Investcorp to float

Investcorp will float $400 million (€312 million) of shares on the London Stock Exchange, ahead of changes to listing rules intended to ease the flotation of funds.

Investcorp, a Gulf-focused investment group, plans to sell $400 million of shares and list on the London Stock Exchange, following a prospectus published today.

Investcorp: Gulf-focused

Citigroup and Credit Suisse are acting as joint global coordinators and joint bookrunners to the firm, which is already quoted in Bahrain.  JP Morgan is the sole co-lead manager while Global Investment House is the sole co-manager

Nemir Kirdar, Investcorp’s founder, president and chief executive officer, said: “This offering and our global depositary receipts listing on London’s main market will help us scale our platform to capture the accelerating growth in alternative investments in the Gulf, while also further enhancing our international presence through improved brand awareness.”

Investcorp’s business model is similar to a traditional merchant banking business, in that it underwrites investments from its parent balance sheet.  It also invests in real estate and venture capital deals. Most of the equity is later placed with a small band of investors, for which Investcorp charges fees.

The Bahrain firm is the latest private equity group to tap public markets, though recent activity has focused on floating funds rather than the management company. Apollo Management listed AP Alternative Assets on the Euronext Amsterdam exchange this month.  Kohlberg Kravis Roberts recently listed a similar vehicle on the same exchange that drew $5 billion in capital.

The Financial Services Authority, the UK regulator, is due to issue a final consultation paper by the end of year, which will outline the measures needed to make it possible to list funds on the London Stock Exchange.
Investcorp is the first private equity firm to launch an offer for shares in its management company on the London exchange since 3i, formerly a UK government investment agency, floated  in 1994.

SVG Capital, a fund of funds investor and a large backer of Permira, floated in 1996. Other managers, including HgCapital and Candover, run investment trusts offering access to their funds.

Baroness Hogg, chairman of 3i, said at the group’s interim results presentation this month: “As the only private equity business in the FTSE 100, and indeed one of only a few companies of any size offering quoted access to private equity returns, we have watched the listing of other private equity vehicles with interest.  These moves, we believe, will help to raise awareness of the benefits of investing in private equity.”

Investcorp was founded in 1982 and has been listed on the Bahrain Stock Exchange since June 1989. 

Investcorp will expand its existing product lines in 2007 with a private equity fund targeted at North American and European institutional investors, and a real estate fund dedicated to mezzanine investments.

The company has $9.8 billion in assets under management, of which $3.1 billion were co-investments from Investcorp’s own balance sheet.

Last year revenues were $560.1 million, an increase of 22 percent over the previous year.