Ithmaar Bank, a prominent Islamic investment bank based in Bahrain, announced today its intention to purchase a 60% shareholding in sister company, Shamil Bank, from Dar Al-Maal Al-Islami (DMI) Trust.
In a two-way deal, DMI Trust will acquire from Ithmaar Bank a 100% shareholding in Ithmaar subsidiary, Islamic Investment Company of the Gulf (IICG) Bahamas.
The dual transaction, which is subject to regulatory approval from the Bahrain Monetary Agency (BMA), has been approved by the Board of Directors of Ithmaar Bank and the Board of Supervisors of DMI Trust, one of the world’s largest Islamic financial institutions.
Both Ithmaar Bank and Shamil Bank, a leading commercial and investment bank based in Bahrain, are public shareholding companies listed on the Bahrain Stock Exchange (BSE).
With the acquisition of Shamil Bank, the activities of Ithmaar Bank will cover the entire spectrum of Islamic banking and finance services, including commercial banking, private and corporate banking, investment banking, takaful (Islamic insurance), and leasing. Its flagship companies include takaful company, Solidarity, based in Bahrain, Faisal Finance (Switzerland) and Faysal Bank Limited (Pakistan).
“The main objective of the transaction is to create added value for the shareholders of both Ithmaar Bank and Shamil Bank,” said an official source.
Under the share swap deal, Ithmaar Bank will increase its stake in Faysal Bank Limited (FBL) to 65% (from 28%) and in Faisal Finance to 100% (from 49%). Ithmaar Bank will also acquire Shamil Bank’s 25% shareholding in Meezan Bank, an Islamic investment and commercial bank in Pakistan.
FBL is a full service Islamic banking institution offering consumer, corporate and investment banking facilities. The Bank has seen strong growth in the past few years, with after-tax profit growing from US$3.5 million in 2000 to US$52 million in 2005, and deposits exceeding US$2 billion. The Bank currently operates 55 branches throughout Pakistan, with plans to add another 25 branches by the end of 2006.
Meezan Bank is a leading Islamic investment and commercial bank with 31 branches in Pakistan. The Bank posted an after-tax profit of US$7 million in 2005, while total assets exceeded US$50 million.
The acquisition will significantly strengthen Ithmaar Bank and its subsidiaries and affiliates, and better position the Bank to advance its mission of becoming the premier provider and manager of Sharia’a compliant investment products in the Middle East.
Initially established as a closed company, Ithmaar Bank made its debut on the Bahrain Stock Exchange earlier this month, following a recent capital increase, which has more than doubled the Bank’s paid up capital to US$360 million.
The Bank is developing a strong pipeline investment opportunities, in addition to the recently announced Infrastructure and Growth Capital Fund, which aims to raise a US$2 billion Islamic private equity fund for investing in infrastructure in the Middle East and North Africa (MENA) region and South East Asia.
Ithmaar Bank is partnering with Deutsche Bank and Dubai-based Abraaj Capital to raise Fund, which will be one of the largest ever in the Middle East region. Ithmaar Bank and Deutsche Bank are co-sponsors of the Fund, while Abraaj Capital is the manager.
The key targeted sectors for the Fund will be oil & gas, petrochemicals, power and water, telecommunications, roads, and health and education.
The predominant focus of the Fund will be to take majority/minority positions in greenfield projects, participate in large scale privatizations and invest in buyout and restructuring opportunities. The Fund will also seek to provide mezzanine funding to companies in the targeted sectors.
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