Riyadh, April 5, 2007 — IFC,
the private sector arm of the World Bank Group, today signed an agreement
with three well-known Saudi companies—the Arab National Bank, the Dar
Al-Arkan Real Estate Development Company, and the Kingdom Installment Company—to
create the first independent, specialized, Shariah-compliant housing finance
institution in Saudi Arabia. The new Saudi Home Loans Company will
promote home ownership by making housing more available and affordable
for the country’s middle- and lower-income population, which is underserved
in housing finance.
IFC will provide an equity investment
of up to 100 million riyals ($27 million equivalent) for a 5 percent stake
in Saudi Home Loans Company. IFC has also introduced the Housing
Development Finance Corporation (HDFC), India’s leading housing finance
provider, to the sponsors to train their management teams in credit risk
management, operations, and management information systems. The project
is a key element in IFC’s long-standing effort to help develop a viable
housing finance market in Saudi Arabia.
Youssef Al-Shelash, Chairman of Kingdom
Installment Company, remarked, “This dynamic alliance with IFC will allow
us to expand our financing program aggressively, as we offer consumers
greater choices and flexibility in their housing finance needs. For
the first time, Saudi consumers will be able to find the combined skills
and expertise of a leading retail bank and a specialist, real estate finance
company to structure and make affordable Shariah-compliant financing solutions
for purchasing residential properties.”
Dr. Robert Eid, Managing Director and
CEO of Arab National Bank, said, “This project is an important part of
our strategy to develop housing finance as a core growth sector in the
Saudi economy and to make home ownership a reality for more Saudi families.
We will also continue to leverage our strong experience and excellent
reputation in the marketplace to develop innovative, Shariah-compliant
products and services for home buyers. IFC will share with us its
expertise in housing finance and structured finance in emerging markets.”
Jyrki Koskelo, IFC Director for Global
Financial Markets, said, "We are delighted to work with the founding
sponsors of the Saudi Home Loans Company. Our investment provides
a strong driver for developing Saudi Arabia and the region’s nascent housing
finance market. Making long-term funding more available for housing
finance will better serve the lower-income segments of the market and increase
their chances to own homes.”
Michael Essex, IFC Director for the
Middle East and North Africa, added, “The creation of the first specialized
primary housing finance institution in Saudi Arabia will have a strong
demonstration effect and will encourage replication by other private sector
players in the country. We expect this kind of institution to stimulate
competition, which will improve market conditions, choices, and delivery
of quality financial services.”
IFC, the private sector arm of the World
Bank Group, promotes open and competitive markets in developing countries.
IFC supports sustainable private sector companies and other partners in
generating productive jobs and delivering basic services, so that people
have opportunities to escape poverty and improve their lives. Through FY06,
IFC Financial Products has committed more than $56 billion in funding for
private sector investments and mobilized an additional $25 billion in syndications
for 3,531 companies in 140 developing countries. IFC Advisory Services
and donor partners have provided more than $1 billion in program support
to build small enterprises, to accelerate private participation in infrastructure,
to improve the business-enabling environment, to increase access to finance,
and to strengthen environmental and social sustainability. For more information,
please visit www.ifc.org.
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