Investment banking: GFH raises cash for new strategy
Hopes to raise equity up to $500 million; Turns away from real estate development
Bahrain-based Gulf Finance House (GFH) is asking its shareholders for up to $300 million this month. The rights issue is part of a programme, approved by shareholders in mid-September, to raise equity capital of up to $500 million.
The bank, which is listed in Kuwait, Bahrain and Dubai, is implementing a turnaround in strategy. It used to be one of the biggest Islamic property financiers in the Gulf. But the region has suffered a real estate crash this year almost as famous as the preceding real estate boom.
GFH made net losses of $54 million in the second quarter of this year and $37.7 million in the first quarter, comprising in total provisions of $81 million and $11 million in operating losses.
Ahmed Fahour: GFH wants to raise $500 million
Ahmed Fahour, the new chief executive, tells Euromoney that the capital-raising reflects difficulties in infrastructure and property markets, above all in commercial real estate, GFH’s former speciality. Fahour says the extra money will also allow GFH to benefit from new and different opportunities. GFH is also looking to raise up to $200 million of equity capital from two convertible issues of an Islamic financing instrument known as a murabaha.