National Bonds Corporation fund posts 23% growth in 2011

The National Bonds Corporation (NBC), a Sharia-compliant savings scheme, has announced that its Mudaraba Fund grew by 23 per cent last year.

Bond sales hit Dh2.39 billion (US$650.7 million) last year, increasing the Mudaraba portfolio to Dh4.6bn. NBC bondholders, whose numbers rose 7.3 per cent to total 655,000 last year, will receive an annual profit of up to 2 per cent, the company said. They are likely to be relieved at the news. NBC delayed the announcement, which was due in January, raising concerns about profits.

Mohammed Qasim Al Ali, the chief executive of NBC, said the prospects for the fund remained strong, The National reported. “The scheme is well positioned across a diversified range of asset classes while it provides the bondholders with the liquidity feature necessary to meet any of their emergencies requirements,” he said.

The private joint stock shareholding company, established in March 2006 and based in Dubai, is 50 per cent owned by the Investment Corporation of Dubai and invests in the private equity, education and property sectors. Current investments include Taaleem, a schools operator, and M’sharie, a subsidiary of Dubai Investments involved in medium and large-scale private-equity investing in the Middle East.

NBC also invests in Souk Extra, which creates “supercentres” of local businesses and government services.

Skycourts, a Dubai residential property development project in which the fund invested, was delivered last year.

“We see significant opportunities in our core market of the UAE and are confident the investments we are making will lead to continued strong growth in the assets under management, leading to further improvements in Mudaraba Fund mobilization efficiency,” Mr Qasim Al Ali said. NBC’s employee savings scheme, which allows workers to save a portion of their salaries in the form of bonds, also reported growth last year, with 15 institutions joining the scheme.

The company said that last year it distributed 272,167 prizes to bondholders and created 12 millionaires.

In January, NBC announced a change to its prize structure, which it said would double the number of prizes awarded to bondholders to 9,635 a week. The new structure also rewards bondholders who save for longer periods with higher chances of winning in the draws.