Dallah Albaraka Group

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Dallah Albaraka Group

PO Box 430
Jeddah
21411
Saudi Arabia
Telephone: ( + 966) 2 671 0000
Fax: ( + 966) 2 669 4264
Web site: http://www.dallah.com

Private Company
Incorporated: 1969 as Dallah Works and Maintenance Company
Employees: 61,000
Sales: $12 billion (2005)
NAIC: 522298 All Other Non-Depository Credit Intermediation; 488510 Freight Transportation Arrangement; 515120 Television Broadcasting; 517910 Other Telecommunications; 531210 Offices of Real Estate Agents and Brokers; 541330 Engineering Services; 551112 Offices of Other Holding Companies; 561510 Travel Agencies; 622110 General Medical and Surgical Hospitals

The Dallah Albaraka Group is one of the leading, privately held conglomerates in Saudi Arabia. The Jeddah-based company controls some 300 companies involved in a variety of industries in more than 40 countries worldwide. Dallah Albaraka groups its operations into three primary categories: Finance, which includes the group's internationally operating network of Islamic banks, as well as investment and insurance vehicles; Business, with operations ranging from hospital operation to cleaning and maintenance to food production and restaurants; and Media, including the company's ownership of satellite broadcaster Arab Radio & Television. Other Dallah Albaraka investments include the manufacture of traffic lights and the production of pesticides, road construction materials, and metal pipes. Since 2002, the company has regrouped its international banking operations, including banks in Jordan, Algeria, Sudan, Pakistan, South Africa, Egypt, and Lebanon under a single entity, Albaraka Banking Group, which became the world's leading Islamic bank. Dallah Albaraka remains controlled by founder Sheik Saleh Abdullah Kamel. In 2005, Kamel and Dallah Albaraka were cleared of suspected support for Al Qaeda and the 9/11 terrorist attacks. Dallah Albaraka's total assets as of 2005 reportedly topped $12 billion.

Building an Islamic Conglomerate in the 1960s

Saleh Abdullah Kamel's business career began at an early age with the launch of a courier service. By the late 1960s, Kamel had laid the foundation for the development of the Dallah Albaraka Group, which was to become one of Saudi Arabia's largest and most diversified conglomerates in the early 21st century.

In 1969, Kamel formed a new company, Dallah Works and Maintenance Company, in Riyadh. That company, which benefited from a series of contracts with the Saudi government, including the concessions for the cleaning and maintenance of the Mecca and Medina holy sites, provided the financial springboard for Kamel's increasingly diversified investments. In the mid-1970s, Dallah expanded its public works investments to include Dallah Avco Trans Arabia Company, which specialized in the construction, operation, and maintenance of airports. That company profited from Kamel's closer relationship with the Saudi government, winning a large number of airport and related concessions in the country, such as the contract to maintain and operate the country's air traffic control system in 1988.

Kamel also founded the company's own health clinic in Jeddah in 1977. Originally created to provide healthcare services to the growing numbers of Albaraka employees, the clinic grew into a full-fledged medical facility. The involvement in healthcare led the company to expand into hospital ownership as well with the opening of the Dallah Hospital in Riyadh in 1987. The company also launched a chain of medical and dental clinics throughout Saudi Arabia, and into North Africa as well, while also developing a new subsidiary, Dallah Health Service Holding Company, which, in addition to the operation of healthcare facilities, provided various medical and pharmaceutical support services to healthcare facilities throughout the Arab world.

Kamel's interests had also turned toward the media, and in 1977 Dallah Albaraka launched the Arab Media Company, one of Saudi Arabia's first television, radio, and film production companies. Kamel's media operations later expanded to include broadcasting, and his company became one of the founding members of the Middle East Broadcasting Center in the 1980s.

Another business in which Dallah Albaraka became involved was real estate and development investment. In 1983, the company participated in the Tunis Lake project, a complex of commercial and residential developments covering some 13,000,000 square meters. In the early 1990s, the company created the Shareek Marketing and Real Estate Development Company as a marketing arm for its various real estate projects, such as a development at Durrat-al-Arrus.

Dallah Albaraka continued to explore a range of investment and business opportunities throughout the 1980s. The company entered food production in the middle of the decade, financing the 1986 launch of Misr Arab Poultry Company, which produced chickens for the local market. In 1988, the company added the Sardine Canning Company in Morocco, with an initial capacity of 13,000 tons per year.

In the 1980s, the company also added transportation services to its range of concerns. In 1986, Dallah Albaraka formed the Dallah Pilgrims Transport Company in order to accommodate the transportation needs of the influx of pilgrims to the country's holy sites each year. The company launched the service with a fleet of 400 vehicles, later tripling its fleet in response to demand. The move into transportation also included freight services, and in 1986 the company established Dallah Transport Co. Ltd., with a specialty in chilled and frozen goods.

