Investcorp Capital posts Q4 profit dip after Abu Dhabi IPO

Bahrain-based asset manager Investcorp Capital reported a net profit of $21 million for the fourth quarter of 2023, in its first results following its market debut in November.

The company, a unit of Mubadala Investment Company-backed Investcorp, said its net profit in the same period a year earlier stood at $32 million, adding in an earnings call on Monday that its 2022 numbers had not undergone a review.

Revenue from capital financing services grew to $14 million in the three months that ended in December, from $12 million a year ago, Investcorp Capital on Monday said in a filing to the Abu Dhabi Securities Exchange, where its shares are traded.

Meanwhile, revenue from capital deployment fell to $10 million in the reported quarter from $24 million in the same period in 2022.

For the second half of 2023, the company reported a profit of $34 million compared with $41 million a year earlier.

“This is in line with the total comprehensive income for the previous year as well [and] is driven by a very strong performance across the whole business,” Abbas Rizvi, the company’s chief financial officer, said.

Investcorp Capital began trading on the ADX on November 17 following an initial public offering that raised Dh1.66 billion ($451 million).

Parent company Investcorp recorded strong demand from local and international investors for the IPO, which gave the company a market capitalisation of about Dh5.04 billion at the time.

At the current stock price, Investcorp Capital is valued at Dh4.56 billion on the ADX.

Investcorp plans further listings of some of its portfolio businesses in the Gulf region, Hazem Ben-Gacem, the company’s co-chief executive, said on Monday.

Hazem Ben-Gacem, co-chief executive of Investcorp. Photo: Investcorp

“The capital markets in the GCC continue to be quite vibrant, and I hope that in the next six to 12 months, we would be in a position to do a further listing of one of our portfolio companies,” he said.

He said he was “highly” doubtful about pursuing a listing of any of its assets in North America and Europe but added that those regions were picking up on the back of a recovery in debt markets.

“We do see healthy trade and mergers and acquisitions (M&A) transactions in the west and perhaps a bit more public market transactions in the east,” he added.

Private equity firms reported 298 exits last year, marking a 28 per cent decline in volume compared to 2022, according to EY.

At the same time, IPO activity in the US, the world’s largest economy, fell to its lowest level in years amid rising interest rates and a challenging economic outlook, which dampened investor interest.

Investcorp may list its “one last business” in China, Mr Ben-Gacem said, without providing further details.

Last year, Investcorp bought a controlling stake in Shandong Jianuo Electronics (Jianuo) to boost its portfolio in the world’s second-largest economy.

Jianuo, based in Shandong and China’s Greater Bay Area, provides speciality premium components used in high-end applications such as electric vehicle power management, battery charging infrastructure, solar and wind power generation and 5G base station infrastructure.

Investcorp plans to float the company’s shares on the Hong Kong Stock Exchange, but the IPO will “have to take a wait-and-see status” for now, Mr Ben-Gacem said.

“The Hong Kong market is still in perhaps a state of health which is not much different from where Europe is today,” he added.

Hong Kong’s economy is expected to grow at a slower pace this year amid challenges from China’s slowdown.

Investcorp Capital will add a new asset class for infrastructure investments, Mr Rizvi said, adding that the company will announce some important infrastructure-related investments in the “next week or two”.

The company expects a “meaningful” level of activity in the private equity, real estate, and infrastructure sectors heading into the second half of 2024, he said.