Investcorp’s net profits hit a new record in 1996, rising by 29 per cent to $90.4 million with the help of income from the sale of its remaining shareholding in Gucci Group and divestments of two other corporate investments. On 10 February, the bank bought the Welcome Break chain of motorway service stations in the UK from the UK’s Granada for £473 million ($758 million).
According to headline figures released by the bank, at the end of 1996 its total assets were $1,700 million, little changed from the year before. Shareholders’ equity reached $516.1 million at the end of 1996 from $458.8 million the year before. Return on average equity rose to 18.5 per cent from 16.2 per cent. The bank’s board is recommending a dividend of $30 million, up 100 per cent from last year.
Investcorp and its clients completed the sale of luxury goods firm Gucci Group through public offerings in October 1995 and March 1996, for a total of just under $2,000 million. Analysts estimate that Investcorp paid about $300 million for Gucci and put another $50 million in capital into the company. During 1996, Investcorp also sold US shop chain Circle K to Tosco Corporation, a US oil refiner, for more than $900 million in cash and Tosco stock. The bank says it sold its remaining interest in UK firm Computacenter, but did not give a value for the transaction. Investcorp also launched two initial public offerings in 1996, for Saks Fifth Avenue and Prime Equipment.
Welcome Break has 21 service stations on British motorways and Investcorp board director Richard Warner says the price was a good one for ‘an undervalued brand and asset’ and added that Investcorp would put about $50 million into the company to improve it.
Investcorp is based in Bahrain, with offices in London and New York. It specialises in acquiring under-performing companies in the US and Europe and restructuring them for resale after a few years. Investcorp is traded in Bahrain, and Gulf Arab investors and Investcorp’s employees own most of the bank’s shares.