The Review - May 2014

The Investcorp Newsletter
Investcorp
acquires Totes
Plus:
Investors Conference - Berlin 2014
Distinguished speakers and guests attend
Corporate Investments
Investcorp acquire Totes and Namet
Real Estate
New Portfolio in Dallas and South Florida
Abu Dhabi office opening
New Investcorp office opens in Abu Dhabi
Guest Feature
Eurozone recovery by Lord Mark Malloch-Brown
The Review | May 2014
2
Welcome
D
uring the course of 2014, we are
seeing improved confidence from
our clients, our investors and our
investee companies. In conversations
across the region, from Turkey to Saudi
Arabia and everywhere in between,
people are telling us that a broadly
improving macro environment, the return
of growth and a clear turnaround in
consumer, corporate and investor
confidence have contributed to a shift
towards risk-on mode once more.
As we enter our fourth decade as a firm,
we are honoured to have been trusted
with the responsibility of preserving and
growing our clients’ wealth throughout
the cycle. The relationships we have built
over the years are, at its core, based on
trust and consistent delivery - whether we
are talking about an individual, a family
office, a business or a Government entity.
If there is one thing that stands out as an
ingredient for success, it is the ability to
listen to our clients, and to understand
what they want and how to deliver it.
To that end, we continue to deliver on
our promise to get even closer to our
clients. We have invested in our
relationship teams to ensure that
whenever we are needed we can be there.
We are delighted with the results as our
clients regularly tell us that they are
seeing the benefit of being able to spend
more time with us, more often, at a time
that is convenient to them.
We aim to continue strengthening our
Gulf relationships and network,
generation to generation, and with the
objective of delivering strong optimal
returns to our clients. This is in our DNA
and what excites us most.
Mohammed Al-Shroogi
President, Gulf Business
Contents
Guest Feature
Page 9
New Abu Dhabi office
Page 12-13
Eurozone Recovery,
by Lord Mark Malloch-Brown.
New office opens in the prestigious
Sowwah Square.
Investors conference
Page 10-11
Bankers receptions
Page 14
Berlin Investors conference
featuring distinguished
speakers and guests.
Investcorp hosts Bankers receptions
in Abu Dhabi and Riyadh.
Corporate Investments
Pages 4-8
A leading international wet
and cold weather brand and a
Turkish meat producer are
among our latest acquisitions.
Real Estate Page 8
Acquisitions in Dallas,
and South Florida.
UN visit and New Joiners
Page 15
Investcorp welcomes Franklyn
Chang and David Walsh.
The Review | May 2014
3
Letter from Nemir A. Kirdar
Growth
of our global franchise
W
elcome, once again, to
The Review. I would like
to start with a recap on an
exceptionally busy period for our firm as
we continue our growth as a successful
global franchise.
On this theme, we recently hosted our
International Investors’ Conference
in Berlin for investors and select
guests. These included senior political,
government, business and media leaders
with a key address from His Excellency
Amre Moussa, the former SecretaryGeneral of the Arab League.
Also present were members of our
European Advisory Board including
His Excellency Kofi Annan, former
Secretary-General of the United
Nations; Dr Ana Palacio, the former
Foreign Affairs Minister of Spain; and
His Excellency Wolfgang Schüssel, the
former Chancellor of Austria. During
the conference, our European Advisory
Board members shared their views on
the critical issues affecting European
and global economies. Later, at our
gala dinner, we were honoured with
the presence of Bundesminister Sigmar
Gabriel, MdB, Vice Chancellor of
Germany and Federal Minister of the
Economy and Energy Affairs.
Our management team addressed this
distinguished audience with a series of
insightful presentations which showcased
the strength of our firm as a ‘smoothrunning’, worldwide business and one of
which we can all be very proud.
The success of this conference and the
positive press coverage it generated
highlighted once again our commitment
to acting not only as a bridge between
the Gulf and investment opportunities
in the West, but also as a facilitator for
wider business and economic discussions
on matters affecting our investors and
shareholders.
