Investcorp buys 3i debt business, mulls healthcare fund

As well as doubling AUM through the 3i deal, the Bahrain-based firm is progressing sector-specific private equity initiatives in technology and healthcare.

Bahrain-listed private equity firm Investcorp has doubled its assets under management with the acquisition of 3i Group’s debt management business.

Investcorp this year embarked on an ambitious plan to grow its AUM from $11 billion to $25 billion over the next five years. With the addition of 3i’s debt management business – for which Investcorp is paying £222 million (€250 million; $271 million) – the firm’s AUM will grow to around $23 billion, Mohammed Al Ardhi, Investcorp’s executive chairman, told PEI on Tuesday.

The new business – which will retain its existing personnel of around 50 people – will sit as a separate business line alongside Investcorp’s three existing “pillars” of private equity, real estate and hedge funds. “We are buying the whole outfit because of the experienced professionals at the firm,” said Al Ardhi, adding that Investcorp will support the new business unit with capital and access to a new client base.

Simon Borrows, 3i’s chief executive, said that the debt management businesses – which was built around the 2011 acquisition of the team from Mizuho Corporate Bank – had produced “strong cash income” but that it “fits less well with the 3i of today as we focus on our growing infrastructure business and a proprietary capital approach in private equity.”

Investcorp, which earlier this year sold a 20 percent stake to Abu Dhabi-based investor Mubadala Development Company, has historically raised capital from high net worth individuals and families in both its home territory of the Middle East and elsewhere in the world. Al Ardhi told PEI earlier this year that part of the firm’s expansion plans involve growing its investor base among institutional investors.

As well as growing assets through acquisition, the firm is currently in market raising fresh private equity capital in the form of its first specialist technology fund, Investcorp Technology Partners IV. The fund was launched in May this year. The target size for the new fund is not known, but its predecessor was a $500 million vehicle raised in 2008, which is returning a net IRR of 18.4 percent and an investment multiple of 1.9x, according to an investor in the fund.

Investcorp is also understood to be considering raising a fund specifically to invest in healthcare businesses in the GCC, specifically in Saudi Arabia. Details of fund size are as yet unknown, but a fund launch is understood to be “imminent”.