Bank acquires 14.3pc stake in Hidd sugar refinery

MANAMA: Bahrain-based International Investment Bank (IIB) has acquired a 14.29 per cent equity stake in a sugar refinery to be established in the Hidd industrial area.

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

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

It will have an annual production of 585,000 tonnes of white sugar.

This acquisition marks IIB's second investment in the manufacturing sector in Bahrain. Last year, IIB acquired an equity stake in the first steel rebar manufacturing facility in Bahrain.

"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," said IIB chief executive officer Aabed Al Zeera.

"IIB also recognises 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."

According to the International Sugar Organisation, world white sugar consumption was 151m tonnes in 2006, an increase of approximately 4m tonnes from 2005.

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

"Insufficient production capacity has made the Middle East one of the largest importers of white sugar in the world," said IIB executive director, direct investment and business development, Mohamed Hadi Mejai.

"With the existing and announced projects capable of meeting only about 60 per cent 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.

"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," he added.

source:gulf daily news