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.
