Gulf banks launch 3 major Islamic investment projects

Seen at yesterday’s press conference to announce the Islamic initiative are from left: Salah Rahimi, deputy CEO, GGFH; Rashad Janahi, managing director, ADIH; Mohammed al-Sayed, CEO, Ithmaar Development Company; Esam Janahi; Mohamed Hussain; Khalid Janahi, chairman, Ithmaar; and Mehran Jamsheer, deputy CEO, GFH

Gulf Times | Thursday, 28 August, 2008

By Pratap John

MANAMA: Three major multi-billion Shariah-based projects to boost infrastructure, agriculture and hospitality sectors in GCC and elsewhere in the Middle East, North Africa and South Asia were launched here yesterday.

Behind these initiatives are Gulf Finance House - which has big investments in Energy City Qatar and other projects in the country, Bahrain-based Ithmaar Bank and Abu Dhabi Investment House (ADIH), which is involved with Entertainment City Qatar at Lusail.

To boost infrastructure projects particularly in the six Gulf countries, InfraCapital with a proposed authorised capital of $6bn and target paid-up capital of $1.5bn is being set up. It will be the GCC’s first investment bank specialising in tailored infrastructure development and finance.

In the farm sector, AgriCapital will be a new investment vehicle focused entirely on serving agricultural ventures and communities. With a proposed authorised capital of $3bn and target paid up capital of $1bn, AgriCapital will channel expertise and specialist capital into five principal lines - food production, livestock, biomedicine, bio-fuels and agriculture technology.

The countries where investments will be channeled into the farm sector include The Philippines, Turkey, India, Sudan and Mali.

The third project - Hospitality Development Fund (HDF) will be established to nurture and support opportunities across the global hospitality sector with focus on the Gulf region and India and Pakistan. The fund will be released in Q4, 2008 with a size of $1bn and an initial closing of $300mn.

The three projects follow intensive due diligence and individual feasibility studies that confirmed a high level of demand across the infrastructure, agriculture and hospitality marketplaces, top executives of Gulf Finance House (GFH), Ithmaar and ADIH said at the Ritz Carlton here.

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 Middle East and North Africa (Mena) region accounted for one in every three dollars spent on worldwide infrastructure initiatives, they pointed out.

Over the next decade the GCC alone will demand up to $545bn investment across the transport, power, water, energy, education and social infrastructures sectors, they said.

InfraCapital has been conceived as a direct response to this demand and 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 specialising in agricultural technologies, bio-technology and an investment bank specialised in agricultural investments will be created.

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 project partners said they recognised the huge contribution Mena and southern African countries could make to addressing problems in supply.

The bank emanating from AgriCapital shall provide funding to every aspect of visionary agricultural projects, catalysing advances in the field of agri-technology and exploiting opportunities arising from the current and future challenges in global food production.

The HDF 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 Delmonia 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 capitalise existing hospitality companies who show tremendous potential for growth.

Esam Janahi, GFH chairman said: “These initiatives are in line 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 catalyse socio-economic change is almost limitless.”

Rashad Janahi, ADIH managing director said: “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.”

Mohamed 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.”

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