DUBAI ISLAMIC BANK ATTRACTING FOREIGN INVESTMENT IN PAKISTAN
By AMANULLAH BASHAR
May 15 - May 21, 2006
Executive Chairman Dubai World & Nakheel LLC, Sultan Ahmed bin Sulayem recently visited Pakistan for a number of meetings with high level government officials in Karachi, Lahore and Islamabad.
During this visit, Sultan Ahmed bin Sulayem was accompanied by Chief Executive Dubai Islamic Bank, Saad Abdul Razzak and other officials of Dubai Islamic Bank Pakistan as the Bank has played a major catalytic role in facilitating Dubai World to invest in Pakistan.
To discuss investment opportunities and expansion plans of the organizations for mutual interest, the delegation met with President General Pervez Musharraf, Governor Sindh Dr. Ishrat Ul Ibad, Chief Minister Sindh, Mr. Arbab Ghulam Rahim, Chief Minister Punjab Choudhry Pervaiz Ellahi and addressed a press conference in Islamabad, hosted by the Board of Investment.
As part of its corporate investment plans, Dubai Islamic Bank intends to encourage foreign investments in Pakistan and act as a facilitator in the process. The top management has been quoted to believe in the economic growth and geographic eminence of Pakistan and takes pride to be a part of it. Dubai Islamic Bank and Dubai World recently announced the launch of the first of its kind US$5 billion family of private equity funds to participate in strategic transactions on a global basis. Dubai World is the holding company of Dubai Ports World, Free Zone Corporation, Nakheel, Istithmar and Dubai Multi Commodities Centre among others.
Dubai Islamic Bank and Dubai World will be seed investors in each fund. Other investors will include blue chip institutions from the Middle East and beyond. Investors' initial contributions will represent approximately 30 per cent of total commitments in each fund. Future drawdowns from investors will be on need-basis.
The combined financial strength and influence of the funds' core investors will provide preferred access to highly visible transactions alongside leading international companies on a global basis. Initial investors will also have preferential rights to co-invest alongside the funds in these attractive transactions.
Dubai Islamic Bank recently commenced operations in Pakistan. The President of Pakistan, General Pervez Musharraf was the Chief Guest at the elaborate launch ceremony where he also signed up as the first account holder of the Bank. This launch is not the first step taken by DIB in being part of Pakistan's growing economy. It was only recent that DIB played an active role in developing the market of Islamic commercial paper in Pakistan when the bank participated as a co-manager of the Sovereign Islamic Sukuk issue.
Dubai Islamic Bank (DIB) has announced a record 127% increase in its 1st Quarter profit of 2006 (including depositors' share of profit) to AED 695 million, compared to AED 305 million in the corresponding period of 2005.
Net profit attributed to shareholders also rose to AED 332 million, a 118% increase as compared to AED 152 million in the 1st Quarter of 2005. The Bank's total assets grew by a record 109% to AED 63.4 billion at the end of the 1st Quarter of 2006, as compared to AED 30.3 billion at the end of Q1 2005.
Customer deposits also showed strong growth of 37% to reach AED 35.3 billion at the end of the 1st Quarter of 2006, as compared to AED 25.8 billion by the end of Q1 2005.
Dr. Mohamed Khalfan bin Kharbash, UAE Minister of State for Finance and Industry and Chairman of DIB, said: "The Bank's impressive performance during the first three months of this year reflects the success of our strategy to diversify our products and services range to meet the growing demands of the market. This success came due to the high growth of our core banking services across all business units such as retail, corporate, real estate & investment banking activities and not one-off benefits."
Dubai Islamic Bank has continued to pursue an ambitious expansion plan in the UAE as well as internationally. By the end of 2007 DIB's local and international branch network will cross 70 branches. A recent example of this is the commencement of successful operations in Pakistan which has been a result of finding a highly potential market and investment friendly government policies here. The bank will be launching eight branches in all major cities of Pakistan. In addition to Karachi, DIB will commence operations in Lahore, Islamabad, Rawalpindi and Faisalabad by the end of this month.
