Moodyâs Investors Service confirmed Investcorpâs Baa2 rating, Fitch Ratings confirmed a BBB rating and Capital Intelligence confirmed a BBB+ rating, all three with a âstableâ outlook qualifier.
In its report, Moodyâs said: "The ratings are a reflection of an institution with a strong and improving franchise in the Gulf, high quality management, a track record of good profitability, high liquidity and strong ability to manage risk."
In its report, Fitch said: "Investcorpâs Rating Outlook has been changed to Stable â¦. reflecting its generally favorable track record as one of the leading private equity investors operating in the US and Europe, demonstrated skills in placing investments with Arabian Gulf investors, moderate leverage targets, and access to liquidity. â¦â¦.Its assets under management in hedge funds have improved fee-based revenues which assists in counterbalancing expected volatility in the private equity business."
In its report, Capital Intelligence said: "Investcorp maintains a very solid capital base and good liquidity profile. Recurring income streams, particularly from asset management, continue to perform well to date. These factors will support the Bank during this challenging period."
Nemir A. Kirdar, Investcorpâs President and Chief Executive Officer, said: "We are very pleased that, having examined Investcorp with their usual scrutiny, the international ratings agencies have re-affirmed our investment grade status. This is concrete evidence that they have recognized the robustness of our business model and our ability to perform and achieve positive results, particularly in the face of difficult market conditions.
"I remain confident that Investcorp is well positioned for growth as we move through 2002."
Investcorp has shown a strong start to the year. The Firmâs securitisation of $250 million of fund of hedge funds, The Diversified Strategies CFO, was the first market value collateralized fund obligation (CFO) and one of the first public issues of this type anywhere. Overall, the Investcorp asset management program has continued to perform well. Over the medium-term, the programâs risk-adjusted returns place it firmly in the top quartile of similar funds-of-hedge-funds.
The real estate line of business has been active taking advantage of the adjustment of urban property pricing in the United States to acquire a number of properties. In April, the real estate team completed an investment in two prestigious office properties in New York City, Metropolitan Tower and 150 Fifth Avenue, and in May completed the acquisition of a 70% interest in an office property, 233 North Michigan Avenue, in downtown Chicago, Illinois.Two real estate portfolios have been placed with clients.
The corporate investment line of business has also been active, with a substantial pipeline of potential acquisitions under consideration on both sides of the Atlantic. In May, Investcorp reached an agreement with the Board of Directors of a public company in the US to acquire the company in a going-private transaction. This investment is in a strong, established business, in line with Investcorp's traditional focus.
Investcorp continues to diversify and lengthen the maturities of its liabilities, recently agreeing another 30-year private placement for $50m. With the existing 30-year Â¥35 billion ($US 325 million) facilities signed with a Japanese institution, this brings Investcorpâs total very long-term funding to approximately $375 million. As a result of these and other long-term financing initiatives, the average maturity of the Investcorpâs liabilities now exceeds 73 months and provides additional strength to Investcorpâs balance sheet. It also underlines the confidence felt in the Firm by the international financial community.
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