Khaleeji Commercial Bank (KHCB), a Bahrain-based Islamic private bank, is entering the building materials business.
The bank is capitalising on the Middle East's construction boom by setting up a construction supplies company called Binaa.
The new entity is expected to have a cumulative investment value of more than US $2 billion.
It will aim to have a capacity of more than 32 million cubic metres (m3) of ready-mix concrete (RMC), precast and cement blocks per annum, in addition to trading in steel, aluminium, glass and various types of aggregates.
"Due to a variety of factors, there is a huge opening in the market at the moment for a building supply company that can serve both the institutional and retail segments," said Ebrahim H. Ebrahim, board member and CEO of KHCB.
"Our intention is to build a first-class, regional brand that will effectively reposition the building materials industry in the region. We will also be looking selectively at consolidation targets as a way to execute the company's growth strategy."
The bank's positive outlook is based on the regional construction boom and the fact that building materials constitute around 40% of construction project costs.
Estimates put the value of projects underway in the GCC at up to US $3.7 trillion. Prices of cement and steel have continued to increase at levels above the official rates of inflation.
Khaleeji Commercial Bank and Binaa have been working with Gulf Organisation for Industrial Consulting to develop the new entity's business strategy. China National Building Materials Company (CNBM) will be a strategic technical and trading partner in the new venture.
Binaa also has strategic partnerships with construction, real estate and investment firms, including Sambu of Korea, Gulf Finance House, Abu Dhabi Investment House, Emirates Islamic Bank, Dubai Investment Company and Athman Investment Company.
"We have been working to develop a distinctive growth strategy for Binaa consisting of both organic investment and targeted consolidation," said Dr Ahmed Mutawa, secretary general of Gulf Organisation for Industrial Consulting.
"The initial activity of the firm will focus on the GCC, and extend into the rest of the Middle East and North Africa."
Khaleeji Commercial Bank (KHCB) is a Bahrain based Islamic private bank, owned by a group of regional strategic investors (60%) and its founding shareholder, Gulf Finance House (40%). It offers commercial and corporate banking services, wealth management, structured investment products and project financing facilities.
In 2007, KHCB earned net income of BD21 million, an increase of 164% over the previous year, and increased its assets by 180% to BD269 million. Return on average equity was 23.4% for 2007, following an increase in paid up capital from BD30 million to BD100 million.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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