Khaleeji Commercial Bank (KHCB), a leader in innovative Islamic Finance products, announced today the intention to establish a building materials company to serve the construction wholesale and retail markets in the Gulf, Middle East and North Africa.The new company, which will be called Binaa, is expected to have a cumulative investment value of more than $US 2 billion. It will aim to achieve a consolidated total capacity of more than 32 million cubic meters of Ready-Mix Concrete (”RMC”), precast and cement blocks, per annum in addition to trading of building steel structure, aluminum, glass and various type of aggregates. “Due to a variety of factors, there is a huge opening in the market at the moment for a building supply company that can serve both the institutional and retail segments,” said Ebrahim H. Ebrahim Board Member and CEO of KHCB. “Our intention is to build a first-class, regional brand that will effectively reposition the building materials industry in the region,” said Mr. Ebrahim. “We will also be looking selectively at consolidation targets as a way to execute the company’s growth strategy.”
Success of the venture is predicated on the fundamental understanding that building materials comprise more than 40% of the construction cost and with the rapid rise in large-project and real estate development throughout the region, market size for building materials is expected to exceed US$ 600 billion. Independent research estimate that in 2007, construction projects in the GCC alone accounted for more than US$ 1.5 trillion. Supported by the increase in oil prices and the governmental expenditures in leading infrastructure and development projects, the prices of building materials have soared and the demand is expected to continue increasing for the next 3- 5 years.
Gulf Organization for Industrial Consulting has been working with Binaa to develop the market assessment and entry strategy being as a market advisor. China National Building Materials Company (CNBM) will be serving as a strategic technical and trading partner in the venture. Binaa has also created strategic partnerships with leading construction, real estate and infrastructure developers including Sambu (First Korean construction company), Gulf Finance HouseGulf Finance , Abu Dhabi Investment House, Emirates Islamic Bank, Dubai Investment Company and Athman Investment Company. ” We have been working to develop a distinctive growth strategy for Binaa consisting of both organic investment and targeted consolidation.” Said Dr. Ahmed Mutawa, Secretary General of Gulf Organization for Industrial Consulting. “The initial activity of the firm will focus on the GCC, and extending into the rest of the Middle East and North Africa.”
“I’m very proud of the manner in which this strategic partnership is turning soaring demand into an opportunity with a secure growth trajectory” said Rashad Janahi, Board Member and Managing Director of ADIH “We are paving the way for a more stabilized building material industry and bridging the supply-demand gap in the market.” “We’re delighted to be strategic partners on such a promising venture” said Cho Si Yeon , Senior Managing Director of Sambu. “An undertaking like this plays directly to the strengths we’ve developed in the construction industry over the last decades in Korea, Asia and Middle East.”