ICG profits bring cheer for buyouts

PRIVATE equity firms and smaller companies breathed a sigh of relief yesterday as mezzanine lender Intermediate Capital Group (ICG) said it would begin deploying fresh cash after an 18-month hiatus.

Intermediate Capital, which offers financing for leveraged buyouts, said it would reel out between £150m and £200m annually after the completion of its first transaction since summer 2008, expected shortly.

The firm said prospects for selling on loans had “improved materially, heightened by the rallies in the equity and bond markets”. In a trading statement, the company said it had generated £36m by selling debt issued by gaming group Gala Coral and £40m from debt issued by German publisher Springer in the fourth quarter.

Intermediate Capital deals in mezzanine loans, a blend of equity and fixed income with higher returns than other loans because they are the last to be repaid.

Its shares rose 2.3 per cent on the update to close at 273.7p. The stock is flat compared with a year ago, having fallen to a low of 79.7 pence in March.

Intermediate Capital said there had been no increase in bad debts despite a tough economic backdrop, with 52 per cent of its investments performing at least in line with last year.

The firm struck a cautious note, however, saying: “There are signs of momentum in mid-market leveraged buyouts in both Asia and North America.”

It continued: “In Europe, a limited number of leveraged buyouts have been completed, but we do not expected the market to re-open in any significant size until there is improved liquidity in the banking system and a re-opening of the syndication market for leveraged loans.”