Gulf Finance House (GFH), the Bahrain-incorporated Islamic investment bank, seems to have hit its fund raising target of $350 million through a mixture of a rights issue, the partial sale of an equity stake and through a Murabaha placement facility. The capital raising exercise is aimed at strengthening the bank’s balance sheet and to enable it to engage in a number of high value investment opportunities presented by the global economic downturn. KPMG Corporate Finance acted as Issue Managers for the rights offering across regional markets, while Bank of America Merrill Lynch acted as Financial Advisor and Corporate Broker to GFH.
GFH, like many other financial institutions in the region, has been affected by the fallout from the credit crunch and the global financial crisis. In August 2009, the Bank reported a net loss for the second quarter 2009 of $54 million compared to a loss of $92 million for the year to date and a profit of $104 million for the corresponding period in 2008. The results, according to GFH, were due in part to the continued challenges in regional placement activity and total provisions of $38 million for second quarter 2009 compared with $81 million the year to date which were allocated to write downs of investments and receivables.
The rights issue passed the $200 million mark before its close on 2Oct. 29, and according to GFH, it will be a major contributor to the broader GFH capital management plan.
The cooperation with Macquarie Group Limited, the Australia-based global provider of financial services, is a planned joint venture to establish a joint Islamic financial services platform in the Middle East which will offer a broad range of wholesale Shariah compliant financial services solutions to clients in the region.
According to GFH CEO Ahmed Fahour who, prior to joining GFH, had spent most of his banking career in Australia, “the strategic partnership with Macquarie represents an exciting opportunity as we look to continue the bank’s diversification into new geographies and opportunities. The strategic relationship would bring together GFH and Macquarie to create the standard in Shariah-compliant products and services for the MENA region.”
The new capital, says GHF, will be deployed within a newly restructured GFH business model designed to extract maximum value from existing projects and diversify its Islamic banking offering across three dedicated banking units including Investment Management, Investment Banking and Commercial Banking. — M.P.
