MANAMA, 22 July 2007 — Venture Capital Bank (VCBank) and United International Bank (UIB), yesterday announced the launch of a Shariah-compliant real estate development company (SAKANI) that will invest in the development of identified residential housing projects that are targeted at low and middle income groups in Bahrain, Saudi Arabia and the UAE, the segment that has been underserved for many years.
SAKANI is expected to raise $100 million through a private offering to investors in the GCC. VCBank and UIB will commit $10 million each as their participation in SAKANI. Investment in SAKANI is expected to generate an internal rate of return (IRR) in excess of 22 percent over an investment period of three years.
Abdul Latif Janahi, chief executive and member of the board of directors of VCBank, said: “The boom in the real estate sector across the GCC has largely focused on high end developments. There is a clear shortage of housing that are targeted at low and middle income groups across all countries in the region.”
Janahi added: “As far as housing developments are concerned, each country in the region has its own challenges. VCBank has undertaken extensive research in order to identify these challenges and put the appropriate measures to overcome them. Among such measures is the use of international know-how by partnering with developers who have long history and track record in developing low-cost housing. We believe that these measures will contribute toward successful implementation and achieving our anticipated returns while prudently managing the risks.”
Hussain Sarhan, general manager, investment and treasury, UIB, said, “We have been working with VCBank team over the past months in looking at residential development market in the GCC. We identified a significant gap in housing projects that cater for the needs of low to middle income home buyers. The focus of SAKANI will be to fulfill this gap. A number of projects have been identified in Bahrain, Saudi Arabia and the UAE that it will immediately pursue.”
Venture Capital Bank, is a Bahrain-based Islamic investment bank established in October 2005 with a full investment banking license from the CBB, Bahrain, with an authorized capital of $500 million and paid capital of $66 million. It has a strong shareholding base comprising some of the largest institutions, family groups, and high net worth individuals in the GCC. Its main lines of business include venture capital, private equity and financial advisory, and real estate. UIB is an Islamic investment bank established in Bahrain and licensed by the CBB in late July 2006. The bank has an authorized capital base of $2.5 billion and paid-up capital of $291 million. UIB provides alternate investment opportunities through its four main lines of business —- Direct investments, corporate investments, Islamic finance and advisory services.