Broker tips: International Capital Group, Quilter

Berenberg started coverage of capital asset manager International Capital Group at ‘buy’ on Thursday with a 2,600p price target.

"We view ICG as a long-term earnings growth story," it said. "We think the private markets industry will continue to grow, and that ICG is well positioned to benefit from this growth given its established brand, diversified business model, and scale."

Berenberg said that originally a mezzanine finance lender, ICG has demonstrated its ability to develop and scale new investment strategies and now runs around $70bn of fee-earning assets under management (AuM).

"We like ICG’s focus on organic growth and think that the company will continue to develop new strategies across asset classes and geographies," it said.

Berenberg said there is headroom for growth and that ICG should be able to deliver around 8% per annum growth in third party fee income from FY24 (year ended March 2024) to FY27.

"We expect this to be driven by the expansion of ICG’s institutional client base as well as a greater average share of wallet," it said.

It also said that the company has an impressive track record of fundraising and has increased its fee-paying AuM at about a 20% compound annual growth rate over FY15-24.

"We also believe that a pick-up in deal activity (which should be enabled by base rate cuts) could be a tailwind for performance fee growth."

Jefferies initiated coverage of Quilter on Thursday with a ‘buy’ rating an 175p price target as it said catalysts were coming.

The bank said it can foresee positive catalysts for the stock, and that the impending provision for ongoing charges has not pinned the price down.

"When the skilled person report comes out in 1H25, it is possible that a low provision will be a positive catalyst," it said.

"Similarly, a budget without major tax hikes could release some pressure from 30 October. After then, and depending on the size of the provision, improving flows (and perhaps share buy-backs in the longer term) can lift earnings per share and the multiple."

Jefferies said the new platform is now driving meaningful flows and it thinks the market has priced in the provision it expects Quilter to take in 1H25 and is prepared for tax rises in the autumn budget.

Jefferies noted that its price target is 17% higher than the current price and allows for a £170m provision.