Global Investment House plans spin-offs

03 January 2010

Shareholders will vote on creation of two new holding vehicles on 12 January

Kuwait’s Global Investment House will ask its shareholders in January to vote on the creation of two new investment vehicles to sell off its real estate and investment assets, the company said on 31 December.

Global plans to form two companies, Global Macro Fund, which will be incorporated in Bahrain, and Real Estate Holdco, to be incorporated in Kuwait. The companies will be wholly owned by Global, and will take over its real estate and primary investment portfolios with the aim of selling them off as part of the company’s programme of debt restructuring.

According to a notice posted on the Kuwait Stock Exchange, shareholders will be asked to vote on the plan on 12 January.  

The troubled investment bank was forced to default on a loan of $200m in December 2008, and subsequently appointed UK bank HSBC to restructure the debt along with a series of other loans and bonds.

Global said on 23 December that it had successfully paid off a KD20m ($69.6m) bond, and that it was on course to repay three other bonds worth KD115m ($400m). On 10 December, the bank said that it had entered into deals with its 53 lenders to restructure its debt, ending the period of default which started a year before. It now plans to focus on asset management, investment banking, and brokerage services.

Although the default has subsequently been overshadowed by the debt crisis in Dubai, Global’s inability to meet its obligations in late 2008 was the first major sign that the credit crunch seen in other parts of the world was affecting Gulf investors.

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