Dubai mall developer Majid Al Futtaim Holding (MAF) is looking to raise at least $500 million from the issue of a hybrid debt sale to finance its buyout of French hypermarket chain Carrefour's stake in a regional venture.
MAF, sole franchisee of Carrefour hypermarkets in the Middle East, said last week it was buying out the company's 25 percent stake in the joint venture for $680 million.
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In an investor presentation seen by Reuters, MAF said it had enough liquidity at hand to finance the purchase.
"However, we are looking at a sub-ordinated security issuance as a pro-active and conservative measure to preserve debt capacity for organic growth, and to ensure no risk to credit rating," the presentation said.
The issue size is expected to be benchmark, typically at least $500 million for investment-grade borrowers.
The hybrid issue will contain both debt and equity characteristics, and as a result, investors would expect to be paid a higher interest rate for the additional risk, than for a secured, senior bond issue.
The security will be ranked as deeply subordinated and unsecured, and carry no fixed maturity date with an initial call date after five years, in 2018, the presentation said.
MAF is rated BBB by Standard and Poor's and Fitch Ratings, and is one of the only investment-grade privately held companies in the region to issue globally-marketed bonds.
Goldman Sachs Group Inc and HSBC Holdings are structuring advisers on the deal, and are joined by Bank of America Corp , JPMorgan Chase & Co and Standard Chartered as join lead managers.
Investor meetings kick off on May 26 and will cover Asia, Europe and the Middle East.
On Saturday, Chief Executive Officer Iyad Malas said the company foresaw capital investments of up to $1 billion this year, not including the Carrefour purchase.
(Reporting by Rachna Uppal; Editing by Dinesh Nair)