The Kingdom-based global investment and asset management group, Investcorp said its full-year profits to June slumped by half when compared to the fiscal 2007, as the global credit crisis hit its deal volumes and investment returns.

Net income in the 12 months to June was put at $151.1 million compared to $302.3 million in the previous fiscal. Gross asset based income dropped 58 per cent to $199.5 million. Similarly, earnings per share too declined 45 per cent to $215 in the fiscal year, it asset management firm said.
“Despite income falling from fiscal 2007’s record high, fiscal 2008 was Investcorp’s second most profitable year ever, and a record year for fund-raising. Investcorp’s performance highlights the contrast between the booming economies of the Middle East, the heart of Investcorp’s client franchise, which have led to a positive fund-raising environment, and the turbulent market conditions across the United States and Western Europe, Investcorp’s primary investment markets, which have led to lower asset returns and reduced deal volumes,” the group said in a statement yesterday.
The Bahrain-based company channellises investments of wealthy Middle Eastern investors predominantly in the United States and European markets in buy-outs, real estate, hedge funds and venture capital.
While fee income remained stable in the year to June 30, increasing slightly to $159.5 million, Investcorp’s investment returns fell in three of its five main areas of operation - private equity, real estate and hedge funds.
“This has been a year of unprecedented dislocation in global financial markets, and we have seen the impact of these conditions across our primary investment markets. The volume of private equity and real estate transactions has declined significantly, while the exceptionally high volatility and illiquidity in capital markets has impacted hedge fund returns and investment valuations,” said Investcorp Chief Executive, Nemir Kirdar. “The contrast between the very positive fund-raising environment and a tough general investment environment provides the backdrop to our 2008 results, which are, despite the landscape, our second best performance ever. We remain confident of the future prospects for our unique business, and this is demonstrated by a 20 per cent increase in dividend,” he said, exuding confidence about an inevitable turnaround.
Asset based income – a combination of investment income from private equity, hedge funds, real estate, treasury and other sources – fell by more than half to $199.5 million, against $471.8 million last year.
Investcorp’s private equity team deployed $438 million of equity across three new acquisitions - Finland’s biggest business and credit information company, Asiakastieto, which boasts of a 74 per cent share of the Finnish information market, Randall-Reilly, the American trade magazine publisher and CEME, Italian fluid control components major besides one add-on acquisition (Anjac). It made one exit - Welcome Break, the UK’s second-largest motorway services operator.
Recently it signed $1 billion JV with a GCC sovereign investment fund for a US real estate debt fund. The group also announced the completion of $2.6 billion in closed-end fund raising.
Client Assets Under Management rose from $9 billion in 2007 to $12.8 billion. Product placement and fund-raising surged to $4.7 billion, up 36 per cent from $3.4 billion FY07. In the real estate sector, it deployed $391 million in new capital in transactions with aggregate value of over $2.5 billion and $122 million in debt investment
The bank is offering its shareholders a dividend of $90, a 20 per cent increase over the previous financial year.
Investcorp announced that its 25th Ordinary General Meeting would be held on September 3 at Investcorp House, Manama. For holders of Investcorp’s GDRs, the ex-dividend date will be September 1, 2008. The dividend record date for both holders of GDRs and holders of Ordinary Shares will be September 3.