Bahrain’s Gulf Finance House (GFH) may sell 30 per cent of shares of First Energy Bank in an initial public offering (IPO) as demand surges for investments in the global energy industry, a senior executive said.
Gulf Finance House, which received approval to set up the $750 million (Dh2.7bn) bank, is in negotiations with the Central Bank of Bahrain to assign a realistic date for the offering, according to Peter Panayiotou, GFH’s acting chief executive officer.
“An IPO is a short-term plan for the First Energy Bank. You will probably see 30 per cent of its shares put to the public,” he added.
The bank, which will be the first Shariah compliant bank to target the energy sector, is scheduled to start operations in 12 months time. First Energy Bank, which is now under formation with a planned paid-up capital of $750m, will capitalise on strong demand for investments in the global energy industry.
It will focus on the upstream and downstream oil and gas, transportation, petrochemicals and power sectors, catering for projects in the GCC countries and beyond, said the company.
The development comes at a time when the Middle East and North Africa require investments to the tune of $56bn annually in their energy infrastructure until 2030, according to the International Energy Agency’s World Energy Outlook 2007.
This implies that the region’s energy sector will need $280bn in investment within the next five years. GFH has also set up energy city projects in Libya, Qatar and India, and has so far raised $1.2bn for investment.
Panayiotou ruled out setting up local IPOs in energy cities as a capital-raising tool, but said there remained prolific demand in locations such as India for future listings for GFH.
“For an energy city, setting up a local IPO for funding is not the right model because if you want to issue IPO you have to have a business that is ever-green. An energy city is a project with a finite life, so we do not believe that an energy is a business model that can be floated.
“We might set up GSF India instead of IPO Energy City India. Since there is so much demand, opportunities and work to do there, you could argue that there is a good solid reason to be there. And maybe one day we might issue an IPO in India, that is quite possible,” he added.
GFH has allocated $670m of investment for India Energy City and $540m for the Qatar project.
GFH to sell First Energy shares