New joint venture will focus on healthcare, education and utilities and may also invest in the wider Middle East and Levant
Bahrain’s Investcorp Bank and Standard Life Aberdeen plan to raise $800 million to $1 billion for a fund to invest in infrastructure in the Gulf Cooperation Council.
The venture between the Bahrain-based alternative-assets manager and the Scottish firm’s Aberdeen Standard Investments unit will focus on healthcare, education and utilities. It may also invest in the wider Middle East and Levant.
“The GCC region has always benefited from significant availability of capital from the state,” Investcorp co-Chief Executive Officer Hazem Ben-Gacem said in an interview in Abu Dhabi. “Now with oil at half what it was a few years ago and the ambition of governments to diversify away from oil, the window is opening for private capital to play a bigger role in this area.”
The partnership comes as Investcorp pushes ahead with plans to boost assets under management to $50 billion through acquisitions and growth in its private equity, real estate and alternative investments units. Last month, it announced a $1 billion European buyout fund in partnership with Coller Capital.
Set up in 1982, Investcorp is the Gulf’s largest private investor in U.S. real estate and has charted a new growth plan after a shift in management in 2015. Abu Dhabi sovereign investment fund Mubadala Development Co. acquired a 20 percent stake in Investcorp in 2017 as part of its strategy to grow through partnering with other investment firms.
Investcorp expects to have a first close for the fund at about $250 million in the summer and reach its target size about 12 months later, Ben-Gacem said. Besides the region, there is interest from Asian investors in the venture as the Gulf carries the advantage of being an emerging market with dollar pegs, reducing currency risk, he said.
Investcorp is already evaluating deals and will announce its investments at the time of the first close -- each of which would involve investing between $50 million to $80 million. It expects returns of between 11 percent to 14 percent, Ben-Gacem said.
“Saudi Arabia will undoubtedly be a big part of the fund given the plans to privatize a lot of healthcare assets over the next few years,” he said. “I hope this will be the first of many funds with Aberdeen, and all being well we could be back in the market for a second fund in a few years from now.”