Sabana Shari’ah Compliant Industrial REIT said it plans to raise $533.4 million  in an initial share sale in Singapore to create the world’s biggest Shariah-compliant property trust by assets.

Sabana will sell 508 million shares at $1.05 each, at the mid-point of its pricing range of $1 to $1.10, according to a filing with the Monetary Authority of Singapore. The share sale will help the city-state’s first Shariah-compliant trust to tap rising demand for Islamic financial products. Including shares to key investors, the trust will raise $664.4 million, it said.

 

The Islamic finance industry has been growing 20% annually since 2000, bringing it into direct competition with non-Shariah-compliant global banking without offering a comparable level of liquidity and returns, according to an Islamic Financial Services Board report issued in April. It estimated assets will reach US$1.6 trillion ($2.07 trillion) by 2012 compared with $660 billion in 2007.

 

The share sale “provides us with an advantage over conventional REITs, with access to investors from both Shari’ah and conventional markets,” Kevin Xayaraj, chief executive offer of the REIT’s manager, said in an e-mailed statement today. “The growth in the Islamic finance industry globally and in Southeast Asia will translate to an increase in demand for Shari’ah-compliant financial products.”

 

Sabana’s shares start trading on Nov. 26 at 2 p.m. Singapore time. The trust, which has 15 industrial properties in Singapore, expects to distribute 8.22 cents per unit in 2011 and 8.25 cents in 2012, according to the filing. Sabana plans to use the share sale proceeds to acquire properties situated near transportation networks.

 

Islamic law, or Shariah, bars investment in industries such as gambling and alcohol.
 

HSBC Holdings Plc, United Overseas Bank and Daiwa Securities Group Inc.’s Daiwa Capital Markets Singapore are managing the Sabana share sale.