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02 March 2020

A solid market position

GFH Financial Group’s landmark $300 million five-year Sukuk issuance was 2.5 times oversubscribed, with a book size exceeding $750 million. The successful issuance is a stamp of approval from regional and international investors on the Groups profile, strategy and dominant market position. Hisham Alrayes, CEO and Board Member of GFH, sits down with Banker Middle East to talk about this success and his plans for the year

Hisham Alrayes, the CEO and Board Member of GFH Financial Group

GFH Financial Group (GFH) successfully priced a $300 million five-year Sukuk in January. Dubbed to be a landmark transaction for the financial institution, placing it in the international debt capital market, the issuance was well-received garnering a strong demand from international investors.

Sukuk Auction

The orderbook for the certificates saw an oversubscription of 2.5 times with a book size exceeding $750 million. International investors outside the region took up 47 per cent of the issuance, while the remaining 53 per cent was allocated to regional investors.

In terms of the types of investors, 61 per cent were fund managers and 39 per cent were financial institutions. “While the issuance was met with strong market interest from both international and regional investors, it reinforces market confidence in our business and strategy,” said Hisham Alrayes, CEO of GFH.

GFH Financial Group is a diversified business group with four business lines. This allows debt investors to invest in a company that is well diversified and hence not exposed to cyclical market factors of institutions with one business line, added Alrayes.

The Sukuk was supported by a 'B' rating from both S&P and Fitch, which recognises GFH's healthy financial position, sound strategy and business model. The proceeds of the Sukuk issuance will be used to enhance the financial position of the group and to fund its next phase of growth.

Future plans

GFH reported a total income of $335 million and a net profit of $80 million attributed to shareholders for 2019. Funds raised reached $2 billion in the equity and money market, a 100 per cent increase from 2018.

The financial institution concluded six transactions at a total deal value of $557 million across the UK, US and GCC markets. Total assets of the group was recorded at $5.9 billion on 31 December 2019, compared to $5 billion in the previous year, reporting an increase of 18.2 per cent.

Total assets and funds under management increased from $ 8.5 billion in 2018 to $10 billion in 2019. GFH’s revenue for 2019 was $335.69 million compared to $286.17 million last year, boasting an increase of 17.3 per cent.

The financial institution attributed this to the continued growth and progress in GFH's core investment banking business, increased contributions from real estate activities and strong performance in the group’s growing treasury business. GFH is listed on the Bahrain Bourse, Kuwait Stock Exchange and Dubai Financial Market under the ticker “GFH”.

Alrayes further expanded on the Group’s operating performance during the year.

“We have achieved a good growth and results from across our core business lines characterised the Group’s performance in 2019. Key among these was continued growth of our portfolio of real estate assets in the US market where we have now concluded investments in excess of $1 billion over the past five years. Our newly established treasury line also exceeded expectations supporting income growth and adding further diversification to our business. These key areas of our business that we will be working to further diversify and grow in 2020.”

A positive trajectory

Over the course of 2019, GFH continued to build its core business lines whilst diversifying in line with its mandate. The financial institution managed to significantly expand its investment banking business closing six transactions which are valued at $557 million in assets under management.

Similarly, GFH witnessed substantial progress in its real estate activities, landmark projects, commencing sales in landmark developments as well as securing profitable and well-timed exits. Additionally, the Group's newly launched treasury business line performed extremely well and contributed to strong and improved income generation.

Commenting on GFH’s progress, Alrayes said, “The progress of the past year has seen us emerge into 2020 with even stronger foundations upon which we will further build the business and advance our strategy to be a leading regional and international investor. As we pursue this mission and expand our international presence, GFH’s entrance into the international debt capital market with our recently issued Sukuk will further positively position our brand globally.”

“Through the Sukuk, a greater number of international investors have now already been exposed to GFH and our business activities. We intend to capitalise on the recognition received as we go forward. Furthermore, GFH’s access to the international debt capital market has also served to diversify GFH’s funding sources, further strengthening the Group’s financial position and better allowing us to continue to source, execute and market unique, attractive investments and opportunities for shareholders and investors,” added Alrayes.

RELATED STORIES: GFH Financial Group Sukuk



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