Bahrain fund Mumtalakat rejects mismanagement claims as 2014 profit rises

CEO denies accusations of poor financial management at fund, which reported a 10.8 percent hike in net profit

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The head of Bahrain sovereign fund Mumtalakat has rebutted allegations made by some parliamentarians that the fund has been financially mismanaged, pointing on Wednesday to increased earnings as proof of its performance.

The fund, which holds stakes in Bahraini companies including Aluminium Bahrain (Alba), Gulf Air and Batelco, posted a 10.8 percent increase in net profit in 2014 as higher revenue outpaced a rise in impairments.

Gulf sovereign wealth funds are facing growing pressure to prove they are wisely investing national reserves, as lower oil prices force governments to consider cutbacks to infrastructure programs and generous state subsidies.

Earlier this year Bahrain’s parliament launched a probe of Mumtalakat, looking at alleged administrative violations at the fund after an audit report revealed irregularities at Bahraini state companies.

“I let the numbers speak for themselves. These are audited financial statements which show what we have achieved,” Mahmood al-Kooheji, chief executive of Mumtalakat, told Reuters.

“At the moment, they (parliamentarians) are basing views on their own opinions. We are happy to be putting the numbers on the table and letting people see our performance. That is the beauty of transparency.”

Mumtalakat made a net profit of 91.6 million dinars ($243 million) in 2014 versus 82.7 million in the previous year, which Kooheji attributed to improved performances by Alba, Batelco and National Bank of Bahrain in particular.

It is the fund’s second positive year after it ended a five-year loss-making run, having been weighed down by a real estate crash, an Arab Spring-inspired uprising in Bahrain and the struggles of Gulf Air.

The airline continues to post losses, although Kooheji said these had narrowed to around 60 million dinars in 2014 from just under 100 million the previous year.

He added he expected the carrier to post a similar improvement this year as it focuses on increasing revenue through better sales practices and lowered costs, aided by lower oil prices.

The better portfolio company performances, which boosted Mumtalakat’s revenue by 10.9 percent to 1.22 billion dinars, offset a 64.5 percent jump in impairment losses to 34.4 million. Kooheji said impairments related to the usual revaluation of Mumtalakat’s assets, without specifying which assets.

He added he was confident net profit would increase again in 2015, aided by further acquisitions.

Mumtalakat has lately been on a spending spree, snapping up buys including U.S. private education company Nobel Learning, and Kooheji expects it to make a similar number of buys as last year’s four, although their total value could be higher.

The CEO said in April the fund wanted to double its 2.4 billion dinars of assets under management in the next seven years.

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