Bahrain's Gulf Finance House (GFH) plans to raise capital by $300m through equity-linked convertible murabahas or similar instruments, and has hired Deutsche Bank as a structuring agent.
A murabaha is an Islamic money market product accounted for on banks' balance sheets, under which a bank buys an asset from third party and sells it to its customer at cost plus profit, thereby providing financing without charging interest.
"We have taken the hard decisions to clean up our balance sheet, re-schedule our long-term debt and develop a leaner operating model," said Group Chief Executive Ted Pretty.
"We now need to aggressively pursue new business in new markets... 2011 is the year we expect to show real progress."
In 2011 and 2012 the bank will be "far more aggressive in seeking growth again", Pretty added.
GFH, hit hard by a regional property crisis, said Deutsche would assist with structuring its $300 million capital increase.
"GFH... has appointed Deutsche Bank AG (London Branch) as its structuring agent," the Islamic investment firm said in a statement to the Bahrain bourse on Monday.
"The board of GFH has also resolved, subject to relevant regulatory and shareholder approvals, to seek a further re-capitalisation of GFH by way of issuing equity linked convertible murabahas or similar instruments to raise up to $300 million," the bank said.
"Such money will be used solely for acquisitions and growth initiatives. Further details will be made available to the market shortly," it added.
The bank also named its founder and chairman Esam Janahi as its executive chairman.
GFH said on Sunday it will increase capital "imminently", without giving an exact timeline.
The company raised $300 million in fresh capital in a rights issue in October last year and placed a $100m convertible murabaha with Deutsche Bank AG in November. (Reuters)
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