The sukuk - the largest ever issue - has a unique structure, partially convertible into equity during an initial public offering (IPO) planned by PCFC during the next two years. The IPO will either cover shares in PCFC or in one of its subsidiaries. Subscribers to the bond will be eligible to receive up to 30 per cent of their investment in equity.

Demand during the pre-marketing phase of the sukuk was sufficient that no formal roadshows took place. Subscription came about 80 per cent from within the region, with Asia accounting for the bulk of the remainder and the balance made up by demand from Europe. The notes were priced at 7.125 per cent, conditional on the IPO.

The paper is formally designated for general corporate purposes, but is closely linked to DP World'splanned acquisition of UK-based port and ferry operator P&O, for which it has tabled a bid of£3,326 million ($5,736 million). However, a rival offer was made in early January by Ports Authority of Singapore (MEED 13:1:05).

Several other Dubai government-affiliated entities are understood to be planning to stage sukuk issues in 2006. The Department of Civil Aviation is likely to approach the market for the second time. It staged its debut issue in late 2004 to part-fund the $4,200 million expansion of Dubai International Airport (MEED 12:11:04).

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