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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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