IIB & co-investors mark establishment of $100 million Saudi real estate venture
International Investment Bank (IIB), a globally focused investment bank based in Bahrain, and its co-investors, today officially announced the formation of the $100 million real estate development company, Ewaan, at the firm’s first founders’ meeting, where strategic shareholders of Ewaan were revealed following the strong oversubscription of the company.
Established by IIB in conjunction with its partners the Islamic Corporation for Development of the Private Sector (ICD), a multilateral investment affiliate of the Islamic Development Bank, and the Saudi Economic and Development Company (SEDCO), a Saudi-based investment group, Ewaan will focus on investment in the Saudi Arabian real estate market. Based in Saudi Arabia, the new firm will seek to invest some SR2 billion (US$533 million) in the fast-developing Saudi property sector over the next three years. With the conclusion of the meeting, Ewaan will now move to acquire the requisite licenses from the relevant authorities in Saudi Arabia to begin its investment activities.
Included in Ewaan’s strategic shareholder base is a well diversified mix of highly regarded investors including high net worth individuals and financial institutions, multilateral businesses as well as government organisations. Among these are Saudi, the Saudi Arabian Pension Fund and the Alzahid Group, to name a few. In inviting subscriptions to Ewaan, together, IIB and its partners focused on identify and securing participation from strategic investors and partners that can add value and further financial and operating strength to the company.
“We are delighted with the response that we have received to the creation of Ewaan from a broad range of investors that recognize the unique value proposition of the company, the strength of the Bank and our partners and the significant market opportunities that exist in the Saudi Arabian real estate sector,” said IIB’s Chief Executive Officer, Aabed Al Zeera.
“Working together with our founding partners and in conjunction with our investor base, we are confident that Ewaan is well positioned to leverage opportunities in this high growth sector and fast expanding marketplace. The Saudi Arabian economy is currently undergoing positive developments across the board and we believe that the Company and all of its stakeholders stand to benefit from these positive trends. An evolving regulatory environment, greater levels of transparency and strong growth potential provide the foundation for success and our ability to bring together best-of-breed partners will help ensure we are able to effectively maximize these opportunities.”
Ewaan will explore a broad range of opportunities in the Saudi Arabian real estate market, where there are a number of promising segments. In particular, the Company will focus on the mid market housing segment, where demand far outstrips supply and into which little investment has been channeled to date.
According to recent projections, it is expected that over the next ten years, the gap between housing supply and demand in Saudi Arabia will reach some 1 million units. Ewaan believes the mid-market segment represents a large proportion of this requirement.
Further commenting on the establishment of Ewaan, IIB’s Chief Operating Officer, Salah Nooruddin, said: “These trends create strong opportunities for companies such as Ewaan, which have the technical and market expertise as well as the financial strength to enter the Saudi market and effectively identify those segments and projects that can deliver superior returns. Over the next three years, the Company intends to put strong inflows of investment towards the development of affordable housing projects in addition to other areas that can provide strong results for Ewaan and its shareholders.”
The Internal Rate of Return (IRR) for investment in the company is expected to be in excess of 22% per annum over a three to five year horizon. Further, there is scope for significantly enhanced returns through capital appreciation at exit should the company be floated through an Initial Public Offering (IPO).
On an ongoing basis, IIB continues to develop and bring to market new and well diversified investment products and opportunities. Already in 2006, the Bank has established a strong deal flow and expects to announce a number of additional transactions across multiple industry sectors and asset classes the months ahead.
These efforts, over the longer term, will also be supported by recently announced plans at the Bank, which subject to regulatory and shareholder approvals will see a significant increase in its paid up capital. With an enhanced capital basis, the Bank intends to further extend its pipeline of attractive investment opportunities in the region and internationally. Since its establishment only two years ago, IIB has already completed a number of corporate and real estate transactions in Europe, Asia and the Middle East.