In terms of our financial performance,
the business excelled in the first half
of the 2014 financial year with a
53% increase in net income. This
was driven by successful fundraising,
exits and deal activity in Europe,
the US and the MENA region with
investments in companies that included
Leejam Sports Company and Al Yusr
Industrial Contracting Company in
Saudi Arabia. To date, Investcorp and
Investors received over US$ 1 billion in
proceeds from investment realizations
and distributions. The second half of
the financial year began well with an
investment in Turkey and the sale of
TDX Group for approximately US$ 327
million.
Building on this success and as part of
our on-going Gulf expansion strategy to
be even closer to our clients, we formally
opened our new representative office
in Abu Dhabi in April 2014. This is
located in the heart of the world’s newest
financial centre and we were honoured
that His Highness Sheikh Nahyan
Bin Mubarak Al Nahyan, Minister of
Culture, Youth and Social Development,
was able to perform the opening
ceremony. His Highness’ involvement
underlines our close relationship with the
Emirate of Abu Dhabi over many years
and our strong commitment to our loyal
investors across the UAE and the wider
Gulf. Continuing investment in our Gulf
expansion strategy will consolidate our
reputation for excellent client service.
To conclude, I would like to thank
the entire Investcorp family for their
contribution, recognising that we owe our
success to their talent, their expertise and
their on-going commitment to making
our business a true industry leader.
We believe we are uniquely positioned
for steady and sustained growth in the
years ahead.
Thank you all.
Nemir A. Kirdar
Executive Chairman and CEO
The Review | May 2014
4
Corporate Investment
Acquisition of
totes»Isotoner
Corporation
In April, Investcorp and
Freeman Spogli & Co.,
announced an agreement
to acquire totes»Isotoner
Corporation, the world’s
leading designer, marketer
and distributor of functional
accessories in the rain,
cold weather and footwear
categories.
The Review | May 2014
5
Corporate Investments
F
ounded in 1923 and headquartered
in Cincinnati, Ohio, the totes
and Isotoner brands are among
the most recognizable and trusted rain
and cold weather accessory brands in
the U.S. and Europe. Within the multibillion dollar functional accessories
category, totes»Isotoner enjoys a market
leadership position in all of its served
markets. The Company has a broad and
diverse distribution footprint, enabling it
to partner with marquee retail customers
to sell its products across a variety of
channels. The Company has a significant
international presence, selling its products
throughout Europe with an emerging
business in Asia.
Mohammed Al-Shroogi, President for
Gulf Business at Investcorp commented:
“We are excited about acquiring a globally
recognized brand which is a leader within
a growing functional accessories market.
We look forward to working closely with
the totes’s management team as they seek
to grow through further international
expansion and the introduction of new,
high-quality products.”
The Review | May 2014
6
Corporate Investments
Investcorp acquires
Namet
The Review | May 2014
7
Corporate Investments
Investcorp and other related Investcorp entities
acquired a significant minority stake in Namet
Gida Sanayi ve Ticareti A.S. in January 2014.
N
amet is the leading Turkish
producer of fresh cut and
packaged processed red meat
products such as soujouk, pastrami, salami,
sausages, smoked meats and frozen and
ready to eat burgers. The Company sells
its products to retailers as well as hotels,
restaurants and catering companies. All of
its products are certified Halal.
Namet has invested extensively in the
past few years to expand its production
capacity and improve the quality of its
products, including the investment in
2010 in a state of the art meat processing
facility located in Istanbul, and the recent
acquisition of a second production facility
located in Antalya.
Namet is Investcorp’s fourth investment
in Turkey to date and, post the acquisition
of Tyrrells, represents its second global
investment in the defensive yet high
growth branded food sector in the last
12 months.
Commenting on the acquisition, Tarik
Kayar, Chairman and CEO of Namet,
said: “We have invested heavily in the
Company in the past few years and
became the #1 vertically integrated
meat business in Turkey. We believe we
are well positioned for steady expansion
underpinned by solid market demand.
This investment demonstrates confidence
in the future prospects of our Company
and our country and we look forward in
partnering with Investcorp.”
