IIB acquires strategic stake in the Bahrain's first sugar refinery

The refinery will be the first of its kind in the Kingdom and the third in the GCC.

The sugar refinery, to be established at an estimated cost of $157m, is expected to be operational in two years and will manufacture white sugar to be marketed in the Middle East and European markets.

The refinery will have an annual production of 585,000 tons of white sugar.

This acquisition marks IIB's second investment in the manufacturing sector in the Kingdom of Bahrain.

Earlier, in 2007, IIB had acquired an equity stake in the first steel rebar manufacturing facility in Bahrain.

Announcing the acquisition, Aabed Al Zeera, CEO, IIB stated:

"As one of the regional market leaders, IIB strongly believes in partnering in projects that not only earn a high return on investment but also strengthen the country's industrial base, contribute to employment generation and add to the overall economic growth of the Kingdom. IIB also recognizes the value proposition of investing in the sugar industry which will not only provide dividend returns to investors but also provide the opportunity for capital growth at the time of exit."

Worldwide demand for sugar has been increasing steadily for several years now, a trend that is expected to continue for a long time.

According to the International Sugar Organization ("ISO"), world white sugar consumption was 151 million tons in 2006, an increase of approximately 4 million tons from 2005.

The Middle East has predominantly been a net importer of white sugar. Against a total consumption of approximately 13.6 million tonnes of white sugar a year, nearly 5.6 million tonnes of white sugar is imported annually.

Mohamed Hadi Mejai - Executive Director, Direct Investment & Business Development added: "Insufficient production capacity has made the Middle East one of the largest importers of white sugar in the world. With the existing and announced projects capable of meeting only about 60% of the total demand of the region, the proposed sugar refinery provides the ideal investment opportunity to tap into an industry that has tremendous growth potential". He also added that the business is led by a strong management team with more than 60 years of combined experience in the development, management, and financing of industrial projects.

Mr. Al Zeera added: "the Bank is currently conducting due diligence on a number of other deals in the region as well as in Europe and Asia, some of which will be announced upon the successful conclusion of the due diligence. This further reconfirms IIB's strategy of presenting its investors with attractive investment opportunities diversified by sector and geography."