Arcapita's rating adjusted to BB+

In response, Atif A. Abdulmalik, Arcapita's Chief Executive Officer, offered the following comments.

"Although we are disappointed at the result of S&P's review, we believe that the current uncertainty surrounding the private equity sector globally has been a dominant factor in their decision. Financial markets everywhere continue to suffer from the extreme conditions brought on by the ongoing challenges in the credit markets, as well as the deteriorating global economic environment.

In recent months, we have been successful in attracting $300m in two year deposits from a group of strategic investors, and we are in the process of securing a significant equity increase from certain sovereign wealth funds. These commitments have been made by investors with a close understanding of the Arcapita business model, and their investments demonstrate a high degree of confidence in the opportunities and growth that Arcapita continues to offer over the medium to long term. Our leverage ratio is modest at approximately 2.2, and our capital adequacy is at 17.5%, almost 50% more than the minimum required by the Central Bank of Bahrain.

Through rigorous investment standards, Arcapita has built up a high quality portfolio of assets that are well diversified by asset class, currency and geography. Working closely alongside our deal teams, the portfolio benefits further from the attentions of a dedicated group of very experienced portfolio management professionals focused on improving the operating efficiency of the portfolio investments, and we will be able to realise the growth in the portfolio once economic conditions begin to normalise. We are also confident that our global footprint places us favorably to capture attractive investment opportunities as the cycle bottoms out.

We continue to enjoy close relationships with our network of investors throughout the GCC, and notwithstanding our historically conservative approach to the management of our balance sheet, we have delivered an impressive track record of profitability since inception. In the short term, profitability in the private equity sector is likely to suffer across the board, but I am pleased that Arcapita has delivered profits for the first half of our current financial year, and I am very confident that we will grow our profits further by the end of our financial year in June."