Investcorp H1 net profit soars on deal income Bahrain firm’s total assets unchanged at $2.7 bln by 2012 end

DUBAI, Jan 30, (RTRS): Bahrain-based alternative investment manager Investcorp said profits for the first half of fiscal year 2013 rose on the back of increased fee income and profitable exits at its investment portfolio. Investcorp, which sold truck and trailer parts distributor FleetPride to TPG for over $1 billion in November, made a net profit of $39.2 million in the first half of fiscal year 2013, compared with $5.2 million a year earlier. Fee income for the period rose 80 percent to $147.6 million, driven by strong acquisition and placement activity, the company said in a statement on Wednesday. “The rise in net profit was driven primarily by an increase in fee-based income that we earned mainly associated with deal activity through acquisition placement and exiting deals,” the firm’s Chief Financial Officer Rishi Kapoor told reporters in a conference call.

Investcorp, which previously took public luxury brands Gucci and Tiffany & Co, had $11.5 billion in assets under management as of Dec 31, 2012. Total assets at the end of 2012 were $2.7 billion, unchanged from the previous fiscal year end, the company said. The company, which raised a $529 million-equivalent loan aimed at refinancing debt in June last year, has no immediate plans to access the debt market again in the coming six months but remains opportunistic, Kapoor said. Kapoor confirmed that the company is offering German insulation firm Armacell for sale but declined to give further details.

The sale of Armacell by Investcorp has attracted six bidders as interest grows in companies making energy-efficient products, two people familiar with the transaction said. Private equity investors Charterhouse, Pamplona, Equistone, HgCapital, Goldman Sachs Private Equity as well as a U.S.-based producer of building materials have placed tentative bids, the people said, adding final bids are due in mid-March. Investcorp may raise new money from investors in 2013 and expects its $1 billion Gulf fund to be fully invested by end-July, the president of the company’s Gulf business told Reuters last week.
The company had bought US information security firm FishNet Security from private equity firm Lake Capital.

Investcorp reported $793 million in new fund-raising during the period, its strongest performance on this front since the onset of the financial crisis in 2008. $204 million was raised in corporate investment deal-by-deal placements, $73 million in real estate through the placement of two portfolios, and $516 million was raised in new hedge funds subscriptions from institutional investors. Investcorp’s continued success and traction in fundraising demonstrates the ongoing commitment and long term loyalty of its investor base. At the same time, Investcorp returned $1.1 billion in proceeds from investment realizations and distributions to Investcorp and its clients, roughly 2.7 times the $412 million returned in H1 FY12.

During the period, Investcorp further strengthened the liquidity and funding profile of its balance sheet with a successful $250 million bond issue in November 2012. Reflecting Investcorp’s global business footprint, the profile of bond investors was geographically well-diversified with 46% from Europe, 27% from the Middle East, 15% from Asia and 12% from the United States. The bond issue followed on from a successful $529 million loan financing in June 2012, ensuring that with no near term debt maturities after utilizing a portion of this financing, Investcorp has ample financial flexibility in place to drive long term growth.

Nemir A. Kirdar, Executive Chairman & CEO, commented: “I am delighted to report a robust start to fiscal 2013. We have enjoyed a six month period of almost record deal flow for acquisitions as well as exits. We have delivered strong growth across our business both in terms of profitability and fee income with our fundraising initiatives enjoying their strongest performance yet since the global financial crisis of 2008-09. Our balance sheet is well-positioned, with the necessary funding in place to meet our long-term objectives in line with our commitment towards generating maximum value for our shareholders and investors.”

Highlights for the period:
* Exits for the period included the sale of FleetPride, North America’s largest distributor of heavy duty truck and trailer parts, to TPG for more than $1 billion; the sale of CCC Information Services, a leading US software solutions provider to the automobile industry to Leonard Green and Partners; and the partial exit of FleetMatics, a leading global provider of fleet management solutions for commercial fleet vehicles, through a listing on the New York Stock Exchange. 

* New investments for the period included the acquisitions of Georg Jensen, Scandinavia’s leading luxury brand, and FishNet Security, North America’s leading provider of IT security solutions and services, and the Gulf Opportunity Fund’s investments in Orka Group, Turkey and Automak Automotive, Kuwait.  

* In real estate, $126 million of investment capital was deployed in the acquisition of ten new property investments. Eight of these were packaged into two new portfolios and fully placed with clients in H1 FY13. The remaining two will be offered to clients in H2 FY13 as part of a third new portfolio.

* Total balance sheet assets at December 31, 2012 were $2.7 billion, unchanged from the previous fiscal year end. Leverage fell to 1.3x and capital adequacy increased to 27.8%.

* Total liquidity comprising cash plus undrawn committed facilities together with Investcorp’s hedge funds co-investment was $1.1 billion at December 31, 2012, comfortably in excess of all medium and long term debt maturities that fall due over the next five years.

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