Dubai: Amlak and Tamweel, the UAE's two publicly listed mortgage finance companies, announced on Saturday that they have begun merger talks.
"With the blessing and support of His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, Amlak Finance PJSC and Tamweel PJSC have begun exploratory discussions for a possible merger," the companies said.
"The resultant [merged] entity would have a combined balance sheet in excess of Dh27 billion and serve as a financial powerhouse with the increased critical mass required to lead the region's real estate finance markets to the next stage in their ongoing organic growth," said Nasser Bin Hassan Al Shaikh, Director-General of the Dubai Department of Finance and Chairman of Amlak Finance.
Analysts and banking industry experts said yesterday that the merger would strengthen the combined balance sheets of the new entity and will help it to expand in and beyond the region.
"Although the mortgage industry is relatively young in the UAE it has matured over the past 7 years. The creation of a new company by combining the expertise and balance sheets of Tamweel and Amlak will create a critical mass in terms of balance sheet strength to expand regionally," said Blair Hagkull, managing director of Johns Lang Lasalle for the Middle East and North Africa.
The UAE's housing mortgage assets are projected to double to Dh70 billion by 2011 from Dh32 billion in 2007.
Asset growth
In 2007, Tamweel's total assets almost tripled and Amlak's grew by 90 per cent.
In the UAE, mortgage lending represented 4.7 per cent in 2007 whereas the average for emerging markets mortgage is 15 to 30 per cent of GDP, according to Moody's.
"The major shareholders of both companies - Emaar Properties for Amlak Finance, and Dubai Islamic Bank and Dubai World for Tamweel - are fully supportive of the merger discussions," said Shaikh Khalid Bin Zayed Bin Saqer Al Nahyan, Chairman of Tamweel.
