Intermediate Capital stages first quarter recovery

The sharp contraction in direct investment would have surprised no one given the circumstances, but it may be overly optimistic to suggest that the step-up in investment activity through Q1 provides a pointer to the direction of travel over the coming months.

Certainly, valuations for the group’s investment portfolios have retraced strongly since the March lows, while total assets under management (AuM) edged up a single percentage point to €45.6bn (£41.1bn). Third-party fee earning AuM increased by 1.4 per cent to €36.4bn over the same period and investors would have been reassured by a relatively modest 2.4 per cent fall in the value of the group’s real estate investments.

That Intermediate Capital has performed creditably since the March lows is testament to its strategic shift towards managing debt investments on behalf of third parties, rather than financing leveraged buyout deals. It is a lower-risk model from a financial perspective, wholly desirable in the present environment.

The overarching concern is the extent to which asset valuations across the board will be impacted once central banks start to limit the amount of liquidity being pumped into the global economy. Realisations from the closed-ended funds, which make up 85 per cent of the group’s AuM, slowed appreciably through the quarter, and the group expects them to remain subdued for the remainder of this year, though it may be a little premature to make that assumption.