Investcorp has announced its results for the 12 months ended June 30, 2014 (FY14).
Investcorp reports a 25 per cent growth in net income and an 84 per cent growth in fully diluted earnings per share over the prior year. FY14 net income is $131.2 million (FY13: $104.9 million), representing a fully diluted EPS of $129 per ordinary share (FY13: $70 per ordinary share) and a return on average equity (ROAE) of 16 per cent.
FY14 saw high levels of activity on all fronts – acquisitions, realisations and fund-raising - which have been a key driver of this strong performance, and reflect the continued appetite from investors for attractive alternative investments around the world.
This fiscal year marks five consecutive years of strong performance for Investcorp, reflecting a sustained and robust recovery from the global financial crisis of 2008-09. Since the end of FY09, Investcorp has seen its book value per ordinary share grow by 64 per cent, while delivering aggregate earnings of $401 per ordinary share and an average return on equity of 11.4 per cent per annum.
Over the last five years, despite turbulent markets, Investcorp has continued to invest in its business, its investor franchise and its product capabilities, adding people and expanding its office network to put in place a robust platform to support its recovery and growth trajectory. This has been further supplemented by prudent financial management, the de-risking and strengthening of the Firm's balance sheet, while maintaining a clear focus on delivering optimal investor returns. Relative to the beginning of FY09, balance sheet leverage has come down by more than 50 per cent to 1.2x and capital adequacy has gone up by more than 60 per cent to 30.4 per cent.
Aggregate realisation proceeds in this five-year period exceeded $5.7 billion, with total fundraising of over $7 billion. Total capital deployed in new investments over this period reached $3 billion with deal-by-deal placements totalling over $2.5 billion. Through the financial crisis and beyond Investcorp has built a strong, sustainable platform which it believes positions the Firm optimally for continued delivery of strong performance for all its stakeholders.
The Firm's performance in FY14 is a continuation of this five year trajectory, and reflects a successful business model which forms a bridge for its clients into attractive corporate, real estate and hedge fund investment opportunities in the US, Europe and the Gulf.
Total fee income in FY14 grew to $343.9 million, up four per cent over the prior year. Investcorp raised more than $1.9 billion in new funds from clients during the year, 21 per cent higher than last year and marking a continued increase in fund raising since FY08. Gulf fundraising for the period was $971 million representing a 29 per cent increase over FY13 ($751 million). Corporate Investment placement activity totalled $571 million, a 16 per cent increase over FY13. Real estate placement reached $285 million, representing a 42 per cent increase. New hedge fund subscriptions from institutional investors reached $1 billion with total hedge fund assets under management reaching the key milestone of $5 billion.
Asset-based income of $47.6 million represented a 48 per cent increase over the prior year, driven by successful realizations and solid growth in the value of the corporate investment portfolio. Asset based income was also buoyed by hedge fund returns, which generated $28.2 million and continued to benefit from a more positive macroeconomic environment compared to FY13. Overall, gross operating income for FY14 was up eight per cent to $391.5 million. Net income for the second half of FY14 was $71.1 million versus $65.7 million over the same period in FY13, an 8.3 per cent increase.
The Board of Directors has proposed a dividend of $15.00 per ordinary share, along with the full dividend of 12 per cent on the preference shares.
Over this fiscal year, Investcorp has continued to invest in its people and infrastructure – with several new strategic hires including Lionel Erdely as Head of Hedge Funds and Gary Appel as Vice Chairman for Corporate Investments in North America. The year also saw Investcorp further enhance its Gulf presence with a new office in Abu Dhabi in addition to its offices in Riyadh and Bahrain – with a new office in Qatar planned for the coming fiscal year. The Firm organised several successful investor-focussed events and conferences through the course of the year in Bahrain, Abu Dhabi and Berlin, further reinforcing its Gulf-based franchise and global credentials.
Nemir A. Kirdar, Executive Chairman and CEO, said: "Our strong performance once again confirms the success of our model and is indicative of the high level of activity in all geographies in which we operate. We continue to invest in our business and in the on-going expansion of our office network across the Gulf, thereby strengthening our franchise's ability to expand our client base and drive attractive returns for our shareholders and investors.
"Underpinned by our strong placement capability, we will continue to identify attractive global investment opportunities that we believe have the potential to deliver superior risk adjusted returns for our investors. With a fifth consecutive year of profitability, we are confident of our skill and talent base, solid foundation as well as the quality of our performance and upward momentum."