Gulf Finance House will sell its 50 percent stake in Bahrain Financial Harbour Holding to Emar Bahrain, GFH said in a statement on Monday.
The sale, which is part of the cash-strapped firm's strategy of divesting non-core assets, come as Gulf Finance House raises funds to repay the remaining $100 million of a $300 million loan.
Analysts have valued GFH's stake in Bahrain Financial Harbour at about $175 million.
Emar Bahrain already owned about 50 percent in Bahrain Financial Harbour, according to Bahrain's commercial registry. Bankers say Emar Bahrain is linked to the country's royal family.
The asset sale will help assuage investor fears of immediate liquidity concerns.
GFH was once one of the bigger investment houses in the Gulf but it was badly hit by the regional property crunch, shrinking its balance sheet to about $1.3 billion.
In February, the company narrowly avoided default after it struck an eleventh-hour deal with lenders to roll over $100 million of its loan by six months.
In addition to cutting costs and diversifying its revenues, GFH promised lenders that it would sell down its assets.
GFH, which arranged property projects from Morocco to India stands for the rise and fall of Bahrain's investment sector like no other company.
It reaped in the money during a five-year oil and property boom in the Gulf by booking largely upfront fees on the money it raised for real estate projects, a business model which was swept away by the burst of Dubai's property bubble late in 2008.
Other Bahrain-based investment houses have also struggled but had been more diversified than GFH, which bankers say was not much more than a trader of real estate across the numerous financial companies and special purpose vehicles it set up.
The Kuwait-listed shares in GFH closed down 2.4 percent while its Bahrain-listed shares ended 6.9 percent lower on Monday. (Reuters)
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.