Slide 1: Full year results presentation
Full year results presentation 22 May 2019
Slide 2: Highlights
2 Highlights Exceptional fundraising, driving FMC profits up 51% €10.0bn of new money raised; AUM up 29% on 31 March 2018 to €37.1bn Third party fee earning AUM up 41% in the year to €29.6bn, resulting in third party fee income up 32% Fund Management Company profits up 51% to £143.8m (2018: £9
Slide 3: Strategic priorities
3 Strategic priorities FY10 – FY18 FY19 – FY23 Strategic transition Recognised as the leading European specialist asset manager Enhanced brand and client base Increased fundraising target of three year rolling average €6.0bn per annum Developed new strategies to deliver gross fundraising targe
Slide 4: Financial Review
Financial Review iCG
Slide 5: Financial highlights
5 Financial highlights Fund Management Company profits up 51% 12 months to 12 months to % £m 31 March 2019 31 March 2018 Variance Fund Third party fee income 219.8 167.1 32 % Management IC management fee 20.5 17.8 15 % Company Other income 34.4 25.2 37 % Operating costs (130.9) (114.8) 14 % FMC prof
Slide 6: Balance sheet and capital strategy
6 Balance sheet and capital strategy Balance sheet capital enables and accelerates growth 31 March 2019 31 March 2018 £m Assets Loans and investments 2,256 1,899 Held for sale financial assets 111 107 Cash 163 248 Other 251 273 Total assets 2,781 2,527 Liabilities Borrowings 1,184 1,021 Other 214 18
Slide 7: Fund Management Company
Fund Management Company iCG
Slide 8: Third party assets under management
8 Third party assets under management Third party AUM up 30% to €34.5bn FY19 AUM fundraising/realisations by strategy Third party AUM up €7.9bn in the period; fundraising €10.0bn; realisations €3.0bn and €0.9bn FX and other €bn 5.0 Realisations in Corporate Investments arising on the older Europ
Slide 9: Fee income
9 Fee income All strategies contributing to fee income growth Fee income¹ by strategy – FY19 Fee rate by strategy over last three funds 1.8% 1.6% £m 1.4% 120 1.2% 1.0% 100 0.8% 0.6% 0.4% 80 0.2% 0.0% Europe Corporate SDP Real Estate Strategic Equity 60 40 20 0 Corporate Investments Corporate Investm
Slide 10: Fee income
10 Fee income Strong visibility of fees from closed end funds model Management fees ‘locked in’ from current AUM¹ £m 220 200 22 21 180 20 20 16 160 13 19 49 10 140 49 17 48 8 120 46 15 100 42 5 14 80 37 4 13 60 118 31 4 112 104 12 94 26 4 11 40 78 11 21 4 4 59 18 20 44 16 33 22 16 16 - FY20 FY21 FY2
Slide 11: FMC operating margin
11 FMC operating margin Operating margin above target as fee earning AUM grows £m Operating m argin 300 60% 250 50% 200 40% 150 30% 100 20% 50 10% 0 0% FY15 FY16 FY17 FY18 FY19 Costs (LHS) Income (LHS) Operating margin (RHS)
Slide 12: FMC operating costs
12 FMC operating costs Operating leverage continues to improve 12 months to % of FMC 12 months to % of FMC £m 31 March 2019 revenue 31 March 2018 revenue Investment team staff costs 29.5 11% 28.0 13% Marketing staff costs 6.3 2% 5.2 3% Infrastructure staff costs 11.5 4% 8.9 4% Staff costs 47.3 17% 4
Slide 13: Investment Company
Investment Company iCG 13
Slide 14: Net investment return
14 Net investment return Returns tracking underlying fund performance Net investment return trend £m 2,500 2,186 1,958 2,000 1,891 1,903 1,500 12.1% 13.7%¹ 12.6% 12.6% 1,000 500 237 258 240 275 - FY16 FY17 FY18 FY19 Average Balance Sheet Portfolio (inc. AFS) Net Investment Return ¹Net investment ret
Slide 15: Net investment return
15 Net investment return Balance sheet portfolio weighted to higher return strategies Net investment return by fund Net Investment Fund returns to % of total NIR FY19 NIR % Return date FY19 Europe Fund VI 97.9 35.5 % 19.0 % 25.6 % Europe Fund V 62.4 22.6 % 23.2 % 19.0 % Strategic Secondaries II* 28.