Mohammed Al-Shroogi, Investcorp’s
President, Gulf Business, commented:
“We are delighted to be partnering with
another successful family business, which
has a rich heritage in Turkey for providing
quality food products. Investcorp will work
closely with the team and together we
will seek to continue to grow the business
domestically as well as assess potential
revenue opportunities beyond Turkey.”
Meetings with Portfolio Companies in Turkey
Investcorp hosted a dinner in Istanbul
on 28 April 2014 at the Ciragan Palace
bringing together family owners in
Investcorp’s three portfolio companies in
Turkey.
Participants included members of
the Tirykioglu family (Tiryaki Agro),
including Tiryaki’s board member
Mehmet Tiryakioglu, chairman Ahmed
Tiryakioglu and CEO Suleyman
Tiryakioglu; members of the Orakcioglu
family (Orka group) including Orka’s
chairman and CEO Suleyman Orakcioglu
and board member Halidun Orakcioglu;
members of the Kayar family (Namet),
including Namet’s chairman and CEO
Tarik Kayar, Group President Haluk
Kayar and vice chairman Faruk Kayar
as well as Mohammed Al-Shroogi, Jim
Tanner, Tristan de Boysson, Ceyhun Eren
and Murat Tasci from CI-MENA.
The dinner was followed by meetings at
the headquarters of the three companies
in Istanbul.
Dinner at the Ciragan palace with Mohammed Al-Shroogi and members of the
Tiryakioglu (Tiryaki Agro), Orakcioglu (Orka) and Kayar (Namet) families”
The Review | May 2014
8
Corporate Investments
Agreed sale of TDX to Equifax Inc.
for £200 million
TDX is the United Kingdom’s largest debt
placement services and debt management
platform company.
Through its technology fund, Investcorp
Technology Partners III, Investcorp
acquired a substantial minority stake in
TDX in 2008, becoming the largest and
only institutional shareholder alongside
TDX’s three founders.
Gilbert Kamieniecky, Principal at
Investcorp, said: “With our support,
TDX has been able to realise its potential
and has evolved from being a UKfocused operation to one with a growing
international footprint. The fact that the
company has attracted the interest of a
strong trade buyer in Equifax is testament
to the quality of solutions and services
TDX offers to its clients in recovering
delinquent debt.”
The transaction is Investcorp’s third
successful exit of its technology portfolio
in 12 months following its agreement to
sell the Skrill Group, one of Europe’s
largest online payment systems, to CVC
Capital and the flotation of Fleetmatics,
the Irish-based leading global provider
of fleet management solutions for
commercial fleet vehicles, on the
New York Stock Exchange.
In January 2014, Investcorp
agreed the sale of TDX to
Equifax Inc., (NYSE:EFX),
a global information
solutions provider, for
£200 million (approximately
US$ 327 million).
Real Estate
Acquisitions in Dallas
and South Florida
In May, Investcorp acquired a portfolio
of commercial and residential properties
in Dallas, Texas and South Florida
for approximately $105 million. The
properties have an average occupancy
rate of 95 percent and consist of over
500,000 sq. ft and reflect Investcorp’s
focus on targeting high quality assets
with attractive yields.
They include:-
One Allen Center, Allen, Texas which
is adjacent to a 1.5 million square foot
open air retail centre and near one of
the largest school systems in the area.
San Remo, Coral Springs, Florida which
is situated in a strong school district,
less than three miles away from major
retail centers and in close proximity to
significant employment centers in South
Florida.
2811 McKinney Avenue - Dallas, Texas
3400 Carlisle Street - Dallas, Texas
The Uptown Office Portfolio (3400
Carlisle Street & 2811 McKinney
Avenue), Dallas, Texas which enjoys
close proximity to some of the most
affluent residential neighborhoods in the
state of Texas in addition to excellent
transportation outlets.
San Remo, South Florida
The Review | May 2014
One Allen Center - Allen, Texas
9
Guest Feature
Eurozone recovery
and a number of large Europe-only
property funds have recently been raised
in record time.
It looks like Europe’s manufacturers
may be leading the way with the Markit
survey showing very strong expansion by
Eurozone metals manufacturers – their
index reads 58.3, where above 50 implies
growth, well above the 16 year average.
