Search for investment goes on for Leeds United owners GFH

YEP 11/5/13
By Phil Hay
The parent company of Leeds United owner GFH Capital has confirmed that the search for investment in the club is ongoing after announcing its latest financial results.
Gulf Finance House, the Bahraini investment bank which controls GFH Capital, said it “undertook due diligence on a number of potential strategic investors” for Leeds during a three-month period in which its small profits rose by 50 per cent.
GFH Capital bought a 100 per cent stake in Leeds in December and sold 10 per cent of that shareholding to another Bahraini organisation, the International Investment Bank (IIB), in March. But comments from company executive and United board member Hisham Alrayes indicated again that further sales of equity were planned.
The commitment of GFH Capital to long-term ownership of United came under scrutiny earlier in the year when a statement in Gulf Finance House’s annual accounts appeared to suggest that it would relinquish its entire stake in the Elland Road club before the end of 2013.
GFH Capital subsequently stated that it planned to retain an interest in Leeds, though the Dubai-based private equity firm is believed to be willing to give up a controlling stake.
Negotiations with Yorkshire businessman Steve Parkin over the sale of 51 per cent of shares – a process which began around four months ago – have so far failed to reach a positive conclusion.
Discussing Gulf Finance House’s figures for the first three months of 2013, Alrayes said that the firm was “focused on maximising the potential of our current portfolio and working on early exits from our projects.”
United’s owner is approaching a critical period in the club’s year with the Championship season over and the transfer window poised to open. Leeds manager Brian McDermott – currently out of the country on holiday – has submitted a list of seven targets to the Elland Road board and stressed the need for quick and effective recruitment this summer.
Gulf Finance House’s latest results show that the bank’s income in the initial quarter of 2013 fell in comparison to the previous year but its profit rose to around £1million.
Alrayes said: “We are pleased with the results of our efforts over the past quarter and look forward to announcing further progress in the coming period.
“Importantly, GFH Capital undertook due diligence on a number of potential strategic investors for Leeds United FC.
“Today, GFH is a bank firmly focused on maximising the potential of our current portfolio of investments and working on early exits from our projects.”
GFH Capital stated on the day of its takeover that it had the funds to support Leeds without external help but director Salem Patel expressed concerns about United’s cash flow, describing it as a “weakness”.
Leeds will use £3.3m from season ticket sales for next season to repay the remainder of the £5m loan provided by Ticketus for the rebuilding of Elland Road’s East Stand in 2011, and falling league attendances have affected the club’s revenue, though their income for the 2012-13 term was aided by multiple cup fixtures at Elland Road.
GFH Capital has been actively seeking investors since the turn of the year and Parkin came to the table in January with a view to securing a 51 per cent stake for a fee of around £12m.
Discussions do not appear to have made significant progress recently, however, though Parkin was unavailable for comment when contacted by the YEP.
The past six months have seen substantial changes to the boardroom at Leeds, with another coming next month when Ken Bates resigns as chairman.
The 81-year-old agreed a deal to become club president when he sold his majority stake in Leeds to GFH Capital and he will start a three-year term in that position on July 1.

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