UAE Finance

The UAE continues to expand towards its goal of becoming one of the world’s great financial centres. Huge interest in the region, and the attractiveness of the Dubai International Financial Centre’s (DIFC’s) regulatory system have seen a surge in high-profile, big-dollar deals.

The year kicked off last spring with a slew of specialized private-equity funds launched under the aegis of the Dubai Islamic Bank and Dubai World. The $5 billion family of funds covered a range of sectors and set a healthy pace for the year.

December saw the UAE as the host for a number of firsts in Islamic financing. The Nakheel sukuk pipped PCFC’s $3.5 billion January 2006 issuance as the world’s largest, at $3.52 billion. Meanwhile, the Abu Dhabi Islamic Bank issued the kingdom’s first ever shariah-compliant debt programme – a $5 billion MTN programme with an $800 million sukuk as the first drawdown. Not only was the programme the largest ever in the region, it was also the first to list on the London Stock Exchange.

In turn, the booming property market has driven demand for ever-larger tranches of capital funded through shariah-compliant methods. The Gulf region’s third largest ever sukuk deal, a $2.53 billion offering from Aldar properties, was closed this March.

With Gulf equity markets continuing to be volatile, the demand for shariah-compliant liquid instruments with a defined maturity value is anticipated to be strong. The Dubai Islamic Bank has already announced its intention of raising $11 billion through sukuk issuance this year – mainly to fund its expansion plans in Pakistan.

It is against this background that international law firms are racing to establish expanded practices in the UAE. Lovells are the latest: with plans to open its fully operational Dubai office in May this year, it follows in the footsteps of other international firms such as Linklaters, Herbert Smith and Clifford Chance.

We hope this 2007 edition of the IFLR Guide to the UAE will provide insightful and balanced analysis into some of the developments expected to take place over the coming year.

 

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