Islamic Banking Pioneer in the 1980s

Kamal had extended Dallah Albaraka's business activities into the financial markets with the launch of Islamic Arab Insurance Company in Dubai in 1979. The company's expansion into the financial industry was due in part to Kamel's interest in the development of theories for the creation of a new type of "Islamic bank," that is, a bank that respected the Islamic Sharia, in particular the rejection of Western-style interest rates, which was considered as usury by many Moslems. Islamic banking principles replaced interest rates with "Musharakah," a partnership system in which lender and borrower together shared both the risk of loss and the possibility of profit of a loan or investment.

In 1982, Kamel became one of the first to launch an Islamic bank, incorporating Albaraka Investment and Development Company (ABID) as a vehicle for the creation of banks, insurance companies, and investment firms based on Islamic financial theory. The company opened its first branches in Saudi Arabia but quickly extended its interests to other Arab and Islamic markets. By 1984, Albaraka had opened a bank in Sudan, and by the end of the 1980s Albaraka banks had been established in Algeria, Jordan, Lebanon, Bahrain, Egypt, Malaysia, South Africa, London, and, in 1991, in Pakistan. These banks, while owned by Dallah Albaraka, remained for the most part independent of one another.

The development of the Albaraka bank network encouraged Kamel to explore further aspects of Islamic financial ideas, and in 1987 the company launched Al-Amin Company for Securities and Investment Funds, one of the first to offer investment vehicles according to Islamic principles. That company converted to bank status in order to be able to launch securities products that respected Islamic banking ideals. The bank also became one of the first to obtain authorization to offer a dual-tier shareholder system, creating management and partnership share classes. Also in 1987, the company launched the International Arab Leasing and Finance Company, providing vehicle and equipment lease financing products to the Arab world.

ABID also continued to develop financial services vehicles for the Arab and Islamic markets, launching a series of companies in the late 1980s and early 1990s. In Tunis, for example, the company opened BEST Re-Insurance, while in Dubai, ABID was behind the launch of the Islamic Arab Insurance Company. In Bahrain, the company opened Islamic Insurance & Re-Insurance, while in Jordan, ABID's Jordan Islamic Bank opened the Islamic Mutual Insurance Company in 1994.

As Dallah Albaraka's bank network grew strongly in the Arab and Islamic markets, the group faced difficulty in establishing a presence in the West. In the early 1990s, the bank came under scrutiny from the Bank of England as a result of changes in ownership rules imposed on international banks after the BCCI scandal of the late 1980s. Albaraka also faced criticism for its reportedly "aggressive" loan-collection tactics. In the bank's defense, Kamel told MEED: "In the name of Islam, they (the debtors) wanted to eat up depositors' money at the bank. Since we are guarantors of depositors' money and, as mudaribeen, our duty is to protect deposits by reverting to law on different levels and not one level." Faced with Bank of England demands that Albaraka bank widen its shareholder base beyond Dallah Albaraka, the company was forced to shut down the London operation in 1993, leaving only a representative office.

Another factor in the shutting down of its London bank and the group's difficulties in expanding its Islamic banking network westward was the lack of a single unifying structure behind its various banking entities. This situation was exacerbated by the group's failure to obtain a banking license in Saudi Arabia in the early 1990s.

Company Perspectives:

Mission Statement: Major strategic underpinning is Dallah Albaraka's commitment to sustainability. The Group operations include a high level of commitment to projects targeted to promote family values, provide infotainment, education, health services, economic research, and philanthropy.

Dallah Albaraka began making preparations for uniting its Albaraka bank operations under a single holding company in the late 1990s. In 1999, the company appointed Kuwait's The International Investor (TII) to guide the consolidation of the Albaraka banking network. The relationship quickly led toward merger negotiations between the two groups. By 2002, a deal appeared to have been reached in which nine of the Albaraka bank branches were to have been merged into TII. The new bank would have become the world's third-largest Islamic bank.

At the last moment, however, the merger was mysteriously cancelled. Instead, Albaraka went ahead and founded the Albaraka Banking Group in Bahrain. That bank then took over nearly all of the existing Albaraka banks and began centralizing back office functions. By 2004, Albaraka Banking Group had also become the holding company for most of the Dallah Albaraka's other financial services operations as well.

Triple Focus for the 21st Century

After a falling out with other members of the Middle East Broadcasting Center partnership, Kamel left that group in order to launch his own satellite broadcasting network, joined by another Saudi investor, Walid bin Talal. Arab Radio and Television (ART) began broadcasting in 1993 and quickly extended its coverage to include five channels available to much of the Arab-speaking world.

ART became a perennial money-loser, with annual losses topping some $76 million per year by the end of the 1990s. Nonetheless, the station formed the centerpiece of Kamel's growing media empire, which included First Net, a pay television service including ART and other channels, launched in 1996, and Iqra, an Islamic Arab satellite channel launched in 1998. By then, ART had acquired some 50 percent of the entire Arab film catalog and had also acquired Arab broadcasting rights to a number of important sporting events, including the World Cup. In 1999, the company extended its media operations to include the Saudi Digital Distribution Company, which provided marketing and distribution services for ART's own channels as well as some 50 other television channels in the area.

