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Providing Capital to Help Businesses Develop and Grow Intermediate Capital Group PLC • Annual Report and Accounts 2021 Intermediate Capital Group PLC PROVIDING CAPITAL TO HELP BUSINESSES DEVELOP AND GROW Annual Report and Accounts 2021 A GLOBAL ALTERNATIVE ASSET MANAGER Our culture centres around long-term relationships with a wide range of stakeholders, sustainable investment excellence, and an outstanding team demonstrating integrity, diversity and collaboration. Contents Highlights Strategic report Profit before tax 2 Our business at a glance 10 Chairman’s statement 12 The ICG business model £509.5m 16 Chief Executive Officer’s review 18 Market environment (2020: £114.5m) 21 Our strategy and KPIs 24 Stakeholder engagement 24 Section 172(1) statement Total Third Party AUM 30 Responsible business 33 Environment 34 TCFD disclosures $56.2bn 36 Employee engagement 37 Non-financial information statement (2020: $47.1bn) 38 Finance and operating review 49 Risk management 57 Viability statement Ordinary dividend Governance report 58 Chairman’s introduction to governance 62 Board of Directors 56.0p 66 Corporate governance (2020: 50.8p) 68 Director induction and skills 69 Board evaluation 70 Audit Committee report UNPRI Assessment Results 79 Risk Committee report 83 Nominations and Governance Committee report 87 Remuneration Committee report 92 Annual report on remuneration A+A+A 102 Directors’ remuneration policy 109 Directors’ report (2020: AAB) 116 Directors’ responsibilities Financial statements 117 Auditor’s report 126 Consolidated and Parent Company financial statements 132 Notes to the financial statements Additional information 180 Glossary 185 ESG index 186 Our funds Visit icgam.com 188 Shareholder and Company information NVESTING GLOBALLY REATING VALUE ROWING SUSTAINABLY See how we are investing globally, creating value and growing sustainably on pages 4 to 9. ICG | Annual Report & Accounts 2021 1 Our business at a glance A global alternative asset manager We manage $56.2bn of third-party assets globally, investing across the capital structure. The funds we manage generate long-term contracted fee streams. Third Party Assets Under Management within strategic asset class Capital Market Investments Multi-asset credit, syndicated loans, Corporate Investments CLOs and structured credit across Private equity, subordinated debt eight strategies and senior direct lending investments across eight strategies $18.0bn $27.2bn (2020: $15.3bn) (2020: $22.8bn) Third Party AUM Average life of funds: 6–10 years Average life of funds: 6–12 years $56.2bn Secondary Investments Real Asset Investments GP-led secondaries and private Real estate senior debt, subordinated equity fund of funds across debt and equity across five strategies three strategies and infrastructure equity $4.7bn $6.3bn (2020: $3.7bn) (2020: $5.5bn) Average life of funds: 6–12 years Average life of funds: 6–12 years Integrated ESG approach Strategic ESG priorities Integrate ESG systematically into all Transparent communication with Ensure corporate behaviour models investment activities stakeholders strong ESG practice Responsible Investing Policy Internal and external communications “Tone from the top” Read more on page 30 Read more on page 24 Read more on page 10 Focus on where we have a material footprint and meaningful impact Environmental Social Governance Climate change Human capital management Anti-bribery and corruption Read more on page 34 Diversity and inclusion Risk management Supply chain Read more on pages 37 and 38 Read more on pages 25-28 2 ICG | Annual Report & Accounts 2021 We have a diversified and growing group of blue-chip clients. We strive to deliver attractive returns on their capital over the long term. Our global in-house distribution team develops and manages our client relationships. 476 clients globally Pension funds 33.0% Insurance companies 17.2% Asset managers 14.1% 77% growth since 2015 Sovereign wealth funds 2.5% Banks 9.0% Fund of funds 4.4% Other 4.5% Family offices 8.8% Endowments/foundations 6.5% A global footprint with deep access to local markets and an investment track record of over 32 years. Global footprint Investment professionals Europe: 149 US: 47 Asia: 17 ICG | Annual Report & Accounts 2021 3 As a leading alternative asset manager, we provide capital to help businesses develop, grow and thrive in the global economy WE INVEST GLOBALLY We demonstrate our values as we raise and invest our third-party funds Our Senior Debt Partners strategy invested in TSG Group (TSG), the number one European business-to-business equipment and systems distributor and services provider to energy distribution networks. Alignment to ESG priorities TSG aims to be at the forefront of the move towards cleaner alternative fuels by supporting the increased infrastructure required to facilitate growth in the market. TSG have launched several growth initiatives offering their core services for new energies: – TSG is a leading player in installing ‘on the move’ electric vehicle charging stations for their clients, with more than 20,000 charging points installed across Europe – Gas solutions: from compressed to liquid gas and hydrogen to support the transition to a zero emission mobility – Professional wash systems, with a focus on environmentally friendly features How it demonstrates our values Our team worked collaboratively to deliver a bespoke financing solution to TSG. The resilience of the business to climate change was a key consideration. 