Investcorp to double deals

Gulf buyer seeks to invest more in US real estate

DUBAI: Investcorp Bank BSC, the Gulf’s largest private investor in US real estate over the past 10 years, plans to step up property investments in the world’s largest economy as it seeks to double assets under management to US$25bil over the next five to seven years.

The company expected to spend US$1.5bil on US real estate in the fiscal year through June, compared with about US$860mil in the year-earlier period, Jonathan Dracos, head of real estate at Investcorp, said by phone from New York. The company, which had backed companies including Tiffany & Co and Gucci Ltd under founder Nemir Kirdar, was looking to grow its real-estate business in the US by acquiring office and residential buildings, he said.

Investcorp was also planning to invest about US$200mil in European property in the 12 months starting from July, Dracos said. The firm is returning to European real estate after abandoning the market in 1994 because of low returns. This time, returns from European deals were not expected to be “that much” lower than those in the US, he said.

The Bahrain-based money manager is charting a new growth plan under executive chairman Mohammed Al Ardhi after a generational shift in the management of the company last year. Mohammed Al-Shroogi and Rishi Kapoor were appointed co-chief executive officers in April last year after Abdul-Rahman Salim Al-Ateeqi, who had been chairman since Investcorp was founded in 1982, retired and Kirdar became chairman.

Under the new management team, Investcorp aims to double assets under management, expand investment products, rebuild its hedge-fund business, and may also seek to do larger transactions in the US through its private equity arm.

The company announced earlier on Tuesday that it sold Texas-based technology company, CSIdentity, to Experian for US$360mil. The sale was the company’s fifth exit in the last six months, it said in a statement. It is also preparing an initial public offering of Saudi Arabia’s Leejam Sports Co, which operates gym chain Fitness Time, people familiar with the matter told Bloomberg last month.

Last month, Investcorp hired Neil Hasson from Macquarie Group Ltd to spearhead its European real-estate investments. The company would be looking to buy residential and commercial properties in the UK, France and Germany, Dracos said. Real- estate investments account for 15% to 20% of the firm’s revenue, and has around US$1.5bil of assets under management.

“We’ve been talking about Europe internally for a long time, been asked about it by clients for a number of years, and we see a good investment opportunity there for us as a logical extension of our private equity and hedge fund platforms, which are already in Europe,” Dracos said.

Investcorp was one of the first companies from the Gulf to channel capital into the US and Europe, and into real estate. Over the past six months it has purchased residential property in metropolitan areas of Boca Raton, Florida and Minneapolis, and office and industrial property in Atlanta, San Francisco and Boston.

Investcorp buys real-estate and private-equity assets using its own balance sheet to underwrite deals and then syndicates the equity to its clients, and charges a fee. When the firm acquired an office building in Washington for about US$180mil earlier this year, it sold the US$90mil of equity to at least four investors in less than two weeks, Dracos said. The transaction was the first as part of the company’s plan to target larger real-estate deals that can be sold to a smaller group of investors happy to hold the assets for longer.

“There are still good deals to be found in the US,” Dracos said. “There’s been more foreign capital coming in but the returns we see are still quite compelling.” – Bloomberg