Arcapita’s Bankruptcy: Effects on Bahrain and Real-Estate Developments

One of Bahrain’s largest investment banks, Arcapita, filled for chapter 11 — an event that shook Bahrain. What has been the effects of this situation on Bahrain Bay development? Robert Lee, CEO of Bahrain Bay answers some of these difficult questions.

He says; “There are three impacts of Arcapita declaring and filing for Chapter 11. Number  one, we are one of the major creditors so our financial situation has changed a little because we had excess capital invested with them. Number two is what it has done in terms of overall impact and view of Bahrain and the Bahrain market because after all, Arcapita was one of the largest, most active, high-profile private equity investment banks. So people are taking a different look at Bahrain, and not just at Arcapita but overall. I think once Arcapita goes through the restructuring process, and they are just at the tail end of it now, I think there will be much more clarity and certainty. The investment market is very simple. Once there is a clarity and certainty, they come back because there has been a new benchmark set. But right now, because we are going through this uncertain flux, people will just sit back and say they want to wait until the game is over.”

Lee further explains that Arcapita’s problems do not impact Bahrain bay. “Arcapita was a founding shareholder and we have a board that involves Arcapita members but they represent different investors. So their Chapter 11 hasn’t had any impact on us. We’ve always had separate bank accounts and separate operations. Bahrain Bay has been an independent company from day one. So that has allowed us a substantial amount of freedom and flexibility in doing what we want to do.” He adds.