GFH Financial Group, a Manama and Dubai-listed financial institution, received a nod from its shareholders to raise as much as $500 million (Dh1.84 billion) through the issuance of Islamic bonds and use 3.8 per cent of its share capital to acquire strategic stakes.
The shareholders authorised the company's board to raise debt through one or more sukuk issuances, the company said in a bourse filing to the Dubai Financial Market, where its shares trade.
The board will decide the "terms and details ... including undertaking all procedures required to implement the issuance", and will obtain regulatory approval for the Islamic bonds, the company said, without specifying the potential timetable of the deal.
The shareholders, who met on December 29, also authorised the use of 140 million shares, representing 3.8 per cent of GFH's total issued shares, for "a strategic share acquisition" in financial institutions, subject to the approval of the kingdom's central bank, it said without naming any target entity.
The board was also authorised to appoint a market maker in the company's shares, and to use up to 3 per cent of shares for market-making purposes in a bid to boost liquidity.
GFH earlier this month received a B long-term issuer credit rating from S&P Global Ratings. The agency assigned GFH a stable outlook after a review of its four distinct business segments, GFH said on December 26.
The S&P report, the company said, underlined the GFH Group's ability to generate cash flows and its improving earnings, and said a new treasury function and progress in its subsidiary, Khaleeji Commercial Bank, would likely contribute to an increase in income and its headline margins.
S&P defines a B rating as one which is below investment grade, but one where the issuer “currently has the capacity to meet its financial commitments on the obligation”.
In September, GFH said it acquired six income-generating healthcare properties in the United States worth Dh661m. The portfolio, which caters to senior citizens, is spread across California, Michigan and Washington states.
The deal was completed in partnership with Madison Marquette, a Washington-based real estate developer, which controls a 6 per cent stake in the properties, while GFH and its investors hold 91 per cent.
The Bahrain-headquartered company also plans to invest $200m in the privately-owned schools sector through its new investment platform, Britus Education.
The company's net profit in the nine months to September 30 fell 29 per cent to $73.5m, despite a 24 per cent increase in total income to $254m. Total group assets increased to $6.14 billion as at September 30, 2019, up from $4.43bn from a year earlier.