Why invest

BAE SYSTEMS Project Finance Initiative 2

In a typical joint venture in Saudi Arabia supported by British Offset, the Saudi and foreign partners may each have a 50% share holding.

The BAE SYSTEMS Project Finance Initiative offers the foreign partner a low interest non-recourse loan for up to 50% of its stake in the venture.  If the equity stake is 12.5% of total project funding this means the foreign partner has all the benefits of a 50% shareholding in the joint venture company for just 6.25% investment.

As a further measure to help reduce risk, the loan repayment schedule is based on the dividend payments made by the joint venture company.

If a Saudi bank requires a parent company loan guarantee, BAE SYSTEMS will contribute a share of the guarantee on a pound for pound basis.  The maximum value available is usually $10 million and can be either all loan guarantee, all equity loan or split between both.

Funding structure for a joint venture Technology partner
1. 50% Saudi Industrial Development Fund
2.
 25% Local banks
3. 12.5% Saudi partner
4. 12.5% Technology partner
A. 6.25% BAE SYSTEMS soft financing loan
B. 6.25% to be funded by the technology partner

 

Animated explanation of funding

(Flash required – download free player here)

Non-animated explanation

1

2

3

4

5