Losses at Bahrain's SWF More Than Doubled Amid Global Slump

(June 28, 2010) — Bahrain Mumtalakat Holding Co., the Persian Gulf country’s sovereign wealth fund (SWF), said its loss for 2009 more than doubled from a year earlier.

Mumtalakat blamed its losses on the global effects of the economic crisis which hurt key businesses, mainly at its money-losing airline Gulf Air and at Alba, an aluminum smelting company.

The Mumtalakat fund, established in July 2006, said its net loss widened to 183 million dinars ($485 million) from 69 million dinars in 2008. Revenue fell 28% to 1.04 billion dinars from 1.45 billion dinars a year earlier.

The SWF, a holding company mostly focused on state-run businesses in the small Gulf island nation, holds stakes in more than 35 companies spanning a variety of sectors, including aluminium production, financial services, telecommunications, real estate, tourism, transportation and food production. The fund had assets of 3.4 billion dinars as of December 31, 2009, according to its website.

“Our figures today are principally due to the truly global effects of the economic crisis, but we are continuing to make progress,’ Chief Executive Officer Talal Alzain said in a statement. “I would characterize 2009 as a year in which we took an inward-looking approach to prepare for the future, focusing on our portfolio companies and building Mumtalakat’s capabilities as a financial institution. However, in 2010 I see a great opportunity to really enhance the value in our portfolio companies and potentially start the process of rebalancing our portfolio through measured steps which fit in with our role of investing for Bahrain.”

Mumtalakat’s mounting losses reflects the struggle to obtain cash faced by state and private-owned Gulf companies following the debt crisis. Lenders have questioned the ability by Gulf companies to cover debts despite its oil wealth, and have raised concerns about inadequate transparency and financial oversight, the AP reported.