BAGHDAD, April 15, 2010 /PRNewswire/ -- FastIraq, one of Iraq's leading providers of Internet and fiber optic connectivity, has received a senior debt facility from Dar Es Salaam Investment Bank (DES), a subsidiary of HSBC. Northern Gulf Partners (NGP), Iraq's leading investment advisory firm, served as exclusive financial advisor to FastIraq. This landmark transaction will allow FastIraq to supply Internet connectivity and dedicated data capacity to Iraqi retail and wholesale consumers, connecting more than 100,000 homes and offices in Iraq.
The Internet is extremely popular among Iraqi individuals and businesses. Widespread access to fast, high-quality connectivity is key to Iraq's future as a modern economy and the Government of Iraq is committed to the growth of the sector, said Mr. Kassim Mohammed AL-Hassani, ITPC Director General, Ministry of Communications. This pioneering transaction between FastIraq and Dar Es Salaam Bank will help to catalyze additional investment in Iraq's broadband infrastructure, Mr. AL-Hassani continued.
Iraq's high-speed Internet penetration, at 5%, is low but growing quickly at a rate of 20% annually. Demand for broadband is currently about 10x available supply and increasing rapidly. Iraq's 7-8% annual GDP growth is among the world's highest.
The loan is historically significant, representing a shift in Iraqi credit culture away from asset-based lending towards a more innovative, cash-flow-based approach. James Hogan, CEO of HSBC in Iraq said, Through Dar Es Salaam Investment Bank, HSBC is committed to supporting the long-term development of the Iraqi economy. We are keen to help the future growth of a strong telecommunications infrastructure in Iraq through supporting companies such as FastIraq. The terms of the debt facility were not disclosed.
Mr. Tim Moore, CEO of FastIraq, explained the facility's importance. This allows a growing business to expand alongside the rapidly improving Iraqi economy and provide services and connectivity to a market with high demand. Without this progressive approach to lending by DES, this may not have been possible.
The transaction has widespread implications for other business borrowers in Iraq who seek access to credit, but lack traditional assets, such as real-estate, to provide as collateral for the loan. As other banks begin to follow the cash-flow-based lending approach pioneered in Iraq by DES, this development will open access to financing for healthy, growing businesses across the country.
Chris Ruth, Managing Partner of NGP stated, We are excited to play a role in driving the Iraqi financial services market forward. For international and local investors alike, this innovative transaction represents a highly positive development in Iraq's banking sector, with increased opportunities for Iraqi businesses seeking expansion capital.
We are also very proud of the role played by FastIraq, DES and NGP in facilitating additional broadband availability in Iraq. Raising the Internet penetration rate by 10% in Iraq would increase GDP by about 1.5%, Ruth added.
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SOURCE: Northern Gulf Partners
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