New Alliance Announces Three Visionary Market Tailored Finance Initiatives
Manama, Bahrain, Wednesday 27th August 2008: An agreement was reached today to create three visionary new initiatives focused on driving market specific innovation across the Middle East, North Africa, South Asia (MENASA) region and beyond. InfraCapital will be the GCCs first investment bank specializing in the provision of tailored infrastructure development and finance; AgriCapital will be a new investment vehicle focused entirely on serving agricultural ventures and communities and Hospitality Development Fund (HDF) will be established to nurture and support opportunities across the global hospitality sector. This trio of sharia compliant initiatives represent a turning point in the systematic approach to specialist investments.
Each of the three initiatives are the product of a strategic alliance between Gulf Finance House, Ithmaar Bank and Abu Dhabi Investment House, and follow intensive due diligence and individual feasibility studies that confirmed a high level of demand across the infrastructure, agriculture and hospitality marketplaces. While each of the three alliance financial institutions will leverage their networks and experience in the creation of InfraCapital, AgriCapital and the HDF, they will all operate as stand alone businesses under their own management structure.
The latest statistics show that the MENA region accounted for one in every three dollars spent on worldwide infrastructure initiatives. Over the next decade the GCC alone will demand up to US$ 545 billion dollars of investment across the transport, power, water, energy, education and social infrastructures sectors. InfraCapital was conceived as a direct response to this demand. With proposed authorized capital of US$6 billion and target paid up capital of US$1.5 billion, it will focus on the provision of specialist services and tailored financial architecture for a wide variety of sub-sector infrastructure initiatives.
The vision behind the establishment of AgriCapital is to create an investment vehicle offering specialist and comprehensive finance solutions for the agriculture sector. It will encompass tailored products designed to serve a broad scope of agricultural projects and food production. Alongside these services and under the AgriCapital umbrella, a second investment company specializing in agricultural technologies, bio-technology and an investment bank specialized in agricultural investments will be created. The overriding goal is to empower innovative agricultural ventures in areas of huge potential across the MENASA region. In the Middle East region alone, domestic production of crops and livestock amounts to less than half what it consumes. Increased consumption, extreme global weather conditions, rising energy prices and demand for bio-fuels have seen global food prices leap by 60% over the past two years. The alliance recognizes the huge contribution MENASA countries can make to addressing problems in supply. With proposed authorized capital of US$ 3 billion and target paid up capital of US$ 1 billion, AgriCapital will channel expertise and specialist capital into five principal lines - food production, livestock, biomedicine, bio-fuels and most importantly, agricultural technology. The bank emanating from Agricapital shall provide funding to every aspect of visionary agricultural projects, catalyzing advances in the field of agri-technology and exploiting opportunities arising from the current and future challenges in global food production.
The Hospitality Development Fund will focus on two specific areas of investment and will call on alliance experience through ADIH’s expertise in the conception of Entertainment Cities, Ithmaar’s work on Dilmunia and GFH’s strategic relations with Banyan Tree. The first asset class will concentrate on developing new hospitality-centric vehicles including hotels, transport solutions and apartment complexes while the second will capitalize existing hospitality companies who show tremendous potential for growth. The fund will be released in the next quarter with a size of US$ 1 billion and an initial closing of US$ 300 million.
Esam Janahi, Chairman of Gulf Finance House said, ‘These initiatives chime with GFH’s vision of creating value and accelerating economic prosperity through innovative thinking. When we introduce innovative concepts and apply decades of industry experience to fast emerging economies, the potential to create enormous value and catalyze socio-economic change is almost limitless.’
Rashad Janahi, Managing Director of Abu Dhabi Investment House added, “The role of foresight is central to the conception of credible products and services and the realization of shareholder value. This is especially true of the hospitality sector and given the combined experience of the alliance, we are well placed to spot emerging trends early and respond to them with innovative solutions.”
