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Wed 7 Nov 2007 10:39 AM

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Al Futtaim closes in on $15bn India deal

Dubai family-owned conglomerate to build Festival City development in Subcontinent.

Al Futtaim closes in on $15bn India deal
Al Futtaim plans to build developments similar to Dubai Festival City, pictured, in India and Egypt.

Al Futtaim Group hopes to clinch a deal in India this year to build a project similar to its $15 billion Dubai Festival City development, an executive of the family-owned conglomerate said on Tuesday.

Al Futtaim, with businesses from autos to financial services, is building the 526 hectare Festival City development with shops, offices, apartments and hotels, as well as a similar $4 billion Cairo Festival City in Egypt.

The group is negotiating a similar deal in India where it will work with a local partner, Marwan Shehadeh, managing director of Al Futtaim Capital, told reporters.

"Ideally India could happen as fast as the end of this year," he said, declining to give details.

A number of Dubai property developers have projects in India, where rapid economic growth is lifting millions of families out of poverty and into income groups that can afford houses.

Dubai's Deyaar Real Estate said on Monday it expected to clinch a $5 billion deal this year to build a township near New Delhi with India's Ansal Properties & Infrastructure.

Dubai-government owned Limitless is working with Indian developer DLF to develop a $12 billion housing and commercial real estate project near the technology and outsourcing hub of Bangalore.

Dubai's Emaar Properties, the largest Arab real estate company, has an Indian joint venture with MGF Development.

Al Futtaim Capital is considering selling Islamic or conventional bonds in the next year to finance Dubai Festival City and other projects, Shehadeh said. The company could also raise the cash through bank loans or a securitisation.

"Dubai Festival City is a typical candidate to do a bond, sukuk or securitisations," he said, adding the borrowing would likely happen in the next year. Sukuk are bonds that comply with Islam's ban on lending interest.

Al Futtaim is in talks with banks for a 2.2 billion Egyptian pound ($401.7 million) loan to finance Cairo Festival City, Shehadeh said. (Reuters)