GB Corp aims to capture a slice of global Shariah sector

By Karen Remo-Listana

Global Banking Corporation (GB Corp), which is flush with liquidity from its GCC investors, is set to make multi-million-dollar investments in projects in the region, the US, Europe and Asia.

The Bahrain-based Islamic investment bank, which marked its first birthday earlier this month, is ready to expand further. Recently, the company launched its first subsidiary to tap opportunities in capital-extensive energy businesses.

In this exclusive interview with Emirates Business, GB Corp CEO Mark Hanson says despite the many players already active in the field, the firm can play a vital role in developing energy projects in a Shariah-compliant manner.

"We are not alone in Islamic investment banking," he said. "But we have set ourselves the challenge that in the next three to four years we will be a dominant global Islamic investment bank. And currently we see the energy sector as one of the most promising ones."

Global Banking Corporation is a young company but it is already operating in the GCC, Europe and Asia. Can you tell us what else you have achieved?

It is very much a young bank in terms of history but not in terms of people as we have senior executives who have brought with them a wealth of experience in the field of investment banking. In our first year we have attained a considerable number of achievements. We obtained our licence, raised substantial capital of $250 million (Dh915m) and have increased our staff to 75. We are in the process of moving into our new headquarters in the Bahrain Financial Harbour, which we purchased earlier this year. We completed two transactions last year and this year we expect to complete at least four to six large deals.

How much were last year's deals worth and how big are the projects in the pipeline?

The first one was worth less than $50m and the other one was worth almost $200m. The upcoming projects range from $100m down to several million dollars each.

You started operations in June last year with an issued capital of $250m and an authorised capital of $500m. With an eye on more and bigger deals, are you looking at increasing these figures?

We have no immediate plans to increase the capital this year. As an investment bank we provide advisory services so all the projects we do are off-balance sheet. We use special purpose vehicles into which we may put some capital. But it's the investors' money that really goes into each project.

Are your investors primarily from Bahrain?

They are from the GCC, mostly individuals or family offices. They are private clients so their identity is confidential.

Your first wholly owned subsidiary – Global Energy Financial Services Co – will be injecting capital into investment-intensive oil and gas companies. However, the energy sector is believed to be oozing with liquidity thanks to high oil price. What's the rationale behind entering this area?

Energy is a very important sector in the world economy, with total global demand anticipated to grow by 40 per cent to 45 per cent by 2030. There's great pressure to develop renewable energy sources, but whether we like it or not energy based on oil is here to stay for the rest of our lives. And we believe we can play a vital role in helping develop that sector from a Shariah-compliant point of view.

What would you like to achieve in the Islamic field?

GB Corp is on the threshold of a new era of Islamic investment banking. Our strategy is aimed at capturing a significant share of the $750 billion global Islamic banking market. GB Corp will leverage its regional expertise and experience to establish a strong presence globally. We will develop strategic investment bridges linking the region to global markets and actively facilitate global investment opportunities by building alliances for mutual development.

Does being Shariah-compliant give you an edge in investment banking?

We are different because we have excellent human capital and that is the key to bringing in investment banking business. Through our shareholder base we have excellent access to finance to fund our deals. We are not alone in Islamic investment banking. But we have set ourselves the challenge that in the next three to four years we will be a dominant global Islamic investment bank.

The GCC countries have joined the renewable energy bandwagon. But these activities will be successful only if they are economically viable. How do you view renewable energy businesses in terms of profitability?

Some of the renewable sources at this stage are still expensive to develop. But I think more and more money will be invested and let's hope that in the coming years there is some technological breakthrough that will reduce the cost. Renewable energy is probably the way to go but on the other hand you have to dig out answers to the waste materials it produces, as in the case of nuclear power.

GB Corp's business areas include private equity and venture capital, real estate and infrastructure development and advisory services in corporate finance and capital markets. What is your biggest sector, and do you plan to enter other sectors?

Currently, our top three sectors are private equity, energy and real estate. We are planning to launch an asset management division this year.

What are the next steps towards becoming a global investment bank?

In the coming 12 months we hope to open offices in London and Asia – the specific locations there would be deal-driven. I think there's a possibility of opening in Kuala Lumpur, Singapore and Hong Kong. We have no current intentions to open another office in the GCC as we find Bahrain is a very effective hub to work from. You can fly down to the UAE in less than an hour so it is not necessary to have offices there.

What are your short and medium-term goals?

We want to be a dominant global Islamic investment bank that bridges Europe and Asia. We want to take capital to Europe and Asia this year and then bring Asian investment here to the region.

The weight of momentum has turned to the East, hasn't it?

The world's economic activity has certainly changed now and has turned to Russia, China, the Far East and the Middle East. You have the sub-prime crisis in the United States and you have part of Europe going into recession. But still you cannot ignore the American economy.

Having said that, will you be investing in the US?

We hope to do something this year. There are investment opportunities now to take advantage of. Due to the US slowdown the cost of commercial real estate has fallen by 50 per cent and a lot of companies are short of capital. American investment banks are raising capital in this region, which is liquid. There are investment opportunities in America now and there will be in the future.

How much are you earmarking for your investments?

We are still looking at opportunities so we wouldn't want to get into figures at this stage. But we are looking at private equity and real estate in the GCC. We have already handled investments in Kuwait and Saudi Arabia.

The West's financial turmoil has benefited you, hasn't it?

It has had some effect on banks in the region that were exposed to sub-prime but generally speaking the turmoil is creating investment opportunities. The problems in North America and Europe represent buying opportunities for those of us who have liquidity.

PROFILE: Mark Hanson, CEO, Global Banking Corporation

Mark Hanson is a qualified barrister and solicitor with a 22-year career in investment banking, specialising in corporate finance, in particular initial public offerings, mergers and acquisitions and formation of investment funds.
He began his career in commercial law in New Zealand before moving to London. He entered investment banking when he joined HSBC in Hong Kong and was later appointed deputy chief executive and head of listings at the Hong Kong Stock Exchange.

The governor of Hong Kong recognised Hanson's contribution to the city by appointing him as a member of the Company Law Reform Commission.

He was also an adviser to the deputy governor of the Saudi Arabian Monetary Authority. Prior to joining GB Corp he was head of corporate finance at Saudi Hollandi Bank in Saudi Arabia.

Hanson holds a bachelor's degree in law from the University of Auckland, New Zealand, and previously served with the Royal New Zealand Artillery and Royal Hong Kong Regiment.