Some European banks also now look very
compelling with the Eurostoxx banks
index having steadily climbed in since the
beginning of the year.
Lord Mark Malloch-Brown
FTI Chairman for Europe Middle East and Africa
Figures from a recent
business survey produced
by Markit imply further
acceleration which could
lead to a fairly respectable
annualized growth rate
of 1-2%.
I
t looks like Europe’s recovery may
be gaining momentum. Output
grew by 0.3% in the fourth quarter
of 2013, up from 0.1% in the quarter
before. Hardly explosive growth but a
lot better than the six quarters of decline
that preceded it. Figures from a recent
business survey produced by Markit imply
further acceleration which could lead to a
fairly respectable annualized growth rate
of 1-2%.
Investors are noticing and the sovereign
debt crisis now seems well behind us.
Portuguese 10-year bond yields fell
below 4% for the first time in four
years recently, a far cry from the 17.4%
reached at the peak of the crisis. Even
last summer, yields were as high as 7.5%
driven by a political crisis. Spanish and
Italian 10-year bonds are also trading
well below 4%. Even the equivalent
Greek bond yields have halved since
a year ago and the Greek government
recently announced that it plans to return
to markets by selling €2 billion of bonds.
This easing of pressure creates a virtuous
circle. Falls in yields correspond to rises
in bond prices improving bank balance
sheets and solvency, which in turn
improves government credit quality
leading to further falls in yields.
But this process is not necessarily entirely
driven by a golden view of Europe’s
future. Much of it might simply be a
reallocation of capital from emerging
markets to developed markets by investors
spooked by the crisis in the Crimea as
well as the wider risk of emerging market
capital flight provoked by the QE taper.
While emerging markets equities funds
have experienced heavy capital outflows,
according to EPFR Global, since the
beginning of 2014 over $20 billion has
flowed into European credit funds.
Yet these flows are probably not like for
like and it is undeniable that the past few
months have seen a change in sentiment
on Europe, independent of any global
capital flows.
Indeed this incipient recovery, together
with some remaining crisis-level asset
values, has spurred interest from bargain
hunter investors. Deals in the Spanish,
Portuguese, Italian and Greek real estate
markets doubled from a year earlier to
€3 billion in the fourth quarter of 2013
But there is not yet a sustained stampede
rather these are straws in the wind. In the
meantime, the structural problem of a
two speed Eurozone remains unsolved.
Europe’s better than expected growth in
the fourth quarter of 2013 was largely
driven by Germany and France’s 0.4%
and 0.3% growth, which make up half of
the bloc’s GDP, as well as even stronger
figures from countries like the UK and
Sweden. Output continued to shrink
from Cyprus in the south to Finland in
the north.
So there are opportunities out there
but skill will be required to navigate
them. A particular challenge will be the
ECB’s upcoming Asset Quality Review,
a probe of €3.7 trillion worth of bank
assets intended to ensure riskier assets
are valued properly and that banks
are adequately capitalised. As ever,
determining where the duff loans are
and which banks are holdings them will
foretell which countries and sectors may
prosper in the coming European recovery.
Mark Malloch-Brown served as a Minister
in Prime Minister Gordon Brown’s cabinet,
where he had particular responsibility for
strengthening relationships with Africa
and Asia.
He has also served as Deputy Secretary
General and Chief of Staff of the United
Nations under Kofi Annan and, for six
years prior, as Administrator of the UN
Development Programme, where he led UN
development efforts around the world.
The Review | May 2014
10
Investors conference - Berlin 2014
International Investors
conference in Berlin
The Investcorp European Advisory Board and His Excellency Amre Moussa
The Investors conference
invited critical discussions
on several geopolitical and
economic insights from
the Gulf, Europe and the
United States.
Dinner at Bärensaal
The Review | May 2014
Conference and the Adlon Hotel
11
Investors conference - Berlin 2014
Amre Moussa
I
n March 2014, Investcorp organized
and hosted its International Investors
conference in Berlin which included
addresses from distinguished speakers
including His Excellency Amre Moussa,
the former Secretary-General of the Arab
League, and Dr. Tamara Cofman Wittes,
Director of the Saban Center for Middle
East Policy at the Brookings Institution
and former Deputy Assistant Secretary for
Near Eastern Affairs at the United States
Department of State.
