Bahrain-based alternative investment manager Investcorp plans to allocate "a significant proportion" of the $1billion-$2bn (Dh3.67bn-Dh7.34bn) of annual private equity investments planned over the next two years to technology assets, as it looks to capitalise on growing tech reliance in the wake of the global coronavirus pandemic.
The company, which counts Mubadala Investment Company as its biggest shareholder, will target assets in FinTech, cyber security and education technology.
"Technology will be a focus area for the firm. It is broadening in scope in the current situation of Covid-19 and the economic downturn we are experiencing. We will continue to invest in the sector," Gilbert Kamieniecky, head of Investcorp's technology private equity business, told The National in an interview.
The pandemic, which has devastated the global economy and upended global trade, has affected asset values, prompting investors to look for bargains across sectors. Dependence on technology in the past few months has risen sharply, as restrictions on movement to stem the outbreak has confined billions of people to their homes, mandating remote working and online learning.
Technology companies facilitating remote working have been the beneficiaries of the situation and have seen rapid growth. Teleconferencing app Zoom said the number of its daily participants has grown to 300 million in April, up from 10 million in December last year. Meanwhile, Cisco reported that daily meeting volumes on its Webex platform have doubled since March, as companies look for secure channels to connect workers confined to their homes.
“Some areas like FinTech and cybersecurity will actually benefit from Covid-19 and potentially from downturn because people tend to spend more money on protecting what they already have like privacy, and data, which is critical.”
Last month, Investcorp acquired cybersecurity firm Avira for $180 million. The company provides software that offers protection against viruses, malware, ransomware and other threats. Its customers include major manufacturers as well as consumers.
“Avira represents an attractive opportunity to invest in a cybersecurity business and marks our third investment in the DACH (Germany, Austria and Switzerland) tech sector in the last 18 months,” he said.
Mr Kamieniecky is also bullish about education technology and the enormous growth potential it offers amid the mandatory social distancing measures put in place by governments around the world.
“Education technology [is] an area that we have made investment in and it will continue to thrive as kids move more and more towards educating through technological means.”
In addition to education technology, the Bahrain-based company has also invested in human resources software provider Softgarden and a cloud computing company known as Calligo and Eviivo, a European software provider for small and medium accommodation providers to manage their online and offline bookings, among others.
“The US, Europe, the Middle East, China, India and South East Asia are the geographies that we are looking to invest in. In China we have a technology fund, which we manage together with China Everbright, a very large sovereign wealth fund and [it] is doing very well,” Mr Kamieniecky said.
Since 2001, Investcorp has invested more than $1.5bn in technology businesses in the US, Europe and Asia, across several verticals including data, security, FinTech & e-payments, internet and mobility.
Mr Kamieniecky added that Investcorp's tech portfolio has performed well, even during the downturn.
“Our portfolio in technology has been extremely resilient and performed really well. So we have not seen an impact in my portfolio from the financial downturn that would result in a reduction in valuation.”
Investcorp has raised four technology funds to date, with the latest being a $400m fund that closed in December 2018. The company has deployed 60 per cent of this.
“Technology has always been a focus area for us. In total we have 100 portfolio companies at the moment and technology will remain a key pillar.”
Investcorp, which was set up in 1982 by investment banker Nemir Kirdar, has made over 195 private equity deals in the US, Europe, Asia and the Middle East and North Africa region, across a range of sectors including retail and consumer products, technology, business services and industrials. It has also completed more than 800 commercial and residential real estate investments in the US and Europe, with a total transaction value of $61bn.
The company had $31.1bn of assets under management at the end of 2019.
