Tuesday, Sep 07, 2010

Gulf News

Bank to play role in expansion project

Abu Dhabi The Abu Dhabi Islamic Bank (ADIB) said yesterday it has funded Dh920 million in the $1.1-billion (Dh4.04 billion) project finance for the Emirates Steel Industries’ expansion.

“With this deal, ADIB has acted on its mandate to contribute to the UAE’s growth and development by ensuring that the financing needs of UAE corporations and other entities are met,” Tirad Mahmoud, Chief Executive Officer of ADIB, said in a statement.

“It [the expansion project] will create additional employment opportunities and revenue sources for the UAE. In addition, this deal signals that the financing environment in Abu Dhabi is improving and could grow this year,” he added.

Mahmoud said the Islamic finance provided by ADIB was customised to the needs of Emirates Steel Industries adding that the bank “will continue to support them as they grow within the UAE and beyond”.

Janany Vamadeva, Banking Analyst with HC Securities, told Gulf News by telephone that the loan by ADIB to Emirates Steel, an entity solidly backed by the financially strong Abu Dhabi government, is a good move.

Healthy growth

“This is an opportunity for the Abu Dhabi Islamic Bank for a healthy loan growth because the asset quality is quite good here. ADIB is adequately capitalised and its loan-to-deposit ratio is quite low, compared with other conventional banks,” Vamadeva added.

Emirates Steel Industries said last month it had raised $1.1 billion in project finance for the expansion of its steel manufacturing facility in Abu Dhabi.

The company said at the time it had signed a seven-year project financing agreement with a consortium of seven conventional banks and two Islamic finance institutions.

Output capacity

The project finance debt was raised through a $367-million Islamic facility and a $733-million conventional facility, each of a seven-year tenure.

Emirates Steel currently has an output capacity of 2 million metric tonnes per annum, which is expected to reach 3 million metric tonnes in 2011 through a Dh9 billion expansion plan.

The conventional banks consortium consists of the National Bank of Abu Dhabi, Union National Bank, First Gulf Bank, Bank of Baroda, Arab Banking Corporation, Al Khaliji France and Al Khaliji Commercial Bank. The two Islamic finance institutions are the Abu Dhabi Islamic Bank and Al Hilal Bank.

Natixis acted as financial adviser and Denton Wilde Sapte as legal counsel.

Emirates Steel is a subsidiary of the Abu Dhabi Basic Industries Corporation (ADBIC), which is wholly-owned by General Holding Corporation (GHC), an Abu Dhabi government-owned company.

With this deal, ADIB has acted on its mandate to contribute to the UAE’s growth ... ensuring that the financing needs ... are met.”

Tirad Mahmoud

CEO, ADIB

By Himendra Mohan Kumar?Staff Reporter

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