Ground-breaking US$ 300-plus million assets-merger

Dallah Albaraka Group (DBG) and The International Investor (TII) have heralded the beginning of an exciting new era in global Islamic finance with the official signing of a ground-breaking US$ 300 million assets-merger deal.

The transaction, which was formally sealed at a signing ceremony in Bahrain on Monday 18 June, creates a pan-regional financial powerhouse combining the strength of DBG's commercial and retail network with the investment banking expertise of TII.

The new entity will become the world's largest Islamic financial services group in terms of geographical coverage, and the first to provide clients with a full range of investment banking and commercial/retail banking products and services across eleven markets.

Full details of the transaction were revealed at a press conference jointly hosted by Sheikh Saleh A Kamel, Chairman of Dallah Albaraka Group and Adnan Al Bahar, the Chairman and Managing Director of TII.

Addressing his audience, Sheikh Saleh A Kamel said the signing of the Memorandum of Understanding (MoU) between DBG and TII marked a major milestone not only for the clients, shareholders, business partners and employees of both companies, but for Islamic finance as a whole.

“Our commitment is to quality and to innovation. This deal will ensure we can offer our clients the most diverse range of products in the market, and introduce new ones not currently available. I am confident this agreement will spearhead the continued growth and development of the Islamic market, both regionally and globally”.

An assets-merger deal in excess of US$300 million.

Under the terms of the assets-merger deal, DBG's assets in 9 banking subsidiaries will be combined with TII. TII intends to increase its share of capital from KD 17.68 million to approximately KD 50 million through the issue of around 330 million shares with a nominal value of KD 0.100 per share and an issue premium of KD 0.155 per share. The shares will be offered to both existing shareholders and new strategic investors. The assets of the new group will be in excess of US$ 3 billion, with total equity of around US$ 350 million.

Meeting the needs of a new regional economy.

Adnan Al Bahar said the new group was uniquely placed to face the challenges, and embrace the opportunities, afforded by the development of the regional economy.

He said: "An open regional market has never been closer to becoming a reality than it is today and it will require a new, different, pan-regional financial infrastructure to support and enable new economic growth and diversification.

“The new group is ideally placed to play a major part. We will seek to strengthen and build our presence in the GCC by establishing a physical presence in those markets where we are not currently involved. But we will also develop a leading regional Internet banking service and will assist our clients grow their own business by providing them with access to e-commerce and B2B solutions.

“By drawing upon our complementary strengths, skills and experience, this agreement will deliver enormous benefits. By centralising resources such as technology and communications we will enhance the efficiency of front and back office operations. This will enable us to provide clients with higher levels of service and customer care, and to offer them a wider range of products and services at more competitive rates.

“We hope that this deal, the first of its kind, will show how two successful organisations can come together to create a new, better third entity. We hereby extend a warm invitation to all others to join us, to face the challenges and grasp the opportunities; to share the risks and the rewards.”

The assets-merger agreement between DBG and TII, which is expected to be finalised during the third quarter of this year, is subject to approval by the shareholders of both companies, as well as by the relevant regulatory authorities.

The assets-merger deal will combine TII with DBG's assets in the following banking subsidiaries:

• Albaraka Islamic Bank B.S.C.(E.C.), Bahrain

• Al Amin Company for Securities and Investment Funds B.S.C. (E.C.), Bahrain

• Albaraka Bank Limited, South Africa

• Egyptian Saudi Finance Bank, Egypt

• Jordan Islamic Bank, Jordan

• Albaraka Turk Ozel Finans Kurumu A.S. (Albaraka Turkish Finance House), Turkey

• Banque Albaraka D'Algerie, Algeria

• Beit Ettamwil Tounsi Saudi (B.E.S.T. Bank), Tunisia

• Albaraka Bank Lebanon S.A.L.

The new merged company will be headquartered in Kuwait and will continue to be listed on the Kuwait and Bahrain Stock Exchanges.