The growth in Islamic finance has slowed with the deepening credit crunch but the Saudi Binladin Group has raised the first sukuk for the world’s most holy boom town: Mecca.
The assets of the Jeddah-based Binladin Group are backing the five-year Islamic bond, worth a riyal equivalent of $267 million. The proceeds will go towards the construction of a five-star hotel in Mecca, the most holy city in Islam.
This is also the first sukuk to be issued by a Saudi family office.
"One of the goals of the Saudi Binladin Group is to support the capital markets of Saudi Arabia and to develop the growth of Islamic finance," said Yahya Mohammed Binladin, the company’s chairman and chief executive, in comments published by HSBC, the sole lead manager and bookrunner of the facility.
Up to now, the Binladin Group, like many other Saudi firms, has relied on bank loans. But the family, which is thought to have more than 600 members, has some massive real estate developments under way. Like other family firms in Saudi Arabia, it is looking to diversify its funding sources, and this deal "substantially broadens the company’s investor base", according to the chairman and CEO.
