Bahrain: Investcorp mobilises $4.7b in '08

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InvestcorpInvestcorp posted strong gains in fiscal 2008 as the firm raised $4.7 billion for its clients and total assets under management crossed $17 billion, a top executive at the world's leading firm InvestcorpInvestcorp said yesterday.

Nemir Kirdar, company executive chairman and chief executive officer, on the sidelines of the annual general meeting of the firm, said that a strong balance sheet can save any financial institution from a crisis and not the income statement.

He warned that high-risk takers would be wiped out and the global economic outlook remains bleak.

Citing an example of a weak balance sheet and how it impacts business, he said that in the recent global financial crisis, weak balance sheets were major reasons behind most of the troubled banks and financial institutions after the sub-prime mortgage crisis struck European and US institutions. "High profits are easy to make but building a strong balance sheet is an uphill task for any institution.

"That is our biggest achievement as InvestcorpInvestcorp built the most robust balance sheet ever at the end of this fiscal year. We announced yet another robust financial-year results for 2008 as the firm yielded a record product placement by raising $4.7 billion from clients this year," said Kirdar. "Total assets under management reached a record level of $17.7 billion.

"At year-end, client assets under management were $12.8 billion, more than double that of two years ago. These results are strong evidence that InvestcorpInvestcorp is achieving its growth plans.

"In the current scenario," Kirdar said, "those who took huge risks are likely to be wiped out and maybe some of them make money." InvestcorpInvestcorp which has had no exposure to the sub-rime crisis, attributed to its due diligence and understanding of the fundamentals of US and European markets, posted strong gains at end of this financial year with net income rising $151.1 million, the second best performance ever, albeit lower than fiscal 2007's record.

"In private-equity buyouts, InvestcorpInvestcorp deployed $438 million of equity across three new acquisitions:

Randall-Reilly, Asiakastieto and CEME as well as one add-on acquisition, Anjac. Substantial progress was made by the new Gulf Growth Capital line of business. It has closed its first fund at more than $1 billion, double its original target, and has concluded its first deal.

"InvestcorpInvestcorp had one of the best performing fund of hedge funds in 2007, with returns benefiting from tactical allocations to portfolio-protection strategies and to managers shorting subprime securities," said Kirdar. "Hedge-fund returns in the first half of this year were, however, affected by unprecedented volatility in global markets and by the withdrawal of liquidity resulting from a meltdown in the financial sector.

"Nevertheless, we believe InvestcorpInvestcorp continues to be a consistent top-quartile performer relative to other fund of funds over the market cycle. The hedge-fund business invested in three new single managers on its seeding platform and won a number of hedge-fund industry awards.

"Underlying operating fundamentals for US commercial real estate has remained generally healthy," said Kirdar, "and therefore, despite general market difficulties, the real-estate business deployed $391 million. It also made $122 million in new debt investments for its Mezzanine Fund I and for a newly created real-estate credit fund, InvestcorpInvestcorp's second real-estate debt offering in which a large GCC sovereign investment fund is the anchor investor. The team also realised $215 million in exit proceeds.

By Mahmood Rafique Business Correspondent

© Bahrain Tribune 2008