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Tue 27 Mar 2018 08:34 AM

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New UK govt office in Dubai could fund UAE projects worth $12bn

There will be up to $7.12 billion in capacity to finance UAE projects, in addition to $5.69 billion for Dubai alone

New UK govt office in Dubai could fund UAE projects worth $12bn
UKEF has already supported a number of projects locally, including $220 million in support for Dubai Arena, a 17,000-person multipurpose arena contracted by British construction firm Kier.

Dubai will be host to a UK Export Finance Team (UKEF), making the GCC only the fourth global market to have dedicated staff in-market, the UK’s Department for International Trade has announced.

The move comes after UKEF – the British government’s export credit agency – financed approximately £2 billion ($2.85 million) of GCC projects that procured UK exports between April 2016 and April 2017.

According to UKEF, the figure represents the largest single allocation of UKEF support to one region in the year.

“The GCC has long been a key trading partner for the UK. Now, more than ever, we are witnessing a strong synergy between the appetite for the UK’s world class goods and services and the future plans of Gulf nations,” UKEF senior counsellor David Moleshead told Arabian Business.

“The decision to establish a dedicated team in-market allows us to further support the remarkable transformational journeys and ventures currently underway in this region, and to continue to play a central role in the region’s development,” he added.

To date, there are only three dedicated UKEF teams in “priority” markets outside the UK, located in Indonesia, Brazil and Turkey.

In the UAE alone, UKEF has announced that there is up to £5 billion ($7.12 billion) of capacity available to project sponsors, as well as an additional £4 billion ($5.69 billion) available for projects in Dubai.

The UKEF website also notes that the other countries of the GCC have “market risk appetites” of between £750million ($1 billion) on the low end for Bahrain and £4 billion ($5.69 billion) on the high end for Kuwait.

“While the traditional infrastructure and energy sectors will remain a focus, UKEF is able to provide flexible financing across the Gulf’s diversification agenda – education, healthcare, life sciences and creative services,” Moleshead noted. “In fact, we’re increasingly witnessing that there isn’t a commercial venture in this part of the world where the UK can’t play a positive part in helping to achieve its ambitions.”

UKEF’s financing options including repayment terms of between two and 10 years and up to 18 in certain sectors, such as renewable energy.

Additionally, UKEF provides flexible UK content requirements for projects supported and capital markets refinancing.

Moleshead said that since 2015, UKEF has had the ability to provide backing to Islamic finance.

It was that year that UKEF became the first export credit agency to develop a guarantee for sharia-compliant sukuk in the debt capital markets, after Emirates airline wanted to use Islamic finance to fund its purchase of four new Airbus A380s.

“The case was hailed as a new gold standard for sharia-compliant asset finance, widening the options for buyers of UK exports and boosting the UK’s aspiration to become the leading Western hub for Islamic finance,” Moleshead noted.

Moleshead added that the UKEF team has already begun working out of the UK’s diplomatic mission in Dubai.

“The team began settling into post last month and we are already working on-the-ground with project owners to highlight opportunities to collaborate in priority growth sectors, as well as to help expedite projects in the region,” he said.

UKEF has already supported a number of projects locally, including $220 million in support for Dubai Arena, a 17,000-person multipurpose arena contracted by British construction firm Kier.

Other UAE projects that are benefiting from UK financing including DWTC One Central and Bluewaters.