The GFH Financial Group, an investment bank based out of Bahrain, turned in a fine performance for the first nine months of 2022 despite challenging macroeconomics. It raised earnings per share to $1.91 compared to $1.76 last year.
The group - with interests in investment banking, real estate, commercial banking, and treasury services - has shown a lot of momentum over the past couple of years. Income has grown 2.5x times from $83.8 million in 2014 to $293 million in 2021. Its market cap is at over $1 billion.
The expansion strategy focuses on enlarging its international footprint, with GFH deploying nearly $6 billion over the past 24 months in Europe and the US to grow its real estate portfolio, which includes student housing investments.
The opening of its London office is expected to strengthen expanding its global asset portfolio of nearly $17 billion, consisting of interests in logistics real estate in Europe and the US (including assets leased to Amazon, FedEx and Michelin). This is in addition to acquiring majority stakes in Roebuck, SQ Asset Management and Big Sky, leading real estate operators in Europe and the US. As recently as last month, GFH acquired 11 medical clinics in the US in a deal worth $400 million.
Financials on firm ground
GFH’s total income for the first nine months grew 8.6 per cent to $294 million from $271 million for the 2021 period. This was primarily driven by the company’s investments and fund performance, the proprietary investment portfolio and improvements in the investment banking business. The proprietary investment income increased 80 per cent and investment banking by around 27 per cent. A noteworthy development were the gains realized from banking subsidiary KHCB, which recorded a net profit of $10 million following a successful restructuring.
The consolidated net profit increased 4.7 per cent to $71.48 million compared to $68.28 million the previous year. While the earning gains were an outcome of improved returns from core business lines, the upcoming diversification strategy would play a pivotal role in navigating the global volatility.
Balancing geographical investments
Diversification and expansion are at the heart of the company’s future strategy. GFH plans to leverage its momentum in real estate and private equity to oversee investments worldwide and in the GCC. The GCC is experiencing significant developments, especially in Saudi Arabia, as the government fuels its ambitious target to make Riyadh one of the 10 largest cities in the world by 2030. GFH investors will likely reap the benefits of all these values adds, along with the impressive dividend yield of 4.5 per cent.