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Albaraka, Turkey Unit to Sell $500 Million in Sukuk in 2011

Albaraka Banking Group BSC, Bahrain’s biggest publicly traded Islamic lender, and its unit in Turkey may raise a total $500 million in sukuk this year, Chief Executive Officer Adnan Ahmed Yousif said.

Albaraka Turk Katilim Bankasi AS is in the process of hiring banks to manage the sale of about $200 million in Islamic bonds by November, Yousif said in an interview in Washington yesterday. The parent bank may sell about $300 million by the end of the year, he said.

“There are many institutions that like to diversify their portfolio to include sukuk,” he said, predicting strong demand for both transactions after Albaraka Turk raised $350 million in a syndicated loan this month. “We asked for $150 million and we got $350 million.”

Global sales of sukuk, which pay asset returns to comply with Islam’s ban on interest, climbed to $17.4 billion in 2011, compared with $10.7 billion in the same period last year, data compiled by Bloomberg show. Albaraka will use the bond-sale proceeds for medium- and long-term financing as it seeks to expand its presence in countries such as Egypt, Tunisia, Algeria, Pakistan as well as Indonesia, where Yousif said it’s planning an acquisition.

Egypt Profit Gain

“We have now about three institutions that we are targeting,” he said. “Most banks available for sale are very small and they are traditional banks that we are going to acquire and convert into Islamic banking,” he said.

The shares of Albaraka Banking Group rose 1.8 percent to $1.14 on Sept. 22, trimming their decline this year to 16 percent amid political unrest in Bahrain. Shares of its Egyptian unit, Al Baraka Bank Egypt, are little changed since trading resumed in March after a revolt that toppled President Hosni Mubarak a month earlier.

“Egypt is excellent,” Yousif said, forecasting profit to increase about 15 percent compared with 2010. The bank has avoided lending to the tourism industry, hit hard as the revolt prompted travelers to shun the Arab country, he said.

Albaraka plans to open a representative office in Libya, where rebels stormed the capital Tripoli and announced the end of Muammar Qaddafi’s four-decade rule, Yousif said.

In Syria, where a popular uprising seeks to end President Bashar al-Assad’s rule, the revolt led to an increase in deposits for Albaraka’s unit, Yousif said. “People have confidence to place money with banks with presence outside Syria.”

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