MAF counts on bonds and sukuk to double in size in five years

MAF chief executive Alain Bejjani plans to grow the group in Egypt, Saudi Arabia and also at home in the UAE.

MAF retains the franchise for the French supermarket group Carrefour, and has plans to double in size over the next five years. Silvia Razgova / The National

Majid Al Futtaim plans to use bonds and sukuk to finance its ambitious plan to double in size within five years, the conglomerate’s chief executive said yesterday.

The news came as a report said that the UAE’s Sharia finance sector is poised for robust growth in the coming years. The report, from the consultancy Ernst & Young, said that Sharia-compliant assets in the UAE are on track to reach a value of US$263 billion by 2019, more than double last year’s value of $127bn.

The UAE is already the third-largest Islamic banking market by value after Saudi Arabia and Malaysia, the consultancy said.

Alain Bejjani, the MAF chief executive, declined to say when the company would venture into the market for sukuk and bonds, or how much is needed to finance the five-year expansion. But as an indication of the scope of the company’s deals, MAF last year launched a 10-year $500 million bond issue, and in 2012 it sold a $400m five-year sukuk under its first Islamic bond issuance programme.

“Our expansion will be funded according to our credit rating standards. As you know we have bonds and sukuk in the markets that fund our operations and expansion,” said Mr Bejjani. “Our five-year plan is announced and all of our investments are according to that, so they are according to strategy and according to plan and funded as per our credit rating standards.”

MAF’s credit is rated BBB by Standard & Poor’s and Fitch Ratings.

The MAF group is an important commercial presence across the Middle East and North Africa. It has the Carrefour hypermarket franchise for the region and also owns the Mall of the Emirates in Dubai and the Mall of Egypt in Cairo. Its hotels include the Novotel City Centre Deira, and the Westin City Centre in Manama.

As part of its wider expansion drive, MAF is focusing on Saudi Arabia and Egypt.

This month, the company announced an increase in investments in Egypt from 18 billion Egyptian pounds (Dh8.63bn) to 22.5bn as part of its expansion plans.

The company is set to embark on a massive mall-building spree in Egypt as it prepares to open Africa’s first indoor ski slope. It aims to have 55 supermarkets and hypermarkets across the country by 2019, up from the current 11.

As the Arab world’s most populous nation with a population of about 90 million, Egypt remains attractive to MAF despite its political and economic turmoil.

The Egyptian government has endorsed the firm’s five-year plan to expand across the country, adding 300,000 square metres of retail space.

That will include the development of three malls and the expansion of its City Centre Malls in Alexandria and Maadi.

In the UAE, MAF plans to open a shopping mall in Dubai this year, with a 10th hotel there planned for 2016.

The group is keen to expand in Dubai despite the competition from other mall operators such as Dubai-based Emaar Malls Group.

“We think as long as Dubai is performing well in terms of tourist attraction which is a fact, and [there is] affluence and growth, there is room for more [malls], but in a competitive environment,” said Mr Bejjani.

Unlike Emaar Properties, MAF does not plan to spin off any of its units. Emaar Malls raised $1.6bn in an initial public offering last year.

MAF has continued to post good profit as it grows. Revenue grew 11 per cent last year to Dh25bn and earnings before interest, taxes, depreciation and amortisation (Ebitda) from recurring operations increased 10 per cent to reach Dh3.6bn.