IFC And City Group Company Sign US$30 Million Funding Deal
City Group Company (CGC), Kuwait’s leading listed public transport company, today signed a US$30 million loan agreement with IFC, a member of the World Bank Group. The agreement will support CGC’s regional expansion plans.
The $30 million senior loan provided by IFC will assist CGC in its acquisition of major stakes in the Comprehensive Multiple Transportation Company in Jordan, and a further public transport company based in the Levant region. The investment, coupled with CGC’s expertise, will help improve and increase access to transportation service levels in both countries and facilitate the acquisition of fuel efficient buses, which is expected to save up to 330,000 tons of carbon dioxide annually.
Richard Woods, City Group’s CEO, commenting at the signing at the DIFC in Dubai said: “This deal will help us improve and develop the level of public transportation in the region, increasing efficiency and helping to decrease traffic and travel time getting to and from destinations. It is a crucial first step in the City Group’s plan to become the leading provider of public transport in the Middle East with a combined fleet of over 3,000 buses by 2015. City Group is committed to working with IFC, ensuring that all newly acquired buses will be environmentally friendly, helping to decrease pollution and overall vehicle emissions in the markets they operate.”
Michael Essex, IFC’s Director of the Middle East and North Africa Department said: “The growing population in the region is contributing to increased urban congestion and pollution. We hope to play a catalyst role with this project to help focus attention on such projects and boost investments in the transportation sector to meet the growing demands for such services.”
GulfMerger advised CGC on the IFC loan. Yann Pavie, Chief Executive Officer, said “GulfMerger is advising CGC on regional acquisitions, and as part of a strategy to secure debt funding for expansion plans, GulfMerger approached IFC and advised on deal terms. IFC brings to CGC a long-term partner confirming CGC’s expansion strategy in the Middle East. This debt transaction also marks the entry of GulfMerger into the debt finance advisory in the Middle East”.
The Levant region features a number of unregulated public transportation options including taxis and minibuses, which coupled with growing numbers of inhabitants, means more traffic congestion and additional stress on the environment. Increasing affordable public transportation options will help reduce the demand for private car ownership, which is a key driver of traffic and pollution.