MANAMA: Investcorp has reported a net loss of $165 million for the fiscal year ended June 30, 2020, (FY20) due to the Covid-19 crisis.
The Bahrain-based alternative investment manager yesterday announced financial results for the six months ended June 30, 2020 (H2 FY20) and for FY20.
Total shareholders’ equity (excluding non-controlling interest) as of June 30, 2020 was $867m, a 24 per cent decline compared to $1,145m as of June 30, 2019.
Total assets at the end of FY20 were $2,123m compared to $2,361m as of FY19, representing a 10pc decline.
The FY20 recommendation for distribution of preferred and ordinary dividends is $22m, with the proposed ordinary dividend being $0.10 per share versus $0.30 per share for FY19.
Financial and operational highlights:
The Covid-19 crisis, and its associated effects, impacted the firm’s profitability as fee income contracted to $288m for FY20, a decline of 23pc compared to $376m for FY19.
Despite reduced fee income, the increased reliance on and stability of recurring fee income helped to cover the firm’s operating expenses.
The sharp recession originating from the crisis also affected the firm’s asset-based income, resulting in a $110m loss reported for FY20, compared to a gain of $89m in FY19. The loss was largely attributable to fair value declines related to a limited number of assets operating in secularly challenged industries, mainly retail.
As of June 30, 2020, total equity was $867m and total accessible liquidity was in excess of $1.2 billion. Prudent capital and liquidity management have served the firm well during this unprecedented crisis allowing a focus on employees’ safety and business continuity.
Continuing diversification across geographies, clients and products translated into a broad-based increase in Assets Under Management (AUM) to $32.2bn, an increase of 14.6pc from $28.1bn in June 2019.
Various strategic transactions and initiatives were also completed during the period to further broaden the distribution platform, scale businesses and source investments from new growth areas.
Achieved significant levels of investment activity in FY20 of $3.1bn ($2.9bn in FY19), placement and fundraising of $4.9bn ($5.7bn in FY19) and distributions of $2.6bn ($4bn in FY19).
Even during the Q4 lockdown period the firm managed to raise $0.9bn through virtual roadshows and meetings with the closing of two fully subscribed funds in the credit management and absolute return investment businesses. Investment activity was also solid with two acquisitions in private equity and the pricing of one new CLO. Several exits in real estate and private equity were also realised in Q4FY20 at no discount to fair values.
The size of the balance sheet contracted by 10pc despite the impact of $100m from the adoption of IFRS 16 (new standard defining how companies must account for leases). Balance sheet contraction was partly due to lower valuations, but also as a result of lower underwriting and improved working capital management.
Net debt increased to $672m in FY20 from $499m in FY19 due to IFRS 16 adoption and completion of some strategic/corporate investments.
“The growth and diversification strategy we introduced in 2015 has helped increase our firm’s resilience during challenging periods by offering a stronger and more diverse, multi-asset class, global platform,” said executive chairman Mohammed Alardhi.
“The unprecedented global impact of the Covid-19 pandemic negatively affected our results. We continue to remain confident in our growth strategy, having entered this crisis and approaching our 2021 fiscal year in a position of strength with now $1.2bn in accessible liquidity and $32.2bn in AUM.”
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