Abu Dhabi-based Emirates Strategic Investment Company (ESIC), owned by Sheikh Mansour Bin Zayed Al Nahyan, has launched a five-year $600 million sukuk on Tuesday, 23 July.
What is sukuk?
According to Investopedia, a sukuk is an Islamic financial certificate, similar to a bond in Western finance, that complies with Islamic religious law commonly known as Sharia. Since the traditional Western interest-paying bond structure is not permissible, the issuer of a sukuk sells an investor group a certificate, and then uses the proceeds to purchase an asset, of which the investor group has partial ownership. The issuer must also make a contractual promise to buy back the bond at a future date at par value.
About the ESIC sukuk
The issuance emanates from ESIC’s $1 billion sukuk programme, which is listed on the London Stock Exchange, and carries a profit rate of 3.939 percent – 35bps tighter than initial price thoughts. Investor demand for the Sukuk was strong with a $3.7bn orderbook, representing an oversubscription rate of 6.2 times.
More than 135 investors from over 20 countries participated – 61 percent of the sukuk was allocated to international investors (33 percent to Asia, 24 percent to Europe and 4 percent to the US), and 39 percent was allocated to GCC investors.
By type, 62 percent were fund managers, 25 percent were banks, 9 percent were private banks and 4 percent were central banks and pension funds.
The transaction followed a comprehensive marketing strategy aimed at introducing ESIC’s credit to the international fixed income community – a senior management delegation met with investors in Singapore, Hong Kong, Abu Dhabi, Dubai and London.
“Under the visionary leadership of His Highness Sheikh Mansour Bin Zayed Al Nahyan, ESIC was established to support the Abu Dhabi Economic Vision 2030 and other strategic initiatives of the UAE. The Sukuk promotes the development of capital markets and Islamic finance in the UAE, as well as setting an international benchmark for other UAE private company to follow. We are very pleased with the outcome of the Sukuk and the international investor demand that we received, which reflects the UAE’s strong standing in the international community”
– Khalid Deemas Al Suwaidi – CEO, ESIC
The deal was led by First Abu Dhabi Bank and Standard Chartered Bank as Joint Global Coordinators. Bank ABC, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, National Bank of Bahrain, Standard Chartered Bank and Warba Bank acted as Joint Lead Managers. Allen & Overy acted as legal counsel for the banks, and Simmons & Simmons acted for ESIC.
ⓘ Information source: Arabian Business