Groundbreaking Saudi Sukuk issue closes at US$600m

The Saudi real estate market continues to grow.

The first international Sukuk issue by a Saudi corporate has successfully closed at US$600m. The landmark three-year issue - based on an Ijara structure - was significantly oversubscribed.

A consortium of international banks announced the successful closing on behalf of Dar Al Arkan Real Estate Development Company (DAAR) - a leading residential real estate developer in the Kingdom of Saudi Arabia - at a ceremony in Bahrain.

Launched as a US$425m issue by ABC Islamic Bank, Arab National Bank, Standard Bank Plc, Unicorn Investment Bank and WestLB AG, the DAAR Sukuk received an overwhelming response from financial institutions across Europe, South East Asia and the GCC region.

"We are delighted with the overwhelming success of this Sukuk, which reflects the strength of DAAR's business model and our strong growth prospects," said Abdullatif Al-Shalash, a member of the board of DAAR. "That earned us a strong vote of confidence from regional and international banks, which we are most grateful about. DAAR is committed maintaining its leading role in providing affordable housing solutions that meet international standards to middle-income families across the Kingdom of Saudi Arabia."

Majid Al-Sayed Bader Al-Refai, Unicorn Investment Bank's managing director and CEO, was equally enthusiastic.

"This is truly a groundbreaking issuance marking a new stage in the rapid evolution of the Islamic capital markets, and its enormous success demonstrates the demand that exists globally for well-structured Sharia-compliant investments," he said.

"The overwhelming response from the regional and international market clearly underscores two important aspects: first, the continuing appetite for well-structured Sukuk transactions, and second, regional real estate as an emerging asset class from the region," added Naveed Khan, Managing Director at ABC Islamic Bank. "This clearly is a landmark transaction and ABC Islamic Bank is proud to be associated with the issuer and the other joint lead managers who have worked so hard, in such a compressed timeline, to bring this transaction to the market and make it such a huge success."

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