Slide 1: Half year results presentation
Half year results presentation 14 November 2017
Slide 2: Operational highlights
2 Operational highlights Record fundraising and strong capital deployment Total AUM up 14% to €27.2bn, with €5.7bn of new money raised Fundraising driven by our Senior Debt Partners strategy raising €4.2bn in the period and growing momentum across our European capital markets strategies Fee ea
Slide 3: Financial highlights
3 Financial highlights Strong financial performance driven by FMC Fund Management Company profits up 30% to £44.3m (H1 2017: £34.0m), with third party fee¹ income up 24% Investment Company profit¹ is lower at £36.7m (H1 2017: £99.0m), due to lower investment income Group profit before tax¹ was
Slide 4: Strategic priorities
4 Strategic priorities FY10 - FY15 FY16 - FY19 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 Increased fundraising targets platform
Slide 5: Financial Review
Financial Review iCG
Slide 6: Financial highlights
6 Financial highlights Fund Management Company profit up 30% on prior period 6 months to 12 months to 6 months to £m 30 September 2017 31 March 2017 30 September 2016 Fund Third party fee income 77.8 138.6 62.9 Management IC management fee 8.3 18.1 9.2 Company Other income 12.3 23.0 11.4 Operating c
Slide 7: Balance sheet and capital strategy
7 Balance sheet and capital strategy Balance sheet efficiency maintained 30 September 2017 31 March 2017 31 March 2016 £m Assets Loans and investments 1,668 1,712 1,798 Assets for syndication 294 90 183 Cash 145 490 113 Other 403 209 236 Total assets 2,510 2,501 2,330 Liabilities Borrowings 1,090 1,
Slide 8: Cash flow
8 Cash flow Strong investment pace results in net cash outflow 6 months to 12 months to 6 months to £m 30 September 2017 31 March 2017 30 September 2016 Cash in from realisations and recoveries 227.5 716.5 302.9 Cash paid to purchase loans and investments (261.9) (366.0) (178.2) Cash movement in cur
Slide 9: Fund Management Company
Fund Management Company iCG
Slide 10: Third party assets under management
10 Third party assets under management Record third party AUM of €25.3bn up 16% in the period AUM H1 inflows/outflows by strategy Third party AUM up €3.5bn in the period; inflows €5.7bn; outflows €1.4bn and €0.8bn FX and other €bn 5.0 Realisations in corporate investments arising on the older Eu
Slide 11: Fee income
11 Fee income Long term, predictable and highly cash generative fee streams Locked-in management fees from current AUM¹ Average Average Locked-in Longevity of management fees illustrated by Weighted Remaining Weighted Management over £800m¹ of locked-in fees from historic Fee Rate Fees fundraising
Slide 12: Fee income
12 Fee income Fee rates maintained across asset classes Weighted average fee rate¹ by strategy – H1 18 Fee rates have remained broadly flat over the last four years 1.60% Fee rates continue to be maintained with lower 1.40% 1.36% fee rates in capital markets strategies supported by higher fee ra
Slide 13: FMC operating margin
13 FMC operating margin Operating margin above target £m Operating m argin 200 50% 180 45% Target 160 40% 140 35% 120 30% 100 25% 80 20% 60 15% 40 10% 20 5% 0 0% FY14 FY15 FY16 FY17 H1 17 H1 18 Costs (lhs) Income (lhs) Operating margin (rhs)
Slide 14: FMC operating costs
14 FMC operating costs Costs in line with expectations 6 months to 6 months to 6 months to 12 months to £m 30 September 2017 31 March 2017 30 September 2016 31 March 2017 Investment team staff costs 13.9 13.1 12.6 25.7 Marketing staff costs 2.6 2.1 2.5 4.6 Infrastructure staff costs 4.2 4.7 4.0 8.7
Slide 15: Investment Company
Investment Company iCG 15
Slide 16: Return on assets
16 Return on assets Loan book a reflection of historic co-investment decisions Average loan book and ROA by product type Average ROA is 14%, down from 17% in FY17, due to the strong level of capital gains £m ROA in the prior period 1,200 20% 18.9% Majority of investment book in the Corporate 18%
Slide 17: Valuation returns
17 Valuation returns Portfolio performing well reflected in healthy unrealised gains Capital gains by type & net impairments £m 140.0 120.0 100.0 48.4 80.0 6.3 6.0 60.0 8.6 14.0 23.7 40.0 70.8 68.7 52.7 51.9 20.0 46.2 - (10.0) (18.1) (21.3) (23.8) (24.2) (20.0) (40.0) H1 16 H2 16 H1 17 H2 17 H1 18 N
Slide 18: Investment Company costs
18 Investment Company costs Costs in line with expectations 6 months to 6 months to 6 months to 12 months to £m 30 September 2017 31 March 2017 30 September 2016 31 March 2017 Staff costs 5.9 8.8 5.6 14.4 Cash incentives 14.8 15.9 10.1 26.0 Deferred aw ards 16.7 15.4 12.8 28.2 Incentive schem es 31.
