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Alinma Bank Provides More Than SAR 700 Million in Financing to Al Rajhi Steel

Alinma Bank Provides More Than SAR 700 Million in Financing to Al Rajhi Steel

3 jumada II 1431 - 17 May 2010 G

Al-Rajhi Steel Industries Ltd, a subsidiary of Mohammed Bin Abdul Aziz Al-Rajhi & Sons Holding Group, has signed a financing agreement with Alinma Bank pursuant to which the Bank will provide a Shariah-compliant financing and banking facilities to the company amounting to SAR 737 million in order to establish a steel factory in Jeddah. This factory will be one of the largest steel factories in the Middle East and North Africa with a production capacity of one million tons per year. The signature ceremony was attended by Mr. Abdulmohsen Al-Fares, CEO of Alinma Bank, and Eng. Abdul Aziz Al Oboudi, Chairman of the Board of Directors of Al-Rajhi Steel, along with a number of senior executives from both parties.

Mr. Al-Fares said that this funding comes as an extension of the strategic plans of the bank, which aim to meet all the needs of its corporate partners and provide them with innovative, Shariah-compliant financial solutions and services. "The banking sector plays a key role in the national economy and economic development,” said Al-Fares. “The Bank’s participation in this funding comes as a support to meet the growing demand for steel in light of the construction boom taking place in Saudi Arabia and confirms the strength of the financial position of Alinma Bank and its ability to finance various projects.”

Eng. Al Oboudi explained that the Al-Rajhi has recently signed detailed contracts with the Italian company, Daniele, one of the largest companies in the world in the field of preparing factories, to implement the project. He said that the project site, which is located in the city of Jeddah, had been handed over to Daniele and that the project would be completed and run on a commercial scale by the beginning of 2012. He added that with the conclusion of the financing agreement, the total volume of Al-Rajhi Steel concluded investments increased to SAR 4 billion and the company's share in the domestic market increased from 17% to 25%. He noted that this increase reflects the strength of steel industry in Saudi Arabia, which will witness a forward leap as a result of the increased demand for this product.

"No doubt the funding of this strategic project by Alinma Bank will contribute to the promotion of basic industries in Saudi Arabia and the transfer of the country to a regional industrial center, especially if we know that this project will become one of the largest steel factories in the Middle East and North Africa," said Eng. Al Oboudi. “The unlimited support offered to the industrial sector from the government of the Custodian of the Two Holy Mosques reflects the government’s keenness to develop and promote local industries in order to diversify the economy and create major industries that contribute to the creation of job opportunities for Saudi youth.”

He added that "the regional importance of such projects cannot be minimized as they represent significant production capacity in the production of iron and steel which are the keystone of industrial development in the region."

Mr. Jianpetro Benedetti, the CEO and Chairman of the Board of Directors of Daniele, said that "the development of the Kingdom has been surprising the world, not only because of the strength of its economy that emerges at a stage where many markets in the world experience economic crises, but also because of the large size of infrastructure allocated to the projects of its private and public sectors and its infinite initiatives to diversify the sources of its economy as one of the leading oil producers in the world.”

It is worth noting that Alinma Bank is well positioned to address the large-scale financing needs of private and public projects in Saudi Arabia. Most recently, Alinma was the Shariah-Compliant Structuring Bank and Joint Shariah-Compliant Documentation Bank, and was the lead financing institution in the financing of the Saudi Electric Company’s SAR 9.5 billion Rabigh Independent Power Plant project.

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