Amlak Jordan

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	27439
Company name	Amlak-Finance Jordan
Country	Jordan
Sector	Finance & Insurance
Environmental category	FI
Department	Global Financial Markets Group
Status	Pending Approval

Date SPI disclosed	August 28, 2008
Projected board date	September 29, 2008

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

This project involves an IFC equity investment for a minority stake in Amlak Jordan (Amlak Jordan or the company). Amlak Jordan is the first specialized housing finance company as well as the first specialized provider of Islamic Mortgage Products in Jordan. IFC has identified this transaction with Amlak Finance UAE (Amlak or the sponsor), a leading Mortgage Finance Company in the UAE.

IFC is considering Amlak as a potential MENA regional champion and has been in discussions with Amlak on their future regional expansion plan. Amlak Finance UAE views this project as a step toward a long term partnership with IFC, which may lead to a number of similar ventures in other parts of MENA.

Project sponsor and major shareholders of project company

The project is sponsored by Social Security Corporation, Jordan Dubai Capital and Amlak Finance UAE. Amlak Finance UAE is one of the largest publicly listed Islamic mortgage finance companies in the region. Amlak was established in 2000 as a subsidiary of Emaar Properties, a UAE top real estate developer, and has evolved into a widely held publicly listed Islamic financial institution. Amlak Finance is currently 48 percent owned by Emaar Properties and with the balance of the shares being actively traded on the DFM. Amlak is a market leader in the Islamic home finance sector in the UAE with a 35% market share.

Amlak Jordan recently completed an IPO for 25% of the company, which closed on June 1st. The post-IPO & equity injection shareholding structure of Amlak Jordan is detailed below: __%__ No. of Shares


JDII (Joint Venture) *	32.5%	20,505,000
Social Security Corporation (Jordan)	20.2%	12,755,000
Arab Banking Corporation	5.6%	3,500,000
Global Investment House	3.2%	2,000,000
Tameer	2.3%	1,419,799
Jordan Kuwait Bank	0.8%	500,000
Masaken	0.9%	570,201
Public	21.8%	13,750,000
Equity Increase Amlak UAE	7.9%	5,000,000
Equity Increase IFC	4.8%	3,000,000

Amlak Finance UAE’s indirect shareholding in Amlak Jordan pre-IPO, amounted to 14.08 % and is through the Jordan Dubai Islamic Investment Company (JDII). JDII is a joint venture between Amlak Finance UAE (37.79%) and Jordan Dubai Capital (62.21%). Amlak UAE’s direct and indirect shareholding in Amlak Jordan post-IPO and post equity injection will be approximately 22.3%.

Total project cost and amount and nature of IFC's investment

Under the proposed project, IFC will acquire a minority equity stake in Amlak Jordan of up to 5% of capital in an amount up to US$ 4.2 million as well as support the company with a long term senior loan of up to $40 million.

Location of project and description of site

The proposed investment will be in Amman, Jordan.

Anticipated development impact of the project

The project is expected to have high development impact by helping develop broad-scale and sustainable mortgage lending in Jordan through providing support to a promising new specialized mortgage finance provider. Specifically, the project is expected to have an impact in the following areas:

- promoting south-south investment and facilitating the movement of excess liquidity from UAE to lesser developed Jordan;
- providing access to a growing segment of the Jordanian population to new products such as Shariah Compliant Housing Finance; and
- deepening the local mortgage market through provision of mortgages to Amlak Jordan’s arrangement with several developers in Jordan.

IFC's expected development contribution

IFC has several roles and contributions in this project. Although Amlak Finance UAE has access to capital, it is looking to enhance its branding by successfully expanding regionally and into emerging markets. Amlak Finance UAE views the IFC as a partner that can add value to its domestic and regional strategy as it engages with new business partners, co-investors, and regulatory authorities in these markets.

Additionally, IFC’s proposed equity and long term senior loan investments in Amlak Jordan will have a strong role in supporting a MENA regional partner to become the market leader in mortgage finance products regionally. Moreover, as equity partner, IFC is expected to bring its global standards of corporate governance and international best practices.

Environmental and social issues - Category FI

This project has provisionally been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.

During appraisal, IFC will analyze the activities proposed to be supported with IFC financing for types of transactions, size, tenor and industry sectors and determine the Applicable Performance Requirements, if any, that would include a combination of:

- The IFC FI Exclusion List,
- The applicable National Social and Environmental Laws and regulations, and/or
- The IFC Performance Standards

Amlak will be required to:

- Develop a Social & Environmental Management System (SEMS) to the satisfaction of IFC
- Identify responsible, qualified persons to manage and implement the SEMS
- Commit to implement the SEMS, to ensure that its investments/activities supported by IFC financing are in compliance with the Applicable Performance Requirements
- Submit a periodic report to IFC as per a format to be provided by IFC

IFC PROJECTS