It said on Saturday it would increase this target to $500 million in fresh money
Bahrain's Gulf Finance House (GFH) plans to reduce its capital and raise up to $500 million in fresh funds to plug the holes a regional property crunch cut into its balance sheet, it said on Saturday.
The Islamic investment house said in August it would hold a shareholder's meeting in October to approve plans to raise up to $300 million through a murabaha, an Islamic equity linked money market instrument.
It said on Saturday it would increase this target to $500 million in fresh money and also reduce its paid up capital by consolidating its shares on a ratio of four to one.
In a statement without providing further details, it said: "During the meeting, shareholders will be asked, amongst other matters, to approve the four to one consolidation of shares, a reduction in paid up capital and the issuance of an equity linked convertible murabaha of up to $500 million."
GFH is one of the Bahraini investment houses that relied on fees charged on investor money raised for private equity and property projects, a market that collapsed when the global financial crisis triggered a regional property crash in 2008.
It posted a $728 million loss for 2009 and has since struggled to pay back its debt as it failed to sell down illiquid property assets and find a new business model.
It narrowly escaped default in February when it reached a last minute deal with lender to roll over a $300 million loan and now needs to find fresh fund to finish the property projects it started from Morocco to India.
International and regional bond and loan markets have been closed to Bahrain's investment sector that is yet to find a new business model, making private placements and capital increases the only source of funding.
This finance house had so much promise, but it squandered a good reputation by trying to be too big, too fast. Its questionable expat leadership is long gone, but the legacy of its failures is still being dealt with. The Bahrain Financial Harbour was a visionary concept, but it too tried to be more Dubai than Bahrain. The shell is there, a relic of when tomorrow never came.