Dubai Islamic Bank seeks to raise 3.18bn dirhams ($866m) selling shares in property unit Deyaar in what would be the Gulf's fourth-largest initial public offering.

Dubai Islamic, the third-biggest lender in the Gulf by market value that complies with sharia, plans to sell 3.178 billion shares at 1.02 dirhams each, equivalent to 55 per cent of the company, in an offering from May 6 to May 16, Deyaar said in a statement yesterday.

Deyaar, which has 17 residential and commercial projects in the United Arab Emirates, Turkey and Lebanon, will use the funds to finance projects in the UAE, Saudi Arabia, Qatar, Kazakhstan and India, Chief Executive Zack Shahin said in the statement. "Proceeds from the IPO will be used to finance the company's massive expansion in property development," Shahin said.

Dubai-based investment bank Shuaa Capital is arranging the share sale.

Only nationals from the UAE and the other Gulf Arab countries – Saudi Arabia, Kuwait, Qatar, Oman and Bahrain – will be able to buy the shares.

The IPO, which would be the biggest in the UAE, would only be exceeded by in the Gulf by Saudi Telecom Co, Saudi Kayan Petrochemical Co. and Qatar-based Islamic lender Masraf Al Rayan. Saudi Kayan plans to sell $1.8bn of shares starting April 28.