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Infrastructure finance: Gulf houses open specialist funds

Weak infrastructure is probably the single biggest obstacle to emerging nations fulfilling their potential. Infrastructure shortcomings in Latin America and Asia are well documented but even in the Middle East, a region flush with petrodollars, more investment is required, especially from the private sector.

Over the next decade, the Gulf Cooperation Council countries alone will demand up to $545 billion of investment across the transport, power, water, energy, education and social infrastructure sectors.

It is against this background that Bahrain’s Gulf Finance House (GFH) and Ithmaar Bank, together with Abu Dhabi Investment House, have entered into a new and separate Shariah-compliant venture that will specialize in infrastructure financing across the Middle East, north Africa and south Asia. The three firms have also joined forces to create new entities to take advantage of opportunities in the agriculture and hospitality industries.

Their focus on infrastructure will revolve around a new bank, InfraCapital, which will invest in projects. The bank will have authorized capital of $6 billion and hopes to raise a further $1.5 billion through private placements. "These projects are big and require specialist institutions with large amounts of capital that can syndicate and can manage such complex transactions," says Mehran Jamsheer, deputy chief executive at GFH.

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