Investcorp
Encyclopedia
Investcorp is a manager of alternative investment products, serving high-net-worth private and institutional clients. Its principal client base is in the six countries of the Gulf Co-operation Council, but it also has institutional clients in North America and Europe. Its three offices (New York, Bahrain and London) work together to identify investment opportunities and place investments.
Investcorp offers investments to its clients in three business classes: corporate investment, real estate
and hedge funds. Founded in 1982, it has arranged investments with a combined value of approximately $44 billion. Unlike most private equity firms, it typically places the equity of companies and real estate properties it acquires directly with investors, ie. on a deal-by-deal basis, rather than through a fund structure. In addition, the firm has raised a number of funds, including a Gulf Opportunity Fund investing in the MENA
region, and a number of technology funds.
From its roots in corporate and real estate investment, Investcorp diversified in 1997 into hedge funds, in order to provide clients with a broader range of alternative investments. Non-Gulf investors, mainly in the US, now account for around two-thirds of Investcorp’s hedge fund client assets under management, with $1 billion in new US hedge fund mandates being secured in 2009.
The company currently has approximately $12 billion in invested assets under management across its three asset classes. In 2011, it ranked 67th in the PEI300 ranking of private equity firms by assets deployed, with $4.68bn invested in private equity over the last five years.
Investcorp maintains relationships with over 1,000 high-net-worth and institutional investors throughout the Gulf through its placement team of around 30 professionals, who cover the Gulf countries out of Bahrain.
Investcorp is regulated in Bahrain as a wholesale bank, and has traditionally utilised long-term and medium-term bank financing, including private placements and syndicated loans, in order to ensure a longer maturity profile. The company’s capital adequacy ratio (Basel II) at its last year end was 22.9%. The company is listed on the Bahrain Bourse, with a financial year end of 30th June.
To date Investcorp has been seen as politically neutral, however, their portfolio company, Moneybookers, ended its relationship with Wikileaks in August 2010 as a direct result of U.S. government pressure.
The past and present portfolio includes over 90 investments across a broad range of industries. Selected past investments include:
Tiffany - world-renowned retailers of exclusive jewelry and luxury goods - acquired 1984, floated 1987
Gucci - designer, producer and distributor of luxury accessories and apparel - acquired from 1989 to 1993, floated 1996
Leica Geosystems - high-precision measuring instrument manufacturer acquired 1998, floated 2000
Jostens - leading US provider of school-related affinity products - acquired 2000, sold 2003
Neptune – US manufacturer of water meters – acquired 2001, sold 2003
MW Manufacturers – a leading US maker of windows and patio doors – acquired 2002, sold 2004
Hilding Anders – leading European mattress and bed manufacturer – acquired 2003, sold 2006
Apcoa – one of Europe’s leading parking management providers – acquired 2004, sold 2007
American Tire Distributors - the largest US independent tire distributor – acquired in 2005, sold in 2010
Moody International - the leading international provider of quality and safety services – acquired 2007, sold 2011
Since 1995, Investcorp has acquired in the region of 200 properties, totaling approximately $10 billion in value. It currently has more than $6 billion of property under management.
program offers clients a selection of funds of hedge funds with varying risk/return profiles. These are invested across different strategies through approximately 45 hedge fund managers.
In addition Investcorp has developed a single manager seeding platform, and currently offers, on a joint venture basis, clients access to seven upcoming managers with specific strategies. The single manager platform currently has around $1.6 billion in client and proprietary assets under management. In the last few years customised portfolios have grown as a proportion of the firm’s overall hedge fund assets under management, with traditional fund-of-funds reducing.
In an Opalesque.TV interview with Head of Hedge Funds Deepak Gurnani, he describes the constant evolution of Investcorp's hedge fund business from an initial fund of funds platform to its current growth as a "hedge fund solutions provider", whereby only 16% of the business is invested through fund of funds. The remainder is invested through customized solutions, seeding businesses and a single manager platform. According to Gurnani, a key area of growth for Investcorp's hedge fund business is in providing institutional investors with access to its emerging manager program, investing with and seeding early stage managers who, based on Investcorp research, outperform larger hedge funds on a risk adjusted basis.
during the period 1980-1982, when Dr. Jawad Hashim was its President. In July 1980 Hashim employed Nemir Kirdar as one of his advisors on one-year secondment from Chase Manhattan Bank
. Initially, Kirdar’s task was to prepare certain feasibility studies in connection with the development of Arab financial markets, promotion of Arab monetary and economic integration and the quest for investment opportunities for the surplus of the oil-exporting Arab countries. Kirdar delivered a report entitled: ARAB MONETARY FUND PROJECT: ESTABLISHMENT OF A PRIVATE INVESTMENT COMPANY. Under the auspices of AMF and on its expense, a new financial institution, Investcorp, was created in 1981/1982. Kirdar would later assert that Investcorp was his “brainchild” without reference to the AMF's role in its creation. To pay for his share subscription in Investcorp, Kirdar requested a second loan for US$600,000 from Dr. Hashim in March 1981.
The establishment of Investcorp commenced in May 1981 with the first founding shareholders subscribing and affecting payments on May 13, 1981. By March 31, 1982, all committed founding shareholders had subscribed and paid their funds. In May 1982, the public subscription was conducted and in June 1982, a general shareholders meeting was convened and the shareholders elected the first Board of Directors. In July 1982, the final incorporation process was completed and Investcorp started to develop its policies and procedures manuals, background material and logistical requirements and had begun to hire its staff. In January 1983, Investcorp commenced business operations.
