15% 40% 30% 45% 41% 20% 10% 0% 2008 2013 Single-strategy Mega Alternative Firms Specialist platforms Diversified asset man
Slide 28: Substantial appetite for private debt
28 Fundraising market There is substantial appetite for private debt Investors’ allocation to private debt 100% 90% 80% 70% 57% 65% 60% 50% 40% 30% 37% 20% 27% 10% 6% 8% 0% Next 12 months Longer Term Decrease Maintain Increase Source: Preqin Investor Interviews, February 2015
Slide 29: Fundraising momentum
29 Fundraising momentum Excellent fundraising dynamics for ICG €bn Funds raised in FY15 by strategy (€m) 7.0 60 Japan Mezzaine 1,629 European Mezzanine 6.0 US Mezzanine 5.0 340 54 Asia Pacific Mezzanine 691 Fundraising expectations c€4bn pa Longbow Real Estate Funds 4.0 627 Longbow Segregated Mandat
Slide 30: Fund raising cycle
30 Fund raising cycle Record fundraising with alignment of European fund cycles Fundraising cycle of European Strategies Longbow II Longbow III Longbow IV Longbow V Europe Fund V Europe Fund VI Fundraising cycle Investment cycle SDPI SDPII SDPIII FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY1
Slide 31: Fundraising pipeline
31 Fundraising pipeline Strong fundraising pipeline across markets Corporate Real asset Secondary Capital market investments investments investments investments Europe Fund VI Longbow IV Strategic European CLOs Secondaries Japan Fund I RE Senior Debt US CLOs US Fund I RE Developmen
Slide 32: Fundraising – investor diversity
32 Fundraising – investor diversity Reputation and strength of team helping to win new clients Investors by geography 2012 Investors by geography 2015 13% EMEA EMEA 21% 38% Americas Americas 16% 69 202 investors 51% investors UK & Ireland 20% Asia Pacific 20% Asia Pacific UK & Ireland 21% Investors
Slide 33: Fundraising – long term client relationships
33 Fundraising – long term client relationships Strong track record leads to clients reinvesting in funds Investors reinvesting in Europe Fund VI* Europe Fund VI – investor profile** Not reinvested New Investors 28% 44% Invested in first close 48% Invested in Expected to Fund V invest in future 56%
Slide 34: Investing
Investing iCG 34
Slide 35: Investment market
35 Investment market Liquidity driving the need for differentiation Corporate Capital market Real Asset Secondary investments investments investments investments Buyout players competing with CLO market is open Significant competition for Volumes & underwritten strategic buyers & IPOs particularly f
Slide 36: Investing our direct investment funds
36 Investing our direct investment funds Investment pace of all funds exceeding expectation Direct investment funds Fund Invested at £m 31 March 2015 3,000 100% 90% SDP I 2,500 87 80% Europe Fund V 2,000 663 70% 60% 1,500 524 50% 915 40% 1,000 320 16 30% North America 209 500 20% Asia Pac III 893 76
Slide 37: Managing Investments
Managing Investments iCG 37
Slide 38: Fund performance
38 Fund performance All direct investment funds performing on or ahead of target Money multiple on Target Gross Fund Target money multiple IRR on realised assets realised assets IRR ICG Mezzanine Fund I 1998 (fully realised at 1 April 2014) n/a 1.5x 13%+ 12% ICG Mezzanine Fund II 2000 (fully realise
Slide 39: Realisation of assets in direct investment funds
39 Realisation of assets in direct investment funds Current year realisations support fund performance IRR of current year realisations by fund 60% European Fund 40% 2006 20% 0% Japan I RF08 Europe Asia Pac ‐20% Longbow II Longbow III Mezzanine Fund V 2005 Senior Debt Partners I Fund 2003 ‐40% ‐60%
Slide 40: Impairments
40 Impairments Impairments lower as pre 2009 portfolio stabilises Percentage of portfolio performing above prior year Net impairments as a percentage of opening book 80% 5% 70% 60% 4% 50% 3% 40% Guidance 30% 2% 20% 1% 10% 0% 0% Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar- FY12 FY13 FY
Slide 41: Capital Allocation
Capital Allocation iCG
Slide 42: Capital allocation
42 Capital allocation Balancing business growth and shareholder returns CAPITAL ALLOCATION • Return on equity above 13% • Gearing 0.8-1.2x 3 1 GROWTH BUSINESS SHAREHOLDERS RETURNS % Reinvest to drive return on equity Dividend Optimise co-investment ratio for Return surplus cash each strategy
Slide 43: Wrap Up
Wrap Up iCG
Slide 44: Business outlook
Business outlook FY10 - FY15 Priorities for the next FY17 - FY18 Building the platform Profit maturity 12 months Manage pre global Consolidate and broaden Deliver gross fundraising financial crisis portfolio existing strategies target Develop a scalable Maximising profitability Enhance b
Slide 45: Q&A
Q&A iCG
Slide 46: Disclaimer
46 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