• International Investment Bank buys minority stake in club
• Owners seek to clarify intentions after confusing statements
The Bahrain-based owners of Leeds United have announced the sale of a 10% stake in the club to another Bahraini investment fund, the International Investment Bank. The sale follows quickly the revelation that there are contradictory intentions stated for Leeds between Gulf Finance House and its subsidiary, GFH Capital, based in Dubai, which concluded the takeover of Leeds in December.
GFH Capital, not GFH, was repeatedly cited in the announcement as the owner of Leeds and as the entity which agreed this 10% sale, of which it said: "IIB is the first strategic investor to come into the club in line with GFH Capital's long-stated plans to strengthen the club's overall shareholder base. Others are expected to join as GFH Capital creates the ownership structure which will provide the club with sound long term finance."
That sought to clarify last week's divergence between GFH Capital's insistence that it wants only to sell "strategic" stakes in the club, and statements in GFH's annual accounts that the parent fund intends to sell the whole club immediately. So far, according to Bloomberg, the Bahraini stock exchange, on which GFH is listed, has received no formal clarification about which investment policy is the true one.
Leeds supporters now having to acclimatise to another institution previously unknown to them becoming a significant shareholder at Elland Road were given almost no detail about IIB in the announcement. Nor was the price paid for the 10% stake disclosed; GFH stated in their accounts that they bought the club, principally from the former major shareholder Ken Bates, for £22m.
On its website IIB is revealed as another finance house in Bahrain, like GFH, which has suffered financially in the global economic downturn and the political turmoil in Bahrain during and since the Arab spring. In 2010-11 the fund's total income was only $3m (£1.98m), and IIB made a loss of £9m. That followed a £28m loss in 2009 and a £21m loss in 2010.
The accounts state that IIB decided not to acquire any assets during 2011 due to the economic slump: "Bahrain was not immune to the Arab Spring, and in fact experienced a significant amount of social and political unrest … which severely disrupted the local economy … As expected, investors' confidence, which had already depleted to low levels, took a further serious hit due to the unrest, as did bank financing."
The accounts suggested that since 2011, the economic position had begun slowly to improve, but no explanation has yet been given about the reasons for investing in Leeds.
Aabed Al-Zeera, the chief executive of IIB, will join the board of the Leeds parent company, Leeds City Holdings Limited, and said: "We are delighted to become investors in Leeds United and would like to thank GFH Capital for facilitating this for us."
David Haigh, the deputy chief executive of GFH Capital, said that the plan, contrary to GFH's stated intention of immediately selling the club for a profit, is to sell strategic stakes to a number of investors and for GFHC to keep a stake itself.
"We believe that a consortium of like-minded investors provides the best ownership model for a club which belongs among the elite of English football clubs and global sporting brands," Haigh said.