Bahrain-based Gulf Finance House (GFH) is seeking further capitalisation of the bank by issuing equity-linked convertible murabahas or similar instruments to raise up to $300 million.
A murabaha is an Islamic money market product accounted for on banks' balance sheets, under which a bank buys an asset from third party and sells it to its customer at cost plus profit, thereby providing financing without charging interest.
The GFH board has resolved, subject to relevant regulatory and shareholder approvals, to seek a further recapitalisation of the bank.
"The fund will be used solely for acquisitions and growth initiatives.
Further details will be made available to the market shortly," the bank said in a statement issued yesterday.
GFH also announced the appointment of Esam Janahi as Executive Chairman and the launch of a new capital programme. Janahi will lead the next stage of recovery and the return to growth of the bank.
Following the board meeting held on August 15, GFH requested the Bahrain Stock Exchange to suspend its shares, seeking first stage regulatory approvals to proceed and also seeking to retain an internationally-recognised adviser.
GFH yesterday requested that the trading suspensions be lifted as the bank received the preliminary approvals and appointed Deutsche Bank AG (London Branch) as its structuring agent.
"I am delighted to advise that the Board has taken the step of asking Esam to lead the bank as Executive Chairman during the next phase of its growth. As the founder of the bank and the leader of many initiatives that have delivered considerable value to shareholders and investors, he is the right person to reenergise GFH and seek to grow through securing new initiatives," said Ted Pretty, Group CEO.
GFH recently announced its first half results for 2010 and it is clear that the business is on track in its plans to reemerge as one of the leading Islamic banks in the region, he said.
"In late 2009 and in the first half of 2010, we have taken the hard decisions to clean up our balance sheet, re-schedule our long-term debt and develop a leaner operating model. We now need to aggressively pursue new business in new markets and Esam has an enviable track record in leading such initiatives. Our losses for the balance of 2010 will now be modest and 2011 is the year we expect to show real progress and success. "
"I am honoured to be asked to assume an executive role within GFH once again.
The market is beginning to recover and now is the time to seek new opportunities. I intend to work closely with our Group CEO, Ted Pretty, to ensure that GFH enjoys the right mix of innovation, entrepreneurialism, strong management and governance," said Esam Janahi Chairman of GFH.
"The details of the capital programme will be announced soon but it will focus on securing new and existing investors who have an appetite for growth," he said.
"Subject to shareholders' approval at an EGM which we intend to hold in October 2010, we expect to offer investors the opportunity to achieve very good returns coupled with strong assurances and conditions that these funds will be used for growth initiatives and acquisitions," he added.
"As I believe in GFH and the opportunity it has to take advantage of the market as its recovers I intend, subject to shareholder approval, to personally support the capital raising. However, confidence and commitment will remain a vital pillar of our future success."
"Esam's commitment to the business is clear. We are on track with our recovery plan and this re-capitalisation will enable us to pursue new growth initiatives and acquisitions. Whilst some other banks will spend 2011 and 2012 continuing to fix their balance sheets and reducing their costs, tasks which we have already accomplished, we will now be far more aggressive in seeking growth again," added Group CEO Ted Pretty.
By Mahmood Rafique
© Bahrain Tribune 2010
