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Kuwait Finance House – Bahrain (KFH-Bahrain), the transaction advisor to Capivest, Elaf Bank and Capital Management House on a potential merger, said today that the three Islamic banks based in Bahrain will be voting on the merger in shareholder meetings to be held by the end of the month.
If approved, the newly-created entity will have a shareholders’ equity of almost $350 million and assets in excess of $400m, which would give them a scale that would make them more competitive in the market.
The transaction would be the first three-way merger to take place in the kingdom.
In addition to shareholder approval, the merger is subject to regulatory and other approvals and is expected to be completed within the second half of 2012.
The expertise and services of the three banks complement each other which will enable the new entity to streamline the integration. Furthermore, a larger capital base in context of limited capital available to such investment companies make it well-equipped to address a wider set of opportunities more quickly within the Islamic banking and investment market.
The merger may prove to be a catalyst to further mergers in the Bahrain Islamic Banking market, analysts suggest.
The proposed merger was announced in September last year and since then, the three banks have been meeting regularly to discuss the details. The due diligence and valuation exercise has already been completed.
Abdulhakeem Alkhayyat, the managing director and CEO of KFH-Bahrain, said: “We are very pleased that the Steering Committee has reached, in principle, agreement on the rationale and benefits of the merger.
“Representatives of the three banks and support teams worked diligently to conclude a deal to benefit all parties.
“The merger is expected to be transformational for the three banks and it is anticipated to bring significant benefits to their potential customers, shareholders and wider stakeholders in Bahrain.”
