Investcorp in Dh2.57b rights offer

Investcorp has decided to offer 400 million fresh shares to existing shareholders at an issue price of Dh6.42 ($1.75) per share on a 1:1 basis.

The issue, which will raise Dh2.57 billion ($700 million), has been underwritten by a group of prominent strategic underwriters. The subscription will begin on November 30 and will close on December 15, whereas the record date has been fixed as November 29.

Investcorp's ordinary shares will be suspended from trading on the Bahrain Stock Exchange from November 30 to December 24 or later, until all required procedures for subscription are completed.

However, there will be no suspension in trading of Investcorp's preference shares. An extraordinary general meeting of shareholders will be held in Bahrain on December 21, to ratify underwriter's allocation and pricing.

The 400 million additional shares will be offered to existing ordinary shareholders, whose names appear in Investcorp shareholder register as of the record date of November 29.

During this period, each ordinary shareholder will be able to exercise the right to purchase one new share for each existing ordinary share owned as of the record date.

Shares not purchased by ordinary shareholders during the rights offer period, will subsequently be purchased by an underwriting group. The additional capital will provide a strong financial platform to the bank.

Nemir A. Kirdar, president and CEO, called the rights issue as the first step in the next phase of Investcorp's development and growth.

"As we progress into the 21st century, Investcorp is ideally positioned to take advantage of opportunities arising from the increasing globalisation of financial markets and investors worldwide."

He added that this will help Investcorp emerge as a powerful global manager of alternative assets with an international reach.

Investcorp's initial capital - $50 million raised in 1982 and an additional $50 million raised in 1986 - has grown to $1.145 billion today. Of this, $345 million has been paid out in dividends.

Since 1982, the bank has conservatively invested its capital to complete 63 corporate and 68 real estate transactions for over $19 billion in aggregate value. Currently, Investcorp has around $5 billion of client and proprietary assets under management in corporate and real estate investments.

The firm's capital adequacy ratio is over 21 per cent with liquid assets comprising over 50 per cent of the asset base.

The rights offer price of $1.75 per share takes into consideration various market conditions and other factors, including the recent 18-month rolling average share price, net book value inclusive of fair market value adjustments on the firm's investment portfolio, peer comparisons; and the valuation derived from a discounted cash flow analysis.