Investcorp, without a fund, completes transition of new senior team

Investcorp, the 33-year old Gulf investment firm, finished transitioning its senior leadership this week.

Nemir Kirdar, who led the firm for more than 30 years, retired on June 30 as executive chairman and CEO.

On July 1, Mohammed Bin Mahfoodh Al Ardhi succeeded Kirdar as executive chairman while Rishi Kapoor and Mohammed al-Shroogi were named co-CEOs. Kapoor was previously Investcorp’s CFO while Al-Shroogi was president of Investcorp’s Gulf business. Investcorp named Tony Robinson to replace Kapoor as CFO.

David Tayeh on Monday rejoined Investcorp from CVC Capital Partners. He will head Investcorp’s North American Corporate Investment business. Tayeh, before he joined CVC in 2011, spent 10 years at Investcorp where he was a member of the firm’s Corporate Investment team.

“We have a tight and dedicated team who are all excited about this new phase in Investcorp’s history,” said co-CEO Kapoor.

With offices in New York, London, Bahrain, Saudi Arabia and Abu Dhabi, Investcorp has three business areas: corporate investment in the U.S., Europe and the Gulf; real estate investments in the U.S.: and hedge funds. As of Dec. 31, Investcorp had $11 billion in total assets under management. Investcorp plans to grow all three business segments, Kapoor said.

Investcorp has remained active as high prices have kept other firms out of the M&A market. In July, Investcorp completed its buy of a majority stake in NDT Corrosion Control Services Co. The firm also acquired Nobel Learning Communities, Arvento and Fritta S.L. earlier this year.

No new funds

The firm’s goal over the next five to 10 years is to grow Investcorp’s three business segments as well as maximize its potential in the Gulf, Kapoor said. Investcorp plans to continue to be the “partner of choice” for family businesses there and has expanded its offices to include Riyadh, Abu Dhabi and Doha. “That’s our roots and where the bulk of our investor base is located,” Kapoor said.

Investcorp has been expected to raise another Middle Eastern buyout fund. Investcorp’s $1 billion Gulf Opportunity Fund was fully invested in 2013, Bloomberg News said at the time.

It also hasn’t raised a private equity fund since 2007 when Investcorp collected $750 million to invest in buyouts and middle market firms in North America and Europe. Performance data for either fund was unavailable.

“We are not in the process of preparing any new funds but are considering potential opportunities,” Kapoor said.

Investcorp currently operates on a deal-by-deal model, he said. The firm’s investors, which include large families in the Gulf, have “expressed a very clear preference for investing in investment opportunities in their line of site,” Kapoor said.

Once the firm finds an attractive investment opportunity, Investcorp performs due diligence and will acquire the target using its own balance sheet, he said. It then reaches out to its 1,000 LPs, which include many foreign investors, and provides them with the opportunity to co-invest. Sometimes the LP will say no but “more often than not we have a lot of repeat investors,” he said.

“This model allows flexible funding structures to be put in place that are adapted to meet the needs of each individual portfolio company,” Kapoor added.

Technology investing

Investcorp is considering whether to raise another technology-focused pool, Kapoor said.

The firm’s last tech fund collected $500 million in 2008. Investcorp Technology Partners III LP focused on late-stage, seasoned investments in tech companies. The firm has exited four of the fund’s nine deals from Fund III, Kapoor said. It returned to LPs roughly twice the capital they invested, he said. Tech Partners III is producing a 17.2 percent net IRR and a 1.8x investment multiple as of Dec. 31, performance data from the California Public Employees’ Retirement System said.

“The choice we have in front of us to decide is how we would want to go to market with [the] next iteration of tech funds. Whether it would be more a technology business services, growth capital kind of fund,” Kapoor said.

A fourth tech fund is currently just a possibility. Investcorp hasn’t determined a target or when it will begin fundraising for the pool, Kapoor said.

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