Islamic Capital Markets
The sukuk practice forms part of Allen & Overy's award-winning International Capital Markets practice which has enjoyed a long established reputation for its global reach and top tier position across the full range of financial products.
Sukuk are Shari'a-compliant certificates which are issued in order to raise finance in a Shari'a-compliant manner and, like conventional bonds, can be listed on international exchanges and, if structured properly, will be tradable instruments in the international markets. However, there are also significant differences between sukuk and conventional bonds, including the fact that sukuk, as trust certificates, are not debt instruments and instead convey a beneficial ownership interest in one or more underlying assets.
In addition, the periodic payments on sukuk are not interest but instead represent a return earned through the underlying assets, for example on an ijara (lease) based sukuk the periodic return represents the rental payments made on the underlying lease.
“ ...sukuk, for which the firm is often rated 'the best in the world'. ”
- Chambers UK 2009, Islamic Finance
“ Allen & Overy LLP is superb for sukuk, and 'demonstrates excellent legal knowledge and extremely strong industry knowledge. ”
- The Legal 500, United Kingdom 2011
Key Islamic Capital Markets contacts
Our specialist global Islamic capital markets team consists of lawyers who are considered by independent directories and publications as the leading lawyers in the world for advising on sukuk transactions. The team has advised issuers (whether corporates, banks, governments or supranationals), managers and delegates on the most high profile and innovative transactions, many of which are market-firsts.
Global sukuk experience
Islamic Project Finance
We advise all parties in projects including sponsors, financiers and ECAs.
We advise all sectors on some of the largest and most complicated project finance transactions.
We advise on all elements of project transactions - project structures, conducting legal due diligence, risk allocation and reviewing the 'bankability' of project agreements.
“With strong Islamic finance capabilities in Dubai, Riyadh, Doha and London, A & O covers a multitude of Shari'a-complaint products and can advise MENA-based and overseas clients on all of their needs in this arena. ”
- Chambers Global 2011
Key Islamic Project Finance contacts
Quarayyah IPP, Saudi Arabia
We advised the lenders (including EDC and US EX-IM) to a consortium of bidders led by AES on the Al Qurayyah IPP in Saudi Arabia, the third in the SEC IPP programme.
Emaar Malls, UAE
We advised on the USD3.6bn Islamic and conventional financing for Emaar Malls, which was a heavily structured retail and real estate financing by Standard Chartered Bank, Dubai Islamic Bank and National Bank of Abu Dhabi.
Al Sufouh Transit System, UAE
We advised the mandated lead arrangers in respect of an export credit agency (COFACE and ONDD) supported loan package and two Islamic facilities (AED and USD denominated) utilising an ijara structure for the Department of Finance, acting on behalf of the Government of Dubai, in an aggregate amount of approximately USD674m.
Jubail Refinery Petrochemicals Project, Saudi Arabia
The Jubail Refinery USD8.5bn project financing was particurarly notable for the complexity raised by having many different facilities in a single financing, including USD and SAR facilities provided under two Islamic structures (an istisna-ijara and a wakala-ijara) and a sukuk issue.
Saudi Kayan Petrochemical Project, Saudi Arabia
We advised in relation to the USD10bn Saudi Kayan petrochemicals complex at Jubail including PIF, 4 ECAs (ECGD, KEIC, K-EXIM and SACE), Islamic (including a murahaba facility provided by Al Rajhi Bank) and commercial bank financing.
Emirates Steel Industries Expansion Project, UAE
We advised the lead arrangers in the Islamic and conventional co-financing of Emirates Steel Industries expansion project in Abu Dhabi.
Shuqaiq Water and Electricity Company, Saudi Arabia
We advised on the USD1.8bn financing of the Shuqaiq power generation and water desalination plant in Saudi Arabia. The transaction included a USD142m Islamic tranche.
Sipchem, Saudi Arabia
We advised on the Islamic refinancing of the International Methanol Company project in Jubail.
Saudi Polyolefins Company, Saudi Arabia
We advised on the USD175m murahaba facility USD400m ijara facilities.
