The ICG (LSE: ICG) share price jumped 11% in early trading Tuesday (18 November). It’s back around a 7% rise at the time of writing, but still spearheading the FTSE 100.
It comes after the company formerly known as Intermediate Capital Group posted two items of news. One is a first-half results update, which I’ll come back to shortly.
In the other, ICG announced a new partnership with French asset manager Amundi. It’s “to develop private markets products managed by ICG and distributed by Amundi targeted at wealth investors“.
10-year deal
The agreement starts with an initial term of 10 years. And “Amundi will provide structuring, sales and aftersales support for products managed by ICG that Amundi distributes“.
The plan includes Amundi acquiring “over time, and by no later than 30 June 2027, a non-dilutive 9.9% economic interest in ICG, becoming a strategic shareholder and anchoring the long-term partnership“.
Amundi will be able to nominate a non-executive director to ICG’s board. So this is a lot more than just a sales and distribution agreement.
Tying up with Europe’s largest asset manager looks to me like it could be a great move for ICG, especially after Brexit gave British firms doing business in Europe such a kicking.
First half
Turning to first-half results, ICG’s assets under management rose 6% in the half for an annualised growth of 14%.
The company saw its management fees grow 16% compared to the first half last year, to £334m. That’s definitely positive, but we need to remember this can be a very cyclical item. Stock markets generally had a better first six months this year than last, helping boost ICG’s asset performance.
It led to profit before tax growing 78% to £352m year on year. Earnings per share also rose 78%, to 102.8p, and the interim dividend is up 5.3% to 27.7p per share. Forecasts suggest a full-year yield of 4.4%.
What next?
Prior to the latest news, forecasts saw ICG growing its full-year EPS by 28% between 2025 and 2028. And this first-half figure has already hit 63% of the forecast 163p for the current year. They also see a year-end price-to-earnings (P/E) ratio of around 11.5, dropping to 9.6 based in 2028 forecasts.
Those predictions will be up in the air now, particularly on the news of ICG’s new partnership with Amundi. I’m not sure we’ll get much in the way of meaningful updates though, at least not until we get close to full-year results.
Saying that, I really don’t see analysts being disappointed by what we’ve just heard. They already had a strong consensus Buy on the stock, with an average price target of 2,590p. That’s 28% ahead of the ICG share price at the time of writing.
Time to buy?
ICG looks to me like it’s been overlooked by investors on the back of a few years of economic gloom. We do have to remember the likely cyclical nature of future earnings though — and the shares have taken a few sharp falls over the years. I think a P/E lower than average is probably warranted.
But I think ICG has to be worth serious consideration — for investors comfortable with the chance of short-term volatility.
