Nakheel looks to raise $1.5bn to fund growth

Dubai-based Nakheel, developer of three palm-tree shaped islands off Dubai's coast, said yesterday it is looking to raise $1.5bn in an Islamic loan to finance projects in the Gulf Arab emirate.

News of the financing initiative emerged on the same day that the developer revealed plans to drastically reshape its plans for Palm Deira, the largest of the Palm Island projects that will eventually be capable of housing one million residents.

Barclays Capital and Dubai Islamic Bank are joint lead arrangers for the loan, Nakheel's chief financial officer said told Reuters by telephone.

"We hope to go to the market in the next two or three weeks," said Kartung Quek. "A big proportion of the banks will be from the Gulf, with maybe a third from overseas, mostly Europe."

Nakheel, which has projects worth more than $30bn, will spend the money on projects in Dubai, including the palm islands and Dubai Waterfront, a seaside residential complex larger than Manhattan, Quek said.

Nakheel sold the world's largest Islamic bond, worth $3.52bn, in December to finance projects.

"When we looked at our balance sheet in September, we determined we needed $5bn," Quek said. Nakheel now plans to raise the balance, Quek said.

Chris O'Donnell, Nakheel's chief executive, said yesterday that the company planned to borrow more, increase its debt-to-equity ratio to 40 per cent within five year, compared with 10 per cent to 12 per cent now.

"The idea is to maximise our returns and better manage our capital," O'Donnell said.