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Gulf Bank pegs listing plan on IFC exit

Gulf African Bank on Kenyatta Avenue in Nairobi. FILE PHOTO |
Gulf African Bank on Kenyatta Avenue in Nairobi. Photo/FILE  NATION MEDIA GROUP

Gulf African Bank has tied its public listing plans to the exit of International Finance Corporation (IFC) from its shareholders’ roll.

The lender is 15 per cent owned by IFC, the World Bank’s private sector lending arm.

IFC bought a 15 per cent stake in the bank for $5 million (Sh430 million) last year, which valued it at about $33.33 million (Sh2.86 billion) at the time.

Chief executive of Gulf Bank Abdalla Abdulkhalik said IFC plans to exit through a public share sale.

“What they are looking at is that this (Gulf African Bank) will go into an initial public offering (IPO) and become a public company and therefore they (IFC) will be bought out by the normal mwananchi,” said Mr Abdulkhalik at the Islamic Finance Conference held in Mombasa last week without however giving time lines.The IPO, which could be a first for a Shariah-compliant bank, is also expected to raise additional capital for the lender. “We have not set a timeframe yet but at some point Gulf African Bank would like to go public,” said Mr Abdulkhalik.

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IFC’s policy is to invest in firms for between five and seven years .Before IFC’s equity investment, Gulf Bank was owned by Istithmar World which had a 32 per cent stake, Government of Dubai sovereign fund and alternative investment BMI Bank BSC with a 21.3 per cent stake, Saudi Arabia-based investor Abdullah Mohammed Al Romaizan (21.3 per cent), Gulf Cap Group, a Dubai-based firm (10.3 per cent) and PTA Bank (5.3 per cent).

Going by the IFC’s investment horizon the public could get a chance to buy into the lender by 2017.

The bank has more than doubled its asset base over the past four years.

Its total assets stood at Sh13.56 billion as at the end of 2012, up from Sh5 billion as at the end of 2008. The bank began operations in December 2007.

In 2008 it made a loss of Sh382 million but posted Sh242.22 million net profit in 2012.

First Community Bank is the only other fully-fledged Kenyan Shariah compliant bank. It has also taken a similar trend in asset and profitability growth.

First Community Bank started operations in June 2008 and posted a Sh307 million loss and had a Sh3.18 billion asset base but as at the end of 2012 it posted a Sh294 million pre-tax profit and had a Sh9.95 billion asset base.

Despite its potent potential Islamic finance is yet to fully take off in Kenya partly due to low customer unawareness and also due to slow enactment of regulatory guidelines for the sub-sector. Both banks have a customer base of approximately 100,000.

“It is difficult to launch products as fast as we would like,” said Mr Abdulkhalik saying each Shariah-compliant product required approval that is not covered by the Kenyan Banking Act.

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