Abu Dhabi’s Mubadala to buy 20 per cent stake in Bahrain’s Investcorp

Investcorp is looking to attract more institutional investors after agreeing to sell a 20 per cent stake to Abu Dhabi’s Mubadala in a deal that will pave the way for a number of joint investments.

Mubadala’s stake will make it the biggest single investor in the Bahraini alternative investment firm, which has made waves over the years with deals involving the luxury brands Gucci and Tiffany & Co.

Mohammed Al Ardhi, Investcorp’s executive chairman, declined to give a value for the Mubadala acquisition. However, last year Investcorp sold a 9.9 per cent stake to an unnamed Arabian Gulf institution for US$137.8 million.

“From an investment perspective, the stable and long-term value-creation mission of Investcorp makes it a logical addition to Mubadala’s diverse financial investment portfolio,” said Khaldoon Al Mub­arak, the group chief executive of Mubadala.

The stake will be sold to Mubadala in two steps. The first is an immediate 9.99 per cent acquisition, while the remainder is to be acquired following regulatory approvals, which could take two months, Mr Al Ardhi said.

Investcorp is seeking institutional investors, initially from the Gulf, as part of plans to boost assets under management to $25 billion in five to seven years from about $11bn now.

Currently, it has institutional investors from Bahrain, Qatar and the UAE.

“I think we are looking at increasing our investor ownership base, and every chance will be looked at in its time,” said Mr Al Ardhi.

The firm, which once targeted family offices and wealthy individuals, is now seeking to attract more sovereign wealth funds and financial investors.

With Mubadala now on board, Investcorp is eyeing bigger deals and co-investments with the Abu Dhabi fund.

“This vision [of doubling assets] has few building blocks and a road map and part of it is what we are doing now, part of it is doing bigger deals, doing co-investments, things that will allow us to leverage all our infrastructure and reach in the Gulf and the West,” said Mr Al Ardhi.

Mubadala, which had assets of Dh246.4bn at the end of last year, has investments in sev­eral high-profile companies, including the US private equity firm Carlyle Group and General Electric.

The Abu Dhabi government last month announced plans to merge Mubadala with another Abu Dhabi-owned investment fund, International Petroleum Investment Company (Ipic), as part of a consolidation wave in the emirate.

Mubadala’s profit last year rose 12.6 per cent to Dh1.1bn amid higher revenue from acti­vities including oil and gas, semiconductors and aerospace and engineering services despite challenging global economic conditions.

Investcorp, which was founded in 1982 as a conduit for Gulf investors interested in acquiring international assets, has been on something of a shopping spree since the start of the year. It has bought property in the United States and has acquired a 55 per cent stake in the luxury Italian menswear specialist Corneliani.

For the remainder of this year, the company is weighing deals in Saudi Arabia, US and Europe, said Rishi Kapoor, the co-chief executive of Investcorp.

The Manama firm posted a 12 per cent increase in its net profit to $50.9m in its fiscal first half that ended December 31, 2015, from $45.3m a year-earlier.

Follow The National's Business section on Twitter