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Mon 11 Feb 2008 11:03 AM

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Ajman to raise $149mn in IPO to create Islamic lender

Ajman Bank plans to open first branch in emirate, before moving into other UAE emirates.

Ajman plans to raise 550 million dirhams ($149.8 million) in an initial public offering (IPO) this month to create an Islamic lender as demand for belief-based bank services surges.

Family ruled Ajman, a member of the UAE federation, will sell 550 million shares at one dirham each, equivalent to 55% of the company, Ajman Bank said in a statement on Monday, ahead of a meeting with reporters.

The 10-day sale starts on Sunday. It values the bank at 1 billion dirhams and will be the UAE's largest IPO so far this year. It would be the seventh UAE lender that complies with Islamic law, which includes a ban on the receipt of interest. HSBC Holdings is advising on the sale.

The Ajman government will put up 25% of the capital and offer the remaining 20% to financial institutions and individuals in a private sale.

Ajman Bank plans to open its first branch in Ajman - which has a population of about 300,000 - before covering the six other UAE members within two years, it said, without giving details.

Citizens from outside the UAE can buy 100 million of the shares, which will be listed on the Dubai Financial Market (DFM), it said.

Ajman last year won initial approval from the UAE central bank to set up the lender with share capital of about 2 billion dirhams, Al-Bayan newspaper reported in March, without saying how it got the information.

UAE bank assets that comply with Islamic law are growing at a faster rate than for conventional assets as demand for belief-based financial services surges, according to bankers, including Abu Dhabi National Islamic Finance CEO Aref Al-Khouri.

Noor Islamic Bank, which is 25% owned by the government of Dubai and 25% by the emirate's ruler, Sheikh Mohammed bin Rashid Al-Maktoum, started operations last month as the UAE's sixth Islamic lender.

Abu Dhabi plans to start operations of its sharia-compliant Al Hilal Bank in June.

The UAE's biggest sharia-compliant lender is Dubai Islamic Bank, with a market value of more than $9 billion. (Reuters)

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