Tamweel plans to raise $500m

Dubai: Tamweel, the UAE's biggest mortgage provider, plans to raise as much as $500 million through Islamic asset-backed loans to fund new business, according to Chief Financial Officer Gaurav Agarwal.

"We're in discussion with a couple of international banks that could lead to this securitisation transaction,'' Agarwal said, without naming the banks. "We're in a high-growth stage and our financing requirements are also growing. We'll probably go back to the market in October or November."

The Dubai-based company has benefited from a real-estate boom in the Gulf's second-biggest economy. Second-half profit may rise 15 per cent from the first six months to as much as Dh455 million ($124 million), Tamweel said last week.

Tamweel issued Dh1.1 billion of Islamic bonds, or sukuk, last month. The notes are compliant with Sharia, which forbids interest and bans investment in businesses deemed highly indebted or involved in activities such as gun-making.

The company's total funding requirement this year will be Dh3 billion to Dh3.5 billion as it plans to increase assets to Dh13.5 billion, Agarwal said.

Banks create asset-backed securities by pooling other debt, including mortgages, and consumer loans and selling them to investors as notes. This allows them to raise capital more cheaply than they could through unsecured debt, or to broaden their sources of funding.

Shares fall

Tamweel provides about 33 per cent of the region's mortgages, Agarwal said. UAE lenders approved Dh64.9 billion of property loans in the first quarter, a 55 per cent increase from the previous three months, according to Central Bank of the UAE data.

Mortgage lenders in the region are in talks with regulators on ways to keep the real estate market from "overheating", Agarwal said, without providing details. About a quarter of property purchases in the UAE are funded with mortgages, less than the developed markets of the US and Europe, he said.