Investcorp Announces Agreement to Purchase 3i’s Debt Management Business Adding $12BN to its AUM

25 Oct 2016

Investcorp, a leading provider and manager of alternative investment products, today announced that it has agreed to acquire the debt management business of 3i (“3iDM”) from UK based 3i Group PLC (“3i”).  The proposed transaction, for a total consideration of £222 million (approximately $271 million), significantly enhances Investcorp’s global franchise as a multi-asset class alternative investment manager by adding $12 billion of assets under management, bringing the total to approximately $23 billion.  

The acquisition is a strategic move for Investcorp, which last year announced that it was targeting growing assets under management to $25 billion in the medium term, and will add to Investcorp’s existing menu of product offerings across private equity, real estate, and alternative investment solutions (formerly hedge funds).  The transaction is subject to various regulatory approvals and is expected to close in the first half of 2017.

3iDM is a leading global credit investment company managing funds which invest primarily in senior secured corporate debt issued by mid and large-cap corporates in Western Europe and the US.  The business has a strong track record of consistent performance and growth, employing approximately 50 people in London, New York and Singapore. The existing management team of 3iDM will remain intact, with Jeremy Ghose continuing as CEO of the overall business and John Fraser continuing to oversee the US operations.

Commenting on the proposed acquisition, Mohammed Al Ardhi, Executive Chairman of Investcorp, said, “This is a milestone deal which will bring together two complementary businesses and broadens product diversity for existing clients of both Investcorp and 3iDM while deepening the geographical reach of the enlarged business.  The combination brings with it some of the most talented credit investment professionals in the industry together with a large universe of private and institutional clients spanning Europe, Asia, the US and the Arabian Gulf.  We’re delighted to welcome the 3iDM team to Investcorp and look forward to growing the business further.”

Rishi Kapoor, Co-CEO of Investcorp, added, “This is an exciting moment for us – we see this as a value-added transaction for all sides which will be accretive for Investcorp from day one. Under 3i’s ownership, the 3iDM team has created a compelling alternative credit investment business which has seen assets under management more than double in the past five years.  We see this business as one of the central pillars of Investcorp’s product platform going forward and are absolutely committed to continuing to grow the business on multiple fronts including fundraising, product development and capital support.” 

Simon Borrows, Chief Executive of 3i, said, “The 3iDM business has had a strong run under 3i’s umbrella and Investcorp is a great home for the business going forward given its strong reputation as a global diversified alternative investment manager with a deep and loyal investor franchise. The combination provides 3iDM with access to new and incremental sources of capital through Investcorp’s client base in the Gulf and the US. The fit is excellent from a cultural, product and geographical perspective.”

The transaction is the largest ever strategic acquisition made by Investcorp. It will be fully funded through the Firm’s existing balance sheet, and will not require any incremental debt financing or equity capital given its current strong capital and liquidity position with a regulatory capital adequacy ratio in excess of 30 per cent and accessible liquidity of close to $1 billion at the end of June 2016.  The Firm will continue to maintain strong levels of liquidity and capital adequacy after the transaction, significantly above the regulatory requirements, giving it considerable flexibility to fund additional strategic acquisitions where appropriate.

Strategic progress

Since announcing its planned medium-term roadmap in November 2015, Investcorp has announced several significant strategic moves.  This includes the acquisition of Hedge Fund of Funds arm of SSARIS Advisors, LLC, a US investment manager of absolute return hedge fund strategies and hedge fund of funds strategies.   In July 2016 it announced the further strengthening of its shareholder base with the agreement by Abu Dhabi based Mubadala Development Company to acquire a 20% ownership stake, alongside Investcorp’s stable of other blue-chip shareholders comprising major institutional investors from Bahrain and Qatar as well as prominent individuals and family offices from across the GCC.

In March 2016 Investcorp broadened its real estate offering with the appointment of Neil Hasson to lead the Firm’s European real estate investment activities.  Investcorp is one of the biggest and most active foreign investors in US real estate, managing approximately $1.8 billion of assets.  

GreensLedge, Gibson, Dunn & Crutcher, Dechert and PwC have advised Investcorp on the acquisition.

Fact Sheets:

– Arabic Fact Sheet.

– English Fact Sheet.