Slide 19: FY18 guidance
19 FY18 guidance Fundraising – average €4bn over fundraising cycle; FY18 to 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 c£2bn with co-investment r
Slide 20: Operating Review
Operating Review iCG
Slide 21: ICG operating model
21 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 22: Fundraising
Fundraising iCG 22
Slide 23: Fundraising market
23 Fundraising market ICG to capitalise on current investor appetite Institutional investors’ long term allocation plans Trend in private debt allocations 80% 60% 80% Decrease Increase 40% 67% 62% 62% 20% 51% 38% 60% 0% (9%) (8%) (9%) (14%) (17%) Increase in allocation -20% -40% 40% H2 2015 H1 2016
Slide 24: Fundraising momentum
24 Fundraising momentum On track for a record fundraising year €bn Funds raised in H1 18 by strategy (€m) 19 7 74 400 Australian Senior Loans 6 416 564 Secondaries 5 Fundraising expectations c€4bn pa 4 US CLOs 6.4 3 5.7 5.2 Real Estate Funds 2 3.8 4.0 4,226 1 Credit Funds 0 FY14 FY15 FY16 FY17 H1 18
Slide 25: Fundraising case study – SDP
25 Fundraising case study – SDP Successful fundraise takes total strategy AUM to €7.9bn SDP AUM progression SDP III Investors €bn 9.0 16% Existing SDP clients 8.0 New clients 7.0 56% 28% Existing ICG clients, 6.0 new to SDP €5.2bn available 5.0 to deploy 4.0 SDP Investors by Sector 3.0 10% 2.0 Pensi
Slide 26: Fundraising outlook
26 Fundraising outlook Strong fundraising pipeline driven by larger strategies H2 18 FY 19 FY 20 Australian Loan Fund Corporate US Private Debt Fund II Investments European Mezzanine Fund VII European Loans, High Yield & Multi-Asset Credit Capital Market Global Loans & Structured Credit Investments
Slide 27: Investing
Investing iCG 27
Slide 28: Investment markets
28 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 UK commercial real estate Strong transaction volumes year markets in
Slide 29: Investing our direct investment funds
29 Investing our direct investment funds Capital deployment strong for our larger strategies Direct investment funds¹ Fund invested £m at 30 September 3,000 2017 100% ICG Longbow IV 2,606 SDP II 2,433 46 90% 2,500 87 781 2,088 80% 31 2,000 261 1,855 Europe Fund VI North America 915 70% 235 1,500 1,3
Slide 30: Managing Investments
Managing Investments iCG 30
Slide 31: Fund performance
31 Fund performance Portfolio performance provides platform for future fundraising Target Realised Fund IRR on realised assets MM MM ICG Europe Fund IV 2006 (fully realised March 2015) 1.5x 1.6x ICG Minority Partners Fund 2008 (fully realised January 2016) 1.9x 2.0x ICG Recovery Fund 2008 (fully rea
Slide 32: Fund performance
32 Fund performance Realising assets locks in investment returns and track record Percentage of realised assets exceeding hurdle rate¹ H1 18 realised assets; performance against hurdle 100% 98% 94% 2 92% +20% above hurdle 90% 80% 80% 4 70% 10-20% above hurdle 70% 60% 3 50% 5-10% above hurdle 40% 30%
Slide 33: Wrap Up
Wrap Up iCG
Slide 34: Wrap Up
34 Wrap Up Well positioned for future growth Grow assets under On track for record fundraising year, with €5.7bn raised in first half management Strong fundraising pipeline as larger strategies return to market Larger strategies investing strongly Invest selectively Maintaining investment di
Slide 35: Q&A
Q&A iCG
Slide 36: Disclaimer
36 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