GFH seeks aid on $3bn plan

Bahrain's Gulf Finance House is tapping international investors for help in financing the centrepiece of a US$3 billion financial centre in Tunisia.

Bahrain's Gulf Finance House (GFH) is tapping international investors for help in financing the centrepiece of a US$3 billion (Dh11.01bn) financial centre in Tunisia. The Tunis Financial Harbour was one of several multibillion-dollar property projects, including the huge Energy City developments in Qatar and Libya and commercial centres in Mumbai and Bahrain, that GFH started during the global boom.

Some investors pulled out of those projects after the financial crisis hit in 2008 and GFH has since revised its business model to focus on investments in financial institutions instead of property.

The company is honouring commitments to build projects it has already announced before seeking an exit. Following its launch in 2007, work started on the Tunis Financial Harbour late last year, a company spokeswoman said. The plan now is to complete infrastructure and drum up support for an offshore financial centre that is to form the backbone of the waterfront development, she said. "It is an old project, so there is already work in progress and they have to finalise this thing," said an analyst in Bahrain, who asked not to be named. "They financed this not only through themselves but they have partners and clients and they have to honour those commitments. But they have plenty of projects, so it will be difficult."

If all goes to plan, the centre will be home to 110,000 people and will create 16,000 jobs. Its backers hope it will be a financial bridge between Europe and fast-growing North African economies. GFH is receiving assistance on the project from the Tunisian government, which participated in the launch of the financial centre at IMF meetings in Washington over the weekend. Taoufik Baccar, the governor of the central bank of Tunisia, said the strategy was to position Tunis as the region's leading financial facility through increasingly open economic policies. The Tunis Financial Centre would "create the region's first offshore financial services centre that will offer a high-quality location for businesses to locate to and for employees and residents to live", he said.

It is unclear how much money GFH has invested in the project or what sum it aims to raise from investors to build the offshore centre. Representatives of GFH did not respond to requests for those details. Earlier this year, GFH exited its investment in the Bahrain Financial Harbour, a development on which the Tunisian project is modelled. It also sold part of its stake in QInvest, Qatar's first Islamic investment bank, last October.

The sales were part of an effort to slim the balance sheet and renegotiate debt after the financial crisis scuttled a business model that relied on using short-term loans to finance longer-term projects and investments. When banks grew reluctant to refinance GFH's maturing debt in the wake of the crisis, it was forced to halt new investments and sell assets as it opened talks with lenders on debt restructurings.

Under the aegis of the Australian Ted Pretty, the company's chief executive, GFH has successfully renegotiated its immediate obligations. Its next loans mature in 2012.