Mumbai: Bahrain-based global alternate assets manager Investcorp will initially focus on growing the private equity and real estate lending practices of IDFC Alternatives platform that the firm is in the process of acquiring, a senior Investcorp executive said.
Mint reported in May that Investcorp was buying the private equity (PE) and real estate lending businesses of IDFC Alternatives Ltd. The sale is part of the restructuring of the IDFC Group, which also saw the sale of the infrastructure investment arm of IDFC Alternatives to US-based infrastructure investor Global Infrastructure Partners.
Investcorp expects to receive regulatory clearances for the deal by early 2019.
“The platform (IDFC) has deep-rooted experience around private equity and real estate. Within PE in particular, they have got capability around high growth consumption sectors, which we like a lot. And within real estate, they have done well on real estate backed lending. So, our first order of business is going to be to back those two groups in the areas where they have already demonstrated core competence and once we have optimized those, then we will get into adjacencies," Rishi Kapoor, co-chief executive officer, Investcorp told Mint on the sidelines of a business roadshow organized by the Bahrain Economic Development Board.
Investcorp currently manages around $22.5 billion of assets across asset classes such as private equity, real estate, special situations and credit. It has offices in New York, London, Bahrain, Abu Dhabi, Doha, Riyadh and Singapore.
Kapoor added that the firm will also look to start a corporate credit business in India eventually as he feels that is an adjacent line of business.
“The adjacencies are probably around corporate credit. They know how to evaluate corporates and they know credit through their real estate lending practice. So you bring the two together, particularly, given the huge demand supply gap in India. Being able to bridge that gap and being a sophisticated provider of credit, we think is the next natural adjacency for us," he said.
For Investcorp, entering the India market is part of its future strategic plan, wherein the alternate assets manager is looking to more than double its assets under management (AUM) to $50 billion.
“When we went through our strategy refresh around three years ago, we concluded that the three pillars of growth for Investcorp over the next 25 years will be—opening up new markets, broadening our footprint across the investor community globally and broadening our product menu," said Kapoor.
A key conclusion of the strategy review was that both India and China were markets that were not just attractive but both were markets where you needed local expertise, local connectivity and local experience, said Kapoor.
“We felt that to enter India the optimum route would be to find a platform that had the experience, performance track record, the network and connectivity, understanding of the local market. Three years ago when we wanted to start our credit business, we had acquired the credit business of 3i Group to enter the credit business as there also we had concluded that building the business from scratch is difficult," said Kapoor.
Investcorp’s assets under management (AUM) is currently skewed towards investments in US and Europe, with the two geographies comprising around 90% of all investments. Asia currently comprises a mere 4% of its AUM.
The firm expects that going ahead, Asia, on the back of India and China, will grow to comprise around 10% of the firm’s AUM.
“We are just in the early stages of developing our Asian investment footprint. As we progress on our own journey and as we look to achieve our milestone of $50 billion AUM over the medium term horizon, we see Asia as an important part of that journey, both in terms of investment activity and as well as tapping into the asian investor universe," said Kapoor.
Similarly, the firm also expects to raise more capital from Asia based investors going ahead, he added.