By Shane McGinley
Negative returns on its hedge funds was the main cause for H2 profit drop
Bahrain-based alternative investment manager Investcorp reported on Monday net income had slumped 90 percent year-on-year to $5.3m during the second half of 2011.
The Bahrain Bourse-listed company, which had $11.6bn in assets under management, raised $735m in funds during the second half of the year and distributed $412m in profits back to investors.
During the last six months of 2011, Investcorp’s fee income from client business activities rose 14 percent to $82m and corporate investment asset-based income grew 90 percent to $65.4m.
However, the impact of the eurozone crisis saw “negative returns” for the company’s hedge funds and, as a result, net income for the period slumped over 90 percent to $5.3m, compared to $56.2 in the same period the year before.
While announcing its half yearly results, Investcorp also revealed it was to sell its 26 percent stake in Redington International Holdings Ltd, a distributor of IT and telecom products in the Middle East, Africa and Turkey, back to parent company Redington India.
From an investment of $65m in November 2008, the stake sale will earn Investcorp $114.8m, a gross capital gain of $49.8m.
Investcorp, which once floated luxury brands Gucci and Tiffany & Co, is looking to spend more than $400m on stakes in companies in Turkey and the Gulf Cooperation Council (GCC) in the coming two years, a senior executive said in November.
Investcorp's $1bn Gulf Opportunities Fund I, which is 50 percent invested so far in four deals, was said to be in advanced talks with four to five target companies, James Tanner, head of corporate investment, told Reuters.
"We hope to close at least two deals next year and to deploy an average of $60m equity per deal," he said.
The company also acquired three real estate assets in the US for $100m, taking its total buys in the US to eight in 2011 with a combined value of $300m.