Slide 16: Balance sheet portfolio
16 Balance sheet portfolio Portfolio diversified across sector and geography Balance Sheet portfolio sector split Balance Sheet portfolio geographical split Health Ca re E quipment & S upplie s Dive rsi fied Se rvices EMEA (excl. UK) Real Estate Manage me nt & Deve lopment Pap er & Fore st P roducts
Slide 17: Investment Company costs
17 Investment Company costs Costs stable and in line with expectations 12 months to 12 months to £m 31 March 2019 31 March 2018 Staff costs 7.8 11.1 Cash incentives 24.6 24.7 Deferred aw ards 41.8 39.3 Incentive schem es 66.4 64.0 Amortisation 2.3 2.3 Other non staff costs 6.9 8.8 Total 83.4 86.2 Bu
Slide 18: FY20 guidance
18 FY20 guidance Fundraising – average €6bn per annum over 3 year rolling period; FY20 expected in line with average FMC operating margin – above 43%; target under review Performance fees to average £20-25m per annum Net investment return – averaging 11.5% Balance sheet portfolio – average
Slide 19: FMC profit trend
19 FMC profit trend Strategic delivery; 33% compound annual growth since FY14 FMC profit before tax and AUM trend £m €bn 160 40 140 35 120 30 100 25 80 20 144 60 15 95 40 10 74 61 52 20 35 5 - - FY14 FY15 FY16 FY17 FY18 FY19 FMC PBT Third party AUM
Slide 20: Operating Review
Operating Review iCG
Slide 21: Our strategy
21 Our strategy To grow our specialist asset management activities Invest selectively Grow assets Manage under portfolios to management maximise value Generate strong shareholder returns to invest in growth and pay sustainable dividends
Slide 22: Investment markets
22 Investment markets Private company earnings growth continues US and Europe EBITDA growth 14% 12% 10% 8% 6% 4% 2% 0% 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 2015 2016 2017 2018 US EBITDA Growth Rate Europe EBITDA Growth Rate Source: ICG US and Europe Private Company Trends; April 2019
Slide 23: Investment markets
23 Investment markets ICG maintains investment discipline Europe leverage and interest coverage Net Debt / EBITDA All Loans ICG Corporate Loans 5.50x 5.00x 8.00x 7.00x 4.50x 6.00x 4.00x Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 5.00x 4.00x 3.00x 2.00x 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1
Slide 24: Investing our direct investment funds
24 Investing our direct investment funds Capital deployment up 23%; remains strong for all strategies Direct investment funds¹ €m Fund invested at 31 March 2019 6,500 5,991 100% 6,000 Asia Pacif ic III 297 5,500 90% 613 Strategic 4,876 Secondaries II 5,000 80% 411 4,500 4,046 70% Japan 678 4,000 140
Slide 25: Fund performance
25 Fund performance Portfolio performance provides platform for future growth Target Realised Fund IRR on realised assets MM MM ICG Minority Partners Fund 2008 (fully realised January 2016) 1.9x 2.0x ICG Recovery Fund 2008 (fully realised March 2017) 2.0x 1.9x Longbow UK Real Estate Debt Investments
Slide 26: Fund performance: assets realised
26 Fund performance Realising assets locks in investment returns and track record Percentage of realised assets exceeding hurdle rate FY19 realised assets; performance against hurdle 100% 98% 95% 60 92% 3 92% +20% above hurdle 90% 80% 50 3 80% Number of assets realised in period 10-20% above hurdle
Slide 27: Fund performance
27 Fund performance Consistency of fund performance a competitive advantage European Corporate returns versus market Frequency 0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x 4.0x Net MM ICG normal distribution Normal Distribution Curves (European buyouts) European buyout net MM distribution Source: ICG dat
Slide 28: Fundraising
28 Fundraising Excellent fundraising performance across a range of funds €bn Funds raised in FY19 by strategy (€m) 12 11 227 280 Australian Senior Loans 698 10 741 SDP 768 US Corporates 8 897 US CLOs 6 2,223 Real Estate Funds 10.0 4 European CLOs 7.8 6.4 5.2 Strategic Equity 2 4.0 4,187 Credit Funds
