Sidra Capital Arranges SAR 400 Million Murabaha Financing Facility For Hajar Tower Real Estate Company

On behalf of Hajar Tower Real Estate Company (HTREC), worth SAR 400 million. The proceeds of the facility have been used to settle the company’s obligations to the promoter of the Abraj Al Bait complex in Makkah.

HTREC is an alliance of leading organisations which hold substantial economic interest in the region, especially their mega projects that they are working locally and globally. Hajar Tower is a 41 floors (1298 rooms) building within the Abraj Al Bait development in Makkah. The hotel and residences are currently managed by the Movenpick Hotel and it is the largest room inventory being managed by any international chain of hotel operators in Makkah.

Mr. Yousef Al Omar, Chairman of HTREC, commented that, “The financing obtained from one of the largest bank in Saudi Arabia, shows that investment in the holy cities has and will always be attractive if they are well structured. With Hajar we have a unique product which responds to the needs of the Muslim pilgrims of having a good quality accommodation within 100m from the Haram. “

Alinma Bank was established with a paid-up capital of SAR 15 million and started its operations in 2008. During its short existence, it has financed a number of companies in a variety of sectors.

Upon the successful completion of this transaction, Mr. Hani Baothman, CEO of Sidra Capital commented that

“As financial advisor to HTREC, Sidra managed to secure financing proposals from both local and international banks before finalizing with Alinma. This shows the success story of HTREC as well as the attractiveness of Makkah and Madina to both local and foreign investors.”

The granting of the facility is in line with the responds from Kingdom’s well capitalized and liquid banks to increasing demand for credit from an expanding private sector. Latest official data shows that bank lending to the private sector grew by 6.9% in the 12 months to April 2011. This represents a reasonable pickup on the 5.7% growth registered in December, particularly given the backdrop of regional political uncertainty.

Mr. Baothman added that “this transaction marked the completion of the second financing transaction arranged by Sidra Capital since it commenced its operations in 2009. The first was a USD 10 million Murabaha Financing Facility from the Islamic Corporation for the Development of Private Sector, a subsidiary of the Islamic Development Bank”.

Sidra Capital was founded in 2009 as Aayan Capital and it is licensed by the CMA. Its license allows Sidra Capital to carry out dealing as underwriter and principal, manager, arranger, advisor and custodian in securities businesses. Its most recent announced transaction was its co-investment in Rolls Royce manufacturing facility with a London-based Shari’ah compliant investment bank.