Investcorp's half-year profit slips amid global economic headwinds

Assets under management, however, rose during the first six months of 2020 financial year despite a weaker economic backdrop

Mohammed Alardhi, executive chairman of Investcorp, says the company is following its "organic and inorganic growth strategy". Phil Weymouth / The National

Bahrain-based asset manager Investcorp reported a 17 per cent decline in net income in the first half of its financial year to December 31, but its assets under management increased despite a subdued global economy and a rise in geopolitical tensions.

Net profit for the six-month period dropped to $48 million (Dh176m), the company said in a statement to the Bahrain Bourse, where its shares trade.

Net income, excluding fair value change of legacy investments at $59m, was 2 per cent higher year on year.

Total comprehensive income for the period declined 18 per cent to $46m. Investcorp’s earnings per ordinary share dropped 12 per cent to $0.65.

The company, which counts Abu Dhabi’s Mubadala Investment Company as its biggest shareholder, said assets under management increased by $3 billion to $31.1bn during the reporting period.

Its strategic and financial objectives, including reaching assets under management of $50bn over the medium term, “are increasingly translating into a more resilient business and financial model,” the company noted.

Fee income of $172m rose 15 per cent year-on-year, driven by a surge in asset management and deal fees.

“[The] results reinforce our confidence in Investcorp’s organic and inorganic growth strategy,” Mohammed Alardhi, executive chairman of Investcorp, said.

“The increase in AUM during the period was largely attributable to organic initiatives, demonstrating strong global demand for our offerings with investors seeking increased exposure to alternative assets.”

The company entered the second half of its fiscal year facing increasing geopolitical and macroeconomic headwinds, Mr Alardhi said.

However, backed by a diversified business and the strength of its balance sheet, Investcorp remains confident in its ability to achieve growth over time, he said.

Despite a weaker economic backdrop, Investcorp invested $1.9bn in the first half of the financial year, compared with $1.2bn achieved in the same period a year earlier.

It further increased the globalisation of its distribution platform, with fundraising outside of the Gulf climbing to $1.6bn out of total fundraising of $2.6bn during the period.

The company, which in September last year voluntarily relinquished its wholesale banking licence to the Central Bank of Bahrain, secured $130m in anchor commitments to focus on direct lending for projects in India.

The funding initiative will focus on affordable and mid-market housing segments in the top seven cities in India, where banks remain weak and the country faces a credit crunch that has crimped growth.

In November, the company closed a Dh165.2m funding transaction for Nephrocare Health Services, which runs a network of dialysis centres across India.

In the same month, Investcorp also bought a portfolio of 126 industrial properties in the United States for $800m.