Aabed al Zeerah has joined Leeds United’s board and GFH’s David Haigh tells Phil Hay he expects more new investors to follow suit.
GFH Capital expects to announce further sales of shares in Leeds United in the weeks ahead after relinquishing a 10 per cent stake to an investment bank in Bahrain.
The International Investment Bank (IIB) has acquired a minority interest in the Elland Road club in what is likely to be the first of several equity deals negotiated by United’s owner.
GFH Capital completed a full purchase of Leeds on December 21 but the addition of IIB to its ranks and the appointment of the bank’s chief executive, Aabed Al Zeera, as a director of United’s parent company, Leeds City Holdings Limited, is an initial step towards reducing the company’s exposure at Elland Road.
The Dubai-based private equity firm – itself wholly owned by Gulf Finance House, another investment bank situated in Bahrain – has been under intense pressure to outline its long-term plans amid doubts about its commitment and firm suggestions that another takeover of Leeds is possible, just three months on from GFH Capital’s own buy-out.
Yorkshire businessman and lifelong United supporter Steve Parkin is leading an attempt to buy a 51 per cent stake from GFH Capital and discussions over his offer continued in the Middle East this week while GFH Capital was finalising the sale of shares to IIB.
The Yorkshire Evening Post has been told that IIB’s investment will not affected Parkin’s bid and that his proposal remains on the table. It would, however, be likely to complicate a future attempt by Parkin or a third party to secure a 100 per cent stake in the Championship side.
The YEP also understands that GFH Capital anticipates further announcements of equity sales in the near future, a strategy which it said would allow it to maintain “successful, sustainable and long term ownership of Leeds United” and create a “consortium of like-minded investors.”
GFH Capital has not disclosed the price paid by IIB for its 10 per cent stake – GFH Capital bought Leeds from chairman Ken Bates and other minority shareholders for around £21million – but Aabed Al Zeera has joined the board of Leeds City Holdings Limited with immediate effect.
IIB’s chief executive has been a director of the bank since 2007 and is listed as an executive of numerous other companies in the UK, the Middle East and Africa.
IIB was established in Bahrain 2003 and calls itself a “regional leader in private equity investment, real estate investment, asset management and corporate finance.”
The bank reported a net profit of £5.4million for 2012 having posted a seven-figure loss in the previous 12 months.
In a statement, Al-Zeera said: “We are delighted to become investors in Leeds United and would like to thank GFH Capital for facilitating this for us.”
GFH Capital executive and United director David Haigh said: “The introduction of IIB is in keeping with what have always been GFH Capital’s aims for the successful, sustainable and long term ownership of Leeds United.
“We believe that a consortium of like-minded investors provides the best ownership model for a club which belongs among the elite of English football clubs and global sporting brands.
“It is our aim to provide the finance and the stability to enable the club to complete that journey as soon as possible.”
GFH Capital’s plans were clouded in confusion last week after the accounts of Gulf Finance House indicated that it was seeking to sell the whole of its 100 per cent stake in Leeds before the end of this year.
A subsequent statement from GFH Capital insisted that the firm was “looking for investment in part of its share in the club, not its entirety” but the apparent contradiction has prompted enquiries by the Bahrain Stock Exchange and demands that Gulf Finance House clarifies its plans.
A spokesperson for the Bahrain Bourse admitted on Wednesday that it was struggling to elicit an acceptable response from Gulf Finance House, saying: “At least they need to tell us what is right or wrong.”
Sources close to Gulf Finance House say the bank is unlikely to alter the statement published with its recent accounts.
The controversy comes at a time when Leeds are heading towards the end of an unproductive Championship season and in need of a suitable replacement for out-going manager Neil Warnock, whose contract ends in June.
The possibility of Nigel Adkins succeeding Warnock following his recent sacking by Southampton faded on Tuesday when Reading unveiled Adkins as their new boss.
GFH Capital, however, sees the deal with IIB as a demonstration of its stated intention to retain a sizable and long-term stake in Leeds, despite indications that it was already poised to relinquish control.
Director Salem Patel admitted on the day of GFH Capital’s takeover that the company would “bring the right people on board – whether that’s management or shareholders or investors – to help try and build that asset to take it to the next level.”
A statement yesterday read: “IIB is the first strategic investor to come into the club in line with GFH Capital’s long-stated plans to strengthen the club’s overall shareholder base.
“Others are expected to join as GFH Capital creates the ownership structure which will provide the club with sound long-term finance as the basis for (their) return to the top tier of English football.”
GFH Capital claims to have invested around £10million in Leeds before and since its buy-out of the club and United recently announced significantly reduced season-ticket prices for the 2013-14 season.
That announcement was tempered by news that the first £3.3million raised through season ticket sales will be used to settle the loan which funded the redevelopment of Elland Road’s East Stand in 2011.
Parkin, meanwhile, is continuing to push his own interests with a view to replacing GFH Capital as the main shareholder at Elland Road.
The chairman of Clipper Logistics was unavailable for comment last night but he is believed to have flown to Dubai at the start of this week as negotiations about his offer for 51 per cent of shares intensified.
Parkin has been involved in previous, unsuccessful efforts to buy both Leeds and Bradford City but GFH Capital’s willingness to forego further portions of its stake could help to facilitate an agreement.
GFH Capital has confirmed that it is continuing to speak with potential investors having closed out its deal with IIB.