Bahrain-based investment holding company Ithmaar Holding received the green light from its shareholders to proceed with the sale of a significant portion of its financial and investment portfolios to GFH Financial. The approval came during an Extraordinary General Meeting (EGM) held on Wednesday.
The deal, estimated to be valued between $695 million and $715 million, involves the transfer of assets along with corresponding liabilities ranging from $665 million to $695 million. The exact structure and terms of the agreement will be finalized by the Board of Directors following further negotiations with GFH Financial. Regulatory approvals are also still required before the sale can be completed.
This move comes amidst Ithmaar's ongoing financial struggles. The company reported accumulated losses exceeding $831 million as of the first quarter of 2024, a figure surpassing its paid-up capital by a significant margin. The asset sale is viewed as a potential path towards improving Ithmaar's financial health.
The specific assets included in the deal haven't been publicly disclosed. However, considering the nature of the companies involved, it's likely that the portfolio comprises financial instruments and investment holdings currently managed by Ithmaar. GFH Financial, a well-established financial group in the region, could potentially leverage this acquisition to expand its own investment offerings and client base.
The impact of this transaction on Ithmaar's future trajectory remains to be seen. While the sale could provide much-needed capital to address its financial woes, it also signifies a strategic shift for the company. Ithmaar will need to redefine its core business focus following the divestiture of a substantial portion of its assets.
For GFH Financial, the acquisition presents an opportunity to bolster its market position. Integrating Ithmaar's assets could enhance its product portfolio and potentially attract new investors. However, successfully managing the integration process and ensuring a smooth transition will be crucial for maximizing the benefits of the deal.
The Ithmaar-GFH Financial agreement reflects a trend of consolidation within Bahrain's financial sector. As companies grapple with economic challenges, strategic mergers and acquisitions are becoming increasingly common. This trend is expected to continue in the near future, potentially leading to a more streamlined and competitive financial landscape in the region.