Bank to set up $2bn building materials firm
Manama, June 4, 2008
Khaleeji Commercial Bank is to establish a building materials company to serve the construction wholesale and retail markets in the Gulf, Middle East and North Africa (Mena).
The new company, which will be called Binaa, is expected to have a cumulative investment value of more than $2 billion.
It will aim to achieve a consolidated total capacity of more than 32 million cu m of ready-mix concrete, precast and cement blocks a year in addition to trading steel structures, 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 bank board member and chief executive officer Ebrahim H Ebrahim.
'Our intention is to build a first-class, regional brand that will effectively reposition the building materials industry in the region,' he said.
'We will also be looking selectively at consolidation targets as a way to execute the company's growth strategy.'
The success of the venture is predicated on the fundamental understanding that building materials comprise more than 40 per cent 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 $600 billion.
Independent research estimate that construction projects in the GCC accounted for more than $1.5 trillion last year.
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 three to five years.
Gulf Organisation for Industrial Consulting (GOIC) has been working with Binaa as a market adviser to develop the market assessment and entry strategy.
China National Building Materials Company will serve 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 South Korean construction company, Sambu, Gulf Finance House, 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 GOIC secretary general Dr Ahmed Mutawa.
'The initial activity of the firm will focus on the GCC, and extending into the rest of the Middle East and North Africa.'-TradeArabia News Service
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