Bahrain's sovereign wealth fund Mumtalakat posts $485m loss for 2009

27 June 2010

High losses at Gulf Air and Aluminium Bahrain weigh down results

Bahrain’s sovereign wealth fund Mumtalakat has reported a loss of BD183m ($485m) for 2009, a 165 per cent fall compared to the $183m it made in 2008.

Revenues at the company fell 28 per cent to $2.75bn in 2009 compared to $3.84bn the previous year, Mumtalakat said in a report announcing its 2009 financial results on 26 June.

The fund attributed the decline to high losses at its portfolio companies: the kingdom’s national carrier Gulf Air and Aluminium Bahrain (Alba), one of the largest aluminium smelters in the world.

Gulf Air’s losses rose 21 per cent to $502.9m in 2009 while Alba, of which Mumtalakat owns a 77 percent stake, posted a loss of $220.7m, compared with a profit of $781.9m in 2008.

The price of aluminium on the London Metal Exchange, considered a benchmark in the industry, fell from a high of $3,200 per tonne in mid-2008, before bottoming out at $1,250 per tonne in 2009.

Mumtalakat also said derivative losses of $170.6m contributed to the fall in profits.

“I would characterise 2009 as a year in which we took an inward-looking approach to prepare for the future,” said Talal al-Zain, chief executive of Mumtalakat, in the report.

Al-Zain sees 2010 as a “great opportunity to potentially start the process of rebalancing our portfolio through measured steps which fit in with our role of investing for Bahrain”, he said.

Mumtalakat announced on 24 June that it had closed the issue of a $750m bond with a five-year tenor, priced at 300 basis points above the mid-swap rate, the middle point between bids and offers on benchmark bonds.

The deal attracted an order book of more than $3.25bn and is the first to be issued by the fund this year. Mumtalakat will use part of the proceeds to refinance existing debt.

Its total assets stood at $12.9bn at the end of 2009.

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