Global Investment House restructures

Following on from its debt default in December, the Kuwaiti-government backed financial institution has restructured its management as part of ongoing reform. It is unclear how this affects its private equity activities.

Kuwait’s Global Investment House (GIH) has reshuffled its management team and streamlined its reporting lines as the institution continues to work towards reducing its debt burden.

Described in a company statement as “one of the many steps recently taken, such as reducing its operational costs and improving its business model”, the changes place the emphasis on the Kuwaiti base as its “main headquarters and centre of excellence”.
Under the new structure, co-founder Bader Al-Sumait will take the role of chief executive of Global Kuwait, to which all business groups will report.

The CEOs of GIH branch offices, as well as legal affairs, group risk management and compliance, will report to managing director and fellow co-founder Maha Al-Ghunaim.

The third co-founder, Omar El-Quqa, has been named adviser to Al-Ghunaim and will also sit on numerous strategic committees.

It is not known whether the restructure will have any impact of GIH’s private equity business, Global Capital Management, which is headed by Shailesh Dash.

Al-Ghunaim said the revised structure supports the plan GIH presented to its banks following its default on a $200 million loan in the second half of December.

Following the default, Fitch Ratings downgraded the GIH’s rating from BBB to C, ratings watch negative.

GIH is not the only Middle Eastern institution to have its ratings downgraded since the crisis took hold in the Middle East in Q3 2008.

In January, Standard & Poors downgraded Bahraini investment companies Investcorp and Arcapita from ‘BBB/A-2’ to ‘BB+/B’. The ratings agency cited concerns over the firm’s private equity and real estate exposure in both cases.

Neither is GIH the only GCC-based firm to have undergone restructuring as a direct result of the economic downturn.

In February, Dubai government-backed Dubai Holding moved to “realise efficiences” and reduce its back office overhead by bringing Dubai International Capital and Dubai Group together under the same holding company, Dubai Holding Investment Group. At the same time, Dubai Holding brought together the back office functions of its three real estate entities, Dubai Properties Group, Sama Dubai and Mizin.