Dubai Duty Free to raise US$1.1 billion in major airport financing deal

Dubai Duty Free’s financing deal will aid the development of Dubai International Airport

UAE. Dubai Duty Free is set to raise US$1.1 billion from the international financial markets, and has mandated a number of institutions to broker the move.

The company said the financing drive was “to optimise Dubai Duty Free’s capital structure in order to support the further development at Dubai International Airport”. Dubai Duty Free is the exclusive operator of duty free shops and seller of goods exempt from duty at the airports in the Emirate of Dubai. It has been a division of the Investment Corporation of Dubai (the government’s portfolio of companies and investments) since 2009.

The move is a major sign of faith from government in the future of Dubai Duty Free’s revenues. In effect it is selling debt based on the company’s future income, as we first reported last month. Already the company has begun 2012 strongly, posting a +14% year-on-year increase in sales.

Dubai Duty Free has mandated Citibank, London Branch, Dubai Islamic Bank PJSC, Emirates NBD Capital Limited and HSBC Bank Middle East Limited and each of their respective affiliates, to arrange and coordinate its debut international transaction.

In additional news from 10 April, Abu Dhabi Islamic Bank PJSC has joined the transaction as a Mandated Lead Arranger and Bookrunner.

The retailer added: “The deal will comprise of a conventional term loan facility and Islamic facilities.”

The syndication was launched on 5 April with banks invited to commit in US Dollars and/or UAE Dirhams. Dubai Duty Free will be hosting a Management Presentation in Dubai this week.

To underpin the retailer’s growth, it will add a further 8,200sq m of retail space in the new Concourse 3 at Dubai International Airport. In addition, Dubai Airports is forecasting passenger traffic in 2012 of 56.5 million, well ahead of the 2011 figure of 51 million.

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