Higher fee income helps profits rise at Bahrain’s Investcorp

Bahrain-listed Investcorp posted a rise in first-half profit on Tuesday helped by higher fee income, and said it had boosted its capital and liquidity position in the wake of challenging global markets.

The private equity and alternative investment firm, best known outside the Middle East for listing luxury goods brands Gucci and Tiffany & Co, boosted its capital adequacy ratio to more than double Bahrain’s regulatory requirements, chief financial officer Jan Erik Back said in a call with reporters.

“I think what we’re doing is a normal course of business, just a matter of de-risking a little bit,” he said, adding that it had increased accessible liquidity to $1.2bn.

Investcorp, founded in 1982 and one of the region’s oldest private equity houses, said first-half net profit rose five percent from a year earlier to $58m.

Fee income rose seven percent in the six months ended December 31 to $150m, helped by higher fees from deals and assets under management.

Placement and fundraising from private equity more than doubled, Back said, to $548m from $247m, while investment activity was up 39 per cent to $416 million.

The firm’s debt management business was impacted by the bottoming of the credit cycle amid a rise in global interest rates, Back said.

The Federal Reserve, whose rate decisions are widely followed by the Gulf central banks, raised interest rates four times last year.

Assets under management remained stable at $22.5bn compared to $22.6bn at June 30, 2018.

Abu Dhabi’s state investor Mubadala Investment Co acquired a 20 per cent stake in Investcorp in 2017, making it the largest shareholder in the firm.

Back said plans to co-invest with the Abu Dhabi state fund had cooled as the state fund focused on consolidation.

“The timing hasn’t been quite right”, Back said, adding that he was sure when the time came, they would pursue joint investment opportunities.

Mubadala joined with Abu Dhabi Investment Company, another investment arm of the Abu Dhabi government in March last year, while three of the banks in their portfolio are also merging.