Running a conventional equipment leasing business within the US since 1977, Atel Capital’s foray into Shariah compliant deals came when it was approached by GCC-backed London-based banks in the mid-1990s, Group Chairman and CEO Dean Cash shared with IFN Investor.
“Up until then, we had never done any Islamic-associated investing although we later learned that true leases are by their nature Shariah compliant. Previously, we didn’t know Shariah from anything and these Middle East-backed banks needed somebody who could originate and manage lease deals for them in the US. They asked if we would work with them and they would bring the money in from the Middle East.”
The GCC-sourced funding, channeled via London banks, was welcomed as competition and an additional source of capital to expand Atel Capital’s core business of leasing low-tech, but essential, equipment to major businesses – including manufacturing, material handling, logistics, construction equipment and rail cars.
While the 2007 global financial crisis brought a pause to this GCC funding flow from the UK-based banks for US equipment leasing deals, Atel Capital was already exploring opportunities to raise funds directly in the Middle East.
The most fruitful talks on the subject were held with UAE-based Capital Guidance group – involved in home fixtures and industrial chemicals – which had created Guidance Financial Group in 2000 as a wholly-owned subsidiary to enter the Islamic financial services field. Atel Capital teamed up with Guidance and successfully raised Shariah compliant funds directly in the GCC for its US equipment leasing business.
As both organizations had a common vision of Islamic financing, those talks led to discussions involving Guidance Investments Chairman Mohamad Hammour proposing to establish an equipment leasing company in Saudi Arabia to lease equipment to MENA companies, with Atel Capital invited to be part of the joint venture.
“We didn’t know the market for leases in the GCC and I thought there is no way the Guidance group would raise any money to do it. But Guidance Financial, with its branch office in Kuala Lumpur, attracted Malaysia’s Muslim pilgrim body Lembaga Tabung Haji to invest the first US$50 million,” said Dean.
“We started the operation in the Kingdom from scratch in 2013. GuidanceAtel pioneered operating leases there and is now the largest operating lease company in Saudi Arabia,” noted Dean. Operating out of Riyadh, Jeddah and Dammam, its current portfolio is valued at over SAR278 million (US$74.13 million) of Shariah compliant equipment leases.
Dean said GCC leasing remains a small part of Atel Capital’s operations. In the US, Atel Capital is managing an equipment portfolio of over US$2 billion, including being one of the top 10 rail lessors in the US with railcars having lifespans of 50 years.
As infrastructural development is picking up in the GCC region, Atel Capital and Guidance Investments were joined in October 2024 by Aljazira Capital – which committed SAR1 billion (US$266.67 million). GuidanceAtel, then, was rebranded as Ijarah Solutions to continue creating Shariah compliant operating lease solutions for companies in Saudi Arabia.
