SABB launches new sharia-compliant inventory financing solution

SABB launches new sharia-compliant inventory financing solution

Saudi British Bank (SABB) has completed its first sharia-compliant inventory finance transaction, as it works to further develop its offering for importers and re-exporters in the Kingdom of Saudi Arabia (KSA).

As part of a deal signed in March, SABB is providing finance to Saudi Arabian dairy company, Al Safi Dairy, with funding supporting the company’s import of feedstock and exports to other countries within the region.

Al Safi Dairy is a joint venture between a major group in the kingdom and a European multinational, supplying products to over 30,000 retailers in a dozen countries across the Middle East.

The new off-balance sheet solution aims to help clients leverage their inventory assets and boost their working capital, with companies able to procure goods and lock in pricing without carrying the stock on their balance sheet.

“This is mainly for larger Saudi Arabian importers who are buying on international letters of credit [LCs] and then sitting on sizeable commodity inventories as part of their business cycle which ties up their cash,” says David Leslie, general manager for global trade and receivables finance at SABB.