By Mohammed Al-Kinani
MANAMA - An agreement has been reached to create what has been described as three new “visionary initiatives” which are focused on driving market specific innovation across the Middle East, North Africa, South Asia (MENASA) region and beyond.Gulf Finance House, Ithmaar Bank and Abu Dhabi Investment House announced on Wednesday the formation of InfraCapital which will be the GCCs first investment bank specializing in the provision of tailored infrastructure development and finance.AgriCapital will be a new investment vehicle focused entirely on serving agricultural ventures and communities and the Hospitality Development Fund (HDF) will be established to nurture and support opportunities across the global hospitality sector. It added that the trio of Shari’ah compliant initiatives would represent a “turning point in the systematic approach to specialist investments.”Each of the three initiatives are the product of an alliance between Gulf Finance House, Ithmaar Bank and Abu Dhabi Investment House and followed what they said were intensive due diligence and individual feasibility studies that confirmed a high level of demand across the infrastructure, agriculture and hospitality marketplaces. While each of the three alliance financial institutions will leverage their networks and experience in the creation of InfraCapital, AgriCapital and the HDF, they will all operate as stand alone businesses under their own management structure.The trio claimed that the latest statistics show that the MENA region accounted for one in every three dollars spent on worldwide infrastructure initiatives. Over the next decade the GCC alone will demand up to $545 billion dollars of investment across the transport, power, water, energy, education and social infrastructures sectors. However, they did not say where the statistics came from.InfraCapital was conceived as a direct response to this demand. With proposed authorized capital of $6 billion and target paid up capital of $1.5 billion, it will focus on the provision of specialist services and tailored financial architecture for a wide variety of sub-sector infrastructure initiatives.The so-called ‘vision’ behind the establishment of AgriCapital is to create an investment vehicle offering specialist and comprehensive finance solutions for the agriculture sector, which is curious in a part of the world which is mainly made up of sand and rocks and all this while a new Saudi sovereign wealth fund is talking about investing in agriculture abroad and is going to cut back its own production and possibly also reduce subsidies.AgriCapital, according to the Bahrain-based trio, will encompass tailored products designed to serve a broad scope of agricultural projects and food production. Alongside these services and under the AgriCapital umbrella, a second investment company specializing in agricultural technologies, bio-technology and an investment bank specialized in agricultural investments will be created.The overriding goal, they say, is to empower innovative agricultural ventures in areas of huge potential across the MENASA region. In the Middle East region alone, domestic production of crops and livestock amounts to less than half what it consumes. Increased consumption, extreme global weather conditions, rising energy prices and demand for bio-fuels have seen global food prices leap by 60 per cent over the past two years. The alliance recognizes the huge contribution MENASA countries can make to addressing problems in supply.With proposed authorized capital of $3 billion and target paid up capital of $1 billion, AgriCapital will channel expertise and specialist capital into five principal lines: food production, livestock, biomedicine, bio-fuels and most importantly, agricultural technology.The bank emanating from Agricapital shall provide funding to every aspect of visionary agricultural projects, catalyzing advances in the field of agri-technology and exploiting opportunities arising from the current and future challenges in global food production.The Hospitality Development Fund will focus on two specific areas of investment and will call on alliance experience through ADIH’s expertise in the conception of Entertainment Cities, Ithmaar’s work on Delmonia and GFH’s strategic relations with Banyan Tree. The first asset class will concentrate on developing new hospitality-centric vehicles including hotels, transport solutions and apartment complexes while the second will capitalize existing hospitality companies which show tremendous potential for growth. The fund will be released in the next quarter with a size of $1 billion and an initial closing of $300 million.
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