Slide 1: Half year results presentation
Half year results presentation 17 November 2015
Slide 2: Operational highlights
2 Operational highlights Strong fundraising start to the year Total AUM up 12% to €20.2bn, with €3.2bn of new money raised Third party fee earning AUM up 18% to €14.4bn €2.2bn of funds raised driven by our European funds – European Mezzanine and Senior Debt Partners Fundraising across multip
Slide 3: Financial highlights
3 Financial highlights Strong performance in line with our expectations Profit before tax¹ £88.1m (H1 2015: £88.1m) Fund Management Company strategy delivering increased profits, up 9% to £29.0m (H1 2015: £26.7m) Investment company profit¹ is 4% lower at £59.1m (H1 2015: £61.4m) Return on eq
Slide 4: Business transition
4 Business transition FY10 - FY15 Priorities for FY16 FY17 - FY18 Building the platform Profit maturity Manage pre global Consolidate and broaden Deliver gross fundraising financial crisis portfolio existing strategies target Develop a scalable Maximising profitability on Enhance brand a
Slide 5: Financial Review
Financial Review iCG
Slide 6: Financial highlights
6 Financial highlights Return on equity improves with growth and re-gearing 6 months to 12 months to 6 months to 30 September 2015 31 March 2015 30 September 2014 Group profit before tax¹ £88.1m £184.1m £88.1m Fund Management Company profit before tax £29.0m £52.0m £26.7m Investment Company profit b
Slide 7: Segmental reporting
7 Segmental reporting 6 months to 12 months to 6 months to £m 30 September 2015 31 March 2015 30 September 2014 Fund Third party fee income 49.9 95.8 50.8 Management IC management fee 9.1 18.7 8.8 Company Other income 9.1 12.8 4.1 Operating costs (39.1) (75.3) (37.0) FMC profit 29.0 52.0 26.7 Invest
Slide 8: Balance sheet and capital strategy
8 Balance sheet and capital strategy Balance sheet being re-geared with £300m special dividend 30 September 2015 31 March 2015 31 March 2014 £m Assets Loans and investments 1,744 1,691 1,908 Assets for syndication 274 244 116 Cash 135 279 115 Other 116 121 102 Total assets 2,269 2,335 2,241 Liabilit
Slide 9: Cash flow
9 Cash flow Net cash outflow as investments outweigh realisations 6 months to 12 months to 6 months to £m 30 September 2015 31 March 2015 30 September 2014 Cash in from realisations and recoveries 166.4 505.6 293.4 Cash paid to purchase loans and investments (153.9) (359.8) (270.9) Cash movement in
Slide 10: Fund Management Company
Fund Management Company iCG
Slide 11: Third party assets under management
11 Third party assets under management Strong fundraising led by our European direct lending funds AUM H1 inflows/outflows by strategy Total net increase €2.1bn; inflows €3.2bn; outflows €0.9bn and €0.2bn FX and other €bn 2.0 Realisations primarily arising on older CLO vintages and €0.3bn from E
Slide 12: Third party AUM outflows
12 Third party AUM outflows AUM increasing as pace of realisations continues to slow Record period of realisations in FY14 are a catch up Third party AUM and realisations from earlier periods delayed by economic downturn €bn 20.0 40% Pace of realisations continues to slow with 6% of 18.0 opening
Slide 13: Fee income
13 Fee income Fees charged on an invested capital basis increasing Third party fee income £m 60.0 50.0 6.4 15.1 40.0 11.5 4.8 9.1 20.8 30.0 12.0 16.8 13.4 17.2 20.0 10.0 21.2 18.5 18.9 22.7 16.3 0.0 H1 14 H2 14 H1 15 H2 15 H1 16 Management fee - commitment during investment period, invested thereaft
Slide 14: Fee income
14 Fee income Increasing fee income following product diversity Third party fee income by strategy £m 60.0 50.0 6.4 15.1 1.2 9.1 40.0 11.5 4.8 7.2 1.3 1.7 1.7 7.1 1.1 4.0 30.0 7.5 8.2 1.2 6.9 0.2 7.9 2.6 3.8 2.2 2.8 20.0 4.6 6.1 23.4 23.8 23.2 10.0 19.0 16.6 0.0 H1 14 H2 14 H1 15 H2 15 H1 16 Mezzani
Slide 15: FMC operating margin
15 FMC operating margin Operating margin benefitting from growth in fee earning AUM £m Operating margin 140 45% 40% 120 Target 35% 100 30% 80 25% 60 20% 15% 40 10% 20 5% 0 0% FY12 FY13 FY14 FY15 H1 15 H1 16 Costs (lhs) Fees (lhs) Operating margin (rhs)
Slide 16: FMC operating costs
16 FMC operating costs Investment in compliance and operations increases costs 6 months to 6 months to 6 months to £m 30 September 2015 31 March 2015 30 September 2014 Investment team salaries 9.1 9.1 8.9 Marketing salaries 1.9 2.0 2.0 Infrastructure salaries 3.2 2.8 2.6 Salaries 14.2 13.9 13.5 Cash
Slide 17: Investment Company
Investment Company iCG 17
Slide 18: Return on assets
18 Return on assets Stable portfolio as realisations provide capital for investment Average investment book and return on assets Average loan book by asset type 30 Septem ber 30 Septem ber First time adoption of 2015 2014 policy of fair valuing equity portfolio £m % £m % £bn Senior mezzanine and sen
Slide 19: Return on assets by product type
19 Return on assets by product type Loan book heavily weighted to higher returning assets Average loan book and ROA by product type £m ROA Majority of investment book in our mezzanine business with expected return of 15-20% 1,400 25% 1,200 20% Regulatory requirement to invest in 5% of equity of
Slide 20: Balance Sheet
