GFH announced on the Bahrain Stock Exchange today that DB had converted US$10 million of the earlier US$100 million murabaha financing it had provided GFH into shares. DB will receive 26,315,789 shares. This is in addition to its November conversion of US$30 million into 78,947,368 shares. Unless I've missed a conversion, DB now owns 105,263,157 GFH shares.
That would give DB roughly 5.7% of GFH.
DB may be building a strategic stake, though if this is the case it has a long way to go. It may have a client interested in GFH. Or it may see the shares as a trading investment. GFH is listed on the Bahrain Stock Exchange, Dubai Financial Market, Kuwait Stock Exchange (Ticker 813), and the London Stock Exchange.
If it is a trading investment, liquidity will be important. Let's take a look at how GFH trades on these four markets.
If it is a trading investment, liquidity will be important. Let's take a look at how GFH trades on these four markets.
On the BSE, during 2009, the average monthly trading volume in GFH was roughly 5.6 million shares and the average monthly US$ value of US$4.3 million. In only six months were more than 2 million shares traded. In 2008 roughly 80 million shares were traded (1.2x 2009's volume) for a total value of US$234 million. That's roughly just short of 9 million shares a month and US$20 million per month. Yesterday (18 January) less than 900,000 shares were traded with the largest ticket 220,000 shares.
The story on the Dubai Financial Market is better but still in the "cold comfort" zone. In 2009 257 million shares traded with a total value of AED417 million (roughly US$114 million). This is 3.8 times the BSE volume and 2.2 times the value. But it's not just a question of number of shares and values, it's also a question of frequency of trades. In 2009 GFH's shares traded on just 80 days. In 2008 the trading volume was a negligible 1.2 million shares for AED 16.6 million (roughly US$4.5 million) with 74 trading days. GFH listed on the DFM - I believe - in mid 2006.
Trading in GFH's GDRs on the London Stock Exchange is even more modest both in volumes, values and days traded.
At this point, there is scarcely enough liquidity to deal with DB's position.
But, the story is thankfully quite different up North. On the Kuwait Stock Exchange, during the first six months of June 2009 (The last report published by the KSE for 2009 is June. Unclear what why no later reports were issued) some 3.32 billion GFH shares changed hands for KD1.65 billion (US$5.76 billion). Yes, that's not a typo. It's billions not millions. Trading is daily and in substantial amounts.
How's DB's investment been doing?
Well it depends on which part of the glass you focus on.
Well it depends on which part of the glass you focus on.
DB acquired its shares at US$0.38 per share as per the terms of the Murabaha financing.
GFH's closing price yesterday (18 January) was US$0.345 per share. That translates into a paper loss of US$3.7 million or a -9.2% return from inception.
If one is an optimist, one would note that yesterday's close was up US$0.03 from the previous day, resulting in a gain of roughly US$3.2 million. Or more precisely a reduction in the loss from inception from US$6.8 million to US$3.7 million. (Rounding).
GFH's closing price yesterday (18 January) was US$0.345 per share. That translates into a paper loss of US$3.7 million or a -9.2% return from inception.
If one is an optimist, one would note that yesterday's close was up US$0.03 from the previous day, resulting in a gain of roughly US$3.2 million. Or more precisely a reduction in the loss from inception from US$6.8 million to US$3.7 million. (Rounding).
A bit of trading/price history: at 31 December 2007, GFH traded at US$3.35 per share and at 31 December 2008, US$0.92 per share.
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