Gulf Finance House Seeks to Exit Investments in India, Tunisia

Gulf Finance House (GFH), the investment bank that acquired England’s three-time soccer champion Leeds United, is seeking to exit assets in India and Tunisia to enter high-yield investments, its acting chief executive officer said.

The Manama, Bahrain-based Islamic investment bank this year started to “partially exit” an infrastructure development project consisting of technology and energy cities in India’s Navi Mumbai, Hisham al-Rayes said in a phone interview on Dec. 24. “The total value of the transaction is $1 billion and we’ve started exiting our clients in 2012 and will continue with the redemption plan in the new year and onwards.”

The company and its clients, will also seek to gradually sell stakes in the Tunis Financial Harbour project from next year, al-Rayes said. “The investment has a total value of $300 million, 10 percent of which is directly owned by us.”

The company emerged from financial difficulties this year after it restructured more than $200 million in debt, cleaning a balance sheet that was laden with $2.3 billion in liabilities in 2008.

“We are looking into high-yield, income-generating properties in Saudi Arabia and the United Arab Emirates, especially Dubai,” al-Rayes said. “The due diligence is under way and the transactions are expected to take place in 2013.”

Gulf Finance is looking for “good opportunities in the Turkish market” after an attempt to acquire Istanbul-based Adabank AS failed due to changes in regulatory requirements, he said.

“Higher 2012 Profit”

“We see the acquisition of Leeds United as an investment in the defensive sector,” al-Rayes said, declining to disclose the value of the deal due to a confidentiality agreement. “The transaction didn’t involve us taking any debt and was fully financed by GFH Capital and their strategic investors,” he said, without naming them.

The investment bank, which returned to profit in 2011 with a net income of $381,000 after a loss of $349 million in 2010 and $728 million in the previous year, expects “higher profits in 2012” bolstered by income from Leeds and other transactions, al-Rayes said. The first debt payments are due in 2014 according to the restructuring plans reached with creditors, he said, adding that the company’s total outstanding liabilities are about $380 million.

Gulf Finance House shares closed down 4.2 percent at 11.5 cents in Manama yesterday. The stock, which is also listed in Kuwait and Dubai, lost 21 percent this year, compared to an 8.5 percent increase in Bahrain Bourse All Share Index. (BHSEASI)

To contact the reporter on this story: Dahlia Kholaif in Kuwait at dkholaif@bloomberg.net

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net