The director of the new Bahrain Financial Exchange, Arshad Khan, stated yesterday he hopes to attract family-owned businesses to become prominent members of the exchange by offering funding opportunities.
Khan's plans would ensure families retained control of their business while still raising funding by selling a small stake in the company. He told Emirates Business magazine: "We'll offer regulations under which the family-owned business could sell less than 50% through IPOs. Earlier, family-owned businesses were mainly funded by banks and private equities, but as these funding sources are drying up companies will come to the exchange."
He went on to praise the family business model: "They have a valid point by not diluting shareholders because their success is due to proper management control. The moment they lose control the business can start suffering."
Many of the large Saudi Arabian family-controlled businesses use the banking system in Bahrain and have recently experienced liquidity problems.
The BFX, set to open for trading during the first quarter of 2010, will also offer Islamic finance products in an attempt to appeal to a wider client base. Khan believes this will add volume to the exchange, which hopes to gain 100 members from a range of countries in the first year. BFX is a multi-asset exchange and aims to offer an alternative to other exchanges that focus more heavily on the equities markets.