On an official visit to Abu Dhabi in early 1977 (in his capacity as Presidential Advisor) to deliver a letter from Saddam Hussein
to the then President of United Arab Emirates
, Dr. Hashim met Nemir Kirdar at a dinner party. When Hashim assumed his post as President of AMF, Nemir Kirdar, as the representative of Chase Manhattan Bank discussed mainly the banking relationship between AMF and Chase Manhattan. Hashim also used to outline the objectives of the AMF in relation to the promotion of Arab capital markets and best ways of utilizing the financial surpluses of the Persian Gulf
region through a viable investment entity.
In the Summer of 1979, Dr. Hashim paid an official visit to Bahrain
. During this visit, he met with Nemir Kirdar at Chase Manhattan Bank. On this occasion Dr. Hashim again discussed his “dream investment vehicle” with Mr. Kirdar, asking if he would join the AMF staff to undertake a detailed feasibility study on the matter. Dr. Hashim approached the chairman of Chase Manhattan, David Rockefeller
, to second Kirdar for a period of one year. Again, Kirdar politely declined. Instead, he suggested that when his assignment in the Persian Gulf came to an end, and before moving to another post with Chase, he might consider taking a long leave of absence to join the AMF on secondment basis from Chase Manhattan.
In soliciting investors, whether institutional or individuals, the AMF indicated emphatically and clearly that Investcorp was the AMF’s creation and upon which it had spent substantial sums of money in the form of salaries, accommodation, travel and legal expenses. Investcorp was not the creation of anybody other than the AMF. It was conceived pursuant to the interpretation of AMF’s Treaty by the then President of the Fund, Dr. Jawad Hashim.
By May 1981 (Nemir Kirdar was still an employee of AMF), the AMF “project” attracted many individuals and institutions to participate in the capital of the proposed company: Investcorp. Approximately US$55 million were committed by the participants. Institutional participants whom Dr. Hashim, as President of AMF, solicited included:
The first individuals to participate in Investcorp’s capital were Dr. Hashim and few of his friends under an entity called Gulf International Investment Network (GINET) with 12% shareholdings. Others included wealthy businessmen from various Persian Gulf states.
On May 24, 1981, an application was made to Bahrain Ministry of Commerce and Agriculture for the incorporation of Investcorp as a Bahrain Exempt Company. While the application was pending approval, the founder shareholders held their first meeting on August 12, 1981, at the Hilton Hotel, Manama, Bahrain.
Pursuant to the understanding between Kirdar and Dr. Hashim at an earlier meeting in the Summer of 1981, Kirdar left the AMF
, resigned from Chase Manhattan Bank
and assumed the post of Project Coordinator in Manama, Bahrain. As there were no budget to cover the project’s expenses from this point, Dr. Hashim advanced US$50,000 from his personal account as a short-term loan. The loan was paid back at a later stage from fees generated by Investcorp.
On April 12, 1982 (nearly eleven months after the application), Bahrain Ministry of Commerce and Agriculture approved the incorporation of Investcorp. Thus, Investcorp (the AMF’s brainchild) came into legal existence with its official name being Arab Investment banking Corporation.
On Sunday, June 20, 1982, Investcorp held its first meeting of the Board of Directors at the Holiday Inn
, Manama, Bahrain. Nemir Kirdar was elected as President and CEO of Investcorp for a three-year term. Kirdar however opposed a similar three year term for the Chairman position to be held by Dr. Hashim.
When Dr. Hashim’s term of office as President of the Arab Monetary Fund
ended in May 1982, and because of political differences with Saddam Hussein
, he did not go back to Iraq
but went to live in London, England. In early June 1982, he sent his written resignation as Presidential Advisor to President Saddam Hussein but his resignation was ignored. Between June 1982 and July 1983, Dr. Hashim received numerous threats from Iraqi intelligence.
Due to the issues with the Iraqi government, Dr. Hashim was unable to perform his functions with Investcorp and attend its Board of Directors and Executive Committee meetings. On December 7, 1983, Dr. Hashim resigned from Investcorp’s Board of Directors and its Executive Committee. His resignation was accepted on February 16, 1984.
The early days of Investcorp’s real estate business saw a number of asset trading investments, the most important of which was the acquisition of the freehold of Tiffany’s flagship store, which was exited the following year.
Corporate acquisitions in the mid 1980s included Dellwood, a dairy processor, Jiffy Lube, an auto service franchiser, Mueller, a fluid flow control manufacturer, Peebles Department Stores and golf cart manufacturer Club Car in the US, along with yacht maker Riva in Europe.
In 1986 a group of international banks participated in a Eurodollar credit facility of $50 million, the first to be arranged for Investcorp.
In 1987 Investcorp completed the initial public offering of Tiffany on the New York Stock Exchange. Catherines, a women’s wear retailer, and Fox Photo, a photofinishing company, were acquired in the US. European acquisitions that year included Breguet, a Swiss watchmaker, and Chaumet, a French jeweller.
