Financial Re-Engineering with Respect to Funding of New Projects of Al Masaken

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Being a subsidiary and a group company of Aerated Concrete Industries Company K S C C (ACICO), Al Masaken Real Estate Company has created for itself a remarkable position in the booming real estate sector in the Gulf region.


Backed up by a good design and engineering team the company has crossed over the initial struggles and has reached the position to take up construction projects of high rise buildings on its own financial strength. As a strategic financial initiative, it was suggested that Al Masaken be promoted as an independent business entity and raise the additional funds required for its proposed high rise construction projects following the IPO route supported by the group image of ACICO. This case study details the circumstances which led to such a decision of providing the individual status to Al Masaken and the various other factors which contributed to the proposal.

Specialized in Housing/Villa projects, Al Masaken was established in 1998 as a part of ACICO group with a 25% ownership from ACICO. Having sailed through the initial hiccups the company specialized in the new wave construction of vertical housing by the year 2003. Being one of the subsidiaries of the ACICO, the financial strategy was to obtain short term loans to finance the purchase of the real estate properties and for the process of construction activity and repay the loan within a maximum period of one and a half years.

ACICO adopted a financial policy of long-term borrowing for its other manufacturing activities and short-term borrowing for the construction activity. ...
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