Investcorp sells 20% stake to Abu Dhabi sovereign fund

The sale comes as the Bahraini firm, led by Mohammed Mahfoodh Al Ardhi, embarks on its ambitious growth plan.

Abu Dhabi-based investor Mubadala Development Company is acquiring a 20 percent stake in Bahraini private equity firm Investcorp.

Mubadala will immediately acquire a 9.99 percent stake, with a further 10.01 percent to come following regulatory approvals.

In a statement, Investcorp said the move would strengthen its shareholder base, which includes institutional investors from the UAE, Bahrain and Qatar, as well as prominent individuals and family offices.

“Mubadala is one of the strongest and most respected investment companies in the GCC and globally, so today’s development is a significant milestone in the institutionalization of our shareholder base,” Investcorp executive chairman Mohammed Mahfoodh Al Ardhi said in the statement, adding that the investment validates the firm’s “vision for the future”.

Al Ardhi laid out this vision – which includes more than doubling its assets under management to $25 billion in the next five to seven years – last November, having taken over his current role in July as part of the firm’s succession plan.

In an exclusive interview with Private Equity International earlier this year, Al Ardhi said he is seeking growth across all business segments. The firm’s current $11 billion of AUM is split between $5 billion of hedge funds, $4 billion of private equity with the remainder in real estate.

In private equity, the firm, which invests on a deal-by-deal basis, plans to almost double the size of the equity cheques it writes from $150 million to $300 million. In real estate, it will move beyond the US to start investing in Europe, as well as start experimenting with club deals.

The firm typically acquires private equity assets and then asks its largely retail investor base if they wish to take a slice of the deal. It is also looking at undertaking more traditional co-investing and partner with institutional investors on a deal.

“It allows you to do bigger deals,” Al Ardhi said. “Instead of perhaps a retail guy who can [invest] anything from $250,000 to $10 million, this guy can put in $150 million.”

Investcorp is also looking to expand its investor base. “We also cannot ignore that there are institutions that maybe don’t have the time to look at deal-by-deal as the retail guys have time and flexibility. But we also find that even those big investors would like some kind of transparency rather than just the old blind fund pool, so we’re starting to think of how we can serve those people.”

In the statement today, Mubadala group CEO Khaldoon Khalifa Al Mubarak said that “from an investment perspective, the stable and long term value-creation mission of Investcorp makes it a logical addition to Mubadala’s diverse financial investment portfolio.”

Abu Dhabi is planning to merge Mubadala and International Petroleum Investment Co. – two of its largest sovereign funds – as part of a consolidation strategy following the slump in oil prices, according to Bloomberg.