Exits in the later 1980s included Club Car, Mueller, Riva and Peebles Department Stores. Acquisitions in that period in the US included Burnham, a transport and distribution company, New York Department Stores, Main Street Dairy and retailer Sports and Recreation. In Europe, 50% of Gucci was acquired along with aluminium products manufacturer Thecla Industries.
In 1989 Investcorp opened its US office at 280 Park Avenue, New York.
Corporate exits in the first years of the decade included Main Street Dairy, Fox Photo and Thecla Industries. In 1991, Catherines was taken public and in 1992 Sports & Recreation.
The next year Investcorp arranged the acquisition of US retail chain Circle K, while in Europe it bought Thorn Lighting, a manufacturer of light fittings.
Investcorp’s new London office at 48 Grosvenor Street was opened by Baroness Thatcher in 1994.
In 1995 Investcorp refocused its real estate business, shifting away from development activity to an investor-driven approach based on prime properties offering a cashflow stream. The purchase of the Boston Properties portfolio in that year represented the first acquisition of a group of buildings, rather than a single building. A portfolio model was then adopted going forward, ie. acquiring portfolios of similar properties, but in different locations, to spread risk. The acquisition in 1997 of PacInvest, a group of seven mid-market hotels in California, represented the first portfolio specifically arranged by Investcorp.
US acquisitions in the mid 1990s included: supermarket chain Star Market, Simmons, a bedding manufacturer, CSK Auto, an auto parts retailer, Prime Equipment, an industrial rental equipment supplier, and Carter’s, a manufacturer of babywear. Ebel, a Swiss watch manufacturer, was acquired in 1994.
In 1994 Thorn Lighting was taken public on the London Stock Exchange, and the following year Gucci and Circle K were taken public on the New York Stock Exchange. Saks Fifth Avenue and Prime Service (formerly Prime Equipment) followed with New York IPOs in 1996.
In 1997 the Firm moved into the hedge funds space, launching a third line of business with three fund of funds, with a fourth fund being added in 1999.
In 1997, some 62 banks participated in a $400 million revolving credit facility, Investcorp’s 11th medium-term facility. The following year Investcorp completed its first US capital markets transaction with a US private placement of $180 million in seven and ten-year tranches.
Acquisitions in the US in the later 1990s included Falcon, a manufacturer of building products, and Harborside Healthcare. Acquisitions in Europe at that time included Leica Geosystems, a Swiss measurement equipment manufacturer, Avecia, a specialty chemicals business and Helly Hansen, a Norwegian manufacturer of outdoor apparel.
In 1998, Investcorp and its clients sold Simmons and CSK Auto was taken public with an IPO.
In 2001 Investcorp launched a technology investment business, raising a $250 million fund. Investments which have now been successfully exited from the fund include Acta, Mobile365, ObjectStar, Portalplayer, Softek and Spectel.
Corporate acquisitions in the early years of the decade in the US included Neptune, a water meter manufacturer and supplier, ECI, a provider of telephone conferencing services, and MW Manufacturers, a window and patio door manufacturer. In Europe Stahl, a supplier of specialty chemicals for leather processing, was acquired. Carter’s was sold in 2001.
Investcorp changed its fiscal year-end to June 30th in 2003.
In 2003, Investcorp acquired Minimax, a German fire protection systems company and Hilding Anders, a Swedish bed and mattress manufacturer. Neptune and Jostens in the US were exited.
In the following year, Investcorp acquired APCOA, a German parking management company. In the US, acquisitions included Thomson Media (later renamed Source Media), a US provider of information products and solutions. CSK Auto, MW Manufacturers, ECI and Gerresheimer Glas were all sold.
In its real estate activities, the decade from 2000 saw Investcorp arrange some 29 portfolios of US real estate for placement with its investors, ranging across the spectrum of office, commercial, residential, retail and hotel properties. In addition, a small number of individual prime properties were placed, such as the W South Beach Condominium Hotel in Miami, Florida in 2010.
In 2004,Investcorp further extended its hedge fund offerings to include single manager seeding funds, with Cura Capital Management as its first partner. This was followed over the following four years with other partnerships including Interlachen Capital Group, Silverback Asset Management and Stoneworks Asset Management..
In 2005 acquisitions included American Tire, a tire distributor; Associated Materials, a manufacturer and distributor of exterior residential building products; CCC, the US market leader in automotive insurance claims software and Polyconcept, a European leader in promotional gifts.
2005 also saw a second technology fund totalling $300 million being raised. Significant investments have included Moneybookers (now Skrill), a leading European digital payment company. The investment in Trema, a French company, has been exited as the fund moves into harvest mode
In 2006 corporate investment acquisitions included Autodistribution, a French auto parts distributor; Armacell, a global manufacturer of engineered foams; and FleetPride, an independent US truck parts distributor. Exits included Minimax and Saks.
Three companies were acquired in 2007: Moody International, a UK-based provider of technical and inspection services; Icopal, the world's leading producer of roofing and waterproofing membranes; and Berlin Packaging, a US supplier of custom and stock rigid packaging. Exits in the year included APCOA, Helly Hansen, Harborside, and Hilding Anders.
Investcorp made a successful offering of GDRs on the London Stock Exchange in 2006.
Investcorp’s 2007 fiscal year saw the firm’s highest ever profit to date, with net income of $302m. The year also saw a record $3.4 billion being raised from clients.