4 ICG | Annual Report & Accounts 2021 Consistent and robust investment culture globally Entrepreneurialism Our local investment teams have sector expertise and and innovation long-standing relationships. They understand the markets in which they operate. These relationships initiate deal flow and provide early access to investment opportunities. This is a key competitive advantage in sourcing and managing investments for our funds. Ambition Performance for Our granular investment approach provides a and focus our clients valuable information database from which our Our values investment teams can gain market intelligence and drive unique insight. success Our consistent, robust and disciplined investment culture enables us to deliver attractive returns to our clients. Our reputation for investment, built up over 32 years, has generated strong, supportive, asset sourcing Working Taking networks globally. collaboratively responsibility and acting with and managing We adopt responsible and sustainable business integrity risk practices to make a positive impact to society through our investments. Read about our global footprint on page 3 ICG | Annual Report & Accounts 2021 5 WE CREATE VALUE We create long-term sustainable value for all of our stakeholders: investors, employees, clients and the communities in which we operate. Making space for growth with Jaguar Land Rover through an investment in new infrastructure Jaguar Land Rover is a British luxury automotive manufacturer. Our Sale and Leaseback Fund will finance a new 2.9m ft2 distribution campus situated in a prime logistics location in the UK, which will be constructed by IM Properties and then leased to Jaguar Land Rover. The campus will be composed of five Grade-A warehouses serving Jaguar Land Rover’s global parts business. Jaguar Land Rover is consolidating from ~20 properties into the distribution campus which will serve as the home of Jaguar Land Rover’s parts business, dispatching 93% of all spare parts required globally. How this creates value The distribution campus is pre-let to Jaguar Land Rover on long-term leases with inflation protection. Long-term occupational demand for the distribution campus is underpinned by the prime location. 6 ICG | Annual Report & Accounts 2021 Fund performance drives growth Strong fund performance is a leading indicator of future growth in fee-earning AUM. Our fund performance is underpinned by our disciplined investment process. Our 32-year investment track record supports fundraising as we retain existing clients and continue to attract new clients. Our global in-house marketing team is client focused. We continue to expand and strengthen our client relationships by providing opportunities to invest in a diversified portfolio of strategies, with a single investment manager, which meet their risk and return needs. Our dedicated team gives us insight that enables the nimble and efficient design of new strategies to respond to market developments, client demand and investment opportunities. We have a relentless focus on performance for our clients. Third Party AUM $56.2bn 2017 23.3 2018 32.6 2019 38.7 2020 47.2 2021 56.2 Five-year Total Shareholder Return 254.1% 2017 212.5 2018 184.5 2019 209.5 2020 110.9 2021 254.1 Read about investment performance for the year on page 38 ICG | Annual Report & Accounts 2021 7 We strive for a more sustainable future, both as a company and as a part of the wider community WE GROW SUSTAINABLY Our European Infrastructure Equity Fund investment creates value for communities Our European Infrastructure Equity strategy invested in CVE, a renewable power producer focused on solar photovoltaic, biogas and small hydro power generation operating in France, the United States, Chile and Africa. CVE has developed an original vision: decentralised power production and a direct sales model targeted to suppliers, businesses and communities. With an overall capacity of 440 MW, the group produces green energy equivalent to the power consumption of a city with 320,000 people. Alignment to ESG priorities Through its core activities, CVE contributes to achieving
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