GFH Financial Group B.S.C. Boosts Treasury Shares: A Closer Look
GFH Financial Group B.S.C. recently announced a substantial purchase of its own shares. This article delves into the implications of this move and provides an investment suggestion.
Summary
GFH Financial Group B.S.C. has increased its treasury shares by 27,112,532, bringing its total to 7.32% of total issued shares. This move, the potential implications, and its impact on the company's future are analyzed in this article.
GFH Financial Group B.S.C., a leading Islamic wholesale bank based in Bahrain, recently announced a significant purchase of its own shares. This move has increased the total holding of treasury shares from 6.61% to 7.32% of total issued shares, representing an increase of 27,112,532 shares.
The decision to purchase was made in September 2021, with approval granted in April 2024. The average purchase price was 0.297 USD per share, constituting 0.707% of the issued capital. Post-purchase, 102,629,873 shares remain available for purchase.
But what does this mean for investors? Treasury shares represent a company's own issued stock that it has bought back from shareholders. They hold several potential benefits for the company and its shareholders. They can be used to ward off hostile takeovers, increase earnings per share, and fund employee benefit plans. However, they can also indicate that a company has excess cash and no profitable investments to make.
In the case of GFH, the company has a solid track record in Investment Management, Commercial Banking, and Treasury & Proprietary Investments across the GCC. This move could be seen as a strategic decision to increase shareholder value. However, it's also crucial to consider that this move reduces the number of shares available on the market, potentially increasing the stock's price in the short term.
Given the company's market cap of 3,610,303,395 and a relatively stable yield over the past months, GFH appears to be in a strong financial position. However, the future of the company is neutral. Therefore, investors should carefully consider their investment goals and risk tolerance before making a decision.
Source
Summary
On 1st May 2024, GFH Financial Group B.S.C. announced that it has purchased 27,112,532 of its own shares (treasury shares). This purchase increased the total holding of treasury shares from 253,516,978 shares, representing 6.61% of the total issued shares, to 280,629,510 shares, representing 7.32% of total issued shares. The decision to purchase was made during the company's board meeting in September 2021 and the authority approval for the purchase was given in April 2024. The average purchase price was 0.297 USD per share, which constitutes 0.707% of the issued capital. After this purchase, 102,629,873 shares remain available for purchase. The announcement was made by Mariam Jowhary, the Head of Compliance & AML of the company.
