Hedge funds giveth, and hedge funds taketh away.
Investcorp, the Bahraini-headquartered investment manager and the largest alternative asset manager in the Persian Gulf region, returned to profit in the second half of last year. The firm suffered its first-ever annual loss in its 2008-2009 fiscal year, burned by big losses in both its hedge fund and private equity units. Investcorp’s assets under management plummeted by more than half to less than US$4 billion.
But in the six months ended Dec. 31, Investcorp, which also has offices in London and New York, turned a US$60.2 million first fiscal half profit. In the first fiscal half of 2008, Investcorp suffered a US$511 million loss, on its way to a US$780.6 million annual loss. Alternative investments were a big part of that decline, with Investcorp’s hedge fund unit losing US$393 million and its p.e. arm losing US$288 million.
Now, it’s hedge fund unit isn’t just contributing to Investcorp’s profit; it is Investcorp’s profit. The firm’s hedge fund business posted $96.6 million in income in the first half, more than the entire firm’s profit during the period.