International Agencies Reaffirm Investcorp’s Investment Grade Rating

VOL. XLV

No 27

8-July-2002

BAHRAIN

International Agencies Reaffirm Investcorp’s Investment Grade Rating

Three of the major international rating agencies have reaffirmed Investcorp’s investment grade ratings with stable outlooks, the company announced on 30 June. These ratings reflect the Baharain-based global investment group’s solid investment track record, demonstrated ability in placing investments, solid balance sheet supported by a strong capital base, moderate leverage and high liquidity. Moody’s Investors Service confirmed Investcorp’s Baa2 rating, Fitch Ratings confirmed a BBB rating and Capital Intelligence confirmed a BBB+ rating, all three with a ‘stable’ outlook. Moody’s 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.”

Fitch said: “Investcorp’s Rating Outlook has been changed to Stable …. 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…Its assets under management in hedge funds have improved fee-based revenues which assists in counterbalancing expected volatility in the private equity business.” 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.”

Investcorp has four lines of business – corporate investment, real estate investment, asset management and technology investment. It was established in 1982 and has since completed transactions with an aggregate value of approximately $20bn. It announced last month that it had bought a 70% stake in a high-rise office property in Chicago for $180mn (MEES, 24 June 2002).

The company continues to diversify and lengthen the maturities of its liabilities, recently agreeing another 30-year private placement for $50mn. With the existing 30-year ¥35bn ($325mn) facilities signed with a Japanese institution, this brings Investcorp’s total very long-term funding to approximately $375mn. As a result of these and other long-term financing initiatives, the average maturity of the company’s liabilities now exceeds 73 months and provides additional strength to its balance sheet. Investcorp noted that its securitization of $250mn of a fund of funds was the first market value collateralized fund obligation and one of the first public issues of this type.