ICG
Transaction Background
In February 1989 Graphite was a founder investor in the start-up of Intermediate Capital Group. ICG is a provider of mezzanine finance for management buy-outs. Graphite participated in the initial financing and provided further finance over the next two years to finance the build up of the loan portfolio.
Deal Attractions
The management team had extensive experience of structuring debt and equity packages for management buy-outs. The UK buy-out market was expected to grow rapidly and US experience suggested that deal sizes would increase and that this would generate demand for high yielding intermediate debt products. There was a shortage of debt providers and none were independent of large banking groups.
Achievements
- ICG established itself as the leading provider of mezzanine finance in the UK and subsequently in continental Europe
- in addition to lending from its own balance sheet it raised a series of third party funds to increase its revenues and grow its loan portfolio
- within six years of its formation the loan book had grown to £170 million and pre-tax profit had increased to £18 million
Exit
- the company was floated on the London Stock Exchange in 1994
- it has continued to develop since then and in 2005 made pre-tax profits of £224 million
- Graphite did not sell shares on flotation; we continue to have a shareholding in ICG having generated over £20 million from share sales to date
- to date we have achieved a multiple of 4.8 times our investment and an internal rate of return of 23 per cent