JEDDAH, 27 October 2004 — The National Commercial Bank (NCB) and Samba Financial Group, along with a group of national and international banks, recently signed the first part of the largest Islamic finance contract with the United Arab Emirates’ Etisalat worth SR6 billion ($1.6 billion). The second part of the contract worth SR2.8 billion ($750 million) is expected to be signed in the coming few months.
Obeid Saeed Bin Mishar, deputy executive director of the Emirate Etisalat Est., Hasan AlJabri, manager of NCB’s corporate finance and Turad Mahmoud, manager of Samba’s corporate sector recently signed the contract.
In addition to NCB and Samba, a 9-bank Lead Mandated Arrangers were comprised of Al-Rajhi Banking and Investment Corporation, Citibank, Emirates International Bank, Kuwait Finance House, Abu Dhabi Islamic Bank, Dubai Islamic Bank and Al Jazira Bank.
As did an additional 15 Saudi, Gulf and international banks participated in the finance which included the National Arab Bank, Arab Bank, ABN Amro, Arab United Finance, International Gulf Bank, Dubai Commercial Bank, Bahrain Bank, Kuwait Bank, Saudi British Bank, Riyad Bank, Banque Saudi Fransi, BNP Paribas Bank, Baroda Bank, Dubai Bank, Habib AG Zurich Bank and United Limited Bank.
The financial procedure took a record time despite the complexity of the transaction, which involved many cohorts, and the Ettihad Etisalat Finance preference for a loan which is compliant with Islamic principles. The first part of this loan will be used to pay the license fees for the Saudi Commission for Information Technology and Communications (CITC) as per requirements of the mobile phone license fees and 3rd generation business (G3) licenses. The second part of the contract will finance the working capital needs.
The NCB and the Samba are the local book runners while Citibank and Emirates Bank will be the international book runners. The NCB also acts as escrow agent and Modareb under the facility. Kuwait Finance House is the co-Modareb. Abu Dhabi Islamic Bank, Samba, Al-Rajhi Bank, Citibank will act as escrow agent. Emirate Bank will be responsible for offshore account. Samba will act as guarantee agent.
Abu Dhabi Islamic Bank, Al-Rajhi Bank and Kuwait Finance House will assume the duty of Islamic Shariah coordination.
Initial public offer of Ettihad Etisalat Consortium, which began at all Saudi banks last Saturday, received great response from local investors. Ettihad Etisalat offered 20 million shares at SR50 ($13.30) each.
Some traders attributed the buying frenzy to the strong performance of the Saudi bourse over the last 18 months, fueled by record oil prices, healthy corporate results and a surge of liquidity in recent months.
Investors have also been encouraged by recent government steps to implement investment reforms, such as establishing a board for the capital market authority to enact a long-awaited capital market law.
The Saudi government awarded the consortium, which is part owned by Etisalat, a permit in August to set up and operate a second mobile phone network worth SR12.2 billion.
The contracts end the monopoly of majority state-owned Saudi Telecommunications Co., the Kingdom’s largest listed firm and one of the most heavily traded on the bourse.
