Wataniya Takaful plans to raise 82.5 million UAE dirhams ($22.47 million), or 55 percent of its capital, through an initial public offering. It will have capital of 150 million dirhams to provide Islamic insurance.

"The Wataniya IPO could be in March or April latest," Aref al Khouri, managing director of the Islamic banking division of National Bank of Abu Dhabi said at an Islamic forum in Abu Dhabi. The venture is backed by National Bank of Abu Dhabi and Abu Dhabi National Insurance Co. -- each with a 35 percent stake -- while Abu Dhabi National Energy Co. and Aldar Properties will hold 15 percent each in the founder's share.

"There is a huge demand for sharia-compliant insurance products with very little available in the market," Khouri told Reuters later. "We see good potential."

The UAE with a population of around 8 million has 59 insurance companies and seven takaful providers.

Takaful works like mutual insurance, but there is a clear segregation of the assets owned by members and those owned by the insurer. Islamic insurers keep away from investments in risky assets and prefer fixed income products for parking their funds.