Esdarat launches private placement for Makkah real estate development

Wednesday, 25 Jun 2008
Category: Construction
Countries: Saudi Arabia
Description: Project will be one of the largest private developments in Makkah
Project will be one of the largest private developments in Makkah

Esdarat Holding Company (‘Esdarat’), with an authorized capital of around US$ 377 million, has launched a private placement of 600 million shares to fund its investment in the largest privately owned real estate development projects in the center of the Holy City of Makkah to date, being developed by Saudi Bin Laden subsidiary, Al Makam.

The private placement, which is expected to raise over $300 million, is a Sharia’a compliant investment opportunity which offers investors attractive potential returns. An initial public offering of the company is expected to take place within 12-18 months, subject to regulatory approvals.

Commenting on Esdarat’s strategy, Mr. Issam Essa Al Asousi, Board Member of Esdarat said, “The long term strategy of Esdarat is to become an active player across all segments of the real estate market in the GCC and the wider MENA region. Given the strong regional economic indicators and expected growth, Esdarat believes that the real estate sector of the GCC, and the Makkah region in particular, is developing at a high annual growth rate per annum.”

Commenting on the transaction, Eng. Mohammad Al Shuaib, Chief Executive Officer of Esdarat Holding, said, “The Makkah real estate sector, especially around the Grand Mosque, truly offers one of the most exciting opportunities in the Kingdom of Saudi Arabia, as well as across the entire region.

The Rawabi Abraj al Bait project that this transaction will in part fund, is unique on many levels, but more so because we are unlikely to see another development project on this scale in Makkah for some time to come. Due to redevelopment of the Haram Mosque, some of the major projects in Makkah have been canceled, which means this project is even more of a rare opportunity.”

Shahzad Shahbaz, CEO of NBD Investment Bank, an Emirates NBD company, which is Financial Advisor and Lead Placement Agent on the deal, said, “This is a rare investment opportunity, which is Sharia’a compliant and provides investors with exposure to the Makkah real estate sector.

We have had strong initial interest from investors across the Middle East, North Africa and South East Asia, and expect to close the transaction by the end of July. A team of syndicate banks have been appointed to cover Saudi Arabia, Qatar, Kuwait, UAE, Malaysia and North Africa.”

Dr. Saleh Al Habib, Chief Executive Officer of Jiwar Real Estate Company, provided an overview of the Project:

• It comprises 9 towers close to Al Haram in Makkah with easy access to the holy site.
• It is a ‘Build, Operate and Transfer’ for each of the 9 towers for a term of 30 Hijri years starting from the date which is 2 months from each tower’s date of delivery;
• The construction period is expected to be completed within a 5 year timeframe
• The total area of Phase 1 is estimated to be around 824,270 sqm, with a net leasable area of approximately 358,196 sqm
• The total project cost is estimated at just under SR10.77 billion

The development will comprise of a series of hotels, residences and commercial facilities situated in the Ajiad area, 170 meters from the Holy Haram area in the Holy City of Makkah.

Phase 1 of the development, construction of which will begin within the next six months, will comprise of nine towers, providing 10,742 rooms split across 479 floors of residential and hotel space. The first phase, which will result in a total built-up area of almost 11 million square foot and is valued at an estimated SR10.77 billion, will represent over half of the final residential project.

When complete, the vast Rawabi Abraj Al-Bait development will consist of 30.8 million square foot of built-up areas, with a total of 21 residential and hotel towers comprising 26,000 hotel rooms and will incorporate over 4,000 parking spaces.

Al Maqam International Real Estate Limited Company (‘Al Maqam’), a subsidiary of Saudi Bin Laden Group, is developing the prestigious Rawabi Abraj Al-Bait project.

• Grand is the largest shareholder in Esdarat
• NBD Investment Bank is acting as the Financial Advisor and Lead Placement Agent on the transaction.
• IIG is the lead manager on the transaction. IIG is Grand’s largest shareholder.
• IIG and Grand will continue to own a minimum of 40% of Esdarat. New shareholders will own up to 60%.

Contact Details

Name: Suha Krimeed
Contact Number: 971 4 4201971
Additional Information: About Esdarat Holding Company

Esdarat is a Kuwaiti Closed Shareholding with share capital of KD100,000,000 (US$ 377 million) Esdarat’s activities comprise investing in Kuwaiti and non-Kuwaiti securities and managing subsidiaries.

About Grand Real Estate

Grand Real Estate is a Kuwait-based company which was founded in 1989 with the desire to develop and market real estate projects in a Sharia’a compliant manner. Grand Real Estate was established as a Kuwait Shareholding Closed Company with a capital of KD1 Million. Via a structured combination of intelligent planning and developmental progression, this capital increased impressively and the company is currently worth over KD36.4 Million,

approximately US$130 Million. This capital growth has enabled further expansion of the company, and allowed internal and external investment. Grand has subsequently grown to become one of the region’s most trusted developers, with innovative projects spanning the whole of the Middle East and North Africa. Grand is listed on both Kuwait Stock Exchange and Dubai Financial Market.

About International Investment Group

IIG is a Sharia’a compliant investment company, licensed and under the supervision of the Central Bank of Kuwait. IIG offers a wide spectrum of corporate finances services, including advisory services, investment banking services and GCC listing advisory services. IIG is listed on both the Kuwait Stock Exchange and the Dubai Financial Market and has a market capitalisation of approximately US $431 million. IIG is listed on both Kuwait Stock Exchange and Dubai Financial Market.

About NBD Investment Bank

NBD-IB is a full service regional investment bank offering a comprehensive range of financing, advisory, investment, and risk management capabilities. It is an Emirates NBD company, licensed for operation in the Dubai International

Financial Centre (DIFC), and regulated by the Dubai Financial Services Authority (DFSA.)

NBD-IB combines world class capabilities with regional expertise to create a unique platform providing integrated and innovative solutions across investment banking, capital markets, and private equity. With its team of experienced professionals, NBD-IB meets the needs of governments, corporate and institutional clients in markets across the GCC and wider MENATSA region.