Mumtalakat Holding Company, the sovereign wealth fund of the Al-Khalifa regime, represents a show of corruption in Bahrain and its failed investments, which are carried out secretly at the expense of the country’s wealth.
Mumtalakat’s record, since its inception in 2006, is replete with the support of loss-making companies that drain the country’s budget, such as the Bahrain Motor Racing Circuit, Gulf Air, and others.
The company acquires all Bahraini non-oil assets and contributes to the state’s general budget of only ten million dinars annually. It is not possible to transfer its profits to expand operations.
Mumtalakat invests in non-oil and gas assets in various sectors, including education, aviation, healthcare, consumer, financial services, manufacturing, real estate, tourism and logistics.
The expansion of Mumtalakat in the British luxury sports car manufacturer McLaren recorded one of the most significant losses for Bahrain’s capabilities.
Mumtalakat owns the most significant stake in the British company, facing great financial difficulties in addition to the challenges the auto industry faces in general.
Bahrain says it is considering offering the company to the public, but that will depend on the results of its future operations. The question here is: Who will finance these future operations? The answer: It is not excluded that this is from the state treasury and at the expense of public benefit projects.
In the details, the CEO of Mumtalakat Khaled Al-Rumaihi said that the company does not rule out the public offering of McLaren Group, indicating that this may happen within 3 years.
Mumtalakat owns a 60% stake in the luxury sports car group, in addition to its ownership of the McLaren F1 racing team.
Al-Rumaihi said in a press statement, “The automotive sector has challenges, but we have confidence in the company, and we believe that it will be a prime candidate for an initial public offering.”
But Al-Rumaihi did not provide reasons for confidence, with the company recording losses estimated at one billion dollars and net debts estimated at 561 million dollars last year since 2020.
Analysts believe that the British company needs to work on a strategy to develop hybrid cars to return to profitability.
Auto production accounts for about 80% of the company’s revenue, so it must spend more in this area.
Car sales fell by about 60% in 2020, which caused the company to lose big, forcing Mumtalakat to lend about 300 million pounds ($363 million) from the National Bank of Bahrain’s treasury.
It is unknown if Mumtalakat intends to inject more money to help the company in the development process, including the production of all-electric cars.
The company aspires to reach sales of 2000 cars by 2025, a number that will allow it to return to recording profitability.
It is clear from these data that Mumtalakat tends to have the initial public offering after the company has moved to profitability or returned to balance, which constitutes an incentive for investors.
This reinforces Al-Rumaihi’s assertion that the initial public offering will not take place before 3 years.
But what is essential from all this is to know whether the development operations that the company is planning, with Michael Letters taking over as CEO this month, will be from the Bahraini government’s treasury or what?