Investcorp, the asset management firm specializing in alternative investments, today announced its results for the 12 months ended June 30, 2010 (FY10). FY10 marked a return to profitability for Investcorp, with net income of $102.2 million.
In a twelve month period, Investcorp’s gross operating profits grew to $365.1 million and client assets under management grew to $9.7 billion. These results reflect an increase in the flow of deal acquisitions and exits and a returning appetite amongst Gulf investors for attractive private equity and real estate investments, combined with substantial inflows into the hedge fund platform from institutional clients.
Highlights for the period:
• Fee income increased by 69% to $218.9 million (FY09: $129.4 million).
• Client assets under management rose to $9.7 billion (FY09 $8.8 billion).
• Total placement and fund-raising activities in FY10 raised $1.4 billion (FY09 $1.1 billion).
• In private equity, the firm deployed $346 million of equity in new and add-on acquisitions in FY10.
• The firm acquired Veritext and made additional investments in Berlin Packaging and in Moneybookers – all three for direct placement with clients – and made investments through the Technology Fund III in CSIdentity and OpSec Security. The firm made its third growth capital investment in Gulf Cryo, the leading industrial gases company founded by the Al Huneidi family in Kuwait, through the Gulf Opportunity Fund I.
• In real estate, the firm deployed $69 million of acquisition funding in FY10.
• Two real estate acquisitions were in retail shopping centers, which were placed with clients as a single portfolio, US Retail V, and a third was an investment in the W Hotel at South Beach, Florida.
• There were several exits, with total realization proceeds of $545 million in FY10. In private equity, the firm completed the exit of Avecia’s Biologics business and the highly successful sale of American Tire Distributors, which valued the company at $1.3 billion. In real estate the firm closed on the sale of the final properties in the Empire Mountain Village portfolio, and sold a first mortgage loan from the Investcorp Real Estate Credit Fund.
• Hedge Fund client AUM increased by 22% to $3.8 billion (FY09 $3.1 billion). Investcorp’s hedge funds co-investment portfolio returned approximately 10% on a gross basis over the fiscal year, significantly outperforming the HFRI Composite Index, despite recent periods of extreme market volatility due to European contagion issues. Investcorp raised $1.1 billion of new hedge fund assets from clients in FY10.
• Private equity portfolio valuations turned around, reflecting the inherent strength of Investcorp’s portfolio and its careful stewardship of investments in difficult economic conditions. There were several add-on acquisitions made by portfolio companies in the year to assist them in growing value, together with transactions to preserve value and limit risk in portfolio companies by appropriate deleveraging.
• Operating and interest expense dropped to $247 million (FY09 $321 million) in FY10 reflecting prudent expense management and reduced interest expense due to deleveraging.
• Total liquidity remains strong at $1.4 billion, with a planned medium-term refinancing completed on schedule. Capital adequacy is at 22.9%, substantially above regulatory requirements.
Nemir A. Kirdar, Executive Chairman & CEO, said: “With an impressive and rapid rebound from the challenges of last year, we now have strong upward momentum as we move ahead. Our strong profitability this year proves the robustness of our business model and the enduring power of our Gulf franchise and relationships in the face of the unprecedented stress in global economies and financial markets over the past two years. This rebound also demonstrates the effectiveness of the bold and decisive action we have taken to reshape the Firm to meet changing conditions and to exploit opportunities that are arising as the world economy resets itself. It also shows the real difference Investcorp’s market position and reputation can make in this more difficult environment as our clients recognize the pre-eminent importance of our 28 year track record of sound advice, first class service, transparency and clear alignment of interests.”
