Bloomberg News

ICG Raises 1.1 Billion Euros for European Mezzanine Loan Fund

October 06, 2011

Oct. 6 (Bloomberg) -- Intermediate Capital Group Plc, a provider of debt for leveraged buyouts, said it raised 1.1 billion euros ($1.5 billion) for a new mezzanine loan fund.

ICG’s investment company contributed 500 million euros to the fund that has now raised about half of its target, the London-based firm said today in a trading statement. The fund made its first investment in a 140 million-euro mezzanine portion of debt supporting Charterhouse Capital Partners LLP’s buyout of Brussels-based Bureau van Dijk Electronic Publishing.

Borrowers are tapping mezzanine loans as pension funds and insurers pull money out of bond funds amid speculation a Greek default will plunge Europe into a recession and make it harder for speculative-grade issuers to pay their debts. Redemptions from high-yield bond funds in Europe last week were $1.49 billion, representing 2.3 percent of assets, Bank of America Merrill Lynch said on Sept. 30.

There are “considerable opportunities for specialist lenders to generate high returns by acquiring debt at attractive discounts in a distressed market,” Christophe Evain, chief executive officer of ICG, said in the statement. “The events of the summer have further highlighted the imbalance between supply and demand for credit which will remain a feature of the European credit markets for the foreseeable future.”

ICG, based in London, said it has seen no “signs of deterioration” in its investment company portfolio as a result of economic uncertainty, and its mezzanine funds “continue to show top quartile performance versus private equity funds.”

Shares surged 6.8 percent to 211.7 pence as of 9:53 a.m. in London, the biggest intraday gain since August. The stock has dropped 36 percent this year, giving the firm a market value of 846 million pounds. ICG’s first-half results will be published on Nov. 22.

Mezzanine loans are a type of debt used to fund leveraged buyouts, ranking behind senior debt and sometimes offered with equity stakes.

--Editors: Cecile Gutscher, Paul Armstrong

To contact the reporter on this story: Stephen Morris in London at smorris39@bloomberg.net.

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net.


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