European Islamic Investment Bank Plc : Strategic Investment in Rasmala

Strategic Investment in Rasmala
6 January 2012

Further to the announcement issued on 22 December 2011, EIIB is pleased to announce that it has today completed an investment in Rasmala Holdings Limited ("Rasmala"), as a first step in building a strategic partnership with Rasmala (the "Transaction"). Rasmala is a leading investment bank operating in the Gulf Cooperation Council ("GCC") countries and Egypt and specializes in asset management, investment banking, brokerage and research. Rasmala was one of the first regional investment banks to be licensed by the Dubai Financial Services Authority with expertise and relationships in the region maintained through its regulated subsidiaries in the UAE, Saudi Arabia, Egypt and Oman. Rasmala serves a wide range of private and institutional clients including government institutions, corporations, family offices and high net worth individuals. Rasmala employs approximately 140 people in the region.

Rasmala has a prominent shareholder base of over 50 leading investors including Deutsche Bank AG, H.H. Sheikh Saud Bin Saqr Al Qassemi (Ruler of Ras Al-Khaimah), H.H. Sheikh Mansour bin Zayed Al Nahyan, Diwan of Royal Court Pension Fund of Oman, Bank Muscat, SAMBA Financial Group, and a prominent group of private investors from the Kingdom of Saudi Arabia.

For the financial year ended December 2011, Rasmala expects to post a loss before interest, tax, depreciation, amortization and restructuring charges of approximately US$7m. Rasmala has however recently undertaken a number of cost reduction and restructuring initiatives which should result in an improved performance during 2012. Rasmala has substantial assets under management deployed in regional Fixed Income, Money Market and Equity.

Mr. Zulfi Caar Hydari, Chief Executive of EIIB said: "Rasmala has a strong regional franchise, and together with EIIB's international capital markets and asset management experience this will be a powerful partnership to seize current opportunities in the GCC.

The GCC is growing in importance as an economic and trading hub as its overall GDP is expected to reach $2 trillion in less than 10 years. Our goal as a public company is to give international investors exposure via a London quoted vehicle to this fast growing region which provides nearly one-quarter of the world's oil supplies."

Mr. Ali al Shihabi, a pioneer of regional investment banking and Chairman of Rasmala, said: "The strength of EIIB and its leadership team should assist Rasmala to capture market share in our high priority markets over the next 24 months. I look forward to supporting the business in my role as Chairman of the Rasmala Supervisory Board."

Mr. Anwar Abu Sbaitan, Rasmala CEO, said, "This year there will be opportunities for regional investment banking transactions as well as asset management. With a strong regional platform and an experienced management team we are well positioned to take advantage of this and grow our business in the region."

The Transaction has been structured as follows:
• EIIB has agreed to make a US$16m investment in Rasmala over a 12 month period. The investment is made pursuant to a financing facility that is convertible into newly issued ordinary shares in Rasmala ("Rasmala Shares"), representing approximately 35 per cent. of Rasmala's enlarged share capital, subject to certain post completion adjustments.
• Rasmala has issued to EIIB a majority of management shares (the "Management Shares") which will allow EIIB to take a leading role in its management. Rasmala's constitution provides that the holders of the Management Shares have the right to appoint the majority of directors to the board of Rasmala.
• EIIB has also acquired 7.4 per cent. of Rasmala's existing share capital from Rasmala's chairman, Mr. Ali al Shihabi. At the same time Mr. Ali al Shihabi will relinquish his Management Shares which shall be redeemed by Rasmala. The consideration payable to Mr Ali Al Shihabi shall be satisfied over a two year period by the issue of up to 98,565,000 new ordinary shares in EIIB ("EIIB Shares") at a price of 3.6 pence per EIIB Share. The agreement between EIIB and Mr. Ali al Shihabi provides that during the two year period from today's date Mr. Ali al Shihabi has a right to buy back, for the original consideration, the Rasmala Shares previously held by him should EIIB seek to acquire the balance of Rasmala Shares which it does not own during that period. If no offer has been made by EIIB for the balance of the Rasmala Shares during such two year period, EIIB shall transfer such Rasmala Shares back to Mr. Ali al Shihabi at the expiry of the two year period at the same price.

Rasmala shall continue to benefit from the strategic input of Mr. Ali al Shihabi who shall continue to support the company in the capacity of Chairman of the Rasmala Supervisory Board. Mr. Ali al Shihabi will also serve as a senior adviser to assist with post transaction integration for a period of two years.

The Transaction will be funded from funds released from EIIB's closure of the Turath Quoted Equities Fund in 2011.

The Transaction positions EIIB as a leading financial services company specialising in the GCC, Levant and North Africa region with strong distribution capability, privileged deal flow, long term investor relationships and Islamic financing capability. EIIB will continue to participate, albeit selectively, in consolidation opportunities in the Middle East financial services sector through organic growth, joint ventures and targeted acquisitions.