CGI Gulf Insights of the Week (142)

ByCGI Gulf Insights of the Week
Monday, 20 January 2020
Published inJanuary 2020

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CRIF GULF WEEKLY INSIGHTS

Country Risk Update - Bahrain

Risk Indicator - DB5c
Risk Level - High
Ratings Trend - Deteriorating

Saudi Arabia's strong support for Bahrain provides a backstop to the economy. A giant oil and gas find off the west coast offers the promise of vast wealth if it proves commercially viable to extract. Bond issuance restocks reserves and reduces FX risk, demonstrating that strong Gulf support has helped revive market confidence in Bahrain.

Market Overview

Emirates NBD said to seek Al Jaber's DIFC land to recover the debt
Dubai’s biggest bank is going after a plot of land in the city’s financial hub that belongs to the debt-laden Al Jaber Group. Emirates NBD is seeking to seize or sell the undeveloped land in the Dubai International Financial Centre after becoming frustrated by the pace of assets sales under Al Jaber’s debt restructuring, according to people familiar with the matter and an enforcement letter sent by the bank. The land - worth about $70 million - was used as collateral to secure a loan for chairman Obaid Khaleefa Al Jaber Al Marri, the people said, asking not to be identified because the matter is private. Al Rihab Real Estate Co, a unit of Al Jaber, defaulted on a mortgage-related to the land, they said. Emirates NBD is among creditors seeking to take action against Al Jaber and recover funds after two rounds of debt restructuring, the people said. Al Jaber last year agreed to raise about $445 million from asset sales by the end of the year, while members of the Al Jaber family and other shareholders pledged to raise as much as $210 million by selling personal assets. Little progress has been made on these sales, the people said.

SoftBank offers to invest $40 billion in Indonesia's capital
SoftBank Group Corp. offered to invest $30 billion to $40 billion toward the development of new Indonesian capital, a senior member of President Joko Widodo’s cabinet has said. SoftBank chief executive officer and founder Masayoshi Son met Jokowi, as the head of state is popularly known, in Jakarta last week and expressed his interest in joining the project. The billionaire has already been appointed to the steering committee overseeing the city’s construction. “I will meet Masayoshi in Davos and then Tokyo,” Coordinating Minister for Maritime Affairs and Investments Luhut Pandjaitan told a news conference in Jakarta. The “president will decide on the matter in February.” The size of the investment proposal from the Japanese company is puzzling as Indonesia has estimated the total cost of building the new capital from scratch at about $34 billion. SoftBank said in an emailed statement later Friday, 17 January 2019 that the company hasn’t disclosed actual numbers. In 2018, the company signed a memorandum of understanding to support a planned $200 billion solar project in Saudi Arabia. SoftBank and the Public Investment Fund have said they’re continuing to collaborate on solar energy plans after the Wall Street Journal said the project was put on hold.

Dubai's Fajr Capital sells stake in Brunei's largest bank
Dubai-based Fajr Capital has announced the sale of its significant minority stake in Bank Islam Brunei Darussalam (BIBD), Brunei’s largest bank, to Brunei Investment Agency. Fajr Capital invested in BIBD in September 2010 with a commitment to transform the bank into a world-class financial services institution. Fajr Capital said it has worked alongside BIBD’s shareholders to devise and begin implementation of a new strategy which resulted in enhanced customer experience, the introduction of internet banking and new digital platforms, international expansion in South East Asia and the Middle East, and improved financial performance. It added that this transaction marks "another successful exit", following several recent high-profile divestments, including GEMS Education and National Petroleum Services. “Fajr Capital’s long-term and successful investment in BIBD validates our investment thesis and demonstrates our commitment to the markets and communities we serve,” said Dato Paduka Iqbal Khan, CEO of Fajr Capital. “BIBD was our inaugural and flagship investment and we are very pleased to have supported the bank’s transformation during the past decade.”

UAE's NMC Health hires former FBI chief to probe Muddy Waters claims
UAE-based NMC Health has hired former FBI director Louis Freeh to investigate allegations by short-seller Muddy Waters Capital of financial wrongdoing by the hospital operator. The appointment is part of NMC’s effort to restore investor confidence. The company’s shares have plunged 44 percent since Muddy Waters said in a December 17 report that NMC’s financial statements hint at potential overpayment for assets, inflated cash balances and understated debt. The stock rose as much as 7.8 percent Friday, 17 January 2019 in London. NMC, which previously called the allegations “unfounded, baseless and misleading,” last month appointed a committee of independent board members to look into the matter. The panel is focusing its review initially on confirmation of the company’s cash balances as of December 15, the company said in a statement on Friday, 17 January 2019. “The committee chose Freeh Group to provide a completely independent, unbiased, comprehensive and transparent report that will address all of these allegations,” said Jonathan Bomford, chairman of the committee. Muddy Waters, led by Carson Block, also alleged that NMC’s independent directors aren’t truly independent and that the company appears to be doing business with entities controlled by its leading shareholders without properly disclosing it.

UAE's Al Hilal Bank agrees to sell Islamic insurance business
Al Hilal Bank, a wholly-owned subsidiary of Abu Dhabi Commercial Bank (ADCB) has agreed to sell Al Hilal Takaful, its Islamic insurance business and operations, to Siraj Holding. The transaction is expected to be completed during the first quarter of 2020, subject to the necessary regulatory approval, according to state news agency WAM. It cited a statement saying the transaction decision is driven by Al Hilal Bank’s decision to focus on delivering high-quality retail banking services, primarily through digital channels and to divest non-core businesses. "The transaction will not impact the profitability of Al Hilal Bank or the wider ADCB Group," it added.

Commodity Tracker

Business Updates

Dun & Bradstreet announced a strategic partnership with QOMPLX, to provide the more than 100,000 Defense Industrial Base (DIB) companies and their subcontractors with fast and reliable assessment and certification as required by the upcoming Cybersecurity Maturity Model Certification (CMMC) framework.

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