UPDATE 1-Investcorp eyes extended growth after profit leap

Sun Feb 2, 2014 7:50am EST

* Expects 15-20 percent annual profit growth over five years

* Sees high demand for hedge funds, U.S. real estate

* Fully invested its $1 bln Gulf Opportunity Fund

* Considering at least two investments in the Gulf

By Mirna Sleiman

DUBAI, Feb 2 (Reuters) - Bahrain-based investment company Investcorp expects 15-20 percent annual growth over the next five years, its chief financial officer said on Sunday after reporting a 53 percent increase in first-half net profit.

Investcorp, which famously took luxury brands Gucci and Tiffany & Co public in the 1990s, made a net profit of $60.1 million in the six months to Dec. 31, against $39.2 million in the same period a year earlier.

"This is a good result in the short term and in sync with our five-year plan," CFO Rishi Kapoor told reporters in Dubai. "Our growth expectations are around 15 to 20 percent a year."

Fee income for the period rose 24 percent to $74.3 million, driven by strong transaction activity and higher demand for alternative investments such as hedge funds.

Investcorp, which had $11.3 billion in assets under management at Dec. 31, has received increasing interest from institutional investors in hedge funds and a strong appetite for acquisitions in the United States, mainly in the real estate sector.

Investcorp, which has offices in Bahrain, Saudi Arabia and Abu Dhabi, has fully invested its $1 billion Gulf Opportunity Fund but no new funds are imminent, Kapoor said.

"We remain opportunistic and ready to raise funds on a deal-by-deal basis. We are working on at least two opportunities in the Gulf region right now," he said.

SECTOR SHIFT

Investcorp is examining possible deals in consumer-focused sectors such as retail, healthcare and education.

The company last month acquired a significant minority stake in Namet, a Turkish supplier of processed red meat to the retail, hotel, restaurant and catering sectors.

That followed the purchase of a 25 percent stake in Saudi Arabian sports and fitness business Leejam Sports Co.

Its technology portfolio, meanwhile, has shrunk over the past year with the New York listing of Fleetmatics and agreements to sell its stakes in British technology firm TDX Group and online payments company Skrill Group.

Sources have said that Investcorp is among three remaining candidates vying to buy a 20 percent stake in Italian luxury goods group Versace, which is selling the stake ahead of a possible listing to fund its internationl expansion and development of new ranges.

Kapoor declined to confirm or deny that Investcorp had bid for the Versace stake.

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