Investcorp, the Bahrain-based alternative asset manager, aims to raise as much as $7 billion in new funding and make exits and distribution to investors of a similar amount in the current fiscal year in a bid boost its infrastructure and credit businesses, its chief investment officer has said.
Backed by Abu Dhabi's Mubadala Investment Company, Investcorp aims to match the $7 billion in financing it raised from investors in the past fiscal year, but the market uncertainty may mean a smaller amount, Rishi Kapoor, who is also the vice chairman of the company, told The National on the sidelines of the Future Investment Initiative in Riyadh on Tuesday.
“We had a very strong year on the credit side but it's hard to call markets with absolute precision now,” Mr Kapoor said. “But I think that $5 billion to $7 billion zip code is very much in the middle of the territory for us.”
The investment manager is currently in the market for a couple of North America funds. Investcorp’s North America Private Equity fund, which is close to $1 billion in size and the GP Fund at around $500 million are well on the way.
“We did our final close on the private equity fund in India in August also. So, that's done and dusted behind us, and now we are focused on continuing to raise capital for our credit funds.”
Return to investors
The investment manager is looking to generate annual distributions to investors between $5 billion to $7 billion, and “we are expecting a recycling of that distribution back into investments with us which is a fairly reasonable assumption”, he said.
“Ideally, we would expect to see more,” Mr Kapoor said, adding that “we've got a few exits in the pipeline”.
Investments and fund-raising in the Gulf region have held up well and if anything, the exacerbation of geopolitical risks in the over the course of the past 12 months has highlighted how the “GCC is really an oasis of not just tranquility, but also economic stability”, he said.
Investcorp, which is known for its shareholding in Tiffany & Co and Gucci during its early years of investing, has grown to become a global investment powerhouse. The company is among several international asset managers seeking funding from local and foreign investors for their Middle East-focused investment funds.
Last year, Investcorp teamed up with China’s sovereign wealth fund to launch a $750 million fund to invest in high-growth companies in Saudi Arabia, other Gulf countries and China, as part of its push to boost its global portfolio of investments.
The Investcorp Golden Horizon platform, which is anchored by institutional and private investors from the Gulf, as well as the China Investment Corporation, is fully deployed and Investcorp will seek to raise in a new fund once its current investments mature in a couple of years' time, Mr Kapoor said.
Rising AUMs
Set up in 1982, Investcorp invests through its six business lines: private equity, real estate, absolute return investments, infrastructure, credit management and strategic capital.
The company, which maintained a brisk pace of acquisition through the Covid-19 pandemic to capitalise on lower asset valuations, has continued its aggressive portfolio expansion since.
As of end of June, the company’s assets under management climbed to $60 billion and are expected to rise to about $65 billion by the end of this fiscal year. The company aims to boost its portfolio of assets to $100 billion through its investments in the Americas, Europe and the broader Asia region, including the Middle East.
Infrastructure and credit business growth
The relative peace in Syria and Lebanon as well as the ceasefire in Gaza have improved outlook for the region and has opened new avenues of reconstruction of infrastructure in conflict-torn nations such as Syria.
Private capital will have some role to play in the rebuilding efforts, but “it's going to be behind government capital and a multilateral aid”, Mr Kapoor said.
Private capital will not be the “first port of call”, for those efforts as “you are acting on behalf of your investors, and you have to assure them of a reasonable return for an acceptable level of risk”, he added.
More broadly, he is bullish about the growth of the company’s infrastructure business and plans to raise fresh funding next year.
“We have $5 billion in the ground already” Mr Kapoor said. He added that Investcorp only has a few million dollars in the dry powder left, which would necessitate a new funding exercise next year.
The company’s infrastructure investments are split in two pools: one in the Gulf where it has invested in projects from water treatment to port infrastructure. Its international investments include marquee assets such as Terminal 6 of John F Kennedy International Airport and Terminal B of LaGuardia Airport, both in New York, as well as projects in the Sydney Port, he added.