DIB has been awarded the Best Islamic Bank in the Middle East and the Best Global Sukuk House at the Euromoney 2006 Islamic Finance Awards. DIB also won the Best Islamic Bank in Middle East Award at the Gulf Wealth Forum, as well as the "Sharjah Human Development Award for Banking sector" during the 8th National Career Exhibition. In addition, DIB won the Regional Continuing Contribution to Islamic Finance Award and Global Continuing Contribution to Islamic Finance in Islamic Retail Development Award at the International Islamic Finance Forum recently.
Dubai Islamic Bank (DIB), established in 1975, is the first Islamic bank to have incorporated the principles of Islam in all its practices.
DIB is a public joint stock company and its share is quoted on the Dubai Financial Market. The bank enjoys a reputation as a leader and innovator in maintaining the quality, flexibility and accessibility of its products and services. In a very short space of time it has created market leading services and products that are setting benchmarks for the rest of the sector.
The bank's recent financial results confirm the strength of its balance sheet and profitability. The bank reported net profit for the year ending 31st December 2005 of AED1.061 billion rising by 130 per cent compared to AED461 million in 2004. The profit for the bank, including depositors' profits, reported a 97 per cent increase for the year ending December 2005 at AED2 billion compared to AED1.017 million for 2004.
Financing and investment operations also delivered strong growth, with total financing now standing at AED25.6 billion rising by 46 per cent compared to 2004. Total assets reported a 40 per cent increase to AED43 billion. Customer deposits too showed an aggressive growth, reaching AED33.34 billion in the year, a growth of 34 per cent over 2005.
The bank has been proactive in creating partnerships and alliances at local and international level. DIB has adapted an aggressive expansion strategy, which started with the establishment of DIB Pakistan Limited, a wholly owned subsidiary of DIB. The bank has also co-managed Pakistan's US$600 million first Sovereign Islamic bond issue that received a tremendous response from investors.
DIB opened its first representative office in Turkey to improve its access to that market. DIB has also acquired 60 per cent of its stake in Al Khartoum Bank and is also among the parents banks of Emirates and Sudan Bank (ESB). The steps taken mark DIB's ambitious plans to roll out its operations into regional and international markets as part of its overall strategic plan.
DIB has also shown its outstanding capabilities by being appointed to provide specialist financial solutions for huge developmental projects including the Dubai Ports, Customs & Free Zone Corporation (PCFC) world's largest Sukuk, Dubai's Department of Civil Aviation US$1 billion Islamic bond issue. The issue was arranged to raise funding for the second phase of the expansion of Dubai International Airport. The bank also managed financing of US$350 million for Nakheel. The financing made further capital available to build on Nakheel's blue chip portfolio of developments such as The Palm in Dubai.
DUBAI ISLAMIC BANK AND DUBAI WORLD
Dubai Islamic Bank and Dubai World have announced the launch of the first of its kind US$5 billion family of private equity funds in April this year to participate in strategic transactions on a global basis. Dubai World is the holding company of Dubai Ports World, Free Zone Corporation, Nakheel, Istithmar and Dubai Multi Commodities Centre among others.
The family of funds that will be launched over the next 18 months comprises seven specific private equity funds covering strategic sectors: Energy, Financial Institutions, Infrastructure, Real Estate, Health and Education, General Industrials and Technology, Media & Telecommunications (TMT). Each fund will be managed by a dedicated team of experienced private equity and industry experts with a proven track record.
The funds will be supported by external advisors including Norton Rose and Baker McKenzie as legal advisors, Ernst & Young as auditors and The Bank of New York as escrow agent. This unique project would allow investors to participate in highly profitable strategic transactions in the sectors of their choice and would strengthen the UAE and Dubai's position as the financial hub of the Middle East.
The funds will focus on transactions with predictable returns and clear exit strategies via public offerings or trade sales. Each fund might also be partially listed within the first three years at the appropriate time should market conditions be favorable, providing additional liquidity to investors.
The Energy Fund will focus on exceptional opportunities generated by growing demand from Asia. The Financial Institutions Fund will actively participate in consolidation opportunities and the growth in demand for Islamic Banking worldwide. The TMT fund will focus on growth opportunities in the Middle East, Asia and Africa where new technologies combined with under-penetrated communications markets provide unique investment opportunities. The first few funds are expected to be raised during 2006. World-class experts in the field of Financial Advisory and Private Equity will manage these funds.