Members of Investcorp’s European
Advisory Board, including His Excellency
Kofi Annan, former Secretary-General of
the United Nations, Dr. Ana Palacio, the
former Foreign Affairs Minister of Spain
and His Excellency Wolfgang Schüssel, the
former Chancellor of Austria, discussed
the critical issues impacting European and
global economies.
Bundesminister Sigmar Gabriel, MdB,
Vice Chancellor of Germany and Federal
Minister of the Economy and Energy
Affairs also attended the Gala dinner
From left to right: His Excellency Wolfgang Schüssel, His Excellency
Kofi Annan, Dr. Otto Schily, Mr. Pierre Keller and Dr. Ana Palacio
hosted at the Deutsches Historisches
Museum.
The Investors conference invited critical
discussions on several geopolitical and
economic insights from the Gulf, Europe
and the United States. Speakers and guests
shared opinion and thought on the most
pressing issues that are affecting the global
economy and businesses.
Nemir Kirdar, commented: “Hosting
this conference in Berlin demonstrates
Investcorp’s continued commitment to
acting not only as a bridge to investment
opportunities between the Gulf and
the West, but also promoting better
understanding on critical issues influencing
the world and maintaining an open
dialogue with investors and shareholders.
The presence of so many of Investcorp’s
long-standing investors, esteemed thoughtleaders and politicians, demonstrates
the continued success of Investcorp’s
global franchise and its reputation as a
highly respected pioneer in alternative
investments.”
Nemir Kirdar
Mohammed Al-Shroogi
The Review | May 2014
12
New Abu Dhabi office
Abu Dhabi
office opening
The Review | May 2014
13
New Abu Dhabi office
On 22nd April, Investcorp formally opened its
new representative office in Abu Dhabi located
in the prestigious Central Business district.
H
is Excellency Sheikh Nahayan
Mabarak Al-Nahayan,
Minister of Culture, Youth
and Community Development officially
inaugurated the new office which is
headed by Mr. Mohamed Sammakia.
His Excellency Sheikh Nahayan Mabarak
Al-Nahayan and Nemir Kirdar, Investcorp’s
Executive Chairman and Chief Executive Officer
Nemir Kirdar, Investcorp’s Executive
Chairman and Chief Executive Officer,
welcomed His Excellency Sheikh Nahyan
to the new office and thanked him for
honoring the firm. He also welcomed H.E.
Abdulrahman Salim Al-Ateeqi, Chairman
of the Board and the Board members of
Investcorp as well as distinguished guests
from the government, business and media
communities and said:
“We are honored to have the support
of H.E. Sheikh Nahyan, who has made
tremendous contributions to Abu Dhabi’s
business community and Vision 2030.
Our new office, in the heart of the world’s
newest financial centre on Sowwah
Square, reinforces our close relationship
with the Emirate over many years and our
total commitment to our loyal investors
across the wider UAE. As a business,
we will ensure our clients receive a ‘best
in class’ service both regionally and
internationally as we continue to strive to
do what we do best - deliver strong optimal
and well balanced investment returns.”
Investcorp Board Members and Coordinators Committee Members
The Review | May 2014
14
Bankers receptions
Bankers receptions I
in Abu Dhabi
and Riyadh
nvestcorp recently hosted a reception
evening at both its Abu Dhabi and
Riyadh offices for key representatives
of leading international and local banks.
Invited guests had the opportunity to
speak to Investcorp’s management team
and share views on the region’s business
and economic drivers. Both evenings
concluded with a tour of Investcorp’s
offices.
Rishi Kapoor, Chief Financial Officer welcoming guests in Abu Dhabi office
Mohammed Al-Shroogi, President Gulf business and Jonathan Minor,
Head of Financial Management welcoming guests in Riyadh office
Mohamed Sammakia, CEO United Arab Emirates (center)
with guests in Abu Dhabi
Timothy Mattar, Managing Director and Head of Saudi team
with guests in Riyadh office
The Review | May 2014
15
UN visit
United Nations Pension
Fund Board meeting in
New York
D
uring February 2014, Investcorp
hosted a meeting of the United
Nations Pension Fund Board of
Directors at its New York headquarters.