Investcorp also launched in 2007 a fifth line of business to make growth capital investments in greenfield projects and buyout opportunities in the MENA region, raising over $1 billion in the Gulf Opportunity Fund and making its first investment, Redington Gulf, a UAE based supply chain service provider.
In its 2007-2008 fiscal year, acquisitions included B2B media company Randall-Reilly in the US, Asiakastieto, a Finnish credit information business and CEME, and Italian manufacturer of fluid control components.
In 2008 Investcorp’s third technology fund raised $500 million. Investments so far include telematics solutions provider Fleetmatics, TDX, a leading UK-based provider of credit risk management solutions, eviivo, the UK's leading online reservation provider for the independent hotels sector, and OpSec Security Group, a leading anti-counterfaiting technology company.
In its 2009 fiscal year, Investcorp recorded its first annual loss, but returning to profit in the 2010 and 2011 fiscal years. During its 2009 fiscal year, the firm also concluded a preference share issue, with subscriptions of over $500 million. New acquisitions in that year included N&W Global Vending, a leading pan-European manufacturer of food and beverage vending machines.
In 2010 Investcorp delisted its London-listed GDRs due to changed market conditions.
In fiscal 2010 the firm acquired Veritext, a leading provider of litigation support services in the United States, and made additional investments in Berlin Packaging and in Skrill, as well as its third growth capital investment in Gulf Cryo, the leading Kuwait industrial gases company. The firm sold Associated Materials and American Tire Distributors, as well as completing the exit of Avecia's Biologics business. In real estate, exits included the sale of the final properties in the Empire Mountain Village portfolio.
In the following fiscal year, Investcorp made its fourth growth capital investment with an investment in Tiryaki Agro, Turkey
's leading agro trader. New hedge fund managers seeded in the single manager platform were Ballast Capital Management and Prosiris Capital Management.
In early 2011 Moody International - acquired in 2007 for $311 million - was sold for $729 million.
In September 2011 Reed Elsevier
agreed to purchase U.S. online-data business Accuity Holdings Inc. from investment firm Investcorp for £343 million ($530.1 million) in cash. The deal is expected to close in Q4 2011.
Investcorp offers investments to its clients in three business classes: corporate investment, real estate
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
and hedge funds. Founded in 1982, it has arranged investments with a combined value of approximately $44 billion. Unlike most private equity firms, it typically places the equity of companies and real estate properties it acquires directly with investors, ie. on a deal-by-deal basis, rather than through a fund structure. In addition, the firm has raised a number of funds, including a Gulf Opportunity Fund investing in the MENA
MENA
The term MENA, for "Middle East and North Africa", is an acronym often used in academic, military planning and business writing.The term covers an extensive region, extending from Morocco to Iran, including the majority of both the Middle Eastern and Maghreb countries...
region, and a number of technology funds.
From its roots in corporate and real estate investment, Investcorp diversified in 1997 into hedge funds, in order to provide clients with a broader range of alternative investments. Non-Gulf investors, mainly in the US, now account for around two-thirds of Investcorp’s hedge fund client assets under management, with $1 billion in new US hedge fund mandates being secured in 2009.
The company currently has approximately $12 billion in invested assets under management across its three asset classes. In 2011, it ranked 67th in the PEI300 ranking of private equity firms by assets deployed, with $4.68bn invested in private equity over the last five years.
Investcorp maintains relationships with over 1,000 high-net-worth and institutional investors throughout the Gulf through its placement team of around 30 professionals, who cover the Gulf countries out of Bahrain.
Investcorp is regulated in Bahrain as a wholesale bank, and has traditionally utilised long-term and medium-term bank financing, including private placements and syndicated loans, in order to ensure a longer maturity profile. The company’s capital adequacy ratio (Basel II) at its last year end was 22.9%. The company is listed on the Bahrain Bourse, with a financial year end of 30th June.
To date Investcorp has been seen as politically neutral, however, their portfolio company, Moneybookers, ended its relationship with Wikileaks in August 2010 as a direct result of U.S. government pressure.
Corporate investment
Corporate investment is Investcorp's traditional activity. It includes the identification of opportunities in mid-size companies in North America and Western Europe, as well as technology small-cap investment (through Investcorp Technology Partners) and opportunities in the Gulf and the MENA region.The past and present portfolio includes over 90 investments across a broad range of industries. Selected past investments include:
Tiffany - world-renowned retailers of exclusive jewelry and luxury goods - acquired 1984, floated 1987
Gucci - designer, producer and distributor of luxury accessories and apparel - acquired from 1989 to 1993, floated 1996
Leica Geosystems - high-precision measuring instrument manufacturer acquired 1998, floated 2000
Jostens - leading US provider of school-related affinity products - acquired 2000, sold 2003
Neptune – US manufacturer of water meters – acquired 2001, sold 2003
MW Manufacturers – a leading US maker of windows and patio doors – acquired 2002, sold 2004
Hilding Anders – leading European mattress and bed manufacturer – acquired 2003, sold 2006
Apcoa – one of Europe’s leading parking management providers – acquired 2004, sold 2007
American Tire Distributors - the largest US independent tire distributor – acquired in 2005, sold in 2010
Moody International - the leading international provider of quality and safety services – acquired 2007, sold 2011
Real estate investment
The real estate team, based in New York, sources and performs due diligence, and arranges financing and the acquisition of US properties and US commercial mortgage debt positions that offer Investcorp clients investment opportunities with the potential for both strong cash flow and attractive capital gains over a five year investment period. The investment in these properties or loans is typically aggregated into a series of multi-investment portfolios for placement to clients. Debt investments are also made within a series of debt funds which are managed by the group. The properties are actively asset managed over the investment term to increase cash flow from operations and to build value until realization.Since 1995, Investcorp has acquired in the region of 200 properties, totaling approximately $10 billion in value. It currently has more than $6 billion of property under management.
