Dubai: Alternative investment manager Investcorp reported a 90 per cent drop in half-year profits Monday, hit by declining hedge fund revenues.
The Bahrain-based firm, which once floated luxury brands Gucci and Tiffany, said net profit was $5.3 million (Dh19.46 million) for the half-year ended Dec-ember 30, compared to $56.2 million in the prior-year period. Investcorp's fiscal year ends on June 30.
The company said fee income from client business activities and corporate investment asset-based income both rose but it was not enough to overcome the impact of the negative hedge fund returns as investors pulled out amid the euro zone debt crisit.
"We are significantly readjusting our positioning to hedge funds and giving greater allocation to portfolio insurance," Rishi Kapoor, Investcorp's chief financial officer, said on a conference call. "We've taken aggressive moves to protect against the impact of hedge funds."
Investcorp also said the sale of its 26-per cent equity stake in Redington International Holdings, an information technology and telecoms firm, back to its parent firm will generate a $49.8-million capital gain on the deal once it's finalised.
The Bahraini asset manager expects the sale to close by early March. It had $11.6 billion in assets under management at the end of December, down from $11.8 billion ont June 30.
