Bahrain-based Investcorp said on Wednesday its net profit rose 5 per cent in its latest financial year on higher fee income, but the asset manager cut private equity co-investments by almost a fifth to reduce risk on its balance sheet.
The move was aimed at allowing the firm to navigate the current economic cycle amid trade and geopolitical tensions, said Jan Erik, chief financial officer of Investcorp in a conference call with reporters.
The creation of a European private equity fund with Coller Capital, a secondary private equity transaction with HarbourVest on a mature technology fund and other private equity exits reduced co-investments in its private equity business by 19 per cent to $505m, the firm said.
Erik said the firm has access to $1.1bn of liquidity, while the capital adequacy ratio of the firm has also risen to 33.8 per cent for the year ended June 30, up from 31.5 per cent.
“The balance sheet is carrying less risk now than last year,” said Erik. “That is another way of saying we have more dry powder.”
Investcorp said its net profit rose 5 per cent to $131m, as fee income climbed 17 per cent. Assets under management rose $1.9bn to $28.2bn in its last financial year.
Investcorp’s medium-term target is to have assets of $50bn across its private equity, real estate, credit and hedge funds business.
Investcorp is also giving up its wholesale banking license in Bahrain to convert itself into a holding company as part of a structure more aligned with peers, it said.
Erik said the firm has not seen any spillover from the collapse of the region’s biggest private equity firm, Abraaj, last year.
“The fund raising has been at record level outside and inside the Gulf. So we have really not seen any effect,” Erik said.
Investcorp said placement and fundraising in its private equity business rose to $1.87bn, up from $580m in the previous financial year, while assets under management in the business grew 21 per cent to about $5.8bn.