GFH Deputy CEO Mehran Jamsheer emphasized, “The pace of innovation in what is a booming GCC infrastructure sector cannot be understated. Given the depth of infrastructure experience inherent in the alliance, we are uniquely well placed to create a bank that will serve the many pioneering projects defining 21st Century business and residential communities across the MENA region and beyond.”
Mohammed Hussain, Co-CEO of Ithmaar Bank commented, “Our approach is very simple. We listen closely to the highly individual needs of specific industries and tailor our services accordingly. The results will be products with a flexibility and foresight to inspire infrastructure, agriculture and hospitality ventures the world over.”
“With the launch of these new companies, we are confident that the region will have access to the resources and expertise necessary to continue its long term growth and development. The creation of such entities is a clear manifestation of our commitment to the community and our desire to give back to the people, while at the same time, providing good returns to our shareholders,” said Khalid Abdulla-Janahi, Chairman Ithmaar Bank.
About Gulf Finance House
Founded in 1999, Gulf Finance House has grown rapidly to become one of the most respected investment banks in the Middle East region in terms of the quality and innovation of its product offerings. Over an eight-year period Gulf Finance House has successfully launched economic infrastructure development projects and investments with an aggregate end value exceeding US$20 billion and received numerous awards for its innovative approach to Islamic banking and finance. Its shares are actively traded on the London Stock Exchange (GDR), the Kuwait Stock Exchange, the Bahrain Stock Exchange and the Dubai Financial Market. 2007 was the most successful year in the banks’ history, closing with a net profit of US$340 million, an increase of 61% compared to the previous year.
Reflecting its international reputation, Gulf Finance House has won numerous local and international awards, such as “Best Investment Bank” for three years in a row in 2005, 2006 and 2007, awarded by The Banker Middle East, “Bank of the Year 2006” awarded by the Arabian Business Magazine and “Best Islamic Real Estate Finance House” awarded by Euromoney.
About Ithmaar Bank
Ithmaar Bank B.S.C. is licensed by the Central Bank of Bahrain and listed on the Bahrain Stock Exchange (“ITHMR”). It has a paid-up capital of $543.6 million, total equity of $1.3 billion and is a full investment bank with its direct business covering the Middle East and North Africa (MENA) region, as well as South Asia, Asia-Pacific and Europe. Besides holding significant investments in the banking, financial services and real estate sectors in different markets, the main direct activities of the Bank include underwriting (equity and other financings), private equity (structuring, participation and portfolio management), Islamic financing, and advisory services covering project financing, investments, capital markets and mergers and acquisitions.
Ithmaar Bank’s flagship subsidiaries and associates include Shamil Bank of Bahrain, Solidarity (an Islamic insurance company, headquartered in Bahrain), Faisal Private Bank (Switzerland), Faysal Bank Limited (Pakistan), and Bahrain based First Leasing Bank, BBK and Ithmaar Development Company.
For more information on Ithmaar Bank, please visit the Bank’s website at www.ithmaarbank.com
About ADIH
Abu Dhabi Investment House (ADIH) was established in 2005 by a combination of leading financial institutions and a group of prominent businessmen and investors from the Gulf region. The main focus of ADIH is to tap into and explore the existing and emerging potential of private equity, corporate finance, real estate, asset management, investment placement, in addition to managing Initial Public Offerings (IPOs), as well as, the management of domestic and international securities. ADIH enjoys unique relationships with various and numerous leading financial and investment institutions, including prominent decision makers within the GCC and Europe.
Since inception, ADIH has been associated with major landmark infrastructural projects across the region including: Beirut Gate (Lebanon), Entertainment City Qatar (Qatar), Sunset Hills, Porta Reef and The Lagoon - Amwaj Islands (Kingdom of Bahrain), in addition to enormous successful investment funds.
Since our establishment in 2005 we have grown in meteoric terms. There is no secret to our success or growth, rather an understanding of the importance of partnership and considered business plan.