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Dubai Islamic Investments in Sukuk
Source:
GlobalIslamicFinanceMagazine.com
The unprecedented Islamic finan- cial Dubai Investments may look to raise up to 1 billion dirhams (US$272.3 million) in 2012 through the sale of Sukuk, or Is- lamic bond, to finance the expan- sion of its manufacturing units and repay debt.
The company, in which emirate’s sovereign wealth fund Investment Corporation of Dubai (ICD) owns an 11.5 percent stake, is already in talks with an Italian lender for a $200 million loan, with a Sukuk issuance only due for considera- tion if the loan deal does not go through, Chief Executive Kha- lid bin Kalban told reporters on Wednesday .
Dubai Investments is in discus- sions with two banks for the po- tential Sukuk issue and a decision would be taken by the end of the year, Kalban added. He declined to name the lenders. “We have three options [...] first is the loan from the Italian bank. If that does not work, we will go for the Sukuk and the final option is other com- mercial lending,” said Kalban. “We need about 750 million dirhams [...] what we are hoping to raise is about one billion dirhams” said Kalban.
Dubai Investments, which has interests in several sectors including property and man- ufacturing, swung to fourth quarter loss last year as their manufacturing business was hit by political unrest in Libya and Syria. Part of the funds raised from the Sukuk would be used for the expansion of Emirates Float Glass factory, the conglomerate’s glass manufacturing unit.
The company has invested 1.5 billion dirhams on its four glass factories so far and plans to invest an additional 800 million dirhams from 2013-2014. These units and their subsidiaries are expected to achieve sales
Du- bai In-
vestments is in discus-
sions with two banks for the potential Sukuk issue and a decision would be tak- en by the end of the year’’
sources said. DIFC Investments’ (DIFCI) Sukuk obligation has been highlighted by analysts as one of the most challenging re-financings in the Gulf Arab region this year, given the size of the maturity and the firm’s limited cash position.Talks to secure finance are still at an early stage, according to the sources, who said the final loan amount is expected to be be- tween US$900 million and $1 billion. Local banks are expect- ed to provide most of the fund- ing, while international names with an existing relationship with the borrower could also be involved in the final bank group, one of the sources said, speak- ing on condition of anonymity.
“It’s something tailored more to the local market as the company has got a good asset base and a lot of land around it which the local banks can get on board with,” a London- based banker said. No imme- diate comment was available from DIFC Investments.
worth 620 million dirhams this year, up from sales of 400 million dirhams in 2011, Dubai Investments said in a statement. The com- pany expects the business to make sales of one billion dirhams from 2013-2014. In Oc- tober, Dubai Investments said it had secured 700 million dirhams (US$190.6 million) of a 1.2 billion dirham loan required in order to expand its operations. Shares of Dubai In- vestments ended 1.3 percent higher on the Dubai stock exchange on, The stock has ad- vanced 50 percent this year.
Meanwhile, the investment arm of Dubai’s International Financial Centre is in talks with banks to raise a loan worth as much as US$1 billion to help it meet the June ma- turity of a $1.25 billion Islamic bond, three
DIFCI hired US investment bank Moelis & Co. to advise it on options for the Sukuk ma- turity, sources said last month.
DIFCI, whose assets range from aerospace to retail, had US$119 million of cash on its balance sheet at the end of 2011, according to a rating announcement from Standard & Poor’s published at the beginning of Febru- ary. The agency added that DIFCI would need to raise at least US$900 million to meet the liability, although the potential for financial support from the government of Dubai if it was unable to do so was “very high.”
The five-year Sukuk, which matures on June 13, was initially sold by CIMB, Deutsche Bank, Dubai Islamic Bank, Emirates NBD, Goldman Sachs and Mashreq.
gif 2012 April Global Islamic Finance 73
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