The league tables reveal where Dubai Islamic Bank (DIB) achieved its greatest success last year. It ranked only behind Malaysia’s CIMB as the biggest bookrunner of Islamic bonds in 2006, according to Ifis, a leading data provider. Admittedly this is based on lead managing only three transactions but two of those were Dubai Ports’ $3.5 billion pre-IPO convertible bond and Nakheel’s $3.52 billion convertible sukuk. Both Dubai Ports and Nakheel are subsidiaries of Dubai World, a quasi-government holding company. Nakheel is the property arm of Dubai World. The transactions are the biggest and second-biggest sukuks.
Critics will argue that both deals were effectively government mandates but DIB, along with Barclays Capital, which was co-lead manager on the two transactions, still had to execute them well. In that respect they succeeded. The Nakheel bond, for example, was originally marketed to raise $2.5 billion but the deal size was increased after demand reached $6 billion. About 100 investors participated in the transaction, of which 40% were from the Middle East and 40% from Europe.
The main difference between the Nakheel bond and the Dubai Ports deal is that the latter involved bonds compulsorily converting into shares if the company lists whereas holders of the Nakheel bond have the option to buy shares in an IPO at a discount.