Plunging asset income cuts Investcorp Bank's full-year take in half

Investcorp Bank's full-year profits dropped by more than half as the European debt crisis and a slowing global economy took their toll on the company's earnings.

Net profits for the period that ended in June fell to US$67.4 million (Dh247.5m) from $140.3m a year earlier, the alternative asset manager based in Bahrain said yesterday. Asset-based income slipped to $31m from $216.2m in the previous period.

"Asset-based income was significantly down year on year due largely to the European crisis, accentuated by a slowing global economic environment," the firm said.

"Asset-based income was also affected by Investcorp's cautious view towards valuation of its corporate investments in light of high levels of market uncertainty, particularly in Europe." Investcorp's hedge-fund business showed a modest recovery in the second half of the financial year, to record a 1.2 per cent gain, it said.

Investcorp became known during the 1980s and 1990s for making eye-catching investments in the luxury retailers Tiffany and Gucci.

It invests mainly in buyouts, property and hedge funds in developed markets on behalf of Middle East clients.

Total assets at the end of June shrank to $2.7bn from $2.9bn in the previous fiscal year, it said. Liabilities in the full year declined from $1.8bn to $1.7bn, while the company's capital adequacy ratio rose to 26.9 per cent.

Investcorp had been striving to recover after a sharp fall in asset prices hurt its balance sheet during the financial crisis of 2008.

In June, the firm signed a $529m loan with Arabian Gulf and international banks to refinance debt due next year. The company proposed a dividend of $7.50 per ordinary share as well as a 12 per cent dividend on preference shares.

Last month, it bought a 30 per cent stake in the Turkish menswear retailer Orka Group and acquired paysafecard.com Wertkarten, an Austrian online-payments company, for €140m (Dh632.2m).