Unicorn reports major deleveraging of balance sheet in 2010
Unicorn Investment Bank (Unicorn) announces its results for the year ended 31 December 2010. The Bank has reported an annual net loss for the first time, reflecting the continuing effects of the uncertainty in the global financial markets. The Bank’s net loss for the year was US$229.5 million, down from a profit of US$2.2 million for 2009.
Unicorn’s net loss in the fourth quarter of 2010 was US$70.1 million, down from a net profit of US$0.2 million for the fourth quarter of 2009.
Total income for 2010 was US$12.3 million, down from US$96.5 million in 2009. With limited exceptions, the reduction in income was due to a general lowering of deal flows, within a stressed financial and operating environment.
Unicorn made investment and other provisions of US$53.9 million and fair value write-downs of US$118.6 million in 2010, reflecting a general drop in the earnings multiples used for valuation within the private equity industry. Unicorn did not realise any material credit losses in 2010 within its financing arrangements, and write-downs and provisions were mainly against investments made prior to 2008 when market valuations were significantly higher.
Unicorn saw major deleveraging of the balance sheet in 2010, which saw the timely repayment of over US$250 million of short term funds. The Bank also recently announced the successful repayment of a US$125 million Syndicated Commodity Murabaha Facility upon its due repayment date on 27 January 2011. Unicorn’s liabilities have fallen from US$610 million in 2009 to minimal levels currently.
Commenting on the 2010 results, Yousef A. Al-Shelash, Chairman of Unicorn, said: “Although the global operating environment remained extremely challenging in 2010 and this had a marked impact on Unicorn, we took concrete measures in 2010 to strengthen the Bank’s balance sheet and improve its operating capabilities. We are pleased to have been able to reduce Unicorn’s long-term debt to zero without resorting to finance restructuring or selling the Bank’s assets, and we have also taken important steps to reduce operating expenses, strengthen our senior management team and enhance our risk management capabilities.”
“Going forward, we will continue to pursue the growth of Unicorn’s business in our core markets, which are the GCC region, Malaysia and Turkey. We are confident that the positive steps that we have taken in 2010 will allow the Bank to emerge as an institution of strength in 2011. ”
Ikbal Daredia, Acting Chief Executive Officer of Unicorn, commented: “Unicorn’s approach has been conservative in 2010 and we believe that this approach will provide a solid basis for balance sheet regeneration in 2011. Although the global economic recession is not showing any sustainable signs of recovery and major market uncertainty continues, the strong corrective measures taken during the year leave the Bank in a strong position to return to profitability in 2011.”
Founded in 2004 and headquartered in Bahrain, Bank Alkhair is an Islamic wholesale bank licensed by the Central Bank of Bahrain, with an international presence in Saudi Arabia, Malaysia and Turkey.
The Bank is also a major shareholder in Burj Bank (formerly Dawood Islamic Bank), Pakistan. Bank Alkhair has completed several landmark transactions since its inception, including the establishment of t’azur, a regional Takaful company; the acquisition of Bahrain Financing Company, the oldest and one of the leading foreign exchange and remittance houses in the GCC; and the successful launch of the Strategic Acquisition Fund, a fund established to acquire strategic stakes in commercial banks globally.