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Jordan Student Loans
Summary of Proposed Investment
This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.
OMNIX INTERNATIONAL LLC
Colleges, Universities, and Professional Schools
Date SPI disclosed
May 14, 2008
Projected board date
June 16, 2008
Signed: June 30, 2008
Approved: June 26, 2008
The proposed project is a student loan program for university students in Jordan, whereby IFC will share risk-on the portfolio of loans. The loan portfolio will be originated and managed by a private Jordanian bank on a commercial basis. The maximum size of the portfolio will be $25 million equivalent.
Loans will be used by students to pay tuition at universities for undergraduate and graduate education at both public and private universities. The maturity of the loans will be up to eight years which will enable students to repay the loans from their earnings after graduation. While the student is still studying at university, they will make interest payments on the loans, to instill a repayment behavior and ensure that the student continues to be eligible for further loan disbursements. The loans will be repayable four and a half years after graduation.
Project sponsor and major shareholders of project company
Students and their families in Jordan are finding it more and more difficult to pay for tuition fees at universities. Mr. Jamal Abu Issa is contributing funds to establish a student loan program. This loan program will make education accessible by providing a financing source for tuition fees. Mr. Jamal Abu Issa is a Qatari national and owner of Omnix International. Omnix International is a Dubai-based provider of software, networking and security solutions in the Middle East.
The Jordanian bank who will be funding and administering the student loan portfolio is Cairo Amman Bank (CAB). CAB was established in 1960 and has a network of branches and offices throughout Jordan and Palestine. CAB offers a wide range of banking, commercial, investment and individual services.
Total project cost and amount and nature of IFC's investment
The maximum portfolio size will be $25 million equivalent and IFC will share senior risk on the portfolio of up to a maximum $10 million equivalent.
IFC investment as approved by Board
9.99 million (USD)
IFC Investment (million USD)
* These investment figures are indicative
Location of project and description of site
Students borrowing from the program will be Jordanian citizens attending public and private universities located in Jordan. Cairo Amman has branches throughout Jordan, and borrowers will be from all geographic regions in the country.
Anticipated development impact of the project
The project is expected to high development impact as it will provide benefits for students, universities and banks. The Facility will address the lack of a student financing product in the Jordanian market, potentially giving whole new pools of students access to education. The universities will benefit from increased enrollments and the enrollment of all academically qualified students. The Facility will demonstrate to Cairo Amman Bank that student loan financing can be a viable and profitable business and increase the bank’s access to new customers.
IFC's expected development contribution
IFC’s role in this project has been to bring all parties together and to structure the program. IFC has developed and launched similar risk sharing facilities in Indonesia, Chile and Brazil and this experience in both structured finance products and student lending has placed IFC in a unique position to take the lead in structuring this Facility. Cairo Amman Bank has not had prior experience in student loans, and IFC’s participation is therefore seen as crucial to provide comfort to the bank and to enable them to provide student loans at reasonable interest rates.
Environmental and social issues - Category C
This project has been classified as a Category C project according to IFC’s Environmental and Social Review Procedure. No further review is required.
For inquiries about the project, contact:
Cairo Amman Bank
950661 Amman 11195
Telephone: +962 6500 6000
Omnix International L.L.C.
For inquiries and comments about IFC, contact:
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
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