In fiscal year 2007, IFC provided an equity investment of up to $27 million for a new and specialized mortgage finance institution to be established in Saudi Arabia, Saudi Home Loan, the first of its kind in the country. As a technical partner, SHL, which is sponsored by the Arab National Bank, DAAR, KIC, and HDFC, will offer various housing finance products, targeting underserved middle-income customers in the country. Overall, the project is expected to have a high-impact contribution on residential infrastructure and financial sector development in the country. Read more...
During the same fiscal year, IFC supported the establishment of a new shariah-compliant life insurance Company, Al-Ahli Life Takaful Company, through an equity investment of up to $3.5 million. The project is sponsored by the National Commercial Bank, with the German FWU AG Group, as a technical partner. The creation of a new licensed shariah-compliant life insurance company will be essential to kick-start an industry that is underdeveloped in comparison to regional and global standards. In addition, the establishment of Takaful Life is expected to allow a greater degree of private sector participation in the Saudi Arabian economy, leading to a number of benefits to consumers, including enhanced service quality. This will be IFC's first investment in a Takaful company and will provide an opportunity for IFC to understand this growing industry better and help develop the model in other parts of the region. Read more...
IFC Investments in fiscal years 2006 and 2005
In fiscal year 2006, IFC provided a term loan of up to $17 million to the Saudi Orix Leasing Company. The loan is expected to support the company's growing operations primarily for increasing on-lending to small and medium enterprises in the Kingdom. In addition, IFC provided equity of about $5.3 million, as of the end of fiscal year 2007, to participate in the capital increase of the company.
IFC invested up to $25 million to support the Kingdom Installment Company Mortgage Funding program through a series of Sukuk issues. The investment is in the form of credit enhancement to the mortgage backed securities issued by the company.
In fiscal year 2005, IFC provided a long-term Morabaha Facility (Islamic financing) of $50 million to the Saudi British Bank to help the bank expand its housing finance portfolio. The loan will have a maturity of 12 years, thus enabling the bank to increase the average maturity of the loan and make it affordable to the lower- and middle-income market segments. This is the first transaction involving the use of local currency paid-in capital by a member country to provide a local currency loan.
IFC's strategy focuses on supporting local and regional players and enhancing their capacity to invest in key sectors. In fiscal year 2007, IFC invested in the following projects:
Karachi Electric Supply Corporation Limited
IFC provided a loan of up to a $125 million to Karachi Electric Supply Corporation Limited, which included some convertible features. KESC is an integrated electric utility supplying power to the city of Karachi, Pakistan's largest industrial and commercial center. IFC's investment in the company contributes to South-South economic growth, as it supports the investment program of a Pakistani power utility that is backed by strong Saudi and Kuwaiti investors.
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Arabian Yemen Cement Company
IFC provided an A-loan of up to $70 million and mobilized another $55 million under a B-loan umbrella to the Arabian Yemen Cement Company to help it establish a new cement plant in Mukalla, the capital of the Hadramout Governorate. The plant will likely be the first cement plant in the less-developed eastern part of Yemen. The project is expected to cost around $250 million and is sponsored by the Eastern Province Cement Company of Saudi Arabia, two prominent Saudi businessmen, Bugshan and Al-Amoudi, and other minority shareholders.
Anwal
IFC provided an A-loan of up to $40 million and a 5 percent equity to Anwal, which has recently acquired Egypt's largest department store in the public sector, Omar Effendi. With IFC's assistance, the newly privatized company will enhance the development of the retail sector, which is a catalyst for growth in the country.
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Saudi German Hospital Group. IFC supported the Middle East and North Africa's health care industry by financing the expansion of the Saudi German Hospitals Group. IFC provided a $37 million financing to support a new hospital in Sana'a, Yemen, and the construction of a hospital in Cairo, Egypt.
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