Intermediate Capital Group, a credit-oriented investment firm, has hired secondary shop NewGlobe Capital as its new secondaries platform. ICG’s new secondaries team will focus on restructuring older private equity funds. The NewGlobe team has been co-leading, along with Goldman Sachs, the restructuring of Diamond Castle IV, which closed on about $1.8 billion in 2006. Under the restructuring, NewGlobe and Goldman have financed the creation of a new $860 million vehicle to house remaining Diamond Castle IV portfolio companies.
Intermediate Capital Group (ICG), the specialist asset manager,announces it has launched a new secondaries platform through its first investment into a secondary private equity portfolio and the hiring of a specialist secondaries team.
The private equity secondary market or ‘secondaries’ allows existing investor commitments to private equity funds to be sold to a third party to provide liquidity to existing investors. The market has evolved as the scale of private equity investing has grown and the impact of the 2008-09 financial crisis increased the hold periods of private equity (PE) assets.
ICG’s new secondaries business will focus on leading restructurings of older PE funds. ICG’s expansion into the secondaries market complements our existing investment led approach and the overall business strategy. NewGlobe and investment funds managed by Goldman Sachs Asset Management have co-led the acquisition of a portfolio of remaining substantial PE assets from the Diamond Castle IV fund by a new $860m investment vehicle to be managed by Diamond Castle.
The NewGlobe team comprises Andrew Hawkins, Christophe Browne, and Ricardo Lombardi, all will now join ICG to launch a global secondaries investing business based in London and New York, reporting into Benoît Durteste. The core focus of this business will be to continue leading private equity fund recapitalisations and complex restructuring deals which require a specialist asset-driven investment approach.
The NewGlobe team have worked together for over seven years and built a unique expertise in leading complex structured secondary investments in private equity.
Benoît Durteste, Managing Director at Intermediate Capital Group, said, “Secondary investing is an area that ICG has been working towards developing for some time. It fits well with our corporate strategy of adding new complimentary businesses and strategies. We have been looking for the right assets and the right team to get this off the ground and we are very excited to be hiring the NewGlobe team whose experience will significantly enhance our investment strength. “We believe that secondary investing at the more structured end of the market is a very attractive proposition for institutional investors in the current market environment. Purchasing mature portfolios mitigates some of the risk associated with private equity and credit investing, it shortens the J-curve, and offers attractive risk / return characteristics. We see a lot of opportunity for this ahead, both in Europe and the US”.
Andrew Hawkins, now Global Head of Secondaries at ICG said, “We are thrilled to be joining ICG to launch a dedicated global business in strategic secondaries. ICG’s first class reputation over 25 years and its strong balance sheet provide an outstanding platform for us to build upon. “We are delighted to partner with the Diamond Castle team to acquire a high quality portfolio of assets and to support the next phase of growth of the companies. The market for complex private equity fund restructurings is now well established as a compelling solution to LPs in older funds, and we believe the opportunity set is growing exponentially as the 2004-08 vintage funds mature. We estimate that there are around $50bn in fund vehicles in our target vintages which shows the size of the opportunity we are targeting”.