Business | Property
Al Futtaim Capital closes Dh1.84 billion real estate funds
Real estate funds are the largest such investment vehicles in the region.
- By Babu Das Augustine, Banking Editor
- Published: 13:58 May 12, 2008
Dubai: Al Futtaim Capital, the investment arm of the Al Futtaim Group, on Monday said it completed raising Dh1.84 billion ($500 million) through two real estate funds.
The four-year closed-ended funds are structured as both conventional and Sharia compliant investment vehicles such as the Al Futtaim Mena (Middle East and North Africa) Real Estate Development Fund and Al Futtaim Mena Real Estate Sharia Development Fund. The Sharia accounts for about one-third of the total funds raised.
"The fundraising exercise has been extremely successful and has exceeded our expectations. This is the first time that Islamic and conventional investors have jointly committed such significant amounts to develop mixed-use properties in the Mena region," said. Omar Al Futtaim, Chief Executive Officer of Al Futtaim Group.
The new funds, the larg-est such investment vehicles in the region are expected to trigger more such fund raising activity in the region said Marwan A. Shehadeh, managing director of Al Futtaim Capital.
"This is an excellent time to pursue large scale, mixed-use developments in the region. The funds are ready to take advantage of Mena's favourable macro-economic fundamentals. Our offering is unique in that we are the first developer in the region, which, through Afim [Al Futtaim Investment Management Limited], offers a regulated investment management platform," said Shehadeh.
The funds managed by Afim, a Dubai International Financial Centre (DIFC) incorporated company wholly owned by Al Futtaim Capital and regulated by the Dubai Financial Services Authority (DFSA) will focus on large-scale urban mixed-use developments in the Middle East and North Africa (Mena).
While the fund received subscription from institutional investors and sovereign wealth funds from the Middle East and Asia, due to the huge demand from European and US investors, the funds are likely to extend their subscription period by a few months. "We are expecting to do a second closing before the year end and raise about a total of $700 million," Shehadeh.
Strategy
The funds' investment strategy will focus on Al Futtaim-led developments in key Mena cities such as Abu Dhabi, Doha, Casa-blanca and Cairo.
The funds' seed asset is a portion of Cairo Festival City, a Dh33.3 billion ($9 billion) mixed-use development at the entrance of New Cairo City.
The funds will leverage Al Futtaim Group Real Estate's (AFGRE) capabilities in development - the expertise that is behind the success of Dubai Festival City, the group's flagship development.
The funds will provide capital and AFGRE the expertise to help landowners unlock the value in their property holdings. The funds and Al Futtaim will offer co-investment rights to its partners so investment volumes are expected to exceed Dh37 billion in the next four years.
Morgan Stanley advised on the structuring of the funds and acted as placement agent and Sharia structuring adviser. Vinson & Elkins LLP acted as international counsel and counsel on Sharia structuring legal matters.
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