Investcorp swings to loss as pandemic hits fee income

FAREED RAHMAN

Bahrain’s alternative investment manager Investcorp swung to a net loss in the 2020 financial year as fee income dropped amid the coronavirus-induced slowdown.

However, the company remains focused on reaching its $50 billion (Dh183.5bn) target for assets under management, executive chairman Mohammed Alardhi said yesterday.

“The unprecedented global impact of the Covid-19 pandemic negatively affected our results,” he said.

“We continue to remain confident in our growth strategy, having entered this crisis and approaching our 2021 fiscal year in a position of strength, with $1.2bn in accessible liquidity and $32.2bn in AUM [assets under management].”

The company reported a net loss of $165 million for the 12 months ending June 30, compared to a profit of $131m during the same period in the previous financial year, it said. Fee income fell by 23 per cent to $288m.

The pandemic has disrupted global trade and tipped the world economy into its deepest recession since the Great Depression. The International Monetary Fund projected a 4.9 per cent contraction for the world economy this year and a sluggish recovery next year.

Most financial institutions have taken steep provisions or had their profits affected by measures to slow the spread of the virus.

Investcorp proposed a dividend of 10 US cents per share. Its total assets declined by 10 per cent to $2.1bn at the end of the financial year. Net debt increased by 35 per cent to $672m due to the adoption of the IFRS 16 accounting standards and the completion of strategic corporate investment deals.

“While the short-term economic outlook remains uncertain due to the ongoing pandemic, we are committed to advancing our growth strategy and reaching $50bn in AUM over the medium term,” Mr Alardhi said.

Assets under management grew by 14.6 per cent to $32.2bn during the financial year due to “continuing diversification across geographies, clients and products”.

Last month, Investcorp sold industrial properties in the US for more than $200m, with the transaction generating “strong returns”.

The properties in Boston and Chicago were acquired by in 2017. The company also intends to invest heavily in technology, with plans to allocate “a significant proportion” of its $1bn to $2bn of annual private equity investment over the next two years into technology assets.

Chairman Mohammed Alardhi said Investcorp is focused on hitting its $50bn target for assets under management