Aldar Properties intends to issue Islamic bonds worth up to Dh5 billion to fund its projects in the UAE and other countries after its earnings rocketed by more than 200 per cent in the first quarter, bankers said yesterday.
The issue of sukuk in the next few days and previous borrowing through bonds and bank loans indicate a boom in the company's business and growing support from the Abu Dhabi Government, they said.
Aldar, one of the largest property developers in the Middle East, said on Thursday it had mandated banks for its debut dirham-denominated Islamic bond sale and a three-day investor road show will begin on Tuesday in Abu Dhabi, Dubai, Bahrain and London
The Abu Dhabi-based company did not specify the value of the planned sukuk but bankers said it would be one of its biggest bond issue.
"I expect it to be between Dh3bn and Dh5bn. The company has been locked in a borrowing programme through bank loans, normal bonds and sukuk to finance its massive projects as it now possesses the largest reserve of property in the UAE within the private sector," an Abu Dhabi-based banker said.
"Aldar needs financing because the projects it is carrying out or plans to carry out in the UAE and other countries are massive. What encourages it is the large increase in its net profits in the first quarter of this year and the strong support demonstrated by the Abu Dhabi Government through Mubadala Development Company when it purchased Dh3.5bn worth of convertible bonds from Aldar."
According to dealers in the Abu Dhabi Securities Exchange, Aldar's net earnings shot up by 203 per cent to Dh1.366bn in the first quarter of this year from around Dh450 million in the same period of 2007.
"This was a three-fold rise," said Ziad Dabbas, Share Dealing Adviser at the Government-controlled National Bank of Abu Dhabi (NBAD), which has been involved along with other banks in arranging bond issue for Aldar.
"It is a massive increase considering the fact that the average profit growth in Abu Dhabi market was around 40 per cent. I believe this one of the main reasons that are encouraging the company to seek loans."
Besides funding of projects, Aldar has converted part of previous sukuk into shares to boost its capital to face growing business, with the latest increase last week boosting its paid up capital to Dh2.47bn.