Investcorp profits rise in year of acquisitions

28 January 1994

The Bahrain-based Investcorp reported a net profit of $67.3 million in 1993, up 7.3 per cent on the previous year. The main feature of 1993 was Investcorp's active pursuit of corporate acquisitions. The bank bought six major consumer ventures in the US and Europe, the largest number of acquisitions in a single year in its 11 years of operations.

'It was a record year for Investcorp; in 1993, we recorded our highest income. We will continue with the same philosophy of acquiring good companies with a niche market,' says Elias Hallack, co-chief operating officer and chief financial officer (MEED 19:2:93).

Investcorp's return on average shareholders' funds in 1993 was 19.3 per cent and return on average assets was 5.4 per cent. In the same year, assets grew by 17.4 per cent to $1,338 million. Total shareholders' funds grew by 15.4 per cent to $372.7 million.

The company completed three corporate acquisitions in the US in 1993. Investcorp closed the deal for Camelot Music, the US' third largest speciality music retailer in November. Earlier in the year, it acquired Circle K, the country's fourth largest chain of convenience stores, and American Blind & Wallpaper Factory, through Color Tile, a firm already owned by Investcorp.

In Europe, the company bought Thorn Lighting, a leading manufacturer of light fixtures. It also increased to 100 per cent from 50 per cent its ownership of the luxury goods company, Gucci, and acquired the remaining 50 per cent of Mondi, the German-based fashion group.

Investment and acquisitions in 1994 will remain focused on the US and West Europe, Hallack says. 'We have no intention of diversifying our focus,' he says. However, within this area, Investcorp will continue to look at a broad spectrum for acquisitions in the consumer sector.

In April, Investcorp entered into a three-year $330 million Eurodollar term facility. The loan, the largest in the company's history, is to be used as working capital. Thirty-eight international banks participated in the loan. Investcorp's total medium-term facilities are now $580 million.

The board of directors has recommended payment of a $15 million cash dividend. The company has maintained an annual dividend of 15 per cent of paid-up capital since it started operations.

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