Bahrain investment bank GFH Financial Group will either cross-list on Saudi Arabia’s Tadawul stock exchange or directly list its Riyadh-based subsidiary GFH Capital on the Middle East’s largest bourse, its chief executive has said.
“We have been working on this file for some time now in Saudi Arabia and we are considering two strategies,” Hisham Al Rayes said during the Fortune 500 Arabia online conference on Tuesday.
As part of the listing process, GFH Financial is working to meet International Financial Reporting Standards (IFRS) disclosure requirements, he said.
“Once we get the approval in Bahrain, I think that will be very straightforward because we satisfy most of the requirements,” Mr Al Rayes said.
Listed on the Bahrain Bourse, the Dubai Financial Market, the Abu Dhabi Securities Exchange and Boursa Kuwait, GFH has assets worth more than $18 billion, with operations focused across the GCC, North Africa and India, along with investments in the US, Europe and the UK.
The Saudi exchange has the highest volumes and valuations, so it is a natural target for companies, Mr Al Rayes said.
In terms of the number of initial public offerings, Saudi Arabia was ranked 11th globally in the third quarter of the year, with the Tadawul and the Nomu Parallel Market attracting 26 listings, according to EY.
The listings raised $2.6 billion, making the kingdom rank 10th worldwide in terms of proceeds.
“We see a lot of opportunity now in the credit business and we started focusing a lot on that, with the environment of [high] interest rates,” he said.
“We think the interest rates will remain high [and] this forms a great opportunity for lenders … [but it is] less appealing to the equity participants.”
GFH Financial reported an annual 33 per cent increase in its second-quarter profit as income from investment banking, as well as treasury and proprietary investments rose.
Net profit attributable to shareholders for the three months to the end of June climbed to about $31 million.
Income from investment banking more than doubled to $45.4 million in the reporting period while treasury and investment income increased by 38 per cent to about $26 million.
GFH is currently focused on hastening the expansion of the group’s Middle East, Africa and GCC-based regional investment platforms.
Earlier this year, it acquired a majority stake in Big Sky Asset Management, a US-based real estate asset manager focused on the defensive healthcare segment.
GFH Financial's sustainable infrastructure platform Infracorp has also co-invested in Aurora Infrastructure, a monopoly electricity distribution network in Finland.
The company is “monitoring” the rising role of technology and artificial intelligence in the financial services sector, Mr Al Rayes said.
“Saudi Arabia, Egypt and North Africa have may be the economies of scale to extract value from any technology being implemented and, to a certain extent, the UAE,” Mr Al Rayes said.
“For the other GCC countries, due to the limited population, the return on investments becomes a little bit challenging because technology moves fast and you need to catch up as a necessity to be aligned with the other providers.”