Bahrain-based Investcorp, a leader in alternative investment products, has reported a net income of $131 million for the 12 months ended June 30, 2019, up 5 per cent compared to $125 million for the twelve months ended June 30, 2018 (FY18).

On a fully diluted basis, earnings per ordinary share were $1.47 for FY19, up 13 per cent from $1.30 for FY18 while total comprehensive income of $124 million for FY19 was 3 per cent higher than $121 million in FY18.

The firm’s assets under management (AuM) increased by $1.9 billion to $28.2 billion during the period. Investcorp attributes its robust financial and operating performance to its continued progress in delivering on its strategic objectives of reaching AuM of $50 billion over the medium term via both organic and inorganic initiatives.

Mohammed Alardhi, executive chairman, said: “Our strong full-year results and ability to deliver on several strategic initiatives demonstrate Investcorp’s resilience and focus on strategic growth and profitability goals, despite various economic and geopolitical challenges.”

“This is attributable to our relentless effort in globalizing our products and distribution platform, while remaining responsive to our clients’ demands and needs. Our expansion into new geographies, such as China and India, and new products, such as direct lending and infrastructure, is mirrored by similar ambitions in diversifying our client base, both by geography and segment.

“Our ambitious growth strategy of reaching $50 billion in AuM over the medium term is unchanged as we remain focused on delivering profitable growth, while retaining a prudent approach to balance sheet and liquidity management. We are well-positioned to continue delivering superior shareholder value and interesting investment opportunities for our clients,” he added.

Gross operating income was $465 million in FY19 compared to $454 million in FY18. Fee Income was $376 million, up 17 per cent compared to $321 million for FY18 as AuM fees grew by 5 per cent from $173 million to $181 million and deal fees increased to $195 million, up 32 per cent from $148 million in FY18.

This was offset by lower asset-based income of $106 million (excluding fair value change of a legacy investment) down 23 per cent compared to $137 million in FY18, largely attributable to lower private equity returns.

Operating expenses for FY19 were $268 million, up 5 per cent compared to $256 million in FY18 resulting in a stable cost-to-income ratio of 65 per cent.

Private equity

Investcorp’s private equity business saw strong levels of activity over the period as client appetite remained strong and valuations have been supportive of realizations.

•    Investment activity was $750 million, up 37 per cent compared to $548 million in FY18
•    Placement and fundraising were $1,869 million, up 222 per cent from $580 million in FY18
•    Distributions were $2,242 million, up 184 per cent from $789 million in FY18
•    AuM grew 21 per cent to $5,781 million from $4,782 million at June 30, 2018

Real estate

•    The real estate business line experienced healthy levels of activity driven by US and European portfolios.
•    Investment activity was $670 million, up19 per cent compared to $565 million in FY18
•    Placement and fundraising were $639 million, up 12 per cent from $569 million in FY18
•    Distributions were $662 million, down 7 per cent from $713 million in FY18
•    AuM grew 4 per cent to $6,126 million from $5,900 million at June 30, 2018

Credit management

Credit markets have been impacted by the weakening macroeconomic environment. However, Investcorp successfully issued four new CLOs, between Europe and the United States, showing the strength of the franchise among the investor community.

•    Investment activity was $1,470 million, down 13 per cent compared to $1,695 million in FY18
•    Placement and fundraising increased to $2.0 billion from $1.8 billion in FY18
•    Net refinancing and reset activity declined significantly from $3.9 billion in FY18 to $127 million in FY19
•    AuM increased slightly by 4 per cent to $11,870 million compared to $11,466 million as of June 30, 2018
•    During FY19 a third-party originator vehicle was set up to satisfy risk retention rules for future European CLOs issuances – TradeArabia News Service