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Seed investors in new fund named.

Manama: Osool, BBK, Mumtalakat and NBB have been named seed investors in the newly-launched Bahrain Liquidity Fund.

In a statement yesterday, the fund's investment manager Securities and Investment Company (Sico), a Bahrain-based wholesale bank, said the four seed investors have aligned interests in enhancing the vibrancy and depth of the Bahrain Bourse (BHB).

The $100 million fund has been launched with the aim of enhancing liquidity in the kingdom's sole stock exchange - the BHB.

The fund will invest in BHB-listed companies and seek to deliver absolute returns to its investors.

Over time, this is expected to result in increased investor confidence in listed securities, narrower valuation gap between Bahrain Bourse and regional peers, reduced bid-ask spreads, enhanced market depth, and increased free float in the market.

The four investors have supported the initiative from the initial stages and are invested equally in the fund through a combination of cash and shares.

As the investment manager, Sico has committed a seed investment that is entirely cash and would remain for the life of the fund.

Osool is the investment arm of the Social Insurance Organisation and the Military Pension Fund and its chief executive Shaikh Abdulla bin Khalifa Al Khalifa said, "healthy capital markets will be beneficial for Bahrain's economy by helping to attract additional local and foreign direct investments".

The fund is part of a series of reforms by the Central Bank of Bahrain and BHB to deepen capital markets and make them more attractive to investors.

They include introduction of a Bahrain Islamic Index (the first in the GCC), active trading of government bonds and sukuks, a minimum free float requirement for issuers, and a planned growth companies market which is expected later this year.

At a time of tightening global liquidity, such measures are likely to help diversify local funding sources.

Bahrain's sovereign wealth fund Mumtalakat's chief executive Mahmood Alkooheji said the fund would be one of the key pillars to attract more investors to Bahrain's stock market, strengthen liquidity, and create a positive impact on the kingdom's economy.

BBK chief executive Reyadh Sater said the bank believed the "collective efforts will enhance trading volumes, and provide a more accurate price discovery process for listed companies in the future".

According to NBB director and chief executive Abdulrazak Al Qassim, the fact that Bahrain's equity market suffered from low free float with thin trade on the exchange was a challenge for investors.

"The launch of this fund is aimed at solving these issues by increasing liquidity, volumes traded and expanding the investor base," he added.

"With assets in excess of $100m, it has the scale to make a significant impact on market liquidity, improve valuations over the long term and enable it to increase gradually the free float for stocks traded."

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Publication:Gulf Daily News (Manama, Bahrain)
Geographic Code:7BAHR
Date:Jun 29, 2016
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