Hedge funds
Investcorp's hedge funds business was established in 1996 and today has approximately $5 billion of capital under management, of which approximately $1 billion is reserved for proprietary investments. The fund of fundsFund of funds
A "fund of funds" is an investment strategy of holding a portfolio of other investment funds rather than investing directly in shares, bonds or other securities. This type of investing is often referred to as multi-manager investment...
program offers clients a selection of funds of hedge funds with varying risk/return profiles. These are invested across different strategies through approximately 45 hedge fund managers.
In addition Investcorp has developed a single manager seeding platform, and currently offers, on a joint venture basis, clients access to seven upcoming managers with specific strategies. The single manager platform currently has around $1.6 billion in client and proprietary assets under management. In the last few years customised portfolios have grown as a proportion of the firm’s overall hedge fund assets under management, with traditional fund-of-funds reducing.
In an Opalesque.TV interview with Head of Hedge Funds Deepak Gurnani, he describes the constant evolution of Investcorp's hedge fund business from an initial fund of funds platform to its current growth as a "hedge fund solutions provider", whereby only 16% of the business is invested through fund of funds. The remainder is invested through customized solutions, seeding businesses and a single manager platform. According to Gurnani, a key area of growth for Investcorp's hedge fund business is in providing institutional investors with access to its emerging manager program, investing with and seeding early stage managers who, based on Investcorp research, outperform larger hedge funds on a risk adjusted basis.
History
Investcorp was founded in 1982 with the aim to innovate and introduce non-traditional products and services to the Gulf region. The concept behind the creation of Investcorp was devised and implemented at the Arab Monetary FundArab Monetary Fund
The Arab Monetary Fund is a regional Arab organization, founded 1976, and operational from 1977. It is a working sub-organization of the Arab League.-Objectives:...
during the period 1980-1982, when Dr. Jawad Hashim was its President. In July 1980 Hashim employed Nemir Kirdar as one of his advisors on one-year secondment from Chase Manhattan Bank
Chase Manhattan Bank
JPMorgan Chase Bank, N.A., doing business as Chase, is a national bank that constitutes the consumer and commercial banking subsidiary of financial services firm JPMorgan Chase. The bank was known as Chase Manhattan Bank until it merged with J.P. Morgan & Co. in 2000...
. Initially, Kirdar’s task was to prepare certain feasibility studies in connection with the development of Arab financial markets, promotion of Arab monetary and economic integration and the quest for investment opportunities for the surplus of the oil-exporting Arab countries. Kirdar delivered a report entitled: ARAB MONETARY FUND PROJECT: ESTABLISHMENT OF A PRIVATE INVESTMENT COMPANY. Under the auspices of AMF and on its expense, a new financial institution, Investcorp, was created in 1981/1982. Kirdar would later assert that Investcorp was his “brainchild” without reference to the AMF's role in its creation. To pay for his share subscription in Investcorp, Kirdar requested a second loan for US$600,000 from Dr. Hashim in March 1981.
On an official visit to Abu Dhabi in early 1977 (in his capacity as Presidential Advisor) to deliver a letter from Saddam Hussein
Saddam Hussein
Saddam Hussein Abd al-Majid al-Tikriti was the fifth President of Iraq, serving in this capacity from 16 July 1979 until 9 April 2003...
to the then President of United Arab Emirates
United Arab Emirates
The United Arab Emirates, abbreviated as the UAE, or shortened to "the Emirates", is a state situated in the southeast of the Arabian Peninsula in Western Asia on the Persian Gulf, bordering Oman, and Saudi Arabia, and sharing sea borders with Iraq, Kuwait, Bahrain, Qatar, and Iran.The UAE is a...
, Dr. Hashim met Nemir Kirdar at a dinner party. When Hashim assumed his post as President of AMF, Nemir Kirdar, as the representative of Chase Manhattan Bank discussed mainly the banking relationship between AMF and Chase Manhattan. Hashim also used to outline the objectives of the AMF in relation to the promotion of Arab capital markets and best ways of utilizing the financial surpluses of the Persian Gulf
Persian Gulf
The Persian Gulf, in Southwest Asia, is an extension of the Indian Ocean located between Iran and the Arabian Peninsula.The Persian Gulf was the focus of the 1980–1988 Iran-Iraq War, in which each side attacked the other's oil tankers...
region through a viable investment entity.
In the Summer of 1979, Dr. Hashim paid an official visit to Bahrain
Bahrain
' , officially the Kingdom of Bahrain , is a small island state near the western shores of the Persian Gulf. It is ruled by the Al Khalifa royal family. The population in 2010 stood at 1,214,705, including 235,108 non-nationals. Formerly an emirate, Bahrain was declared a kingdom in 2002.Bahrain is...
