JEDDAH, 17 March 2005 — Bahrain-based Investcorp said it would launch a three-week public offering this month as part of a series of measures to raise its share price.
Founded 20 years ago, Investcorp employs Arab funds for investments in European and US hedge funds, private equity, real estate properties and venture capital in start-up firms.
Chief Operating Officer Gary Long said that Investcorp would use its management fees over the last 12 months and shareholders balance sheet to reassess the share price, which he estimated was worth around $2,000 instead of the current $1,500.
Long said that this $2,000 fair value for Investcorp shares is based only on past performance for the last twelve months. It does not take into consideration the current capabilities and future expectations of this firm. “With our current infrastructure, competitive position and track record, I strongly believe that Investcorp is capable of targeting and delivering a much higher value to shareholders in the near to medium term. And, as each of our business lines performs to its full potential over time, the fair value should rise even further,” he said.
Bank officials said the first three-week public offering would start later this month, with offers to buy up to 1,000 shares and sell 16,000.
The new mechanism takes into account both the share book value and Investcorp’s franchise value.
“If you look at our share price, it is about the same as our notebook share value,” Long said.
Investcorp last traded in January. Brokers say the share had rarely been traded for almost two years before that.
“Our shares have been traded on the Bahrain Stock Exchange at around $1,500 for a couple of years despite the fact that our net income in the same period rose nearly 80 percent,” Long said, adding that lack of liquidity was due to shareholders’ “long commitment” to the stock.
“If somebody tries to buy shares on the Bahrain Stock Exchange, it is difficult for them to do so because most share holders are long-term committed shareholders,” he said.
The company has established a trading portfolio with brokerage firm Securities & Investment Company in which both strategic investors and Investcorp would put money “at risk” to buy and sell shares periodically.
Investcorp’s nominal share value at the time of its establishment in 1982 was $250. The bank reported a net profit of $90.1 million in the fiscal year which ended on June 30, 2004, a 20 percent increase over the previous year. Its total assets stood at $4.1 billion at the end of June.
Investcorp says 70 percent of its clients are wealthy individuals and families. The remaining 30 percent are institutions, with most of the funds coming from Saudi Arabia.