x Abu Dhabi, UAETuesday 25 July 2017

Majid Al Futtaim appoints banks to manage $1bn sukuk

Majid Al Futtaim has appointed four banks to manage its first islamic bond issuance programme, worth $1 billion.

Majid Al Futtaim Holding is the retail conglomerate behind Carrefour in the Middle East. Jeff Topping/The National
Majid Al Futtaim Holding is the retail conglomerate behind Carrefour in the Middle East. Jeff Topping/The National

Majid Al Futtaim (MAF) Holding, the retail conglomerate behind Carrefour in the Middle East, has appointed four banks to manage its first Islamic bond issuance programme, worth $1 billion (Dh3.67bn).

The privately-held company, which also owns and runs huge malls such as Mall of the Emirates, has chosen Dubai Islamic Bank, Abu Dhabi Islamic Bank, HSBC and Standard Chartered to set up its first programme.

"We are still looking at the market," said Shrimati Damal, the deputy treasurer at MAF. "Our first job was to put the sukuk programme in place to create flexibility to access another important pool of liquidity. We will issue when the market is right."

She added the company was still hoping to issue in the next few months and that a five-year tenor was most likely for a debut issuance.

MAF had previously said a five-year sukuk would be issued at about $500 million.

The proceeds are expected to fund expansion plans worth $2bn for malls and shopping centres in Lebanon, Egypt and Syria, alongside plans for a hypermarket in Erbil, Kurdistan.

MAF had previously completed roadshows for a conventional bond issuance from a $2bn medium-term notes programme, but decided not to issue a bond because of weak market conditions caused by the Arab Spring and the debt crisis in Europe.

Abu Dhabi National Energy Company, also known as Taqa, is looking to issue a bond and Al Hilal Bank is also laying the groundwork for a sukuk programme.

Rising demand from institutional investors in the Middle East and Asia has sparked renewed interest among banks and companies to tap the Islamic bond market.

The move to raise finance through sukuk comes at an interesting time, as the ratings agency Standard & Poor's warned last year that Gulf bond issuers could face difficulties meeting deadlines to refinance bonds and sukuk worth $25bn maturing this year.

In its new prospectus, MAF broke down revenues from its three business units: retail; properties; and ventures.

The retail business is a joint venture between Carrefour, which holds a 25 per cent stake, and MAF, which has a 75 per cent stake.

It earned revenues of Dh7.7bn and gross profits of Dh393m in the first half of last year.

MAF Properties currently runs 10 shopping malls in the UAE, Egypt, Oman and Bahrain and is constructing an additional four malls in the UAE, Lebanon, Egypt and Syria.

In the first six months of last year, the division earned revenue of Dh1.3bn and gross profit of Dh843m.

MAF Properties also owns 10 hotels, nine of which are in the UAE and one recently completed venue is in Bahrain and expected to be open for guests this year.

MAF Ventures operates the company's leisure and entertainment services, including Ski Dubai, and reported revenues of Dh351m in the first half of last year.

rjones@thenational.ae

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