MANAMA: A strong balance sheet, rather than an income statement, can save any financial institution from a crisis, a top executive at the world’s leading firm Investcorp said yesterday. Nemir Kirdar, company executive chairman and chief executive officer, was speaking on the sidelines of the annual general meeting of the firm, telling reporters that high-risk takers were likely to be wiped from the scene.
Citing an example of a weak balance sheet and how it impacts business, he said that in the recent global financial crisis, weak balance sheets were major reasons behind most of the troubled banks and financial institutions after the sub-prime mortgage crisis struck European and US institutions. “High profits are easy to make but building a strong balance sheet is an uphill task for any institution.
“That is our biggest achievement as Investcorp built the most robust balance sheet ever at the end of this fiscal year. We announced yet another robust financial-year results for 2008 as the firm yielded a record product placement by raising $4.7 billion from clients this year,” said Kirdar. “Total assets under management reached a record level of $17.7 billion. “At year end, client assets under management were $12.8 billion, more than double that of two years ago. These results are strong evidence that Investcorp is achieving its growth plans.
“In the current scenario,” Kirdar said, “those who took huge risks are likely to be wiped out and maybe some of them make money.” Investcorp which has had no exposure to the subprime crisis, attributed to its due diligence and understanding of the fundamentals of US and European markets, posted strong gains at end of this financial year with net income rising $151.1 million, the second best performance ever, albeit lower than fiscal 2007’s record.
“In private-equity buyouts, Investcorp deployed $438 million of equity across three new acquisitions: Randall-Reilly, Asiakastieto and CEME as well as one add-on acquisition, Anjac. Substantial progress was made by the new Gulf growth capital line of business. It has closed its first fund at more than $1 billion, double its original target, and has concluded its first deal.
“Investcorp had one of the best performing fund of hedge funds in 2007, with returns benefiting from tactical allocations to portfolio-protection strategies and to managers shorting subprime securities,” said Kirdar.
