Fitch Upgrades GFH Rating on resolution of legal cases

Rating for the Bahraini Sharia-compliant investment firm moves up one notch to B from B-

Fitch has upgraded its rating for GFH to B from B-, five steps below investment-grade, with a positive outlook, owning to the Bahraini sharia-compliant investment firm’s settlement of legal cases last year.

“The upgrade principally reflects GFH’s improved financial position following the settlement of a number of pieces of litigation in connection with previous investment transactions and dealings, strengthening the institution’s capital position and reducing associated legacy uncertainties,” Fitch said in a statement.

GFH settled last year a number of cases filed against former executives, including two ex-chairmen. GFH, which had liabilities of over $1 billion in 2008, has gone through numerous debt restructurings and is currently in an acquisition and expansion phase.

The Abu Dhabi Financial Group (ADFG), an alternative investment company with US$5 billion in assets, is the largest shareholder in GFH.

GFH, which is listed in Bahrain, Kuwait and Dubai, posted a first quarter net profit attributable to equity shareholders of $31.9 million, more than five times the $6.1m it made in a year-earlier period.

“The Positive Outlook reflects Fitch's view of the measures GFH's current management has taken to reshape the group's business model towards a greater focus on income-generating investments, with consequent expectations of more consistent profitability,” said Fitch, adding ADFG’ stake is credit positive.