By: Mahmoud Gamal

Dubai – Mubasher: The reason behind Gulf General Investment Co.’s (GGICO) current financial problems is the company having abandoned its primary activity of investing in real estate and turning to investing in stock markets, commented Fadi El-Ghattis, CEO of MindCraft Consultants.

GGICO’s investment appetite in the bourse began in 2004, prompting it to take high-interest loans, and eventually resulting in its current debt, the analyst told Mubasher.

The Dubai-listed company’s problems became evident in 2008, coinciding with the global financial crisis, he added.

GGICO last reported turning to losses with AED 37.09 million in the second quarter of 2017 against AED 5.85 million in profits in the year-ago period.

Meanwhile, results for the first six months of 2017 showed AED 81.71 million in losses against profits of AED 14 million in H1-16.

Furthermore, GGICO’s first quarter disclosure which indicated a surge in losses, on higher expenses and lower revenues, resulted in reducing the company’s AED 1.8 billion capital by as much as 56% to offset these losses.

The investment company’s revenues fell 10% in 2016 to AED 857.8 million, whereas its losses for the period amounted to AED 98.76 million against AED 20.72 million in profits in 2015.

GGICO’s newest agreement with creditors, which involves maintaining its distance from non-core investments and refocusing its investments on the real estate sector, confirms the company’s commitment to its debt restructure scheme, according to El-Ghattis.

Earlier on Sunday, GGICO said it had completed an AED 2.1 billion ($584 million) debt restructuring scheme after obtaining agreements from the majority of its creditors.

GGICO’s creditors include, but are not limited to, Dubai Islamic Bank (DIB), Emirates NBD, Abu Dhabi Islamic Bank (ADIB), Abu Dhabi Commercial Bank (ADCB), and Commercial Bank of Dubai (CBD).

The deal was described by GGICO’s chairman Abdalla Juma Al Sari as a “win-win deal” for both the company and its creditors.

The company previously said that it was planning to repay its debt by selling some non-core real estate assets.

Translated by: Nada Adel Sobhi