Al Rajhi starts corporate finance business

Al Rajhi starts corporate finance business

Al Rajhi Banking & investment Corp (M) Bhd kicked off its corporate finance business with the signing yesterday of a US$450mil (RM1.5bil) financing facility for Saudi Arabia’s largest phone company, Saudi Telecom Co (STC).

Head of corporate and investment banking division Asim M. Basharullah said the bank embarked on corporate banking in the middle of 2007.

“We started as a retail banker.We will use Malaysia as a platform to expand our banking activities in South-East Asia,” he said after the signing of an agreement with Saudi Telecom to provide the latter with the financing facility.

Chief executive Ahmed Rehman signed on behalf of the bank while STC was represented by directors Ameen Fahad Al Shidi and Khalid Salah Al Ghurair.

Under the agreement, Al Rajhi would provide STC with a 10-year term financing of US$450mil on the basis of structured commodity financing facility.

The facility was extended to facilitate STC’s investment in the US$900mil junior sukuk issued by Binariang Sdn Bhd, the holding company for Maxis Communications Bhd.

In June 2007, STC said it was taking a 25% stake in Binariang GSM. This is STC’s first foreign deal and would also see it end up with 51% equity interest in Maxis’ Indonesian subsidiary, PT Natrindo Telepon Selular.

Asim said the deal represented the largest corporate deal the bank had secured in South-East Asia to date.

Al Rajhi Bank, he said, was looking at expanding to Indonesia, Singapore, Brunei and Thailand.

“We will also look at Hong Kong and some parts of China where there is growing interest in Islamic financing,” he added.

To a question, Asim said the bank had no plan to set up a physical branch in Indonesia but would serve the market through its presence in Malaysia.

He said the bank would also like to partner with leading international as well as local banks in the sukuk or syndicated Islamic market.