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Group's First Sukuk Issue Over-Subscribed

The Olayan Group’s first issue of sukuk, or Islamic bonds, has successfully concluded, raising $173.3 million (SR 650 million) for Olayan Real Estate Company, the Group’s property development subsidiary in Saudi Arabia. 

The maiden issue was over-subscribed, raising 30% more than its initial target of $133.3 million (SR 500 million).

The five-year sukuk was priced at 150 basis points over the Saudi interbank offered rate (SAIBOR).  The privately placed transaction was sold to banks, insurance companies, and private funds.

The bonds are guaranteed by Riyadh-based Olayan Financing Company (OFC).

HSBC's Saudi Arabian unit and Riyad Capital, the investment bank arm of Riyad Bank, arranged the sukuk. Baker & McKenzie was legal advisor to the company on the deal.  Allen & Overy was the bank's legal advisor. 

Olayan Real Estate Company (ORECO) was founded in 1989 to plan, coordinate and secure the real estate requirements for The Olayan Group’s numerous commercial and industrial operating companies in Saudi Arabia.  Over the years, ORECO's activities have evolved to include independent property development and real estate management.

ORECO's most recent development was a 12,844-square-meter warehouse located in Dammam.  Expanding into the hospitality sector, the firm is in the early stages of developing a four-star hotel in Jeddah in collaboration with the Rezidor Hotel Group, owners of the Radisson brand.