Al Hilal Bank, a leading UAE-based Islamic bank, has allocated Dh430 million ($117 million) to partially fund a plant expansion project of Emirates Steel Industries, the UAE’s largest steel manufacturer.

The fund allocation is part of a major Dh4.77 billion dual tranche Islamic and conventional financing deal covering Emirates Steel Industries, said a statement from Al Hilal Bank.

The Ijarah-structured loan will help fund the plant project and partly repay Emirates Steel’s Dh2.6 billion multicurrency bridge loan facility, it added.

The deal showcases Al Hilal’s ability to facilitate innovative and flexible Shari’a compliant financing as it involved cash sweeps, deferrals and inter-creditor agreements, said a top official.

"The Islamic tranche was closed in just eight weeks against a backdrop of volatile steel prices and tight bank liquidity, with more than 2x oversubscription on the commercial debt and 4x on the Islamic facility," said Sarie Asaad Ahmed Arar, executive VP, Wholesale Banking, Al Hilal Bank.

"The financing scheme for Emirates Steel was our top Islamic banking deal for 2010. It earned us a lot of respect for our ability to engage big industry players in major contracts and also provided an opportunity for us to showcase our Islamic financing capabilities," he added.

This deal, said Arar, has helped Al Hilal maintain its strategic market position as one of the UAE’s fastest-growing Islamic banks.

"The financing agreement was awarded the ‘Middle East Islamic Finance Deal of the Year 2010 by Project Finance Magazine," he added.

Fully owned by the Abu Dhabi Investment Council, Al Hilal Bank aims to become the leading financial corporation in the region.

Through its 19 branches across the UAE, Al Hilal Bank has emerged as a major contributor to the growth of local Islamic banking.-TradeArabia News Service