Your expertise is fundraising. What types of concerns do LPs have now?
Today’s political and economic environment is challenging, so it’s hard to blame investors for demanding greater transparency. Investors should be treated with respect and should be given full disclosure—in good times and bad. To do that, we’ve implemented all of ILPA’s guidelines on transparency in reporting. Investors seem especially concerned by a perceived “use it or lose it” mentality within some GPs. Around $400 billion of uninvested and committed capital is out there; a lot of it is in vintage 2005 and 2006 funds that are expiring. Many LPs worry the cash will be spent on lower-return deals rather than returned. Frustrations also surround the difficulties in evaluating GPs’ ability to create post-acquisition value. All firms tout operational prowess: but, it isn’t what you do, it’s how you do it. That varies dramatically among GPs. Investors have a right to demand a disciplined, systematic and institutionalized set of processes used in deal sourcing and due diligence as well as post-acquisition.
Investcorp first targeted institutional private equity investors outside of the Gulf region in 2007. What is your investor mix?
Investcorp decided three years ago to add institutional investors in the United States and Europe who invest through a fund in the same deals as our investors in the Gulf. Investcorp was founded 28 years ago and, since then, our Gulf investor base has grown to over 1,100—made up of high-net-worth individuals and institutions.
Investcorp’s private equity team is focused on buyouts in North America and Western Europe. What type of deals have you done?
We recently announced the sale of American Tire Distributors, the largest independent tire distributor in the U.S., to
What sectors do you feel are the most promising now?
Through the years, we’ve developed deep expertise in four industries: growth industrials and distribution; business services; consumer and retail; and media and education. Within business services, we’re looking at companies with strong business models in legal, energy and health care services. Our longstanding relationships in the United States, Europe, Asia and the Gulf really help us in sourcing, screening and winning deals.
Your sweet spot is the middle market. What size equity checks do you cut on average?
Our equity investments are typically in the $100 million to $300 million range. But we really define our sweet spot as doing deals where we can create a lot of upside value through our post-acquisition work and leveraging our global presence.