ICG raises €4bn for seventh European fund

Francesca Veronesi
21 November 2018

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Hybrid fund manager Intermediate Capital Group (ICG) has completed a тЌ4bn close for ICG Europe VII, Unquote understands.

The firm launched its seventh European fund in March and held a €2.6bn close in Q3 this year.

The fundraising had reached €4bn in commitments by third parties as of November 2018, according to documents seen by Unquote, while ICG itself will commit a minimum of €500m to the fund.

ICG Europe VII is targeting a gross IRR of 18% and a gross total value multiple of 1.8x.

A management fee of 1.5% of committed capital will be charged until the end of the five-year investment period, with discounts offered to investors committing more than €150m, falling to 1.25% thereafter. For carried interest, 20% is payable above an 8% hurdle rate.

ICG is able to use fund-level leverage of up to a 3:2 ratio for ICG Europe VII. However, fund-level leverage was not used in the GP's previous two funds and ICG does not foresee doing so in the current fund, according to documents seen by Unquote.

The firm's previous fund, ICG Europe VI, held a final close on €3bn in July 2015 and was 60% invested as of September 2017, at which point it had generated a net IRR of 45%. ICG Europe V reported a net IRR of 13% and total value multiple of 1.4x as of September 2017.

Investors
LPs that have committed to the vehicle include Pennsylvania State Employees Retirement System, which had pledged €80m as of Q3 this year; and Teachers Retirement System of Louisiana, which approved a commitment of $75m earlier this year. Connecticut Retirement Plans and Trust Funds was considering a commitment of up to €75m in Q3.

Investments
The fund will invest across the capital structure with a focus on mezzanine and equity-like instruments throughout the European mid-market. The majority of investments will be corporate deals with a more significant equity component, which will make up between 30-80% of the fund. Sponsor-backed LBO and opportunistic lending will each account for 20-50%.

People
Intermediate Capital Group – James Roddis (head of UK, equity and mezzanine).