London-listed global alternative asset manager Intermediate Capital Group (ICG) announced on Tuesday that it has acquired the Australian real estate debt investor Newground Capital Partners (Newground) for an undisclosed amount.
The newly acquired business, which will trade as ICG-Newground, will underwrite loans of A$30-200 million ($23-154 million) to owners of value-add, stabilised, and construction assets, according to the announcement.
Newground, led by Daniel Erez, arranges, invests, and manages real estate financing solutions in the Australian mid-market. With offices in Brisbane, Sydney, and Melbourne, the firm has deployed more than A$200 million of capital and currently manages investments for over 100 clients.
ICG, on the other hand, provides capital to help companies grow. It manages €47.2 billion ($57.5 billion) of assets in private debt, credit, and equity, principally in closed-end funds.
Following the acquisition, ICG-Newground is set to launch an institutionally-focused fund in Q3 this year to capitalise on the growing interest in real estate debt among Australian investors. Erez will join ICG as head of Real Estate Australia and New Zealand.
Martin Wheeler, ICG’s real estate business co-head, said the acquisition is a further positive step in the growth of ICG’s real estate strategy and footprint in Australia.
“We are looking forward to working with an entrepreneurial management team to realise the attractive opportunities in the Australian real estate market,” Wheeler added.
ICG will join several new lenders that have entered the Australian market due to the shift in risk appetite from traditional lenders, opening up opportunities for new lenders to compete, according to research from Savills Australia.
In early 2020, Australia’s real estate debt capital market was quietly optimistic. By January, the residential market had recovered almost all of the losses suffered between 2017 and 2019, according to a report released by Stamford Capital Australia.
The report added that the market expects lending activity to continue, with 70% expecting major banks and 84% expecting non-banks to maintain or increase their investment loan appetite.