ICG boosts dividend as interim profit falls but beats expectations

ICG PLC on Wednesday said it is targetting a capital structure around a position of zero net debt over the medium term as it reported better-than-expected first half results.

The London-based alternative asset manager said pretax profit fell 18% to £287.3 million in the six months ended September 30 from £351.6 million a year prior, but this still beat £268 million company-compiled market consensus.

Total revenue fell 7.4% to £532.1 million from £574.5 million.

Within this, total management fees increased 12% to £373.7 million from £333.6 million, topping £361 million consensus.

Fee related earnings climbed 18% to £198.6 million from £168.0 million, ahead of £184 million consensus.

FRE operating expenses totalled £175.1 million, up 5.7% from £165.6 million, with growth in administrative expenses due to a number of factors including a higher proportion of hiring- and IT-related expenses.

Earnings per share declined 22% to 80 pence from 102p. The dividend was boosted 4.7% to 29.0p per share from 27.7p.

Fee earning assets under management increased 3.6% to USD89.67 billion at the end of September from USD86.52 billion at the end of March, above £89.11 billion consensus.

Chief Executive Benoit Durteste said ICG is seeing "our focus on long-term investment performance rather than short-term asset gathering increasingly recognised by institutional clients."

He noted that over the last two years ICG has had seven funds close at or above their target, including most recently Europe IX at EUR12 billion, "the largest structured capital fund ever raised globally".

Fundraising in the period totalled USD7.6 billion ahead of USD5.72 billion consensus.

Looking ahead, ICG said it intends to manage its capital structure around a position of zero net debt over the medium term.

At September 30, ICG had net financial debt of £93 million, down from £113 million at the end of March.

"This capital structure will ensure we have a strong and flexible balance sheet to enable us to continue to grow and broaden our business organically, as well as position us to withstand any macro shocks," it said.

Excess cash is expected to be returned to shareholders.

"Notwithstanding this, if we see attractive opportunities to grow our FRE per share, including inorganic opportunities, funding these would be prioritised over continuing with any buyback programme, and we would also be willing to prudently and temporarily re-lever the business if appropriate," it added.

Shares in ICG were up 3.2% at 2,016.00p each in London on Wednesday.

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