Bahrain-based First Islamic Investment Bank (FIIB) has signed a definitive purchase agreement for the acquisition of US building materials group B.R. Lee Industries. Financial close on the $77.2 million transaction willbe completed by the end of the month, says Atif Abdulmalik, FIIB’s chief executive officer.
The acquisition of B.R. Lee Industries, one of the largest manufacturers of commercial paving machines and road building equipment in the US, is the fourth major private equity deal done by the bank since its establishment in 1997. ‘We have other deals we are working on at present,’ says Abdulmalik. ‘There is a telecoms company in the US southeast we are looking to acquire at some stage this year, but the deal is still in its early stages.’
FIIB on 25 January announced its full-year 1999 financial results, with net income of$16 million standing 33 per cent up on the $12 million recorded last year. Return on average assets was 10.8 per cent and the bank will propose to shareholders a 10 per cent dividend, equivalent to $11.2 million, for the year.
It seems that 2000 will be a busy year for FIIB. ‘After two full years of operation we are planning to make our first divestment this year,’ says Abdulmalik. ‘We have a holding horizon of three-to-five years but we think the market is ripe for an exit and it would be good to prove that we can close the cycle.’ The oldest investment on FIIB’s books is the US-based Perception Group, a manufacturer of kayaks andcanoes acquired for $40 million in mid-1998 (MEED 10:7:98).
There are also plans for the bank to revisit the Islamic capital market. ‘After the success of the $50 million murabaha facility last year, we will be looking to tap the market again this year,’ says Abdulmalik. ‘With our business growing we expect to come to the market for $75 million-100 million at some point in the second or third quarter.’
He also forecasts rapid growth for FIIB’s Ijara Liquidity Programme, a securitised leasing fund offering Islamic investors short-term low-risk returns equivalent to the conventional interbank market. ‘We expect the fund to grow to $400 million by the middle of this year,’ says Abdulmalik. Primary subscribers to the fund paid in $100 million (MEED 17:12:99).