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| ENSEC MBS |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 25061 |
| Company name | Emirates National Securitization Corporation |
| Country | United Arab Emirates |
| Sector | Finance & Insurance |
| Environmental category | C |
| Department | Global Financial Markets Group |
| Status | Active |
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| Date SPI disclosed | July 25, 2006 |
| Projected board date | August 31, 2006 |
| Previous Events | Invested: July 25, 2007
Signed: July 25, 2007
Approved: November 2, 2006 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
The project involves an IFC investment of up to $45 million and Technical Assistance (TA) to support Emirates National Securitization Corporation (ENSEC or the company). The proposed investment consists of:
- up to $42 million of credit enhancement (CE) to support ENSEC’s Residential Mortgage-Backed Securities (RMBS) program;
- an IFC minority equity investment of up to $3 million; and
- a TA program that will focus on improvements of ENSEC’s corporate governance. |
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| Project sponsor and major shareholders of project company |
| The project sponsor is ENSEC, which in turn is sponsored/owned by Dubai Islamic Bank (35%), Istithmar (35%), Island Capital Group (20%), and Pender International Limited (10%). Within the next few months, there is expected to be some change to ENSEC’s shareholding structure, primarily; with the addition of Tamweel and Amlak as additional shareholders. ENSEC was formed in 2003 and started operations in 2004, as the first securitization company in the UAE (and the GGC Region) to support the development of the real estate and capital markets in the UAE. ENSEC’s plans include performing special servicing of non performing assets and recovery collections services which it expects can bring significant advantages to the nascent consumer finance business in GCC. In the near to medium term future, ENSEC plans to expand outside of UAE including to Egypt, India, Indonesia, Yemen, and Turkey. |
| Total project cost and amount and nature of IFC's investment |
| The proposed project consists of an IFC equity investment of a minority stake, as well as a credit enhancement of up to $42 million. In addition, this project comprises a TA component to help improve ENSEC’s corporate governance. The overall IFC package is expected to result in an enhanced ability of ENSEC to package pools of mortgage loans in the form of MBSs for on-sale to institutional investors. |
| Location of project and description of site |
| ENSEC is headquartered in Dubai, United Arab Emirates. To date, ENSEC employs a total of about 20 staff. |
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| Anticipated development impact of the project |
The securitization market in the UAE has not yet developed. The success of this project is expected to lead to a stepping up in the development of UAE’s/GCC’s overall securitization program as well as the in sophistication of its capital markets. The project is expected not only to increase expertise among local capital markets players but also to increase investor confidence. The success of the project will also lend credibility to ENSEC and hence assist it in achieving its other developmental and business goals including, securitization of assets other than mortgages.
The project will support the development of the mortgage market in the UAE and neighboring countries, by increasing funds available for long-term consumer lending, by freeing up the originator companies’ balance sheets to originate more housing loans, and enabling them to extend the tenor of mortgage products. It will increase the availability of Islamic compliant products as both the underlying assets and the notes to be issued by the securitization structure to investors are Sharia compliant. This will attract regional and international investors seeking Islamic products. |
| IFC's expected development contribution |
IFC’s contribution as an equity investor to ENSEC’s growth is expected to lend credibility to ENSEC; especially as it ventures overseas. IFC’s expected development contribution also lies in the area of enhancement of ENSEC’s existing corporate governance and other institutional practices. Through its participation in the transaction, IFC will provide critical support to ENSEC as it seeks to expand in the GCC and MENA region. The project follows a successful securitization that IFC recently concluded in the GCC region, and is very much a part of IFC's regional strategy to expand housing finance and improve house affordability in the Gulf region. In addition, the project is expected to provide a boost to the local capital markets by diversifying investment products, and to demonstrate through ENSEC, the development of better corporate governance standards and practices.
By partnering with ENSEC, IFC will have a strong role in supporting the growth and development of housing finance products which is particularly important for households seeking more affordable terms on their financing
In short, this is expected to be the first IFC equity investment in this market segment in the GCC region and as such it could have a significant demonstration of IFC’s commitment in the region and also spark other opportunities in high development impact areas. |
| Environmental and social issues - Category C |
| This is an environmental and social category C project. No further environmental or social analysis is required. |
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| For inquiries about the project, contact: |
Mr. Mohamad Sotoudeh, CEO
Emirates National Securitization Corporation
Al Attar Business Tower
Sheikh Zayed Road
Dubai, UAE
Telephone: +971 (4) 367 11 77 |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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