Slide 29: Fundraising
29 Fundraising Number one ranked Europe focussed private debt fundraiser Top 10 Europe focused private debt fundraisers, 2012-18 Funds raised ($bn) 30 28 25 20 19 15 10 9 9 8 7 6 5 5 5 5 - Intermediate Ares Hayfin Capital AXA Bluebay Asset EQT The Carlyle Avenue Alcentra Apollo Global Capital Group
Slide 30: Fundraising – Strategic Equity III
30 Fundraising – Strategic Equity III Growth through scaling of existing strategies Growth of strategy Investor by type* Pension Asset Manager Other Insurance Company Investor by geography* EMEA (excl. UK & Ireland) 9 Americas UK & Ireland Strategic Secondaries Strategic Secondaries Strategic Equity
Slide 31: Fundraising - European Mid-Market
31 Fundraising - European Mid-Market Growth by evolving and scaling European Corporate strategy Investment size Europe Fund VII (2018) Europe Fund VI Europe Fund V (2015) (2011) European Mezzanine Fund 2006 Fund 2003 ICG Mezzanine Europe: Fund 2000 Mid-Market Mezzanine Fund 1998 Source: ICG as at 30
Slide 32: Fundraising outlook
32 Fundraising outlook FY20 fundraising focus on newer and smaller strategies FY 20 FY 21 Australian Senior Loans NEW European Mid-Market Corporate Investments SDP Mandates Senior Debt Partners IV Asia Pacific Fund IV European Loans, High Yield & Multi-Asset Credit Capital Market Global Loans & Stru
Slide 33: Governance update
33 Governance update Significant progress made in D&I and ESG considerations Diversity and Inclusion Environmental, Social and Governance (ESG) Signatory to HM Treasury’s Women in Finance Appointed a Responsible Investing Officer (RIO) Charter with a remit of integrating ESG considerations acros
Slide 34: Summary
34 Summary Well positioned for further growth Grow assets under Exceptionally strong fundraising year, with €10.0bn raised management FY20 fundraising focus on newer and smaller strategies Funds investing at, or ahead of, their linear investment pace Invest selectively Investment discipline
Slide 35: Q&A
Q&A iCG
Slide 36: Appendix
Appendix iCG
Slide 37: ICG operating model
37 ICG operating model INVESTING FUNDRAISING • Fund deployment • Gross fundraising to average €6.0bn on a 3 year rolling basis • Fund performance and track record • Maintain fee level • Selective product expansion INVESTMENT IN NEW FUNDS IC PROFITABILITY FMC PROFITABILITY • IC gross return on assets
Slide 38: Vijay Bharadia – incoming CFOO
38 Vijay Bharadia – incoming CFOO An introduction Vijay Bharadia has extensive experience as a CFO in the alternative asset management sector and, in particular, of helping drive significant international growth He has worked for the past decade as International CFO for Blackstone with responsib
Slide 39: Maturity of existing strategies
39 Maturity of existing strategies Significant, foreseeable growth from existing strategies Mature investment strategy Europe CLOs Europe Corporate ICG Enterprise Trust European Senior Debt UK Real Estate Proprietary Capital US CLOs Asia Pacific Corporate Real Estate Senior Debt Strategic Equity Nor
Slide 40: Interest rates
40 Interest rates Rising interest rates benefit ICG Long term structural trend towards alternatives predicted to remain Fundraising Alternatives will continue to offer vastly superior returns on traditional asset classes Flexible mandates allow us to deploy at appropriate risk/return Deploymen
Slide 41: Brexit and ICG
41 Brexit and ICG EU regulated subsidiary in operation Clients Access to clients will not be disrupted Agile workforce with local offices in key markets People Low number of London employees who do not meet UK residency criteria No portfolio companies are dependent on trade between UK and
Slide 42: Disclaimer
42 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