Al-Rajhi Capital and Arcapita launch $500m fund

Saudi Arabian Business

Saudi Arabia-based investment bank Al-Rajhi Capital has teamed up with Bahrain's global investment bank, Arcapita Bank to launch a US$500 million fund that aims to makes progress in the Middle East real estate sector.

Zawaya reports that the entities will seed the fund with a joint investment of US$50 million and acquire investments for the fund in high-quality, income-generating real estate assets in Saudi Arabia and other GCC (Gulf Cooperation Council) nations. The focus will be on logistics warehouses, as well as health-care and education-related assets.

In terms of market capitalization Al Rajhi is the GCC's largest commercial bank as well as being the world's largest Islamic bank. The investment bank subsidiary has already announced its first acquisition, the largest logistic and distribution centre in Riyadh, which was acquired for US$79.7 million. Under the deal it will be leased back to Saudi Arabia's leading supermarket firm Azizia Panda United Company for 18 years.

Jorge Cantonnet, managing director and head of private equity at Al-Rajhi said, "As the economic downturn shows signs of bottoming out, we are beginning to see good opportunities for investors with available capital for investment.

"We believe that this fund is launching at a time that will allow us to deploy our financial resources to gather a portfolio of prime real estate assets at attractive valuations."

It is hoped the partnership between Arcapita and Al-Rajhi will create a power force among GCC members region with enough leverage to execute many big investment deals.

"We have worked closely with investors in developing the fund mandate," said Hisham Al-Raee, executive director of investment placement at Arcapita.

"Investors are exhibiting good appetite for high-quality yielding investments within the GCC, particularly in Saudi Arabia, where economic growth has remained strong and positive throughout the economic downturn."

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Daniel Jones

Daniel is a Politics and Philosophy graduate from Cardiff University where he also worked as a section editor on the award winning student newspaper. After university he joined an IT support company where he was a B2B online writer. He loves anything to do with sport and joined GDS in July 2009.

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