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Intermediate Capital changes payout policy

The specialist asset manager is more closely aligning its dividend policy with the fortunes of its fund management business
May 30, 2017

Intermediate Capital (ICP) has been strategically shifting towards third-party fund management for the past seven years. Now, with third-party fee income up more than a quarter during the 12 months to March, management has revealed a new dividend policy. The specialist asset manager will pay out between 80 per cent and 100 per cent of fund management post-tax profit, reflecting its transition to a more stable and predictable business model. It anticipates growing its dividend by between 6 per cent and 8 per cent annually.

IC TIP: Buy at 883p

Against a backdrop of the low yields offered by traditional asset classes, alternatives such as real estate debt and secondary private equity investment have remained popular with institutional investors. Assets under management for the fund management business grew 13 per cent to €21.8bn (£19bn), while capital market investments enjoyed the biggest boost in third-party funds, up a third on the previous year.

Fundraisings totalled €4bn, lower than in recent years as larger strategies had remaining investment capacity. Management focused on fundraising for its smaller strategies such as its Strategic Secondaries Fund, raising €614m last year. Meanwhile, capital gains on Intermediate's balance sheet investments more than doubled, boosting investment income by almost a third to £361m.

Analysts at Shore Capital expect adjusted pre-tax profit of £177m during the 12 months to March 2018, giving EPS of 54.9p.

INTERMEDIATE CAPITAL (ICP)

ORD PRICE:883pMARKET VALUE:£2.48bn
TOUCH:882.5-883.5p12-MONTH HIGH:940pLOW: 446p
DIVIDEND YIELD:3.1%PE RATIO:12
NET ASSET VALUE:418pNET DEBT:54%

Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201337014332.120
201446416437.021
201542617950.322
201644915941.923
2017*62525274.527
% change+39+58+78+17

Ex-div: 15 Jun

Payment: 4 Aug

*Excludes special dividend of 63.4p a share paid in August 2016