Latest Gulf Delisting Ends Almost Four-Decade Era for Investcorp
(Bloomberg) -- Investcorp Holdings BSC, the Middle East’s biggest alternative asset manager, will delist from the Bahrain stock exchange after almost four decades in response to low trading volumes, the latest in a string of companies in the region to go back into private ownership.
The firm, which manages assets of more than $35 billion, got approval from investors to delist at a shareholder meeting in Bahrain Wednesday. Investcorp shareholders will have the option either to let the company buy back the stock or to remain as investors in a private entity.
“Looking at our future strategy and growth plans, Investcorp is better off for its shareholders as a private company,” co-Chief Executive Officer Hazem Ben-Gacem said in an interview. “That’s where we feel we can generate the best returns, and execute on our strategy without having to worry about quarterly results or certain other requirements of public markets.”
The company will continue to be headquartered in Manama, with the Central Bank of Bahrain as its primary regulator, Ben-Gacem said. “For now our focus is on executing our long-term plan as a private company, and there’s no plans to consider another public listing,” he said.
Investcorp is one of the biggest international financial firms in Bahrain, which used to be the Middle East’s financial center until the rise of Dubai as a business and banking hub in the late 1990s and early 2000s. Yet trading on Bahrain’s bourse has languished in recent years.
On some days less than a million shares change hands, and Investcorp’s stock was rarely traded at all. It was the the sixth-biggest member of the Bahrain Bourse All Share Index, with a weighting of 4.3%.
Sluggish trading, a slump in prices and liquidity, and a desire by companies to escape investor scrutiny have been driving delistings in Dubai. Emaar Properties PJSC said in March it will effectively delist one of its units for about two-thirds of its original public-offering price. Late last year, government-controlled Meraas Holding LLC proposed taking DXB Entertainments private at a 33% discount.
Investcorp’s decision to delist was “not an issue with the Bahrain stock exchange,” and was taken because the firm’s shareholder base “is not one that sees the public market listing as an important instrument,” said Ben-Gacem. Most of its investors are long-term holders, he said.
The delisting, which is still subject to regulatory approvals, is expected to be completed in the next month, Ben-Gacem said.
Founded by Nemir Kirdar in 1982, Investcorp’s shareholders include some of the Middle East’s wealthiest royals and business moguls.
Originally established to raise money from the Gulf and invest it in the U.S. and Europe, the firm has pivoted to become more global in the past few years. Investcorp recently opened its first office in Beijing as it pursues a plan of expanding in Asia.
Over the past 18 months the firm has invested about $500 million in Asia in technology, health care and consumer consumption, Ben-Gacem said. Investcorp is also currently raising a $1 billion North American private equity fund to do bigger buyouts there, people familiar with the matter told Bloomberg in March.
The money manager is already the Gulf’s largest private investor in U.S. real estate and has said it wants to boost its assets under management to $50 billion in the coming years. Abu Dhabi sovereign fund Mubadala Investment Co. in 2017 acquired a 20% stake in Investcorp, which has backed companies including Tiffany & Co. and Gucci Ltd.
Most of its private equity investments in the Middle East region have been focused on Saudi Arabia. Investcorp is planning to begin raising a $500 million Saudi investment fund later this year, Ben-Gacem said.
Four firms where Investcorp owned a stake have sold shares on the Saudi stock exchange in the past few years, most recently Theeb Rent a Car Co. in March. Since then its stock has risen almost 33%.
©2021 Bloomberg L.P.