ICG begins marketing its second recovery fund

As of 31 March, 34% of that first Recovery fund was invested in private capital, 59% in secondary investments in bank debt portfolios and 7% in other secondary investments, according to Hamilton Lane’s presentation to the state pension’s board of trustees at the July meeting. The fund made 11 investments, generated an internal rate of return of 11% and reached a total value to paid-in capital multiple of 1.6 times.

Market dislocations arising from this year’s coronavirus pandemic have created attractive investment opportunities in credit, opportunistic and structured financings, according to Hamilton Lane. The opportunities range from credit to secondaries, equity and distressed strategies, the advisory firm said.

ICG joins firms such as Bain Capital, Blackstone Group, Oaktree Capital Group and Carlyle Group that are reportedly targeting opportunities created by the pandemic as lockdowns hammered businesses. For instance, WSJ Pro Private Equity data show Oaktree aims to raise $15bn for its Oaktree Opportunities Fund XI to buy debt in distressed companies.

The Louisiana pension system also committed $50m to a similar fund, Castlelake V Dislocated Opportunities. Sponsor Castlelake aims to raise $750m for the fund and intends to invest in opportunities in the US and Europe arising from pandemic disruptions, pension documents show.

Generally, ICG invests in mezzanine financings, leveraged credit, minority equity, alternative credit, senior debt, secondaries and infrastructure equity, among other strategies. Its latest fundraising comes on the heels of a $2.4bn haul for the firm’s private equity-focused ICG Strategic Equity Fund III fund, which it closed to new investors in January.

ICG plans to provide 10% of the newest Recovery fund’s value, or as much as €100m. The firm expects to make 15 to 30 investments of €20m to €100m each in primary debt as part of rescue packages and lender-led restructurings. The firm also anticipates making secondary purchases, including of senior loans from UK banks and through restructuring situations, and acquiring liquid securities, pension documents show.

The Recovery fund’s deal-sourcing will come from ICG’s global investment platform, the documents show. It will be led by Alan Ross, the firm’s managing director and head of special situations, and Zak Summerscale, senior managing director and global head of credit fund management, to ensure that it benefits from ICG’s investment insights and relationships, the documents said.

An ICG representative didn’t respond to a request for comment on the new fund.

Source: Private Equity News