GEMS Education, a Dubai-based schools operator, is seeking to raise about $500 million from a debut sale of hybrid Islamic bonds to finance its expansion plans, according to three sources aware of the matter.

The company, which employs about 11,000 staff and operates around 100 private schools across the Gulf region, has hired Morgan Stanley Inc, Credit Suisse and Abu Dhabi Islamic Bank (ADIB) to arrange the sale.

Issues of hybrid or perpetual bonds - which combine elements of both debt and equity - by Gulf companies other than banks have only started in recent weeks. Some Gulf banks have issued such instruments since last year to boost their capital.

United Arab Emirates malls operator Majid Al Futtaim raised $500 million from a perpetual bond sale last week, offering a rate of 7.125 percent to investors. The proceeds were to be used to partly fund the company's acquisition of Carrefour's stake in a joint venture.

Saudi Arabian dairy firm Almarai sold a 1.7 billion riyal ($453 million) perpetual sukuk in September, the region's first such issue by a corporate borrower.

GEMS plans to begin roadshows in the United Arab Emirates this Thursday with investor meetings scheduled in Asia and Europe next week, said one of the sources, who declined to be identified.

Bloomberg News first reported GEMS' plans to issue the Islamic bond instrument. The company did not immediately comment.

In September, GEMS Chairman Sunny Varkey told Reuters that the firm was seeking to raise about $500 million to fund growth by selling a stake in itself of up to 20 percent, and had engaged Credit Suisse to help with the process.

It was not clear whether the company was still proceeding with that plan.

Abraaj Group, the Middle East's largest private equity firm, bought 25 percent of GEMS in 2007, restructuring the stake five years later into a loan.

GEMS raised a $545 million loan from local banks including ADIB in April for new investments in schools in the region and for refinancing. – Reuters