Dubai’s The First Group Closes US$135m Sukuk Al Ijarah as Two More GCC Corporates Get Approval for Imminent Benchmark Issuances

Dubai-based The First Group (TFG), the integrated global property developer and hospitality specialists, successfully closed a five-year US$135 million Sukuk Al Ijarah in August 2019. The Sukuk certificates mature on 7 August 2024.

The transaction was solely managed and underwritten by SHUAA Capital, the UAE-based financial services group which has recently completed a transformational merger with Abu Dhabi Financial Group (ADFG).

The Sukuk was issued through a Cayman Islands’ incorporated special purpose vehicle, TFG Sukuk 1, wholly-owned by the obligor, The First Group, and priced at a coupon rate of 10.5% per annum. It was distributed through a public subscription.

According to SHUAA, the issuance was structured as a senior-secured asset-backed (Ijarah) Sukuk and “incorporates a robust security package and employs an amortizing structure from the third year. The funding provides growth capital to TFG to execute its pipeline of developments and continue expanding its business in the UAE and beyond.”

With a fast-growing portfolio of upscale hotels, residential properties, F&B brands and real estate asset management services, TFG has carved a successful niche offering property investment opportunities in high-growth markets to clients from more than 70 countries worldwide.

“We were among the first developers to identify the tremendous potential in providing private investors the opportunity to purchase hotel guestrooms, suites and serviced apartments in our collection of upscale properties located in highly popular locations across Dubai. This strategy for success provides a blueprint for our ongoing expansion into new and exciting markets worldwide, reinforcing our commitment to developing landmark properties, brands and services that deliver attractive returns to our investors,” explained TFG.

Rashad Barajakly, Managing Partner and Chief Financial Officer of TFG, said: “Having successfully delivered eleven developments over the last decade, TFG has been transitioning from a pure real estate developer to an asset manager as well as an operator of international and home grown F&B brands. The Sukuk provides financing that will allow us to deliver on our pipeline and grow the business.”

According to Fawad Tariq-Khan, Chief Executive Officer of SHUAA, “At SHUAA, our continuing success in placing bonds and Sukuk reaffirms that they represent an ideal financing mechanism for the long-term funding requirements of real estate companies, as reflected in the ability to match up cash flows and tap into a more diversified investor base. We are delighted to continue partnering with great companies such as TFG in providing financing solutions and expanding access to both providers and seekers of capital in the region.”

The issuance reflects a growing trend in the debt capital markets, with the S&P estimating global Sukuk issuances could potentially reach US$115 billion in 2019. TFG also elected to have its Sukuk listed on the London Stock Exchange providing more transparency to investors as it expands its hospitality and F&B asset management business.

Meanwhile, the UAE’s Emaar Properties has mandated a group of banks to arrange investor meetings for a proposed 10-year US dollar Sukuk starting on 6 September 2019.  The investor meetings will be held in Singapore, Hong Kong and London. Emaar is 29.22 per cent owned by the Investment Corporation of Dubai.

Standard Chartered Bank is the global coordinator for the deal, while Dubai Islamic Bank will serve as Shariah advisor. Deutsche Bank, Emirates NBD Capital, First Abu Dhabi Bank, Mashreq Bank and Sharjah Islamic Bank will be joint lead managers and bookrunners. 

Kuwait-based Warba Bank has received approval from the Capital Markets Authority (CMA) of Kuwait to issue a Sukuk. Nasser Hamoud Al Hamoud, Secretary to the Board of Directors, in a company disclosure confirmed that “Warba Bank has obtained the Capital Markets Authority approval dated 29/8.2019 for the issuance of Sukuk not exceeding US$500 million under the umbrella of a Sukuk Program not exceeding US$2 billion. The Bank desires to launch, market and sell these Sukuk in the state of Kuwait.” The Sukuk will be issued subject to imminent completion of the offer documents and prospectus.

The Sukuk will be issued under the Wakalah (agency) structure.

Fitch Ratings has assigned the Warba Bank US$2 billion Trust Certificate Issuance Programme, housed under its Cayman Islands’ incorporated SPV Warba Sukuk Limited (WSL), ‘A+’/’F1’ ratings.

The ratings, said Fitch in its ratings rationale, are in line with WB’s Long- and Short-Term Foreign-Currency Issuer Default Ratings (IDRs) of ‘A+’ and ‘F1’, respectively, and apply only to senior unsecured certificates issued under the programme.

Share this post