Dar Al Arkan Real Estate Development, the biggest publicly-traded real estate developer in Saudi Arabia, appointed a group of local and international banks for a potential sukuk deal, just months after it raised funds from the debt capital market to meet its corporate requirements.
The company mandated Alkhair Capital, Citi, Deutsche Bank, Dubai Islamic Bank, Emirates NBD Capital, Mashreq Bank, Nomura, Standard Chartered Bank and Warba Bank as joint lead managers and bookrunners for the new transaction, it said in a statement to the Tadawul stock exchange, where its shares trade.
The company from Monday will start meeting institutional investors in the UAE and London. A seven-year US dollar fixed rate benchmark senior unsecured sukuk may follow an investor roadshow, depending on the market conditions, it said, without specifying the size of the potential deal. A benchmark transaction refers to a deal worth $500 million (Dh1.84 billion) or more.
The Riyadh-based developer in October raised $600m from the market through sukuk, or Islamic bonds, to meet its general and corporate requirements. The deal received significant interest from Middle Eastern, European and Asian investors with the order book climbing to $1.67bn.
The listing of the sukuk on Nasdaq Dubai pushed total Islamic bonds listed on the exchange by Dar Al Arkan to $1.6bn, its said in a statement in November.
Dar Al Arkan, which has real estate projects in the UAE and Saudi Arabia, reported a net profit of 135m Saudi riyals (Dh132.2m) for the third quarter, a jump from 37m riyals reported for the same period in 2018. It attributed the rise in quarterly profitability to higher operating income.
Dar Al Arkan, one of the biggest developers in the kingdom, has projects spanning 12.4 million square metres under development. The developer, which has offices in Dubai, London and Bosnia, holds a land bank valued at 17bn Saudi riyals.
The public and private sector entities in the six-member economic bloc of GCC are increasingly looking to tap debt capital market to shore up finances as interest rates globally remain low. Fitch Ratings in a report earlier this month said that global sukuk issuance rose 6 per cent in 2019 to $42.2bn, as range of issuers and investors broadened. Last year's increase was particularly driven by an uptick in sukuk issuance in the fourth quarter, it noted.
The report also said the supply of new sukuk deals has diversified geographically over the last decade, having initially been dominated by issuers from Malaysia and Bahrain. The oil-exporting sovereigns will remain major contributors to overall sukuk volumes this year and next, as borrowing needs increase due to lower oil prices forecast, according to the report.