Bahrain-based Islamic mortgage finance provider Sakana Holistic Housing Solutions is looking to raise $50 million (Dh183.6m) through a sukuk issue by year-end or early 2010 to meet its business growth plans, according to the company's chairman.

"There is no timeframe set for this fund-raising exercise, but we may launch it by year-end or early 2010 depending on the market situation," Abdul Hakim Khalil Al Mutawa told Emirates Business.

Although the company has adopted the wait-and-watch approach, the option of acquisition or joint ventures is being studied for expanding its business in the region.

"We do want to replicate our business model in this region and we do closely watch for opportunities such as acquisitions and joint ventures," Al Mutawa added. Excerpts from an interview:

How has the Bahraini real estate market fared during this slowdown?

Bahrain real estate market has slowed down over the past few months with lesser number of resale transactions. This has had a knock on effect on real estate prices and the percentage of price reduction on investment category land is significantly more than residential category land. However, we are witnessing increase in inquiries in the past few weeks, which is possibly an indication of improved market activity ahead.

Has the slowdown affected your business in the first four months of 2009? How are you planning your way forward?

We had expected this slowdown to happen in the first quarter of 2009 and accordingly it did not affect our budgeted performance. We had healthy commitments of approximately BD8.5m at the end of the last year, which are being disbursed during the year. We expect gradual recovery over the remainder of the year. We also expect some of the major developments to commence handover in the latter part of the year, which may increase deal flow and real estate activity.

Will you be offering 100 per cent finance on properties? Currently, what is the LTV (loan-to-value) that you offer?

Prior to fall out of financial crisis, we offered up to 90 per cent finance for resident customers in Bahrain-based on certain criteria. During the crisis, we have reduced this to 80 per cent and have maintained this level to date. Our financing focus has always been on customers who wish to purchase property either to live or rent based on their existing income level.

Tamweel and Amlak, two largest Shariah-compliant mortgage providers in Dubai, are not lending since the past few months. Do you plan to enter the UAE market?

To date, we haven't stopped financing. In line with changes in market conditions, we prudently adjusted the financing criteria. Though our aim is to replicate our successful business model elsewhere in the region and beyond, our focus for now is on Bahrain.

Is the time right for a regional foray?

We do believe the market needs some more time to stabilise before we can consider the possibility of moving to other markets.

Are you looking to raise funds through debt obligations or sukuks?

We are looking at raising funds through sukuks and other financial instruments to fund our business growth. We may raise $50 million by year-end or early next year, but nothing has been planned yet.

Are you planning to reduce your profit rates this year in order to be competitive?

Sakana believes that competitiveness can be achieved through offering innovative products and services with unique selling proposition. Pricing decision is a combination of cost of funds, operating cost of business, returns to shareholders, needless to say competitor pricing.

How much lending have you achieved since your formation in December 2006?

Our mortgage finance approvals (net) are in excess of $125m. Our total assets are at BD41.1m as of March 31, an increase of 98 per cent, from BD20.8m during the same period last year.

Are you looking for any acquisitions or joint ventures to expand in the region?

We may look at acquisitions or joint ventures as possibilities to expand in the region. We have two strong shareholders – BBK and Shamil Bank – that have regional presence and will be leveraging on their strength.

Is the company looking to diversify into the development business? Do you plan to launch your own projects and will UAE be on your radar?

We are in the process of diversifying into development business. Our first project will be a residential one targeted primarily at Bahrainis and we are a couple of months away from announcing it. Thereafter, we are also planning to launch few other freehold projects