. During this visit, he met with Nemir Kirdar at Chase Manhattan Bank. On this occasion Dr. Hashim again discussed his “dream investment vehicle” with Mr. Kirdar, asking if he would join the AMF staff to undertake a detailed feasibility study on the matter. Dr. Hashim approached the chairman of Chase Manhattan, David Rockefeller
David Rockefeller
David Rockefeller, Sr. is the current patriarch of the Rockefeller family. He is the youngest and only surviving child of John D. Rockefeller, Jr. and Abby Aldrich Rockefeller, and the only surviving grandchild of oil tycoon John D. Rockefeller, founder of Standard Oil. His five siblings were...
, to second Kirdar for a period of one year. Again, Kirdar politely declined. Instead, he suggested that when his assignment in the Persian Gulf came to an end, and before moving to another post with Chase, he might consider taking a long leave of absence to join the AMF on secondment basis from Chase Manhattan.
Initial investors
To give credibility to the concept which the AMF developed, Hashim, in his capacity as President of the AMF, sought to solicit first the participation of institutional investors, mainly the national banks of each Persian Gulf state. Beginning in November 1980, he first wrote to the Chairman of the Board of National Bank of Abu Dhabi (NBAD) Ahmed Khalifa Al-Suwaidi. Similar letters were sent to the National Bank of Bahrain, Bank of Oman, The Dubai Bank, National Bank of Sharjah, Qatar National Bank and Commercial Bank of Qatar. Some of these letters were signed by Dr. Hashim while others were signed by Nemir Kirdar in his capacity as Advisor to the President of AMF. In all those letters, it was clearly indicated that the project was undertaken by the Arab Monetary Fund. For example, by a letter dated January 17, 1981, to the Chairman of National Bank of Bahrain, it was unambiguously stated that the AMF invites the said bank to contribute in the proposed investment company’s capital.In soliciting investors, whether institutional or individuals, the AMF indicated emphatically and clearly that Investcorp was the AMF’s creation and upon which it had spent substantial sums of money in the form of salaries, accommodation, travel and legal expenses. Investcorp was not the creation of anybody other than the AMF. It was conceived pursuant to the interpretation of AMF’s Treaty by the then President of the Fund, Dr. Jawad Hashim.
By May 1981 (Nemir Kirdar was still an employee of AMF), the AMF “project” attracted many individuals and institutions to participate in the capital of the proposed company: Investcorp. Approximately US$55 million were committed by the participants. Institutional participants whom Dr. Hashim, as President of AMF, solicited included:
- National Bank of BahrainNational Bank of BahrainNational Bank of Bahrain was established in 1957 as the first indigenous bank in Bahrain. A nation-wide network of 25 branches, 46 ATMs and over 4,000 Point of Sale terminals in addition to their branches in Abu Dhabi and Riyadh makes NBB the leading provider of commercial and retail banking...
- Bank of Bahrain and KuwaitBank of Bahrain and KuwaitThe Bank of Bahrain and Kuwait B.S.C. was established in 1971 in both the Kingdom of Bahrain and the State of Kuwait. Its shareholders consist of the general public and government of Bahrain, and banks and investment companies in Kuwait...
- Commercial Bank of Kuwait
- Qatar National Bank
- Saudi-Cairo Bank
- Gulf Union Insurance Co.
The first individuals to participate in Investcorp’s capital were Dr. Hashim and few of his friends under an entity called Gulf International Investment Network (GINET) with 12% shareholdings. Others included wealthy businessmen from various Persian Gulf states.
On May 24, 1981, an application was made to Bahrain Ministry of Commerce and Agriculture for the incorporation of Investcorp as a Bahrain Exempt Company. While the application was pending approval, the founder shareholders held their first meeting on August 12, 1981, at the Hilton Hotel, Manama, Bahrain.
Pursuant to the understanding between Kirdar and Dr. Hashim at an earlier meeting in the Summer of 1981, Kirdar left the AMF
Arab Monetary Fund
The Arab Monetary Fund is a regional Arab organization, founded 1976, and operational from 1977. It is a working sub-organization of the Arab League.-Objectives:...
, resigned from Chase Manhattan Bank
Chase Manhattan Bank
JPMorgan Chase Bank, N.A., doing business as Chase, is a national bank that constitutes the consumer and commercial banking subsidiary of financial services firm JPMorgan Chase. The bank was known as Chase Manhattan Bank until it merged with J.P. Morgan & Co. in 2000...
and assumed the post of Project Coordinator in Manama, Bahrain. As there were no budget to cover the project’s expenses from this point, Dr. Hashim advanced US$50,000 from his personal account as a short-term loan. The loan was paid back at a later stage from fees generated by Investcorp.
On April 12, 1982 (nearly eleven months after the application), Bahrain Ministry of Commerce and Agriculture approved the incorporation of Investcorp. Thus, Investcorp (the AMF’s brainchild) came into legal existence with its official name being Arab Investment banking Corporation.
On Sunday, June 20, 1982, Investcorp held its first meeting of the Board of Directors at the Holiday Inn
Holiday Inn
Holiday Inn is a brand of hotels, formally a economy motel chain, forming part of the British InterContinental Hotels Group . It is one of the world's largest hotel chains with 238,440 bedrooms and 1,301 hotels globally. There are currently 5 hotels in the pipeline...
, Manama, Bahrain. Nemir Kirdar was elected as President and CEO of Investcorp for a three-year term. Kirdar however opposed a similar three year term for the Chairman position to be held by Dr. Hashim.
