• Home
• News Article

GFH looks to GDR issue, further international growth

The Bahrain-based Islamic investment house has big plans for international expansion.

Gulf Finance House is moving to grow its international shareholder base and is particularly interested in tapping into the European market, with plans to open a London arm, deputy chief executive Peter Panayiotou told GSN.The Bahrain-based Islamic investment house, headed by Esam Jenahi, on 12 December signed a $300m three-year term revolving credit facility and now plans to issue global depository receipts (GDRs) on the London market. The GDR issue "will allow international institutional investors to buy our shares, while trading across London terminals, Panayiotou said in a 12 December interview in London.

Panayiotou said GFH was advised by the London arms of Merrill Lynch , Citigroup and UBS, who are looking to place $100m worth of GDRs into the London market. "GDRs can be traded electronically, and for us this creates another core of liquidity. The shares traded will either be newly issued, or bought from existing shares."

This could be followed by the opening of a London office. "We're going for full regulatory status here," said Panayiotou. Once of PriceWaterhouseCoopers , Panayiotou is working with former PWC colleagues to identify what sort of licences GFH would need to set up in London.

GFH is building up its senior team. "I've taken the ex-head of private equity of Royal Bank of Scotland, and he's going to build a European private equity business for us. I've taken the chief information officer out of Skandia, and he's going to build an asset management business for us. I've also done a deal with Roger Bootle from Capital Economics - they're the economic advisors to GFH - for exclusivity in the Middle East and North Africa region."

Panayiotou was insistent that "we're an international bank now. In 2007 little of our revenues will come from the Gulf Co-operation Council states. Most of it will come from abroad. Our projects in India, China, Libya and Tunisia will be the main source of our revenue in the next 12 months."

Panayiotou was insistent that GFH was more than a vehicle for Jenahi family influence. The family is the leading player in the Bahrain Financial Harbour (BFH) and other schemes.

Chief executive officer Esam Jenahi's elder brother Khalid Abdullah Jenahi is CEO of leading Manama-based Islamic institution Shamil Bank of Bahrain and of Geneva-based Dar Al-Maal Al-Islami (DMI) , chaired by Prince Mohammed Al-Faisal Al-Saud. Other Jenahi brothers are active in various sectors - Ahmed Jenahi Architects designed BFH.

According to Panayiotou, the family's input into GFH 's operations is limited:"Esam is chief executive officer, and that's as far as it goes. Khaled has nothing to do with it, nor does Rashid. KPMG London is GFH 's board advisor."

Panayiotou said what makes GFH different is that "we're an infrastructure investment house." GFH doesn't get involved in project finance, it assembles equity from private clients, and employs the funds in special purpose vehicles (SPVs) that participate in projects. "On occasion we will participate alongside the client, and we do not rule out the possibility of project finance in the future."

GFH has a client base of 2,000 individuals, families, some corporates and a few institutions, Panayiotou reported: "We don't invest directly in our projects - instead we have clients who are investing in our projects... with real estate activities, we put our client's money into an SPV, and the SPV owns the real estate, not us. So the bank is not taking any risks."

Project portfolio

The $1.4bn BFH scheme has completed its first phase, which includes reclaiming over 2m ft2 of land from the sea, topping out the Dual Towers (construction is 83% complete) and starting civils and other work. Kuwait-based Gulf Holding Company (GHC) is planning a $450m residential complex, called Villamar, with completion scheduled for mid-2009.

Panayiotou told GSN: "Before we set up BFH we took advice from Canary Wharf - we flew them out to Bahrain and they explained the realities of building a financial centre. They told us not to assume any pre-lettings, so we have minimised the amount of space we pre-let." He added: "40% of retail space has been sold [but] nobody will move into BFH until it's completed... My view is that if we get half of phase one up and running by the end of 2007, then we've done very well."

Already committed to setting up in BFH are GFH , Khaleej Bank and the Bahrain Stock Exchange ; negotiations are under way with Deutsche Bank and United Gulf Bank.

The $4bn Energy City Qatar project was launched in 2005 by GFH , Kuwait Investment Company and Abu Dhabi Investment House . Their Gulf Energy Holding Company (GEHC), chaired by Esam Jenahi, is the developer. Qatar'sMZ & Partners have prepared a master plan and architectural designs. Phase one of the $5bn development, in Lusail north of Doha, is costed at around $1.6bn. GFH is also planning an energy city in India.

Looking ahead, GFH sees direct investment in oil and gas production as an option.

GFH signs for $300m revolver

Gulf Finance Housesigned a $300m, three-year term revolving credit facility on 12 December in London, where chief executive Peter Panayiotou told GSN, "it will be used to expand our own business." The loan was supported by 30 banks, nearly three-quarters of whom were Arab institutions (with 6% Asian and 20% European). Panayiotou said: "We decided to take the facility to help the growth of our shareholder base, rather than continuing to dilute it. GFH has no leverage - we're not in debt, and we don't want to be. So, in order to continue our financial growth we decided the best option was to have a revolving credit facility."

The facility was two-times over-subscribed, drawing in the following:

• MANDATED LEAD ARRANGERS - RZB, WestLB(London branch);

• CO-ARRANGERS - Abu Dhabi Commercial Bank , Abu Dhabi Islamic Bank , Commercial International Bank , HSH Nordbank, Qatar Islamic Bank ;

• LEAD MANAGERS - Al-Ahli Bank of Kuwait , Bahrain Islamic Bank , Boubyan Bank , Burgan Bank, Commercial International Bank , Doha Bank , Dubai Bank , First Gulf Bank , Islamic Development Bank , Landesbank Rheinland Pfalz, National Bank of Fujairah , National Bank of Kuwait , The Arab Investment Company , Tunis International Bank ;

• MANAGERS - Bank of Overseas Chinese, BankMuscat International , Bank Muamalat, Bank Sepah, Banque BIA, BMCE Bank Paris, Maybank Group;

• PARTICIPANTS - Attijariwafa Bank Europe, Emirates Bank International PJSC, Jordan International Bank , Shanghai Commercial & Savings Bank, Vakifbank International.

© Gulf States Newsletter 2006