Emaar Misr for Development is looking at financing options to develop projects in Egypt, including Islamic bonds (sukuk) and an initial public offering, a senior company official told Zawya.
"We have considered sukuk and we would like to consider sukuk further ... We have tried several times to go into agreements about how to use sukuk, however we have not reached an agreement because of the difficulty of the subject in Egypt as a whole," the official said.
Development of Islamic bonds in Egypt has been hampered by the absence of legislation. The Egyptian government said in March it had drafted a bill to introduce sukuk as a debt tool to the market, which would allow private, listed and state-owned entities to issue the Islamic bonds.
Emaar Misr, which is owned by Emaar Properties of the UAE, received a USD 352 million financing package from Commercial International Bank and HSBC Egypt in 2011. The company needs to secure between EGP 3 billion-4 billion every year to fund expansion. It had sales of EGP 1.1 billion during the first quarter of 2014, according to reports.
"Commercial banks are cooperating with us. However there is a limitation at the end of the day to commercial banks and the quota that they have for real estate," the official said.
LIMITED FINANCE OPTIONS
Emaar Misr is working on three major developments across the Egypt, including one in Cairo. The company has invested EGP 39 billion (USD 5.6 billion) since it was set up and hopes to increase that to EGP 53.5 billion (USD 7.6 billion) this year.
Last month the firm said it would spend up to EGP 6 billion on a residential and commercial project in Cairo.
Limited finance options have forced the company to offer customers loans of between five to seven years to buy units.
"The problem is that we are becoming financers of our units. It is not only slowing my progress, it is also bringing me into the business of others. I am not in the business of finance. I am in the business of development," the official said, adding that there should be a government-based solution.
He said the Central Bank of Egypt is trying to find ways to facilitate the mortgage and real estate finance by introducing new laws and regulations.
IPO
Emaar Misr has announced it intended to launch an IPO and potentially a private placement. The process could take place during this year or in 2015.
"This (IPO) is very serious. We are working with several investment banks," the official told Zawya.
But he declined to provide further details or comment on the size of the stake to be offloaded or how much the company hoped to raise from the offering.
© Zawya 2014
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