Petromin to invest in KAEC’s Industrial Valley

Samir Nawar, CEO of Petromin, left, with Rayan Qutub, CEO of the Industrial Valley during the signing of the agreement.
Updated 11 January 2017
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Petromin to invest in KAEC’s Industrial Valley

JEDDAH: King Abdullah Economic City (KAEC) has succeeded in adding Petromin to the growing list of investors in the Industrial Valley.
Under the deal, Petromin will lease 193,917 sq. meters of land to build a logistics service center for Nissan vehicles.
“King Abdullah Economic City’s efforts are focused on boosting the competitiveness of the Industrial Valley as a regional manufacturing and logistics hub,” said Fahd Al-Rasheed, group CEO and managing director of KAEC.
“The unrivaled quality of our infrastructure will attract national and global manufacturing and logistics giants, which will give us further impetus to press on with achieving the strategic vision the government has set forth for this modern city.”
Petromin is one of the Kingdom’s leading producers of automotive lubricants and automotive service providers. The company is active in five major sectors: Mass production and retail sales of automotive and industrial lubricants; Petromin Express, the company’s quick automotive service arm; automotive maintenance and repair; retail sales of automotive fuels through the company’s gas stations; and automotive retail — the company is the official Nissan Motors dealer in Saudi Arabia.
Samir Nawar, chief executive officer of Petromin, underlined the importance of the two sides working together as a team.
“This is why we have long-term investment in King Abdullah Economic City at the very top of our priorities,” he said. “There are so many favorable aspects that make the KAEC the perfect place for us to expand our investments, including the city’s strategic location, the commencement of operations at the King Abdullah Port and the sheer ease of doing business thanks to the record time in obtaining the necessary permits and licensing from the Economic Cities Authority.”
Rayan Qutub, CEO of the Industrial Valley, said that the deal reflects the growing demand for space in the Industrial Valley.
“The automotive sector, which includes vehicle dealers, distributors, spare parts suppliers, commercial vehicle assembly corporations and lubricants manufacturers, is a runaway success in the Industrial Valley,” he said. “It is a natural outcome that the Industrial Valley is developing as the primary base of operations for this sector, thanks to its strategic location on the coast of the Red Sea, its logistical access, the upcoming re-export zone, and the opening of the roll-on/roll-off pier at King Abdullah Port.”
The Industrial Valley, he said, has become the number one choice for corporations that seek to start or expand their business in the region.
“So far, we have been able to attract 120 of the biggest corporations of which 25 have already begun production and 35 others are in the process of building their facilities.”


Saudi Real Estate Refinance Co. plans up to $1.07bn sukuk sale this year

Updated 12 min 48 sec ago
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Saudi Real Estate Refinance Co. plans up to $1.07bn sukuk sale this year

  • The plan by SRC, a subsidiary of Saudi Arabia’s sovereign Public Investment Fund, comes as it prepares to purchase more home loan portfolios
  • SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year

RIYADH: Saudi Real Estate Refinance Co. (SRC), modelled on US mortgage finance firm Fannie Mae, aims to issue up to 4 billion riyals ($1.07 billion) of long-term sukuk this year, its chief executive said on Tuesday.

The plan by SRC, a subsidiary of Saudi Arabia’s sovereign Public Investment Fund, comes as it prepares to purchase more home loan portfolios from mortgage financing companies and banks to boost the Kingdom’s secondary mortgage market.

SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year, Fabrice Susini told Reuters in an interview.

“Our strategy is clearly to tap the market twice this year,” he said. “We are really looking at probably issuing something between ... 2 and 4 billion riyal that we may be issuing in two tranches.

He said SRC was looking at sukuk in the 10 to 15-year range, to help minimize refinancing risks. “Generally speaking we are trying to issue as long as possible,” Susini said.

He said the company was assessing whether it could also issue bonds in currencies other than the local riyal.

In March, SRC completed a 750 million riyal sukuk issue with multiple tenors, under a program that allows it to issue up to 11 billion riyals of local currency denominated Islamic bonds.

“The rule of the game for us is, like many projects across the Kingdom, attract liquidity from foreign investors,” Susini said.

He said SRC had spent 1.2 billion riyals from its balance sheet buying mortgages from local mortgage financing companies and provided liquidity to these firms.

It has also signed initial accords with several commercial banks to acquire housing mortgage portfolios.

Saudi Arabia’s housing ministry is targeting the mortgage market to reach a total value of 502 billion riyals by 2020 from around 300 billion riyals now.

The government wants to increase activity in the real estate market as it moves to revitalize the economy and is taking steps to reform the sector as part of its 2030 reform plan.

It has been working with developers and local banks to counter a shortage of affordable housing — one of the country’s biggest social and economic problems. Saudi Arabia wants 60 percent of its nationals to own homes by 2020, up from 47 percent in 2016.

The size of real estate financing relative to its gross domestic product is 5 percent in Saudi Arabia compared to 69 percent in the United States, 74 percent in the United Kingdom and 43 pct in Canada, the housing ministry has said.

“The goal of SRC in this market was to make sure that we will be able to refinance at least around 10 percent of the market in 2020, and 20 percent of the market by 2028,” Susini told Reuters.