Arab Monetary Fund
The Arab Monetary Fund is a regional Arab organization, founded 1976, and operational from 1977. It is a working sub-organization of the Arab League.-Objectives:...
ended in May 1982, and because of political differences with Saddam Hussein
Saddam Hussein
Saddam Hussein Abd al-Majid al-Tikriti was the fifth President of Iraq, serving in this capacity from 16 July 1979 until 9 April 2003...
, he did not go back to Iraq
Iraq
Iraq ; officially the Republic of Iraq is a country in Western Asia spanning most of the northwestern end of the Zagros mountain range, the eastern part of the Syrian Desert and the northern part of the Arabian Desert....
but went to live in London, England. In early June 1982, he sent his written resignation as Presidential Advisor to President Saddam Hussein but his resignation was ignored. Between June 1982 and July 1983, Dr. Hashim received numerous threats from Iraqi intelligence.
Due to the issues with the Iraqi government, Dr. Hashim was unable to perform his functions with Investcorp and attend its Board of Directors and Executive Committee meetings. On December 7, 1983, Dr. Hashim resigned from Investcorp’s Board of Directors and its Executive Committee. His resignation was accepted on February 16, 1984.
1984-90
In 1984 Investcorp opened its second office in London. In the same year, Investcorp acquired Tiffany & Co.The early days of Investcorp’s real estate business saw a number of asset trading investments, the most important of which was the acquisition of the freehold of Tiffany’s flagship store, which was exited the following year.
Corporate acquisitions in the mid 1980s included Dellwood, a dairy processor, Jiffy Lube, an auto service franchiser, Mueller, a fluid flow control manufacturer, Peebles Department Stores and golf cart manufacturer Club Car in the US, along with yacht maker Riva in Europe.
In 1986 a group of international banks participated in a Eurodollar credit facility of $50 million, the first to be arranged for Investcorp.
In 1987 Investcorp completed the initial public offering of Tiffany on the New York Stock Exchange. Catherines, a women’s wear retailer, and Fox Photo, a photofinishing company, were acquired in the US. European acquisitions that year included Breguet, a Swiss watchmaker, and Chaumet, a French jeweller.
Exits in the later 1980s included Club Car, Mueller, Riva and Peebles Department Stores. Acquisitions in that period in the US included Burnham, a transport and distribution company, New York Department Stores, Main Street Dairy and retailer Sports and Recreation. In Europe, 50% of Gucci was acquired along with aluminium products manufacturer Thecla Industries.
In 1989 Investcorp opened its US office at 280 Park Avenue, New York.
The 1990s
1990 saw Investcorp acquire Saks Fifth Avenue, its largest ever transaction.Corporate exits in the first years of the decade included Main Street Dairy, Fox Photo and Thecla Industries. In 1991, Catherines was taken public and in 1992 Sports & Recreation.
The next year Investcorp arranged the acquisition of US retail chain Circle K, while in Europe it bought Thorn Lighting, a manufacturer of light fittings.
Investcorp’s new London office at 48 Grosvenor Street was opened by Baroness Thatcher in 1994.
In 1995 Investcorp refocused its real estate business, shifting away from development activity to an investor-driven approach based on prime properties offering a cashflow stream. The purchase of the Boston Properties portfolio in that year represented the first acquisition of a group of buildings, rather than a single building. A portfolio model was then adopted going forward, ie. acquiring portfolios of similar properties, but in different locations, to spread risk. The acquisition in 1997 of PacInvest, a group of seven mid-market hotels in California, represented the first portfolio specifically arranged by Investcorp.
US acquisitions in the mid 1990s included: supermarket chain Star Market, Simmons, a bedding manufacturer, CSK Auto, an auto parts retailer, Prime Equipment, an industrial rental equipment supplier, and Carter’s, a manufacturer of babywear. Ebel, a Swiss watch manufacturer, was acquired in 1994.
In 1994 Thorn Lighting was taken public on the London Stock Exchange, and the following year Gucci and Circle K were taken public on the New York Stock Exchange. Saks Fifth Avenue and Prime Service (formerly Prime Equipment) followed with New York IPOs in 1996.
In 1997 the Firm moved into the hedge funds space, launching a third line of business with three fund of funds, with a fourth fund being added in 1999.
In 1997, some 62 banks participated in a $400 million revolving credit facility, Investcorp’s 11th medium-term facility. The following year Investcorp completed its first US capital markets transaction with a US private placement of $180 million in seven and ten-year tranches.
Acquisitions in the US in the later 1990s included Falcon, a manufacturer of building products, and Harborside Healthcare. Acquisitions in Europe at that time included Leica Geosystems, a Swiss measurement equipment manufacturer, Avecia, a specialty chemicals business and Helly Hansen, a Norwegian manufacturer of outdoor apparel.
In 1998, Investcorp and its clients sold Simmons and CSK Auto was taken public with an IPO.
The 2000s
In the US, Investcorp acquired in 2000 Jostens, a manufacturer of school-related affinity products, while in Europe, the firm acquired Gerresheimer Glas, a provider of glass packaging.In 2001 Investcorp launched a technology investment business, raising a $250 million fund. Investments which have now been successfully exited from the fund include Acta, Mobile365, ObjectStar, Portalplayer, Softek and Spectel.
