* Abu Dhabi Islamic Bank to arrange loan facility

* Proceeds to partly repay investors via dividend recap

* Listing possible for Gulf Marine in two years

* Sale process for Gulf Marine stalled last year

By Mirna Sleiman

DUBAI, May 20 (Reuters) - Abu Dhabi private equity firm Gulf Capital is close to signing a 1.32 billion dirhams ($359.38 million) Islamic loan for its company Gulf Marine Services, some of which will be paid out to investors as dividends.

Gulf Marine, the largest operator and owner of jack-up barges in the Middle East, said on Monday it was due to sign the syndicated Islamic loan with Abu Dhabi Islamic Bank ADIB.AD .

"The funds we are raising will partly be used to buy a new vessel, refinance debt and pay investors dividends. It's a good time to refinance debt," Gulf Capital's Chief Executive Karim El-Solh said.

Gulf Capital, which owns 79 percent of Gulf Marine, had hoped to receive about $500 million from the sale of the group but talks collapsed last year partly due to financing issues and differences over valuation. ID:nL5E8HA061

The chief executive reiterated that Gulf Capital was still exploring a potential stock market listing for Gulf Marine - one of the biggest assets in its portfolio - on a major stock market such as London or Singapore in two years' time.

Private equity firms buy companies with the aim of selling or listing them later at a profit.

Two industry sources close to the company told Reuters that Gulf Capital would use the loan to pay out $100 million to shareholders through a dividend recapitalisation. El Solh said the dividend recapitalisation portion was less than a $100 million but he declined to specify the value.

Dividend recapitalisations, a process that adds to a company's existing borrowings so it can pay a dividend, are becoming more common among European and Middle East private equity firms as a lack of M&A activity has prompted them to look for other ways to get value out of assets. ID:nL5N0CV1P9

Gulf Capital's dividend recap deal follows a similar move by Bahrain's Investcorp INVB.BH for its Berlin Packaging business, in which the firm raised a new $610 million loan to fund a payout to shareholders and existing management.

In the first quarter of 2013, UK pet-shop chain Pets at Home

PETHO.UL and Spanish metal packaging firm Mivisa MIVIS.UL both did dividend recapitalisations. ID:nL6N0D91UG

Gulf Capital, which has around $2 billion in assets under management, plans to double them 2018, El-Solh said earlier in the year. ID:nL5N0CO0JJ ($1 = 3.6730 UAE dirhams)

(Reporting By Mirna Sleiman; Editing by Dinesh Nair and Jane Merriman)

((Mirna.Sleiman@thomsonreuters.com)(+971559374644)(Reuters Messaging: mirna.sleiman.thomsonreuters.com@reuters.net))

Keywords: EMIRATES GULFCAPITAL/