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A testing lab at Bahra Cable Company

Bahra Cables receives $265m Islamic financing

JEDDAH, September 21, 2014

Bahra Advanced Cable Manufacturing Company, a leading cable manufacturing company in Saudi Arabia, has received an Islamic financing of $265 million from Standard Chartered bank.

The company will utilise $200 million as a short-term Islamic structured financing solution to increase its production and distribution in new markets, particularly after the completion of its facilities such as the new fully-automated warehouse and the Polyvinyl Chloride (PVC) production plant. The second loan of $65 million, which is a five-year long-term loan, will enable the company to go ahead with its expansion plans to meet the growing demand for its high-quality cables.

Stephan Riekert, director, solution structuring team, transaction banking at Standard Chartered, said that the deal involves an Islamic (musawama) ownership structure that differs from standard forms where the inventory would be bought from the client and sold immediately with a deferred payment term.

He further pointed out that here the inventory is held and sold on behalf of the bank, which strengthened the bank's security position and eliminated an array of complexities brought about by a vanilla security structure.

Furthermore, he assured that while musawama is not new to the trade finance market in Saudi Arabia, the ownership structure of this facility, combined with the end-to-end purchase-to-sale financing capability makes this facility particularly innovative to the Saudi market.

Talal Idriss, CEO of Bahra Cables Company, said: "Getting two such facilities from an international bank like Standard Chartered is considered an international certificate and testimony of the company's position as being one of the largest cable producers in Saudi Arabia, and confirms the approach and plans it follows since its foundation." – TradeArabia News Service

Tags: Islamic Finance | Standard Chartered Bank | Bahra Cables |

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