Bahrain's Mumtalakat set to return to profit in 2010 – CEO

Talal Al Zain reports strong interest in Alba IPO, proceeds will go to new investments
Bahrain's Mumtalakat set to return to profit in 2010 – CEO
Mumtalakat registered a net loss of $485m last year. (Getty Images)
By Ed Attwood
Tue 19 Oct 2010 03:04 PM

Bahraini sovereign wealth fund Mumtalakat is set to return to profit in 2010, one year after registering a net loss of $485m, the firm’s CEO has said.

“Today, our balance sheet is the strongest ever. This year, we’re expecting - on a Mumtalakat level - that we will be reporting profits,” Mumtalakat CEO Talal Al Zain told Arabian Business on Tuesday.

In 2009, Mumtalakat reported a 28 percent decrease in revenues due to the performance of Gulf Air, operational restructuring and the review and alignment of its strategy to market conditions, a company statement said earlier this year.

“Last year, yes, we reported a loss figure. But really, last year was one of our most successful years,” Al Zain said.

“The loss really came because our accounting follows IFRS standards, and because of those standards, we need to consolidate our investments. Also we had to reflect Gulf Air on our balance sheet, so if you take those two combinations, that’s what caused the loss.”

The CEO also indicated that interest so far in the Aluminium Bahrain (Alba) IPO had been strong, especially from markets in Europe and Asia.

Earlier this week, Mumtalakat announced that it was seeking around $540m for a stake of up to 11.5 percent in Alba, which has reported profits of around $200m in the first half of 2010.

“On the international side, investors have huge interest in our region because of the wealth creation, but because they don’t understand our market they constantly look at vehicles to get into these markets,” Al Zain added.

“A company like Alba is a global player; 40 percent of the production goes to downstream manufacturers in Bahrain, and the balance gets exported to Asia, Europe and the US. It is a fantastic vehicle that these institutional investors can come and tap into our markets.”

Al Zain also said that the proceeds of Mumtalakat’s $750m bond, which took place in June, will not go into any existing or new investments. It will instead be used to increase the tenor of the company’s liability, he said.

However, the results of the Alba IPO will be spent on additional investment, although the CEO did not specify which sectors the firm was considering.

Mumtalakat, which began operations in 2006, holds stakes in over 35 commercial enterprises spanning a variety of sectors, including aluminium production, financial services, real estate, transportation, and food production.

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