Investcorp income plummets, fundraising soars(2)

The Middle East- and London-based investment manager has reported its second strongest year even as net income declined and the pace of private equity deals slowed.

Bahrain- and London-listed alternative assets manager Investcorp has had its second most profitable year to date for the fiscal year 2008 – despite a 50 percent drop in net income to $151 million (€97 million). The firm booked profits of $582 million for the period ended 30 June, representing a 32 percent decline from the record $856 million it earned the prior year.

The investment bank’s net asset-based income, hailing primarily from private equity, real estate and hedge funds, dropped from a profit of $145 million in 2007 to a loss of $8.5 million in 2008. Its net fee-based income was $159 million, marginally higher than fiscal 2007.

Asset returns and the volume of private equity and real estate investments declined significantly due to dislocation in the global financial markets, Investcorp said.

Gross asset-based income of $200 million, as compared to $472 million in 2007, included only $5 million from private equity and $19 million from real estate. Hedge funds contributed $100 million. In 2007, Investcorp had $78 million of gross income from private equity, $26 million from real estate and $322 million from hedge funds.

Fundraising, however, remained strong due to Investorp’s substantial Middle Eastern client base, the firm said. Gulf Opportunity Fund I, the private equity fund of Investcorp's Gulf Growth Capital business, raised greater than $1 billion, while Investcorp’s third technology fund raised $500 million.

“The contrast between the very positive fundraising environment and a tough general investment environment provides the backdrop to our 2008 results, which are, despite the landscape, our second best performance ever,” chief executive Nemir Kirdar said in a statement.

The investment bank’s total assets grew 11 percent to $4.8 billion.

During the 2008 fiscal year, the bank’s private equity team deployed $438 million of equity across three platform and one add-on acquisition.

The private equity team, targeting US and European buyouts, acquired Alabama-based Randall-Reilly Publishing, Finnish business and credit information company Asiakastieto and Italian pump and valve maker CEME. Anjac was acquired as an add-on acquisition for an existing industrial supplies portfolio company, Orexad.

The team made an exit from motorway services operator Welcome Break for an undisclosed amount after buying the company for £473 million in 1997.