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Kingdom Sees Future in Islamic Loan as Alwaleed Builds Tower

Jan. 29 (Bloomberg) -- Kingdom Holding Co., controlled by billionaire Prince Alwaleed bin Talal, established a committee to help the company move toward Shariah-compliant loans as Islamic financing gains appeal among borrowers.

The committee will “prepare an integrated strategic plan for the conversion of future loans in accordance with the Islamic Shariah,” the Riyadh-based company said in an e-mailed statement today. The panel will comprise Sheikh Abdullah Sulaiman Al Manee’a, an adviser to the Royal Court, Sheikh Mohamed Ali Elgari, Sheikh Ali Abdulaziz AlNashwan and Abdulah Salim AlGhamdi.

Global banks including HSBC Holdings Plc and Standard Chartered Plc have set up Islamic banking units to take advantage of growing demand for financial products that comply with the religion’s ban on interest. Global Islamic financial assets are set to double to as much as $3 trillion by 2015, according to Standards & Poor’s estimates.

JPMorgan Chase & Co. said last week it would focus on clients in countries including Saudi Arabia and Malaysia amid plans to increase its Islamic business. Malaysia hosts the world’s biggest market for Islamic bonds, while Saudi Arabia boasts the world’s biggest share of Shariah-compliant assets.

Kingdom Holding, 95 percent owned by Prince Alwaleed, is building a 1 kilometer-high (0.62 mile-high) skyscraper in the Red Sea port city of Jeddah, seeking to surpass the Burj Khalifa in Dubai as the world’s tallest tower. The company received shareholder’s approval in March 2012 to sell as much as 3.75 billion riyals ($1 billion) of bonds inside Saudi Arabia or abroad.

“Kingdom Holding is showing its willingness to profit from the abundance of liquidity in Islamic debt markets and the relatively cheaper borrowing costs compared to the conventional debt markets,” Montasser Khelifi, a Dubai-based senior analyst at Quantum Investment Bank Ltd., said by an e-mail today. “This announcement of a Shariah committee may be a sign that Kingdom Holding will tap the sukuk market imminently.”

The shares climbed 2.1 percent, the most in a month, in Riyadh trading today, giving the company a market value of about 73 billion riyals.

To contact the reporter on this story: Deema Almashabi in Riyadh at dalmashabi@bloomberg.net

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net

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