Gulf Finance House completes strategic review and increases its capital by 30 per cent to support expansion plans

Gulf Finance House (GFH) today announced that the Board of Directors has completed its review of the bank's long term strategy and recommended that it will increase the Bank's capital by 30 per cent, to be effected by the issuance of new shares to registered shareholders at a premium of 300 Kuwaiti fils over a par value of 100 Kuwaiti fils. The increase in capital is subject to necessary approvals including the shareholders at the general meeting.

Announcing the capital increase in a press conference at Kuwait Stock Exchange, Dr. Fuad Al-Omar, Chairman of GFH said:

"The Bank's activities have grown considerably in the six years since its inception. Our strategy is to expand GFH's geographical reach and to diversify our income stream and asset base to place the bank in a position to take advantage of new opportunities in capital markets, private equity, asset management and infrastructure development. The increase in the bank's capital is an important milestone in our strategic plan and will sustain and grow the bank's earnings even if there are any changes in the business cycle."

"At GFH we study the strategies and business models of successful global investment banks and we adapt and fine tune our own model in order to enhance total returns to our shareholders. In particular we have already established a leading position in originating and Islamically financing infrastructure and economic development projects that make a direct and visible contribution to the economic well being of the countries in which we invest. We now also intend to establish GFH as a leading bank in the provision of other investment banking services," he added.

He pointed out that the Bank's regional projects, which include the US$1 billion Royal Metropolis in the Hashemite Kingdom of Jordan, the US$3.8 billion Legends in Dubailand in the UAE, the US$1.4 billion Bahrain Financial Harbour, the US$750 million Al Areen

Development in Bahrain and the latest, "Energy City-Qatar At Lusail", are solid examples of the application of GFH's business strategy which seeks to derive value from the growth potential of the economies in the GCC and Middle East and North Africa (MENA) region and to encourage foreign direct investment.

Elaborating on the Bank's future strategy and the capital increase, Mr. Esam Janahi, Chief Executive Officer and Board Member of GFH, said: "GFH has reached a crucial stage in its long term strategy, which aims to consolidate its position as a leading Islamic investment bank in the MENA region while preparing the Bank to offer the services and products that will establish it as the leading Islamic investment bank globally. The increase in capital will allow us to extend our geographical coverage and to build our new businesses."

On the back of sustained revenue streams from its investments, GFH has posted a record financial performance so far in 2005, with the Bank reporting a 93 per cent rise in its net profit at US$92 million for the first nine months of this year.

GFH has an excellent track record in delivering results. The Bank's aim is to provide clients with high yields through offering either income generating assets or assets generating capital growth. In a short span of time, GFH has exited from various investments providing investors attractive yields.

"All our exits from investments and various funds are timed well to take advantage of the prevailing economic trends. GFH has sold its proprietary private equity portfolio which includes investments in Osoul House Ltd, Al Khaleej Development Company, Kuwait National Real Estate Services & Investment Company, Gulf Development Real Estate, Rasmal Holding Company, Halcore, Menajet & Arab Finance House. The transaction will provide GFH a Return on Investment of 35 per cent," added Mr. Janahi.

Earlier, the bank had sold its 49.9 per cent stake in the Costa Coffee business to Jawad Business Group based in Bahrain, which realized a profit of 65 per cent for GFH's clients over a three-year holding period. GFH also listed Al Khaleej Development Company in 2005 on the Bahrain and Kuwait stock exchanges by way of exit yielding a return of 170 per cent over a three-and a-half year period.

Another significant exit was for GFH's clients who invested in the reclamation phase of Bahrain Financial Harbour, who sold their investments for a profit of 50% over two years.

Mr. Janahi also announced the anticipated sale of the Gulf Atlantic Real Estate UK (GARE) portfolio to an international investor as part of GFH's exercise to align its investment portfolio to current market conditions. This reflects trust and reputation GFH enjoys in the international markets.

Also in line with the Bank's strategy to expand its regional shareholder base, GFH is in the process of evaluating listing the Bank's shares on new regional stock markets. GFH is currently listed on the Bahrain and Kuwait stock exchanges, where its stock is actively traded.
Commenting on the Bank's fund raising activities, Mr. Abdul Rahman Al-Jasmi, Deputy Chief Executive Officer of GFH said: "We are constantly increasing our fund raising capability and have reached a leading position. I am pleased to report that in 2005, we raised more than US$2 billion of equity from our clients,"

"We are building our suite of products to offer our clients more choice. We shall soon be announcing several innovative investment products in new asset classes. Our long term objective is to provide a world class wealth management service to our clients." Mr. Al-Jasmi added.