Investcorp is buying US private credit manager Marble Point for about $200mn as the Bahrain-based investment manager significantly boosts its presence in US credit markets at a time of higher interest rates.
The acquisition underscores the push into private credit markets by Middle Eastern investors flush with cash thanks to high oil and gas prices at a time when sharply rising rates are boosting yields.
Founded in Bahrain in the 1980s, Investcorp manages $42.7bn of assets and once owned large stakes in Gucci and Saks Fifth Avenue. In recent years it has become a diversified alternative asset manager, with units dedicated to corporate buyouts, credit investments, real estate and infrastructure. It manages money on behalf of institutions globally and wealthy individuals in the Middle East.
As oil prices have skyrocketed, fund managers in energy-rich Gulf states such as Bahrain have become interested in deploying excess cash into credit-based investments to take advantage of attractive returns.
“We are seeing good demand for private credit and it is timely for us to be doubling down in the space and building scale,” said Rishi Kapoor, co-chief executive of Investcorp, in an interview. “What you find in the Middle East, it is much less negative and in some cases a positive sentiment.”
Investcorp will be paying about $200mn for Marble Point, which is owned by US credit investor Eagle Point Credit Management, according to sources familiar with the matter.
Investcorp declined to comment on the purchase price.
Marble Point has largely focused its business on investing in the US loan market, including issuing and managing collateralised loan obligations, known as CLOs.
The firm manages $7.8bn and, once the takeover by Investcorp is completed, the combined firm will oversee $22bn in credit assets. Investcorp said the deal would make it one of the top 15 managers of CLOs.
The proliferation of CLOs over the past decade supercharged the $1.4tn leveraged loan market as managers raised hundreds of billions of dollars to invest in the floating rate debt.
Many junk-rated companies that would traditionally tap the high-yield bond market instead turned to loans, given the voracious appetite from CLO managers, the largest buyers of leveraged loans.
CLOs raise cash by selling bonds and equity to investors and use the proceeds to buy up hundreds of loans from different companies.
But the CLO market has suffered this year during a broader sell-off as many big investors, including Wells Fargo and JPMorgan Chase as well as Norinchukin Bank in Japan, slowed or stopped new investment.
The pullback by banks has given a leg-up to well-known and established players in the space such as Blackstone and Prudential’s PGIM unit. Data from Levfin Insights showed the top 25 managers accounted for the majority of the $123bn raised through CLOs in the US this year.
Investcorp, which has the bulk of its staff in the US and Europe, aims to use the current market disruption to become a mainstream presence in the market.
“With $50bn in total firm assets under management after completion of this acquisition, Investcorp is well poised for the next phase of its evolution and development,” said Mohammed Alardhi, executive chair of Investcorp.
The firm is hoping to double its assets under management, with much of that growth coming from credit-based investments.