GFH: Financing the future

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Banker Middle East sat for an exclusive interview with Hisham Ahmed Al Rayes, CEO of GFH Financial Group to discuss what the group’s strategy has been and what the future might hold

editor's pickWednesday 10, October 2018

What has been GFH’s investment strategy and which industries have you focused on? 

GFH’s strategy has been focused on the acquisition of income-generating assets across the GCC, US and Western Europe. Our focus has been on defensive sectors including education, consumer retail and healthcare as well as multiple asset classes across the US/Western Europe real estate segment. 

Can you speak a little bit about any recent exits that might be of interest to potential investors? 

We have a strong track record of success in not only making strong income generating investments but importantly in securing strategic, profitable exits that have benefited the Group and our shareholders and investors. This is reflected in the continued strengthening of our financial results and performance and the strong investor and market confidence in GFH.  Some notable recent exits include: 

  • Exit of British School of Bahrain in 2017 for an aggregate value reaching $180 million. 
  • Philadelphia Private School was successfully exited in 2018 with 33 per cent ROI. 
  • The Lost Paradise of Dilmun waterpark was successfully exited in late 2018 in a deal valued at $60 million. 
  • Exit of Diversified US Residential Portfolio (DURP) delivering cash dividends of nine per cent on a quarterly basis to investors and an ROI of 1.29x. 

I have noticed that you have several funds devoted to private schools in Bahrain, such as the British School of Bahrain, and the UAE, such as Sheffield Private School, how large a role does education play in GFH’s private equity and asset management business and how do you see this trend likely to move going forward? 

We continue to see education as a strong area of focus for the Group.  Our current portfolio includes the Dubai based Sheffield Private School and the international AMA Group following a number of strategic exits.  We continue to actively assess opportunities for further acquisitions in the education sector in the GCC as well as in the US and Western Europe. 

From a real estate development perspective, what has been the strategy behind GFH’s investments? 

We have a long and distinguished track record of developing landmark projects both in the GCC and international markets.  Today our strategy is to undertake development through JV structures alongside world-class partners.  In 2017, we acquired a 1.2 metre squared landbank in North Africa and India and are working towards the potential monetisation of our real estate portfolio.  Currently under development are a number of landmark projects both in Bahrain and the UAE. This includes the iconic Harbour Row and Villamar projects located at the Bahrain Financial Harbour and California Village in the UAE within the prestigious Dubailand project. 

What rationale does GFH adhere when looking at potential disposals throughout the real estate portfolio? 

Ultimately our primary focus and objective is on value creation for shareholders.  With this in mind, we are currently aiming to reposition our total assets and funds under management to yielding assets. 

How has GFH set its targets to generate shareholder value? What have been the strategic aims? 

Our aim is to increase AUMs to $30 billion over the next two to three years through organic and inorganic acquisitions. We are targeting double digit ROE and aim to maintain above market average dividend pay-out ratios. 

Can you talk to me about how GFH approaches issues of dividend distribution and buyback schemes? 

Our top priority is creating and returning value to shareholders. Since 2016, we have returned cumulative shareholder value of $235 million through dividends and share buybacks.  Our aim going forward is to maintain our strong dividend distributions and support market cap by way of share buyback.  We have completed a share buyback of five per cent during 2018, and the Group is currently in the process of seeking regulatory approvals to acquire up to an additional five per cent of shares. 

What is your personal management style? 

I believe in a culture that encourages collaboration and team work and one that encourages and demands excellence across the organisation. At the same time, I believe it’s critical to give individuals the support and resources they need to excel and at GFH we do that, we invest heavily in our people for mutual success. 

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