Leeds United: Bahraini’s view investment in Whites as a ‘value play’

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The International Investment Bank, the Bahraini firm which bought 10 per cent of Leeds United in March, paid £2.5million for its minority stake according to the company’s latest financial report.

IIB described its decision to invest in Leeds as a “value play” – an opportunity to buy shares which it expects to increase in value – and claimed the plans of owner GFH Capital would “make the club more sustainable and an attractive investment opportunity.”

The bank announced a deal to purchase a small portion of GFH Capital’s 100 per cent shareholding on March 28 having first discussed a minor investment around the time of GFH Capital’s £21million takeover of Leeds midway through December.

The exact details of the agreement with IIB and the price paid for its 10 per cent stake were not disclosed initially but the firm’s annual report for 2012 has shed more light on its outlay and intentions.

In a statement, IIB’s chief executive Aabed Al-Zeera – appointed to the board of United’s parent company as part of the bank’s equity deal – said: “This investment is a ‘value play’ with a high return potential should LUFC get promoted to (the) Premier League.

“The investment opportunity was introduced to IIB by Gulf Finance House (GFH Capital’s parent company) after its purchase of the club in December 2012.

“GFH exclusively own 90 per cent of LUFC through its Dubai-based investment arm GFH Capital and are currently in talks with other regional players to participate in the investment. IIB has made a capital injection of £2.5million against this acquisition.

“IIB believes that GFH’s plan to restructure the financial operations of the club and take on other strategic investors will make the club more sustainable and an attractive investment opportunity in the future.”

Al-Zeera also admitted that IIB would look to sell its stake once progress at Elland Road offered the bank a profitable return, saying: “IIB anticipates capital appreciation over the medium-term, therefore we are currently taking the approach to hold the 10 per cent with a consideration to offer it once the club’s financial position is solidified.”

Al-Zeera joined the board of Leeds City Holdings Limited in March while Salah Nooruddin –formerly chief operating officer at IIB – was named as a United director towards the end of last month.

Companies House’s website is still to confirm either appointment but GFH Capital said Nooruddin would be tasked with “bringing new investors on board as part of (our) strategy.”

The Dubai-based private equity firm has repeatedly spoken of building a consortium of “co-investors” as it looks to end United’s 10-year exile from the Premier League.

The company is believed to be willing to sell a controlling interest in the club.

IIB’s acquisition of a 10 per cent stake was expected to be the first in a line of similar deals, though no further investment has yet been confirmed.

GFH Capital is at the beginning of its first summer transfer window and United manager Brian McDermott will return from holiday next week with the intention of pushing ahead with plans to rebuild his squad.

McDermott wants as many as seven new signings, a wish-list which will examine Leeds’ and GFH Capital’s financial strength.

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