Alba: a case study in investment according to the rules

Aluminum Bahrain (Alba) has undertaken a $32.5 million financing deal arranged with Gulf International Bank and sponsored by the Al Rajhi Banking and Investment Corporation. The funds are intended for a fume treatment plant. The plant is being built as a component of an Alba environmentalist effort. The deal is in the istisna' format. The actual construction of the plant is undertaken by a Norwegian firm ABB Environmental Norsk Viftefabrik. Al Rajhi will first buy the plant from ABB and then sell it to Alba over a six year period. Al Rajhi's profits will be derived from its intermediary function. Both Al Rajhi and Gulf International Bank are looking to take part in more such transactions. An example of Islamic financing of major projects is Kuwait Finance House's role in funding Pakistan's Hub Power Project. Istisna' deals have also been undertaken by international banks like ANZ Grindlays.