Arcapita swings to $50.2m profit
Manama, September 14, 2011
Bahrain-based investment firm Arcapita swung to a profit in its fiscal year ended June 30, it said on Wednesday, helped mainly by multiple exits or disposals of assets in its investment portfolio.
The Islamic investment firm recorded net income of $50.2 million compared with a loss of $560 million for the year before.
Arcapita said it completed seven full and partial exits during the year, returning about $1 billion to the firm and its shareholders.
The company was badly hit by the crisis as it struggled to exit its investments due to global investment woes and its fee income from raising fresh funds in the Gulf region collapsed.
Arcapita, whose total assets stood at $3.7 billion at June 30, raised $435 million from its investment in property firm Mapletree Industrial Trust last year and sold a portfolio of senior living communities in the United States for $630 million in early 2011.
The bank registered an increase of 7.5 per cent in uits assets from the previous year, and recurring income and management fees combined to reach $203.5 million, up 22.2 per cent over the figure recorded in fiscal 2010.
After a lengthy period in which economic conditions stifled the opportunities for exits from within the banks’ investment portfolio, Arcapita completed seven full and partial exits during the year, in the process returning approximately $1 billion to Arcapita and its investors.
Commenting on the results, Arcapita CEO Atif A. Abdulmalik said, “Based on generally improving sentiment, our expectation at the beginning of the financial year was for return to growth and economic stability.”
“In the event, market fundamentals have remained volatile, but by focusing on the areas within our control, protecting the bank’s investment portfolio, delivering exits where appropriate, operational efficiency and close management of the balance sheet, I am pleased that we have made our income target for the year,' he remarked.
'We also continue to make progress in adapting our business to the changed market fundamentals and the evolving needs of our investors,' he added.
Alongside its core business of deal-by-deal investments, Arcapita has made good progress in building its funds product offering, building on its track record in the industrial warehousing sector to develop several funds during the year, in Asia, in Europe and in the Middle East, the top official said.
The bank has also built out its infrastructure team in preparation for similar product expansion within this asset class, he added.
Arcapita said it needs to refinance a $1.1 billion murabaha loan due in April 2012. The bank plans to exit more investments and use funds for part repayment of the loan, Abdulmalik had said in June.
In his comments, Arcapita chairman Mohammed Abdulaziz AlJomaih said the board’s view is that over the short term, the global macro environment will remain constrained by slow growth and continued sovereign debt problems.”
“Against this background, we expect that Arcapita will continue its focus on strengthening the balance sheet and leveraging its global investment platform to deliver steady growth targets for next year,” he added.-Reuters and Trade Arabia News Service