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29 March 2024

GFH-Macquarie alliance to start working in 2010

(AFP)

Published
By Reuters

Bahrain-based Gulf Finance House (GFH) aims to have its planned partnership with Australia's Macquarie Group operational by the beginning of 2010, a GFH executive said yesterday.

GFH said on Monday it plans to set up a Shariah-compliant joint venture with the Australian bank for the Middle East and North Africa (Mena) region.

"We should have concluded the transaction within three months, the platform should be up and ready at the beginning of next year," said John Wright, the group's Chief Operating Officer.

The Islamic investment bank traditionally generates most of its revenues by providing finance to large real estate and infrastructure projects. Hurt by the economic and property market downturn, it posted three consecutive quarterly losses and is currently raising $300 million (Dh1.1 billion) through a capital hike to repair its balance sheet.

The deal with Macquarie is part of an attempt to diversify its business and reduce the weight of the infrastructure business, said Wright.

"For GFH, about 65 per cent of revenues come from the infrastructure business, over time we aim to reduce that to 20-odd per cent," Wright said.

Under the terms of the partnership, Macquarie intends to invest $100m in the Islamic investment bank in the form of a convertible murabaha, a Shariah-compliant financial instrument, GFH said in a statement.

The partnership between the two banks is still subject to board, internal and regulatory approvals, it said.

Details such as the legal structure of the partnership or in which countries the banks will jointly develop products will be worked out in the following months, said Wright.

 

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