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Monday, 29 September 2008

Bahrain's Unicorn eyes overseas acquisitions

DUBAI: Bahrain-based Unicorn Investment Bank said on Sunday it was looking to spend up to $2 billion to buy banks in Europe, Southeast Asia and the Gulf and plans to arrange $1.5 billion of Islamic bonds by year end.

Fred Stonehouse, head of strategic mergers and acquisitions at the Islamic bank, said it planned to convert any banks it acquires to comply with Islamic banking rules that ban interest.

"In the UK we see potential businesses (banks) we could acquire and Islamicise as appropriate," he said.

Stonehouse said the bank was looking at two opportunities in Southeast Asia, four in the Gulf and one in the UK or Europe adding that it was "in no rush to conclude these."

"The total acquisition value of these would be in the range of $1.5 billion to $2 billion ... There are some mid-range institutions and one fairly sizeable one, he said,"

Gulf Arab investors, awash with cash after riding a regional economic boom spurred by high oil prices, are looking to expand in the Gulf region and beyond to diversify their revenue streams as competition in home markets intensifies.

In January, it received a licence to set up a unit in Malaysia after a failed bid to buy a stake in the country's oldest Islamic lender, Bank Islam Malaysia Bhd.

The bank said on Sunday it was acquiring family-owned foreign exchange firm Bahrain Financing Co through a $1 billion acquisition fund to tap into the growing remittance market fuelled by large expatriate workforce in the Gulf Arab region.

Majid al-Sayed Bader al-Refai, the bank's managing director and chief executive, declined to give a value for the deal.

Unicorn is also looking to arrange $1.5 billion worth of Islamic bonds, or sukuk, in the Gulf Arab region by year end, Refai said, declining to elaborate.

Defaults on US home loans and the ensuing credit squeeze have raised borrowing costs, prompting many Gulf borrowers to shelve bond sales as banks became more reluctant to lend.

Refai said in June bonds under the bank's mandate would be sold in the United Arab Emirates, Saudi Arabia and Kuwait.

Sukuk comply with an Islamic ban on the receipt of interest. Instead, returns are derived from underlying physical assets, such as property, paying rent or other returns to bondholders.

Unicorn, which was founded in 2004, focuses on corporate finance, private equity and asset management.

In January the bank bought 80 percent of US electronics firm Victron Inc for $70 million in its second purchase in the United States in two months. In December, it bought 75 per cent of Open-Silicon Inc, a microchip maker. (The Economic Times)

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