Mr Kapoor remains bullish on Investcorp’s private credit portfolio. It expects this to double from close to $23 billion in the next five years.
“I think what will happen is there's going to be an exponential ratchet on the credit side of the business,” he said.
“One is we are seeing increasing opening up of the investor market, in particular for credit investing regionally and in Asia. And the second is with our insurance solutions business, which is a major growth engine for us, and compounding quite quickly,” he added.
WIDE%20VIEW
%3Cp%3EThe%20benefits%20of%20HoloLens%202%2C%20according%20to%20Microsoft%3A%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EManufacturing%3A%3C%2Fstrong%3E%20Reduces%20downtime%20and%20speeds%20up%20onboarding%20and%20upskilling%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EEngineering%20and%20construction%3A%3C%2Fstrong%3E%20Accelerates%20the%20pace%20of%20construction%20and%20mitigates%20risks%20earlier%20in%20the%20construction%20cycle%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EHealth%20care%3A%3C%2Fstrong%3E%20Enhances%20the%20delivery%20of%20patient%20treatment%20at%20the%20point%20of%20care%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EEducation%3A%3C%2Fstrong%3E%20Improves%20student%20outcomes%20and%20teaches%20from%20anywhere%20with%20experiential%20learning%3C%2Fp%3E%0A
The Written World: How Literature Shaped History
Martin Puchner
Granta
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Key products and UAE prices
iPhone XS
With a 5.8-inch screen, it will be an advance version of the iPhone X. It will be dual sim and comes with better battery life, a faster processor and better camera. A new gold colour will be available.
Price: Dh4,229
iPhone XS Max
It is expected to be a grander version of the iPhone X with a 6.5-inch screen; an inch bigger than the screen of the iPhone 8 Plus.
Price: Dh4,649
iPhone XR
A low-cost version of the iPhone X with a 6.1-inch screen, it is expected to attract mass attention. According to industry experts, it is likely to have aluminium edges instead of stainless steel.
Price: Dh3,179
Apple Watch Series 4
More comprehensive health device with edge-to-edge displays that are more than 30 per cent bigger than displays on current models.
The specs
Engine: 6.2-litre supercharged V8
Power: 712hp at 6,100rpm
Torque: 881Nm at 4,800rpm
Transmission: 8-speed auto
Fuel consumption: 19.6 l/100km
Price: Dh380,000
On sale: now
Learn more about Qasr Al Hosn
In 2013, The National's History Project went beyond the walls to see what life was like living in Abu Dhabi's fabled fort:
Avatar: Fire and Ash
Director: James Cameron
Starring: Sam Worthington, Sigourney Weaver, Zoe Saldana
Rating: 4.5/5
Farage on Muslim Brotherhood
Nigel Farage told Reform's annual conference that the party will proscribe the Muslim Brotherhood if he becomes Prime Minister.
"We will stop dangerous organisations with links to terrorism operating in our country," he said. "Quite why we've been so gutless about this – both Labour and Conservative – I don't know.
“All across the Middle East, countries have banned and proscribed the Muslim Brotherhood as a dangerous organisation. We will do the very same.”
It is 10 years since a ground-breaking report into the Muslim Brotherhood by Sir John Jenkins.
Among the former diplomat's findings was an assessment that “the use of extreme violence in the pursuit of the perfect Islamic society” has “never been institutionally disowned” by the movement.
The prime minister at the time, David Cameron, who commissioned the report, said membership or association with the Muslim Brotherhood was a "possible indicator of extremism" but it would not be banned.
Dhadak 2
Director: Shazia Iqbal
Starring: Siddhant Chaturvedi, Triptii Dimri
Rating: 1/5
The specs: 2018 BMW R nineT Scrambler
Price, base / as tested Dh57,000
Engine 1,170cc air/oil-cooled flat twin four-stroke engine
Transmission Six-speed gearbox
Power 110hp) @ 7,750rpm
Torque 116Nm @ 6,000rpm
Fuel economy, combined 5.3L / 100km
