Bahrain’s GFH Plans $230m Sukuk Issue In 2015 To Fund Acquisitions

Gulf Finance House (GFH), the Bahraini Islamic investment firm, plans to make a $230 million sukuk issue this year to help it fund acquisitions of two to three regional companies, the bank’s chairman told Reuters.

The bank sold $170 million of convertible sukuk murabaha last year to raise money for the investments, Ahmed Khalil al-Mutawa said in an interview on the sidelines of an economic conference in Bahrain. The paper was converted into equity in the same year.

In addition to the funds raised through sukuk last year and this year, the rest of the money needed for the acquisitions is likely to come from bank borrowing, Mutawa said.

The bank is borrowing from financial markets again as it recovers from a debt restructuring that was prompted by a decline in asset values and hefty borrowing during the global financial crisis.

GFH is in talks to buy two asset management companies for a total of up to $500 million, chief executive Hisham al-Rayes told Reuters in December.

Mutawa said this week that the two to three companies targeted by GFH focused on asset and wealth management and were based in Saudi Arabia, Bahrain and Dubai. The deals, which involve taking controlling stakes, should be closed by the end of the second quarter, he said. He did not give further details.

GFH was granted approval by shareholders in April last year to raise up to $500 million through sales of convertible sukuk to help fund its expansion plans and service debt.

The bank may review its sukuk plans if oil prices remain under pressure for a prolonged time, potentially subduing investor demand for new issues, Mutawa said.