Tuesday 16 January 2018

Debt investor will pull out of France if Le Pen triumphs

Front National leader Marine Le Pen Photo: AP Photo/Jacques Brinon
Front National leader Marine Le Pen Photo: AP Photo/Jacques Brinon

Joe Mayes

Intermediate Capital Group (ICG) will suspend further investment in France if National Front leader Marine Le Pen becomes president in this year's elections, according to the company's chief executive officer.

Its a signal that a wave of unpredictable elections this year across Europe are already being weighing on investors' risk appetite.

"It cannot be positive," said Christophe Evain in an interview at his offices. "We would certainly freeze investments for some time and see what happens." His London-based firm has €22bn of assets under management.

ICG, a major UK-based specialist in debt investments, has 29pc of its portfolio in France. Evain cited Le Pen's economic policies, which include backing protectionism, as a cause for concern, and said her proposal to take France out of the euro would add to the political instability in Europe.

Le Pen, who has spent years trying to detoxify her anti-immigration party in the minds of the electorate, is a front-runner in the presidential elections, which start in April and conclude in a possible run-off the following month.

An Elabe poll for Les Echos last week suggested Le Pen would get through the first round of voting, though Evain doesn't think she'll win the presidency. Still, the Paris-born ICG chief cited the risk of political upheaval as one of the biggest challenges facing his firm in 2017.

"At this stage I think it's highly unlikely she'll win," Evain said. "But I got it wrong on Brexit and I got it wrong on Trump. I'm worried about jinxing the whole process."

ICG invests in French firms including Groupe Charlois, a manufacturer of oak barrels for wine and cognac production, and DomusVI, which operates about 200 nursing homes across the country.

The money manager's assets have swelled from €12.1bn in September 2013, fuelled by institutional investors seeking higher returns as traditional assets like government bonds yield close to zero. Its stock has risen to 710 pence as of 8.25am in London on Wednesday, after sliding to as low as 501 pence in the wake of the UK's June decision to quit the European Union.

The company plans to do more direct lending in the US this year and to bring two of its established funds involved in products including US mezzanine and European direct lending back to the market, Evain said. It's also looking to acquire new teams.

ICG is tightening the criteria for deploying capital in the UK, where it has about 11pc of its portfolio, due to concerns over the nation leaving the world's biggest single market. Companies vulnerable to rising import costs or a decline in consumer spending are now less attractive, he said.

"We'd rather invest in companies that are not going to suffer as much from a difficult Brexit," Evain said.


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