Airport retailer Dubai Duty Free has mandated banks for a $1.1 billion multi-tranche loan facility to help fund the expansion of Dubai’s international airport, the company said in a statement on Monday.
Citibank along with Dubai Islamic, HSBC and Emirates NBD have been hired to arrange and coordinate the debut international transaction, the company said in an emailed statement.
DDF, which is owned by Investment Corporation of Dubai (ICD), said the facility includes Islamic and conventional tranches.
Dubai was looking to raise at least $500 million by selling debt based on future revenues at DDF, sources told Reuters last month.
“The purpose of the facilities is to optimize DDF’s capital structure in order to support the further development at Dubai International Airport (DIA),” DDF said in the statement.
Dubai has been examining ways of raising finances to expand its existing aviation infrastructure, as it goes slow on a $34 billion new facility designed to become the biggest in the world.
Its existing airport serves over 50 million passengers a year as the emirate attempts to leverage its position at the crossroads of air corridors between continents.
DDF said the syndication was launched on April 5 and banks have been invited to commit in U.S. dollars and UAE dirhams. Presentations would be held in Dubai during the week.
Sales at Dubai Duty Free, which covers a sprawling 18,000 square meters of retail space at Dubai International Airport, rose 15.7 percent to $1.46 billion in 2011.
The operator, which sponsors high-profile sports events such as the Dubai tennis championship and is famous for lavish giveaways, has seen business boom on the back of sales of branded perfumes, watches and designer clothes.
Liquor, including some of the world’s most expensive brands, also boosts sales as travellers and expatriates stock up in a country that largely restricts alcohol sales outside of hotels and restaurants.
Duty Free is expected to add an additional 8,000 square meters by the end of 2012.