17 March 2011
Capital Intelligence (CI), the international credit rating agency, today announced that it has affirmed Investcorp Bank's Long-Term and Short-Term Foreign Currency Ratings of BBB+ and A2 respectively. CI also maintained the Financial Strength Rating (FSR) at BBB+ and Support Level of 4. The Outlook for the ratings remains 'Stable.' Investcorp's ratings are supported by a sound capital base, a strong rebound in profitability and diversified sources of funding.
The ratings remain constrained by high investment and market risks, significant concentrations within the private equity portfolio as well as ongoing market volatility. Investcorp's profitability returned to positive territory in FY 2010 subsequent to a substantial net loss in the previous year attributed to the effects of the global credit crisis. Notwithstanding the ongoing challenging global operating environment, Investcorp's strong net profit recovery was driven by improved asset-based income from hedge funds and corporate investments as well as by higher fee income due to an increase in assets under management (AUM). In response to the evolving market conditions, Investcorp's strategy has shifted towards augmenting fee income (namely management fees from investments under management for clients). This should continue to improve the quality of earnings over the medium term and reduce the reliance on relatively volatile asset-based income.
Investcorp's balance sheet is solidly capitalised, after a substantial increase in shareholders' funds in the previous year earmarked to rebuild a capital base negatively impacted by a net loss. The marked deleveraging underway - term debt and investments (notably hedge funds) continued to contract - evidences the scope of Investcorp's balance sheet management initiatives and the aim to safeguard the comfortable level of liquidity achieved. Supported by diversified sources of funding, this liquidity benefits Investcorp's ongoing timely fulfilment of financial obligations over the near to medium term.
Acting as an alternative asset manager, Investcorp performs the role of principal and intermediary in international investment transactions principally in the US and Western Europe. Investcorp operates under a wholesale banking license issued by the Central Bank of Bahrain and offers its investment products to institutional and very high net worth individual clients, both in the Arabian Gulf and internationally. At end-December 2010, Investcorp reported total assets of USD2.9 billion and total capital of USD975mn.
- Ends -
For more information, please contact:
Primary Analyst
Morris Helal
Senior Credit Analyst
Tel: 357 2534 300
morris.helal@ciratings.com
Secondary Analyst
Chris Nicolaou
Senior Credit Analyst
chris.nicolaou@ciratings.com
Rating Committee Chairman
Tom Kenzik
Senior Credit Analyst2
The information sources used to prepare the credit ratings are the rated entity and public information. Capital Intelligence considers the quality of information available on the issuer to be satisfactory for the purposes of assigning and maintaining credit ratings. Capital Intelligence does not audit or independently verify information received during the rating process.
The rating has been disclosed to the rated entity and released with no amendment following that disclosure. Ratings on the issuer were first released in September 1986. The ratings were last updated in February 2010.
The principal methodology used in determining the ratings is Bank Rating Methodology. The methodology and the meaning of each rating category and definition of default, as well as information on the attributes and limitations of CI's ratings, can be found at www.ciratings.com
Capital Intelligence (CI), the international credit rating agency, today announced that it has affirmed Investcorp Bank's Long-Term and Short-Term Foreign Currency Ratings of BBB+ and A2 respectively. CI also maintained the Financial Strength Rating (FSR) at BBB+ and Support Level of 4. The Outlook for the ratings remains 'Stable.' Investcorp's ratings are supported by a sound capital base, a strong rebound in profitability and diversified sources of funding.
The ratings remain constrained by high investment and market risks, significant concentrations within the private equity portfolio as well as ongoing market volatility. Investcorp's profitability returned to positive territory in FY 2010 subsequent to a substantial net loss in the previous year attributed to the effects of the global credit crisis. Notwithstanding the ongoing challenging global operating environment, Investcorp's strong net profit recovery was driven by improved asset-based income from hedge funds and corporate investments as well as by higher fee income due to an increase in assets under management (AUM). In response to the evolving market conditions, Investcorp's strategy has shifted towards augmenting fee income (namely management fees from investments under management for clients). This should continue to improve the quality of earnings over the medium term and reduce the reliance on relatively volatile asset-based income.
Investcorp's balance sheet is solidly capitalised, after a substantial increase in shareholders' funds in the previous year earmarked to rebuild a capital base negatively impacted by a net loss. The marked deleveraging underway - term debt and investments (notably hedge funds) continued to contract - evidences the scope of Investcorp's balance sheet management initiatives and the aim to safeguard the comfortable level of liquidity achieved. Supported by diversified sources of funding, this liquidity benefits Investcorp's ongoing timely fulfilment of financial obligations over the near to medium term.
Acting as an alternative asset manager, Investcorp performs the role of principal and intermediary in international investment transactions principally in the US and Western Europe. Investcorp operates under a wholesale banking license issued by the Central Bank of Bahrain and offers its investment products to institutional and very high net worth individual clients, both in the Arabian Gulf and internationally. At end-December 2010, Investcorp reported total assets of USD2.9 billion and total capital of USD975mn.
- Ends -
For more information, please contact:
Primary Analyst
Morris Helal
Senior Credit Analyst
Tel: 357 2534 300
morris.helal@ciratings.com
Secondary Analyst
Chris Nicolaou
Senior Credit Analyst
chris.nicolaou@ciratings.com
Rating Committee Chairman
Tom Kenzik
Senior Credit Analyst2
The information sources used to prepare the credit ratings are the rated entity and public information. Capital Intelligence considers the quality of information available on the issuer to be satisfactory for the purposes of assigning and maintaining credit ratings. Capital Intelligence does not audit or independently verify information received during the rating process.
The rating has been disclosed to the rated entity and released with no amendment following that disclosure. Ratings on the issuer were first released in September 1986. The ratings were last updated in February 2010.
The principal methodology used in determining the ratings is Bank Rating Methodology. The methodology and the meaning of each rating category and definition of default, as well as information on the attributes and limitations of CI's ratings, can be found at www.ciratings.com
© Press Release 2011
