IFC’s minor stake acquisition in AUB indicates World Bank support for financial institutions in emerging markets - IFN

IFC’s minor stake acquisition in AUB indicates World Bank support for financial institutions in emerging markets

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BAHRAIN: As announced on the Bahrain Bourse yesterday, the International Finance Corporation (IFC) has secured a 2.95% shareholding in Ahli United Bank (AUB). The acquisition was conducted through a conversion of the mandatory convertible preference shares of the IFC Global Capitalization Fund into AUB common shares at a conversion price of 74.8 US cents. As a result, AUB issued approximately 167.04 million shares at a 10% premium on the said price. The conversion exercise by IFC Fund was expedited on the grounds of AUB’s solid financial and operational performance. Fahaad Al Rajaan, the chairman of AUB, said: “IFC Fund’s decision to exercise the conversion option prior to the mandatory conversion date represents a strong vote of confidence in the solid fundamentals of AUB and its regional business strategy.” In the first half of 2013, AUB recorded a net profit of US$403 million, with an exceptional gain of US$212.9 million on the divestiture of its 29.4% stake in Ahli Bank Qatar. Fitch later assigned a long-term issuer default rating (IDR) of ‘BBB+’ to the bank while its viability rating has been downgraded to ‘bbb’ from ‘bbb+’. The IDRs for the bank’s units in Kuwait and the UK were also affirmed at ‘A-’ and ‘BBB+’ respectively. All IDRs carry a stable outlook. The IFC Global Capitalization Fund was established in 2009 by IFC Asset Management Company, a subsidiary of the IFC, a member of the World Bank Group. It was created to strengthen systemically important banks in emerging market countries. As a founding partner, Japan Bank for International Cooperation and the IFC jointly committed US$3 billion for equity-linked investments. The fund consists of an equity fund of approximately US$1.3 billion and a subordinated debt fund of approximately US$1.7 billion. As of the 31st August, it has 19 investments in commercial banks across the emerging markets totalling to US$2.1 billion.