DUBAI: Saudi Arabia’s Dar Al-Arkan Real Estate will use the proceeds of an Islamic bond issue to help finance SR2.7 billion of ($720 million) capital expenditure during 2010, a prospectus for investors showed on Monday.
“Management expects Dar to make a total of SR2.7 billion of capital expenditures during 2010 principally related to development of the Al-Qasr and Shams Ar-Riyadh masterplanned communities,” the prospectus said.
Dar moved its international road show to the United Arab Emirates on Monday as it looks to drum up investor interest across the Middle East, Europe, Asia and the United States.
“Dar Al-Arkan intends to fund its capital expenditures with a combination of cash from operations, current debt facilities and the proceeds from the offering of the certificates pursuant to this Offering Memorandum,” the document obtained by Reuters said.
Deutsche Bank, Goldman Sachs and Unicorn Investment Bank are arranging the sale.
Dar operates in speculative, cyclical, and capital-intensive land development and homebuilding activities, and in the still-opaque and immature Saudi housing market, ratings agency said on Jan 20. It assigned a BB- long-term rating to Dar Al-Arkan and for the benchmark sukuk.
“I think (it will be between) between half a billion and a billion (dollars),” Alain Marckus head of sukuk, credit trading treasury at Noor Islamic Bank said on the sidelines of the road show in Dubai on Monday. “The appetite is there and people will be interested in Saudi paper... the market is losing its appetite for sukuk generally in Dubai so that might help them a little,” he said.
A second banker attending the meeting also said the issue could be worth about $1 billion.
As of Dec. 2009 Dar Al-Arkan land bank consisted of SR8.9 billion of undeveloped land and SR4.5 billion of developed land, the prospectus said.
The road show will now move on to Asia and the United States and is due to be completed in two weeks.
Dar’s Managing Director Abdullatif bin Abdullah Al-Shelash declined to comment.