“This result reflects a notable increase in investment and placement activity driven by continued demand from clients in the Gulf for alternative investments, supported by a steady flow of profitable realizations. Gross operating income increased by 35% in FY13 to $361.8 million (FY12: $267.1 million). Second half net income was $65.7 million (H2 FY12: $62.2 million),” the Firm in a statement said.
“The Firm delivered a strong overall performance despite continuing uncertainty in the global economic environment. The board of directors has proposed a dividend of $15 per ordinary share (FY12: $7.50 per ordinary share), along with the full dividend of 12% on the preference shares.”
“We are pleased by the progress we have made against a backdrop of slow recovery in the world economy, which is a testament to our model of offering investors the opportunity for international portfolio diversification,” Nemir A. Kirdar, Executive Chairman and CEO, said.
“As we enter our fourth decade, our plans to invest in our office network across the Gulf are well underway, with our Riyadh office expanded and new offices in Abu Dhabi and Doha pending regulatory approval. By being closer to our clients we believe we will strengthen our unique ability to raise money across the Gulf, the US and Europe and continue to drive returns for our shareholders and investors,” he added.
The Firm The Firm saw strong fee income growth of 40% year-on-year to $329.5 million in FY13 (FY12: $236.0 million), primarily driven by a very strong increase in deal activity fees, which more than doubled to $193.4 million and represented 58.7% of total fee income. During the year, Investcorp concluded eight new corporate investments and there were four significant realizations.
Asset-based income was up slightly year-on-year, with the strong turnaround in hedge fund returns offset by flat returns on Corporate and Real Estate investments. The mix of performance across the three asset classes during the year highlighted the benefit of diversification within the balance sheet co-investment portfolio and the lower risk to asset-based earnings from lower return correlation.
During the period the Firm continued to delever through the repayment of medium and long term debt. This has reduced financial leverage down to 1.3x and the balance sheet co-investment portfolio is now more than 100% covered by long-term or permanent sources of capital. The regulatory capital adequacy ratio increased to 33.8%.
In November 2012, the Firm successfully completed a $250 million bond issue in the public markets. Reflecting Investcorp’s global business footprint, the profile of bond investors was geographically well-diversified with 46% from Europe, 27% from the Middle East, 15% from Asia and 12% from the United States. Proceeds from the issue were used to repay drawn revolving facilities and prepay term debt facilities that were due to mature in March 2013. With no near term debt maturities, the bonds, which mature in November 2017, add further flexibility and extend the Group’s overall liquidity and funding profile.