Investcorp eyes big health and tech deals
Investcorp is considering a US$2.5 billion private equity deal and plans to launch two funds next year as the Bahrain-listed company seeks to boost its assets.
The alternative investment company is also planning to cooperate with UAE partners such as Mubadala, said Mohammed Alardhi, Investcorp’s chairman.
Mubadala will become the biggest single investor in Investcorp after it agreed in July to buy a 20 per cent stake.
“We are increasing our investor base so we can continue to grow our offerings,” said Mr Alardhi.
Investcorp, which has assets under management (Aum) of $23bn, is in early talks to acquire an international consulting business valued at $2.5bn as the company hunts for bigger deals to increase its assets to $25bn by next year.
The company, which usually makes four to five deals a year, besides acquisitions for its funds, relies on investors, its balance sheet and debt to finance its deals. It wants to strike private equity deals in the range of $1bn to $2bn, rather than its current range of $100 million to $1bn.
The company had initially set a goal to reach its $25bn Aum target in five years, but this year’s agreement to acquire UK-based 3i Group’s $12bn debt management business has allowed it to meet its goal earlier than planned and broadened its investor base, product offering and geographical reach.
“A lot of the regulatory environment has pushed banks away from debt and the credit businesses and therefore the growth of the debt business as it is,” said Mr Alardhi.
With a bigger asset base under its belt, Investcorp plans to approach sovereign wealth funds.
“With our newly acquired business, debt management, this is going to be again a very good product that I am sure Mubadala and Adia will be interested in looking at,” said Mr Alardhi.
“Adia is a very important investor globally, a huge sovereign fund. Adia is somebody we will be approaching to see what opportunities again we can work together on.”
Investcorp, which was founded in 1982 as a conduit for Arabian Gulf investors interested in acquiring international assets, has been on a shopping spree since the start of the year. It has bought property in the US with a value of about $1bn and has acquired a 55 per cent stake in the luxury Italian menswear specialist Corneliani.
The company is also set to launch two funds next year. Tech 4 will target technology companies, with a focus on Europe, and will be in the range of $400m to $500m. A healthcare fund focused on the Arabian Gulf region will range between $800m to $1bn.
“We found, particularly with low oil prices, the diversification effort by the government and the privatisations effort – that there is so much demand for health care and there is so much demand for support of healthcare projects,” said Mr Alardhi.
Investcorp is also contemplating setting up a $2bn fund targeted at Asian investments into the Gulf region, which would be its biggest fund to date.
“We find there are investment funds in the East, families in the East that have the appetite and would like to invest in the Gulf because they know the Gulf and we would like to facilitate that,” said Mr Alardhi.
The company also plans next year to continue investing at least $1bn in real estate in the US and begin investing about $250m each year in property in Europe, in countries such as the UK and Germany.
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Updated: November 9, 2016 04:00 AM