Gulf Holding KSCC – A Closer Look - Who are the Shareholders?

Dr. Herbert West at the GFH Medical Center, AA in Background,GH Kuwait on the Table

As the picture above indicates Gulf Holding KSC (Closed) ("GH") has “come back to life” after a prolonged state of dormancy apparently though efforts by GFH (now its majority shareholder) over the past 3 years.  

Information on GH is fragmentary.  When corporate distress hits, a typical reaction in this part of the world and others is to go silent.  Or to change the name of the institution in the hopes that the public won’t know that the newly named entity has a less than illustrious past.  A “unicorn” loses its horn and turns to good, one might say. 

More info is emerging after GH’s reported awakening from its coma.  

But what do we know?   Not much. 

As usual AA has your back.  

This the first of four planned posts will look at shareholding.  

GH is a closed private Kuwaiti company and as such need disclose less than a public company.  The nature and extent of the “problems” at GH was severe, probably leading to more than the normal reticence from the company and its shareholders.  

We know that the company was created “in Kuwait in November 2005 by well-known investment companies in the region” who for obvious reasons chose to remain less well known in recent years.  Web searches do not disclose shareholder names.  If there was a self-congratulatory announcement of the formation of the firm back in 2005 (which would be reasonable given the year of creation), it has disappeared down the memory hole.  Some sources refer to five founding shareholders. 

We do know that GFH was involved.  If you look at annual reports back to 2012 (at least), you’ll see references to GFH officers holding senior positions at GH and on its board.  Chairman of the Board.  CEO.  But no mention on GFH’s shareholding which we only about learned from GFH’s 2018 FY Annual report.  GFH's investment in GH was fully provisioned sometime in the unknown past.  

Some information on that topic emerged in Note 14 in GFH’s 2Q18 unaudited interim financials and in Note 20 in GFH’s audited annual 2018 financials.  GFH held a 19.79% share (carrying value nil) prior to becoming a 51.18% shareholder through the June 2018 acquisition of an additional 31.39% in shares.  

One other shareholder has self-identified.  That is GBCorp Bahrain (20% owned by GFH). In Note 6 to GBC’s 2018 annual report, GH emerges from nowhere shown as fully written off with the date captions for this entry strangely set to 2014 and 2013 in the 2018 AR.  Amount shown before provision is USD 13.4 million.  Assuming AA is correct and that 1 USD = KWD 0.2920 in November 2005 GBCorp would have 4.9% shareholding based on GH’s KWD 84.7 million paid in capital.  

But we don’t know what GH’s original paid in capital was and whether there were additional amounts raised or earnings capitalized via bonus shares. Remember the Note in GB's financials because you’ll find their plaintiff’s claim against GH outlined here.  We’ll be looking at that in a future post.  

What can we do to find the others?  

My wise mentor on things Middle Eastern once told me “AA, look at the boards of directors and you’re likely to discover undeclared shareholders, especially if you see shaykhly names.” Either the shareholders themselves or their known associates or “friends”. 

So, for example, at one time two sons of Shaykh Zaid were on the board of a bank listed on the ADX.  ADX shareholder records showed their shareholding as minimal.  Were their board memberships an example of only selfless public service?  Or that they were undeclared major shareholders?   AA was told by someone who should know that it was the latter.  

So other than GFH who are shareholders?  

Besides the GFH members disclosed on GH’s website, the GH board includes one individual from Kuwait Real Estate Company, one from INOVEST, and one from GBCorp.   

It’s hard to imagine an individual seeking to associate with GH.  That wouldn’t be much of a reputation builder.  That suggests that KREC and INOVEST are the missing two shareholders.  We don’t know what their holdings, if any, are.  And also if there were other shareholders.  If GBCorp is a shareholder, was Global Investment House in Kuwait one as well?  

There is other information on an earlier shareholder.  

Mr. Ahmed Mohammed Abdulla Al Ameer of Bunyan Real Estate Company a subsidiary of Bayan Investment Company Kuwait is described as one of the principal founders of GH.  He was Vice Chairman of GH for a while.  He doesn’t appear any longer.   Was BIC/BREC a (partial) source of the shares that GFH purchased?   

In the comings posts we’ll take a look at the sorry state of GH, prior to GFH’s rescue.  

And as well raise an interesting legal issue for discussion by the community.