UN Secretary-General Ban Ki-moon also
visited the Investcorp offices and joined
the members of the Board for lunch.
He was welcomed by Investcorp’s
Executive Chairman and CEO, Nemir
Kirdar, who himself serves on the Pension
Fund Board and is one of nine members
of the UN Investments Committee.
Nemir Kirdar commented: “It has been
an honor to serve on the UN Pension
Fund Board and the Investments
Committee for the past eight years and
a privilege for Investcorp to host the
meeting of the Pension Fund Board.
We were delighted to welcome SecretaryGeneral Ban Ki-moon to our New York
headquarters and we look forward to
continuing our good relationship with
the UN.”
Nemir Kirdar welcomes UN Secretary General Ban Ki-moon to Investcorp’s New York headquarters
New Joiners
Franklyn Chang
I
n May, industry veteran Franklyn
Chang joined the firm as a Managing
Director bringing nearly 20 years
of experience in institutional sales,
placements and distribution of alternative
investments. His key responsibility will
be to help grow Investcorp’s Hedge
Fund Group’s assets under management
through strategic and targeted business
development efforts.
He joins from Eaton Partners, LLC, where
he was responsible for global distribution
of alternative investment funds and served
as both Partner for US Distribution and
Managing Partner for the European and
Middle East Distribution. During his eight
years with the company, Mr. Chang was
involved in successfully placing over $12
billion in limited partner assets.
Lionel Erdely, Head and Chief Investment
Officer of the Hedge Funds Group said:
“We are very pleased to welcome a person
of Franklyn’s experience and caliber to
our team. His wide ranging experience
and capabilities within the alternative
investment industry will allow us to expand
our product offerings to further meet our
clients’ needs as we significantly grow our
hedge funds platform.”
David Walsh
In May, David Walsh joined our Hedge
Funds business reporting directly to Nick
Vamvakas, Head of Single Manager
Business.
Commenting on his appointment, Lionel
Erdely, Head and Chief Investment
Officer of the Hedge Funds Group said:
“David has been identifying and working
with early stage hedge fund managers
for years in his prior roles. We believe his
background will enhance our capabilities
in identifying and sourcing new hedge
fund talent early in their life cycle.
His addition is a boost to our seeding and
emerging manager program as we work to
execute on our plans to significantly grow
our investment universe.”
Prior to joining Investcorp, David served
as a senior member at UBS as part
of their Capital Introduction Group,
where he was actively involved in all
aspects of the prime brokerage business –
including originating prospects, sales, and
relationship management.
Franklyn Chang
The Review | May 2014
INVESTCORP BANK B.S.C.
Investcorp House
P.O. Box 5340
Manama
Kingdom of Bahrain
Telephone: +973 17 532 000
Facsimile: +973 17 530 816
INVESTCORP INTERNATIONAL LTD.
Investcorp House
48 Grosvenor Street
London W1K 3HW
United Kingdom
Telephone: +44 (0) 20 7629 6600
Facsimile: +44 (0) 20 7499 0371
INVESTCORP INTERNATIONAL INC.
280 Park Avenue
New York, NY 10017
United States of America
Telephone: +1 212 599 4700
Facsimile: +1 212 983 7073
INVESTCORP SAUDI ARABIA FINANICAL
INVESTMENTS CO.
Al Faisaliah Tower, 29th Floor
P.O. Box 61992
Riyadh 11575, Kingdom of Saudi Arabia
Telephone: +966 11 484 7600
Facsimile: +966 11 273 0771
INVESTCORP BANK B.S.C – ABU DHABI
Al Sila Tower, 8th Floor, Sowwah Square
Al Maryah Island, P.O. Box No. 36961
Abu Dhabi, United Arab Emirates
Telephone: +971 2 501 8900
Facsimile: +971 2 644 1566
www.investcorp.com