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Ski Dubai is part of the Mall of the Emirates, which is operated by Majid Al Futtaim Holding. Pawan Singh / The National
Ski Dubai is part of the Mall of the Emirates, which is operated by Majid Al Futtaim Holding. Pawan Singh / The National

Units spun off by MAF Holding as profits rise

In a bid to reassure future investors in the company, Majid Al Futtaim Holding has sold off its Syrian and Iranian operations - to the firm's founder, business scion Majid Al Futtaim.

Majid Al Futtaim Holding has spun off its Syrian and Iranian units to its owner to head off concerns about exposure to sanctions as it adds 4,000 jobs throughout the Middle East.

The Dubai-based family business, which operates Mall of the Emirates and is the owner of the regional franchise rights to Carrefour supermarkets, made the move "proactively" to ease bond and sukuk investor concerns as the company geared up to roll out new malls across the Middle East.

The Syrian and Iranian units are now owned directly by the company founder Majid Al Futtaim.

MAF Holding yesterday reported a 10 per cent rise in annual revenues to Dh21.6bn (US$5.88bn) compared with 2011 and is planning future expansion.

MAF Holding's growth comes as the UAE economy - and Dubai in particular - experiences a rebound from the malaise of the past few years, with increased tourist arrivals swelling till receipts for retailers and other mall owners such as Emaar. It is also enjoying a return to growth in Bahrain and Egypt, where it is due to commence construction next month on the Mall of Egypt. MAF Holding will sign a $450 million loan agreement next month for a syndicate led by National Bank of Egypt and Banque Misr to finance the mall's construction, said Iyad Malas, MAF Holding's chief executive.

Mall openings in Egypt, Lebanon and a move into Central Asia, starting in Georgia are projected to require an additional 4,000 new staff hires for the firm.

But to continue tapping bond markets, the company has sought to minimise any risk of sanctions on Iran and Syria hampering investor willingness to support its growth plans.

"We have been compliant with all the sanctions all along," said Mr Malas. "We decided in light of our access to the bond market that it was probably a safer idea… so that some investors would not then preclude themselves from investing."

The Iran business, a joint venture with Carrefour consisting of hypermarkets selling local produce, has been sold to Mr Al Futtaim and the French retailer for an undisclosed cash sum. Mr Al Futtaim is the sole shareholder of MAF Holding.

MAF Holding also spun off its Syrian arm to Mr Al Futtaim in August.

"The company is no longer involved in Syria," said Mr Malas.

A year earlier - and after the country's civil war had started - MAF Holding announced that it had begun construction of $1bn mixed-use development west of Damascus.

MAF Holding generated earnings before interest, taxes, depreciation (Ebitda) of Dh3 billion during 2012, an increase of 7 per cent compared with the same period last year.

Stripping out a sharp devaluation in the Iranian rial, the growth rate would have been 9 per cent, said the company.

The devaluation of the Iranian currency this year as a result of United States and European Union sanctions against the country's central bank caused MAF's revenues generated in Iran to shrink to 4 per cent of the total last year from 8 per cent a year earlier, although the business has grown in real terms.

Fear of exposure to sanctions "has not posed any concern to any investors" at this time, said Mr Malas.

In February, MAF Holding launched a $400m sukuk, becoming one of the first family-owned businesses in the region to sell Islamic bonds. It followed with a $500m bond sale in July.



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