The chairman of Saudi Orix Leasing Co. managed to launch Saudi Arabia’s first-ever domestic corporate bond issue in March, just days before the war started. SOLC had spent a year working with regulators and intermediaries to structure the landmark deal, and al-Omair wasn’t about to let that effort go to waste. The former Finance vice minister believes that once the Iraqi conflict is resolved, “things will go back to business as usual. I am always optimistic, never pessimistic.”
The 50 million-riyal ($13.3 million) offering is guaranteed by the International Finance Corp., the World Bank’s private sector lending arm, which owns 10 percent of SOLC, and by Saudi Investment Bank, which has a 28 percent stake. The guarantee ensures that the bond is treated as a banking product and therefore regulated by the Saudi Arabian Monetary Authority rather than subject to review by a shari’a court, where edicts are less predictable.
With the Saudi government weighing legislation to liberalize its capital markets, more companies could follow SOLC’s lead. “This is a modest transaction in terms of the size of the Saudi market and the potential,” says Sami Haddad, IFC’s director for the Middle East and North Africa.
This isn’t al-Omair’s first groundbreaking transaction. Two years ago he established SOLC in partnership with Japan’s Orix Leasing as the kingdom’s first nonbank financial company. In 1997 he launched the Saudi Arabian Investment Fund, the first vehicle to allow foreigners to buy Saudi stocks. And he’s already seeking partners for his next venture. “What the country needs,” he says, “is investment banking.”
