ICG (-) : ICG FY-26 results first take

Research evidence excerpt

ICG (-) : ICG FY-26 results first take

Investment case, valuation and risks

ICG (Underperform, Target Price GBP17)

Investment case

ICG is an alternative asset manager with >$80bn in third-party fee-paying AUM across

structured equity, strategic equity, private debt, credit and real estate.

We continue to see ICG's fund management business as good quality. Management

fees are recurring in nature, locked in for c.8-10yrs and don't mark-to-market in a

downturn (i.e. management fees are based on deployed capital at cost). Fundraising

has been strong but now the company enters a cyclical slowdown as no flagship

products are in market until CY27. Longer term, we see structural growth in private

markets and ICG has various levers to grow their AUM base as they scale existing

strategies, develop emerging strategies and innovate into new areas, although we see

them growing below peers' growth rates.

The private debt landscape has turned unfavourable for lenders: (i) leveraged loan

spreads are at decade-lows; (ii) banks have fully re-entered the BSL (broad syndicated

loan) market, creating borrower-friendly terms and squeezing the pricing advantage

that independent direct lenders once enjoyed; and (iii) direct lending volumes are still

well below the 2024 peak, so the supply-demand mismatch favours borrowers and

limits the upside on new loan originations. ICG is most exposed to this with ~68 % of

third-party FPAUM in debt.

Given that the balance sheet represents c.30% of value, ICG's valuation is also less

geared to the FMC business. Overall, we see more upside across the Alts universe in

both Europe and US.

Valuation methodology

We value Intermediate Capital using a 2027e SOTP, valuing management fee earnings

on an EV/NOPAT methodology on a multiple for our estimate for NOPAT.