International Investment Bank (IIB), a globally focused Islamic investment bank based in the Kingdom of Bahrain, announced the launch of a mortgage finance company in the Kingdom of Saudi Arabia. IIB and its investors will own 65% of the venture while 35% has been subscribed by a regional commercial bank that will act as the technical partner.
The new venture is mandated to offer Shari'ah compliant mortgage finance products and services in the Saudi market. With an initial paid-up capital of SAR 375.0 million which will be increased to SAR 562.5 million in year 3, it is one of the few finance companies in the country to specialize in housing mortgage finance services.
The upcoming Mortgage Finance Law will have a booster effect on the housing mortgage market in Saudi Arabia.. About 163,000 new units are required each year, and approximately, 86% of the real estate activity in Saudi Arabia is undertaken on a cash basis.
Mr. Aabed Al-Zeera, IIB's Chief Executive Officer and a Board member said: "We are very pleased to be announcing our third transaction in Saudi Arabia. We believe that this niche project represents a high-quality investment opportunity for our investors, and we intend to capitalize on the expected growth in the real estate sector in Saudi Arabia and in particular low-income housing. With the high population growth rate of 2.45% and large increase in expatriate numbers, we see the potential for considerable growth in the mortgage finance sector. The new venture will offer Islamic mortgages that will be suited for multiple purposes including housing and land purchase as well as house improvement and extension."
He added that "It is estimated that by 2010 real estate activity in Saudi Arabia will reach USD 129 billion. Through 2020, a total of 2.62 million housing units are needed at an average rate of 163,750 units per annum which will involve new investment of USD 320 billion. The housing market itself constitutes around 75% of the total real estate activity in Saudi Arabia and it is estimated that by 2020, USD 20 billion will be needed annually to meet the housing needs in Saudi Arabia. Working with our technical partner, we are very confident of the success of the company to deliver attractive returns to our investors."
Mr. Mohamed Hadi Mejai, Executive Director of Direct Investment and Business Development, commented that "We are very confident about the success of this new venture, which constitutes part of our strategy towards the Saudi market. Earlier, we have launched an affordable housing development company and an asset management firm in KSA with ICD-affiliate of Islamic Development Bank, Public Pension Agency and SEDCO. This venture complements our ongoing presence in the Saudi market. The clearance of the draft Mortgage Finance Law by the Shoura Council is a good sign for the sector. Hence, our launch is timely with this forward looking strategy by the Saudi authorities to facilitate access to housing which is a basic need for every household. Islamic banking is all about community service, sustainable development and decent living for all people".
-Ends-
About International Investment Bank
International Investment Bank B.S.C. (c) (IIB) was incorporated in Bahrain in October 2003 as an Islamic investment bank, with an authorized capital of US$ 200 million and a paid up capital of US$ 43 million. In December 2007, IIB concluded a combined rights issue and private placement offering that has increased the issued share capital to US$ 110 million and total shareholders' equity in excess of US$ 200 million. The Bank's shareholders are high net worth individuals, business houses and institutions from the GCC states. The Bank undertakes two core business activities - private equity and real estate - and aims to offer its clients an internationally diversified range of investments generated through its network of strategic partnerships. It has been involved in investments worth more than USD 2.5 billion including debt and other investors' equity since its inception.
For more information please contact:
Ghizlane Rahali
Associate -Corporate Communications and PR
Tel: (+973) 17565086
Fax: (+973) 17565050
Email: grahali@iib-bahrain.com
Reem Ayoub
Officer - Public Relations
Tel: (+973) 17565064
Fax: (+973) 17565050
Email: corpcom@iib-bahrain.com
visit: www.iib-bahrain.com
© Press Release 2008
