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Intermediate Capital takes flight

The London-listed group continues to ride the enormous investor appetite for alternative assets
November 19, 2019

Intermediate Capital’s (ICP) strong recent track record in attracting and deploying capital to its various credit, debt and alternative asset funds means shareholders are used to positive surprises.

IC TIP: Buy at 1,582p

Half-year numbers repeated the trick, in two respects: not only did adjusted and reported profits in the core fund management arm come in above forecasts, leaping 32 per cent, but the division’s minimum operating profit margin target has now been raised from 43 per cent to at least 50 per cent.

To chairman Kevin Parry, this is possible thanks to a model that “is more robust than at any time in the company’s history”. Chief executive Benoit Durteste put it differently, suggesting that because the group’s clients do not pull their money in response to sudden movements in financial markets, this makes ICG’s closed-end funds more sustainable – thereby allowing it to increase or maintain average fee rates “on an underlying fund basis”.

Growth in assets under management remains strong. While inflows of €4.6bn (£3.9bn) were down on the comparative period, this is still well above a three-year rolling target of €6bn a year.

Following these numbers, analysts at broker Numis signalled they would lift their earnings per share forecasts, which currently stand at 92.7p for the year to March 2020 and 95.5p in FY2021.

INTERMEDIATE CAPITAL (ICP)  
ORD PRICE:1,489pMARKET VALUE:£4.32bn
TOUCH:1,489-1,491p12-MONTH HIGH:1,585pLOW: 911p
DIVIDEND YIELD:3.4%PE RATIO:21
NET ASSET VALUE:486pNET DEBT: 79%
Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201825912443.610.0
201930415350.815.0
% change+18+24+17+50
Ex-div:5 Dec   
Payment:14 Jan