CMH acquires stake in power plant
Manama, July 16, 2009
Bahrain-based Islamic investment firm Capital Management House (CMH) is leading a consortium taking a 15 per cent equity stake in the Al Dur power project, an executive has said.
"On the equity side, CMH and the consortium we're involved in are acquiring a 15 per cent stake in the project," CMH managing director Khalid Mohamed Najibi said yesterday (July 15), adding that the project's equity amounted to almost $600 million.
The Al Dur water and power project has been sponsored by Kuwait's Gulf Investment Corporation (GIC) and France's GDF Suez.
Other investors are also expected to take stakes in the project.
Najibi said CMH, which earlier this year increased its paid-up capital to $100 million, is also arranging $50 million of the $300 million Islamic tranche of the $1.7 billion debt financing for the project.
The Islamic finance industry in the Gulf region is trying to diversify away from its reliance on the real estate sector, which has seen a sharp downward correction since late last year.
The region's energy industry, which needs hundreds of billions of dollars in investments over the coming years, is an obvious alternative, but Islamic banks and investments houses are seen as too small to play a role.
Najibi said he sees demand for Islamic utility and energy funds.
"These sectors are not accessible to individual or family investors, even (for) financial institutions like insurance companies and others as there are no structured products for them," he said.
In 2007 CMH, with local partner Tuareg Capital, set up the $30 million Libya Fund through which it has acquired energy services provider TAB Energy.
Its unit Etelaf Oil Services has won oil drilling contracts from Woodside Energy and Royal Dutch Shell.
Najibi said CMH is planning to increase the capital of TAB Energy and is holding talks with international oil companies on leasing out drilling rigs to them.
He said CMH is also looking for acquisitions in the Libyan oil services sector.
"We're trying to establish ourselves as a leading service provider in the Libyan oil and gas industry," he said.
Najibi said CMH is also planning to set up a regional equities fund and a fund for sukuk, or Islamic bonds, this year.
"The sukuk market in 2008 and 2009 has dried up, but sovereign issues are undervalued on the secondary market, and due to the financial crisis investors are selling their stakes," Najibi said.
He declined to provide a volume for the two funds, which will be marketed to both institutional and retail investors. – TradeArabia News Service