UDC plans $400m convertible bond sale
Qatari firm looks to bolster FM services for Pearl Qatar project
United Development Company is to sell around US$400 million of convertible bonds by the end of this year to fund its projects and new business lines, including facilities management, a senior finance executive revealed today.
Abdullah Araj, executive vice president of finance of the Qatari investment company, told Bloomberg that the money raising would fund its FM ventures, including that which is looking after Pearl Qatar, its mixed-use mega-project off the coast of the gas-rich state.
Convertible bonds allow the holder to 'convert' their debt into an equity stake in the issuer's company. It is less popular as a method of money raising that initial public offerings as it is a newer concept in the GCC, analysts say. The move is part of a wider move for real estate companies and the country at large to diversify its economy.
Last week, it was reported that Barwa Real Estate Company received the first US$3.5 billion tranche for one of its units as the first stage of a financing deal with Qatari Diar Finance, the money management arm of developer Qatari Diar.
UDC, which works over four main business sectors, posted a net operating profit of QR353.25 million for the first half of 2010. Pearl Qatar, as a work in progress, was valued at QR3.59 billion in the company’s last financial statement. The value of its assets that are considered work-in-progress increased from QR2.764 million to QR3.593 million.