Bahrain’s Investcorp Plans New Fund After Investing $1 Billion

Investcorp Bank BSC, the Bahrain-based alternative investment firm managing $10.5 billion, is planning a new buyout fund for the Middle East after almost completing investments in its $1 billion Gulf Opportunity Fund.

The new fund “could be a similar size” or smaller than the existing fund, Mohammed Al-Shroogi, president for Gulf business, said in a phone interview from Manama, Bahrain today. The Gulf Opportunity Fund has cash for one small deal, he said.

Investcorp said today it had bought a 30 percent stake in Saudi Arabia’s Theeb Rent A Car, the Kingdom’s second-biggest car rental company. The investment in Theeb, whose revenue and profit rose more than 17 percent annually over the past three years, is the fund’s fourth investment in Saudi Arabia and the tenth in the region.

Countries in the Persian Gulf region, including Saudi Arabia, the United Arab Emirates and Qatar, are spending hundreds of billions of dollars from their oil wealth to diversify their economies. Saudi Arabia, the biggest Arab economy, plans to invest more than $500 billion to build industries, roads and housing to help create jobs and boost growth after popular uprisings toppled regional leaders.

Investcorp will also look at selling some businesses in the region over the next 12 to 15 months, Al-Shroogi said.

The company earlier today also said it acquired Chicago-based stationery and greeting-card retailer Paper Source Inc. for an undisclosed amount from Los Angeles-based buyout firm Brentwood Associates Inc. Paper Source, which operates 73 stores across 23 states, designs and produces fine and artisanal papers.

Investcorp said in July it planned to double its dividend after full-year profit climbed 56 percent to $104.9 million. The firm, which invests in private equity, funds of hedge funds and real estate, completed eight deals in the fiscal year including buying a controlling stake in oil and gas services provider Hydrasun Ltd.