Dallah Albaraka's involvement in media operations—the company also acquired stakes in three Saudi daily newspapers, as a well as a 10 percent stake in Ashar Al-Awsat publisher Saudi Resarch—led it to restructure its operations in 1995. The reorganization divided the company into to three primary divisions: Business, Finance, and Media.

Dallah Albaraka continued to develop its wide-ranging interests in the late 1990s and 2000s. The company's real estate projects included the launch of the Durrat Al-Arus Trousitci City on the Red Sea in 1997. The completion of the first phase of the project included some 2.3 million square meters, while the launch of the second phase at the turn of the 21st century added another five million square meters. By 2003, the company had begun preparations for new projects in Algeria, Malaysia, Tunisia, and Dubai, as well as for a new holiday resort complex in Riyadh.

Kamel and the Dallah Albaraka group faced several difficult years following the September 11, 2001 terrorist attacks on the United States. Kamel and Albaraka Bank were suspected to have provided financial backing to Osama Bin Laden and the Al Qaeda terrorist group. It was not until 2005 that both Kamel and Albaraka were cleared of wrongdoing. In the meantime, Kamel continued to seek means for widening the scope of his financial empire. In 2004, he joined a consortium of investors seeking to establish a new international Islamic investors bank to be based in Bahrain. The new entity, intended to help establish a capital market in the Middle East, was expected to begin operations with a capitalization of $2 billion. Saleh Kamel remained at the head of Dallah Albaraka, one of the Arab world's largest and most successful privately held business empires.

Key Dates:

1969:: Saleh Abdullah Kamel founds the Dallah Works and Maintenance Company, which becomes the cornerstone of the Dallah Albaraka empire.
1975:: Dallah Avco Trans Arabia Company is established in order to build and operate airports.
1977:: Dallah Albaraka creates the Arab Media Company to provide film, radio, and television production.
1979:: The group enters financial markets with creation of Islamic Arab Insurance Co.
1982:: Dallah Albaraka pioneers Islamic banking with the founding of Albaraka Investment and Development Company.
1984:: The group establishes the Albaraka bank and joins in the launch of Middle East Broadcasting Center (MBC).
1993:: Dallah Albaraka leaves MBC and launches a pay-television network, Arab Radio and Television (ART).
1999:: Parts of international Albaraka banking network are consolidated under a single holding company, and the company later reaches an agreement to merge Dallah Albaraka into Kuwait's TII.
2002:: After the TII merger falls through, the group establishes the Albaraka Banking Group in Bahrain as a holding company for most of the group's financial services operations.
2004:: The group joins a consortium to establish an international Islamic investors bank in Bahrain.
2005:: Kamel and the Albaraka banks are cleared of involvement in Al Qaeda and the September 11, 2001 terrorist attacks on the United States.

Principal Subsidiaries

Albaraka Bancorp (USA); Albaraka Bank Lebanon; Albaraka Bank Ltd. (South Africa); Albaraka Bank Sudan; Albaraka Islamic Investment Bank (Bahrain); Albaraka Turkish Finance House (Turkey); Al-Tawfeek Co. For Investment Funds Ltd. (Cayman Islands); Al-Amin Co. For Securities & Investment Funds (Bahrain); Albaraka Medical Clinic; Algerian Saudi Leasing Holding Co. (France); Al-Towfeek Investment Bank Ltd. (Pakistan); Arab Leasing International Finance (ALIF) Ltd.; Arab Radio & Television (ART); Arab Reach Media (ARM); BEST Re-Insurance (Tunisia); Banque Albaraka D'algeria; Banque Albaraka D'jibouti; Banque Albaraka Mauritanienne Islamique; Beit Et-Tamweel Al-Tunisi Al-Saudi; Dallah Albaraka (U.K.) Limited; Dallah Albarak Holding Co. (Malaysia); Dallah Al-Baraka (Malaysia) Holding SDN. BHD.; Dallah Albaraka Holding Company for Umra Services; Dallah Communications Holding; Dallah Establishment for Contracting and Maintenance; Dallah Health Service Holding Company; Dallah Hotels and Resorts; Dallah Human Skills Development Co.; Dallah Transport Co. Ltd.; Dallah-Dowail Co.; Egyptian-Saudi Finance Bank (Egypt); Emin Sigorts A.S. (Turkey); International Arab Leasing and Finance Company; International Information & Trading Services Company; Iqraa Co. for Printing and Paper Trading; Islamic Arab Insurance Co. (IAIC) (United Arab Emirates); Islamic Insurance & Re-Insurance Co. (IIRCO) (Bahrain); Jordan Islamic Bank; Misr Arab Poultry Co.; National Wood Works Co.; Sardine Canning Co. (Morocco); Saudi Digital Distribution Company; Saudi Real Estate Maintenance Co.

Principal Divisions

Business; Finance; Media.

Principal Competitors

Temasek Holdings Private Ltd; Banque Algerienne de Dévèloppement; Dimon Zimbabwe Private Ltd; Banque Tunisienne de Solidarité; Bank Hapoalim B.M.; Abbar and Zainy Group of Cos.; Alghanim Industries.