20 Balance Sheet Capital used to hold assets for funds being raised Current assets for syndication by strategy (£m) TOTAL: £274m Current assets held for syndication means we can source attractive deals whilst fundraising and the IC 27 TOTAL: £244m benefits from returns 17 24 23 £71m held for syn
Slide 21: Capital gains
21 Capital gains Strong performance of co-investment portfolio 6 months to 12 months to 6 months to £m 30 September 2015 31 March 2015 30 September 2014 Realised gains 1.2 6.8 4.4 Realised gains recycled from AFS 8.6 18.0 9.2 Unrealised gains 52.7 86.8 34.7 Total 62.5 111.6 48.3 Unrealised gains i
Slide 22: Investment Company costs
22 Investment Company costs Improved performance driving increase in incentive costs 6 months to 6 months to 6 months to £m 30 September 2015 31 March 2015 30 September 2014 Salaries 4.0 6.4 2.9 Cash incentives 10.0 8.1 5.0 Deferred aw ards 9.1 9.4 8.0 Incentive schem es 19.1 17.5 13.0 Other non sta
Slide 23: FY16 guidance – tax rate updated
23 FY16 guidance – tax rate updated 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 – aver
Slide 24: Operating Review
Operating Review iCG
Slide 25: ICG operating model
25 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 26: Fundraising
Fundraising iCG 26
Slide 27: Fundraising momentum
27 Fundraising momentum Excellent fundraising dynamics for ICG €bn Funds raised in H1 16 by strategy (€m) 7.0 20 Japan Mezzanine 6.0 1,191 European Mezzanine 5.0 US Mezzanine 94 Asia Pacific Mezzanine Fundraising expectations c€4bn pa 4.0 135 70 135 Longbow Real Estate Funds 6.4 3.0 Longbow Segregat
Slide 28: Fundraising pipeline
28 Fundraising pipeline Strong fundraising pipeline across markets Corporate Real asset Secondary Capital market investments investments investments investments Strategic European CLOs Japan Fund I Longbow IV Secondaries US CLOs US Fund I RE Senior Debt Loan Mandates Asia Fund II
Slide 29: Fundraising focus on first time funds as product offering expands
29 Fundraising Fundraising focus on first time funds as product offering expands Mature investment strategy Europe CLOs Europe Mezzanine Real Estate Mezzanine Senior Debt Partners Asia Pacific Mezzanine US Private Debt Real Estate Senior Debt Real Estate Development Loans US CLOs Alternative Credit
Slide 30: First time funds take longer to raise as conversion rate lower
30 Fundraising First time funds take longer to raise as conversion rate lower Established fund - Europe Fund VI First time fund - North America I 198 investors targeted* 622 investors targeted* 184 initial meetings 279 initial meetings (93%) (45%) 7 7 75 investors conducted DD 67 investors conducted
Slide 31: Fundraising – long term client relationships
31 Fundraising – long term client relationships Sticky existing client base and significant new client wins Investors reinvesting in Senior Debt Partners II* Senior Debt Partners II– investor profile** Invested in other ICG Reinvested Fund Invested in 59% 15% SDP I 24% Not reinvested 41% New Investo
Slide 32: Expansion of ICG’s client franchise
32 Expansion of ICG’s client franchise ICG’s client base has diversified over the past 3 years Investors by Geography 2012 Investors by Geography 2015* 13% 22% 51% 39% EMEA EMEA 16% (excl.UK & Ireland) (excl.UK & Ireland) 69 Americas 217 Americas investors investors UK & Ireland UK & Ireland 20% Asi
Slide 33: Investing
Investing iCG 33
Slide 34: Investment market
34 Investment market Liquidity driving competition and need for differentiation Corporate Capital markets Real Asset Secondary investments investments investments investments Buyout players competing with CLO market is open Significant competition for Volumes & underwritten strategic buyers and IPOs
Slide 35: Investing our direct investment funds
35 Investing our direct investment funds Investment pace of all funds on track Direct investment funds Fund invested at 30 £m September 2015¹ 3,000 SDP I 100% Europe Fund V Longbow III 2,433 90% 2,500 87 80% 2,000 663 70% 1,737 1,581 60% 1,509 1 1,500 524 50% 330 915 663 40% 1,000 320 Longbow IV 488
Slide 36: Managing Investments
Managing Investments iCG 36
Slide 37: Fund performance
37 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 2015) n/a 1.5x 13%+ 12% ICG Mezzanine Fund II 2000 (fully realise
Slide 38: Realisation of assets in direct investment funds
38 Realisation of assets in direct investment funds Current year realisations support fund performance IRR of current year realisations by fund 25% IRR Target IRR 20% 15% 10% 5% 0% ICAP08 MF03 Senior Debt Partners I Longbow II Longbow III Money multiple of current year realisations by fund Money Mul
Slide 39: Impairments
39 Impairments Impairments lower as pre 2009 portfolio runs off Percentage of portfolio performing above prior year Net impairments as a percentage of opening book 80% 5% 70% 4% 60% 50% 3% 40% Historic average 30% 2% 20% 1% 10% 0% 0% Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 FY13 FY14 FY15 H1
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 outlook
Business outlook FY10 - FY15 Priorities for FY16 FY17 - FY18 Building the platform Profit maturity Manage pre global Consolidate and broaden Deliver gross fundraising financial crisis portfolio existing strategies target Develop a scalable Maximising profitability Enhance brand and infra
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