Bahrain-based Gulf Finance House (GFH) is eyeing the $1 trillion Islamic finance market by exploring opportunities in all vital segments of this rapidly growing global segment of the global economic system, a senior official at the GFH said.
“GFH has set a new benchmark in financial engineering by establishing at least 10 new financial institutions worth $2.5 billion of assets,” Esam Janahi Executive Chairman GFH said.
He also shed some light that how GFH being a leading Islamic investment has had managed to navigate through the difficult times, thanks to the recapitalization plan approved by the shareholders.
“Over the past decade, the GFH team and the Bank’s shareholders have together created Islamic financial institutions across the MENA, GCC and Asia regions with paid up capital of approximately $2.5billion,” he said.
The shareholders have ratified bank’s plans to raise up to $500m through a convertible murabaha to strengthen capital base and fund growth strategy.
The shareholders nod will help the management to support the bank in its plans to improve the bank’s capital structure, strengthen its balance sheet and raise funds to pursue its growth strategy.
A committee of shareholders to assist in the implementation of the Banks plans was also formed in order to review and support the proposed recapitalisation plan.
“We understand very clearly the challenges that we face and I know that our shareholders appreciate those challenges too. The Board and I firmly believe that the measures we will now implement will help us not only overcome these challenges but emerge as a stronger, better funded and more robust institution,” he added.
“ The capital that we will raise from our convertible murabaha will enable us to take these steps and move forward with plans to recapitalise the Bank, fund acquisitions and provide initial seed capital for investments. This will take time but we believe that, with the continuing support of our shareholders, our plans will ultimately place GFH at the forefront of the Islamic financial services market: a market that is over $1 trillion in size and growing at 20% per year,” he added.
The realigned GFH growth strategy will see a stronger focus on the creation, development and management of Islamic financial institutions offering a range of financial products and services to corporate and retail clients, enabling a more stable business model of recurring revenues.
“GFH will target its new strategy in regions and countries such as Saudi Arabia and the GCC, Turkey, the Levant region, Africa, Central Asia, India and Malta, with an opportunistic approach to other markets,” Janahi said while elaborating on the future strategy.
Shareholders had also approved the recommendation made by the bank to consolidate and reverse share split of the issued shares of GFH at a ratio of 4:1 to be carried out. This will result in the issued shares being reduced from 1,896,332,565 shares to 474,083,141 shares and reduce the paid up capital of GFH to $145.78 million to eliminate accumulated losses.
The share consolidation and capital reduction will not alter the underlying value or market capitalisation of the Bank and shareholders will continue to hold the same levels of ownership. Shareholders have also approved, as part of the capital raising, the transfer by Esam Janahi, Executive Chairman of GFH, of his entire approximately 10% holding in Khaleeji Commercial Bank to GFH in return for GFH’s 100% equity interest in Al Areen Leisure and Tourism in addition to $3 million to be paid through GFH Treasury Shares. This takes GFH’s shareholding in Khaleeji up to 47%.