Complex Made Simple

Bahra Cables and Standard Chartered receive 3 awards

The Islamic finance agreement between Bahra Advanced Cable Manufacture Company and Standard Chartered for $200m, received three awards from specialized financial magazines and websites including The Asset – Triple A Award, GTR Best Deals and Trade Finance.

The mentioned magazines and website said: “The short-term financing will enable Bahra Cables to take full and best advantage for utilizing its assets. It would also help financing the inventory and sales of its production, which covers a significant share of the domestic market. They, as well, pointed out that Bahra Cables Company is a subsidiary of Construction Products Holding Company (CPC) which is owned by Saudi Bin Laden Group, being recognized as the largest construction group in the Middle East and one of the world’s top five.”

This facility is a short-term structured Islamic financing to finance inventory and sales (Warehouse & Export Invoice Structured Finance) to finance the working capital of Bahra Cables Company and it is the first of its kind in Saudi Arabia.

In this regard, Stephan Riekert, director, solution structuring team, transaction banking at Standard Chartered, explained: “What’s unique is 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: “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, 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.

Eng. Talal Idriss, CEO of Bahra Cables explained: “Getting such two facilities from an international bank like Standard Chartered is considered an international certificate and testimony of the company’s position being one of the largest cable producers in Saudi Arabia, and confirms the approach and plans it follows since its foundation which successfully led the company to supply and participate in several mega projects inside and outside Saudi Arabia.” Idriss added: “This financing will help Bahra Cables to proceed forward in increasing its production and distributing in new markets, particularly after completing its related facilities such as the new fully-automated warehouse and the Chloride Poly Vinyl (PVC) production plant.”