Corporate acquisitions in the early years of the decade in the US included Neptune, a water meter manufacturer and supplier, ECI, a provider of telephone conferencing services, and MW Manufacturers, a window and patio door manufacturer. In Europe Stahl, a supplier of specialty chemicals for leather processing, was acquired. Carter’s was sold in 2001.
Investcorp changed its fiscal year-end to June 30th in 2003.
In 2003, Investcorp acquired Minimax, a German fire protection systems company and Hilding Anders, a Swedish bed and mattress manufacturer. Neptune and Jostens in the US were exited.
In the following year, Investcorp acquired APCOA, a German parking management company. In the US, acquisitions included Thomson Media (later renamed Source Media), a US provider of information products and solutions. CSK Auto, MW Manufacturers, ECI and Gerresheimer Glas were all sold.
In its real estate activities, the decade from 2000 saw Investcorp arrange some 29 portfolios of US real estate for placement with its investors, ranging across the spectrum of office, commercial, residential, retail and hotel properties. In addition, a small number of individual prime properties were placed, such as the W South Beach Condominium Hotel in Miami, Florida in 2010.
In 2004,Investcorp further extended its hedge fund offerings to include single manager seeding funds, with Cura Capital Management as its first partner. This was followed over the following four years with other partnerships including Interlachen Capital Group, Silverback Asset Management and Stoneworks Asset Management..
In 2005 acquisitions included American Tire, a tire distributor; Associated Materials, a manufacturer and distributor of exterior residential building products; CCC, the US market leader in automotive insurance claims software and Polyconcept, a European leader in promotional gifts.
2005 also saw a second technology fund totalling $300 million being raised. Significant investments have included Moneybookers (now Skrill), a leading European digital payment company. The investment in Trema, a French company, has been exited as the fund moves into harvest mode
In 2006 corporate investment acquisitions included Autodistribution, a French auto parts distributor; Armacell, a global manufacturer of engineered foams; and FleetPride, an independent US truck parts distributor. Exits included Minimax and Saks.
Three companies were acquired in 2007: Moody International, a UK-based provider of technical and inspection services; Icopal, the world's leading producer of roofing and waterproofing membranes; and Berlin Packaging, a US supplier of custom and stock rigid packaging. Exits in the year included APCOA, Helly Hansen, Harborside, and Hilding Anders.
Investcorp made a successful offering of GDRs on the London Stock Exchange in 2006.
Investcorp’s 2007 fiscal year saw the firm’s highest ever profit to date, with net income of $302m. The year also saw a record $3.4 billion being raised from clients.
Investcorp also launched in 2007 a fifth line of business to make growth capital investments in greenfield projects and buyout opportunities in the MENA region, raising over $1 billion in the Gulf Opportunity Fund and making its first investment, Redington Gulf, a UAE based supply chain service provider.
In its 2007-2008 fiscal year, acquisitions included B2B media company Randall-Reilly in the US, Asiakastieto, a Finnish credit information business and CEME, and Italian manufacturer of fluid control components.
In 2008 Investcorp’s third technology fund raised $500 million. Investments so far include telematics solutions provider Fleetmatics, TDX, a leading UK-based provider of credit risk management solutions, eviivo, the UK's leading online reservation provider for the independent hotels sector, and OpSec Security Group, a leading anti-counterfaiting technology company.
In its 2009 fiscal year, Investcorp recorded its first annual loss, but returning to profit in the 2010 and 2011 fiscal years. During its 2009 fiscal year, the firm also concluded a preference share issue, with subscriptions of over $500 million. New acquisitions in that year included N&W Global Vending, a leading pan-European manufacturer of food and beverage vending machines.
In 2010 Investcorp delisted its London-listed GDRs due to changed market conditions.
In fiscal 2010 the firm acquired Veritext, a leading provider of litigation support services in the United States, and made additional investments in Berlin Packaging and in Skrill, as well as its third growth capital investment in Gulf Cryo, the leading Kuwait industrial gases company. The firm sold Associated Materials and American Tire Distributors, as well as completing the exit of Avecia's Biologics business. In real estate, exits included the sale of the final properties in the Empire Mountain Village portfolio.
In the following fiscal year, Investcorp made its fourth growth capital investment with an investment in Tiryaki Agro, Turkey
Turkey
Turkey , known officially as the Republic of Turkey , is a Eurasian country located in Western Asia and in East Thrace in Southeastern Europe...
's leading agro trader. New hedge fund managers seeded in the single manager platform were Ballast Capital Management and Prosiris Capital Management.
In early 2011 Moody International - acquired in 2007 for $311 million - was sold for $729 million.
In September 2011 Reed Elsevier
Reed Elsevier
Reed Elsevier is a publisher and information provider operating in the science, medical, legal, risk and business sectors. It is listed on several of the world's major stock exchanges. It is a FTSE 100 and FT500 Global company...
agreed to purchase U.S. online-data business Accuity Holdings Inc. from investment firm Investcorp for £343 million ($530.1 million) in cash. The deal is expected to close in Q4 2011.
External links
- Investcorp home page
- http://www.bahrainbourse.com.bh Bahrain Stock Exchange
- http://www.banksbahrain.org Bahrain Association of Banks
- http://www.gcc-sg.org/eng Gulf Co-operation Council
- JMHinternational Investcorp - its creation resources & references