Al Qatrana IPP, Jordan
We advised the successful bidder (a consortium comprising Xenel and Kepco) on the Al Qatrana IPP in Jordan. The financing involved direct conventional facilities from KEXIM and Proparco, a facility covered by KEXIM and provided by BNP Paribas and KfW and an Islamic tranche from Islamic Development Bank.
Target Line O&G Project, Libya
We advised Kuwait Finance House in relation to its financing on a murahaba basis of an acquisition of an oil rig for use in Libya.
Zayed University PPP Project, UAE
We advised on the USD1bn PPP project entailing the development of the Zayed University on a 28-year concession, located in New Capital District, near Abu Dhabi International Airport. The financing involved an AED520m senior Islamic tranche provided by Al Hilal Bank.
We advised the Islamic banks on the USD150m Islamic finance tranche of the USD500m refinancing of the Taweelah A2 power generation and desalination plant in Abu Dhabi.
Arabian Amines, Saudi Arabia
We advised Saudi Hollandi Bank as sole mandated lead arranger and underwriter on the USD195.4m fully Islamic financing for Arabian Amines Company.
Our team offers clients advice on a broad spectrum of banking transactions with a particular focus on large-scale Islamic financings.
The breadth of our expertise in banking-related fields is demonstrated by the calibre of transactions on which we have advised. Some of the major Shari’a-compliant transactions on which we have recently advised can be found below.
“ This firm offers the best of both worlds for clients seeking a keen understanding of local law coupled with a highly regarded international transactions practice. ”
- Chambers Global 2011 UAE
Dubai Aerospace Enterprise, UAE
We advised the borrower on the refinancing of its facilities.
Derindere Turizm Otomotiv San Tic A.Ş. , Turkey
We advised Citi as arranger on the USD60m murabaha facility for Derindere Turizm Otomotiv San Tic A.Ş.
Arabian Petroleum Investments Corporation, Saudi Arabia
We advised Riyad Bank, Banque Saudi Fransi, The Saudi British Bank and Al-Rajhi Bank, as mandated lead arrangers on the SAR2.5bn murabaha facility for Arabian Petroleum Investments Corporation (APICORP).
Etihad Etisalat (Mobily), Saudi Arabia
We advised Al Rajhi Banking & Investment Corporation, Banque Saudi Fransi, Riyad Bank, Samba Financial Group, Saudi Hollandi Bank, The National Commercial and The Saudi British Bank, as mandated lead arrangers on the SAR10bn financing for Etihad Etisalat (Mobily), one of the largest general syndicated Islamic financing deals to date.
We advised Bank Saudi Fransi, Samba Financial Group, The National Commercial Bank, The Saudi British Bank and Al-Rajhi Bank, as mandated lead arrangers on the SAR4.5bn murabaha facility for Marafiq.
We advised National Bank of Abu Dhabi, Noor Islamic Bank and Al Hilal as arrangers of an over AED5bn facility (with USD tranche) comprising both conventional and Islamic murahaba facilities for International Petroleum Investment Company (IPIC)
Aldar Etihad Investment Properties LLC, UAE
We advised Aldar Etihad Investment Properties LLC on the AED785m financing of its acquisition of the Abraj Towers residential real estate project in Abu Dhabi. The financing involved a conventional term loan facility and a commodity murabaha facility.
We advised Sorouh on the AED2.7bn conventional and Islamic term loan and revolving facility secured by mortgages over certain of Sououh’s real estate assets.
We advised the banks as the mandated lead arrangers on a dual currency USD500m syndicated Islamic financing for ENOC Supply & Trading LLC.
We advised Emirates Islamic Bank and Emirates Bank International on a USD1.2bn dual currency mudaraba facility for Limitless LLC, a subsidiary of Dubai World, the proceeds of which will be used to fund landmark real estate projects being developed in Dubai and Riyadh.
We advised Aldar Properties PJSC, the Abu Dhabi-based property developer, on an AED2.203bn (USD600m) ijara facility.
Al Raha Beach Development, UAE
We advised Dubai Islamic Bank and others as arrangers in relation to a USD2.1bn ijara and conventional co-financing for the Al Raha Beach development in Abu Dhabi.
Islamic Derivatives and Structured Finance
Our Islamic derivatives and structured finance practice is a market leader and is made up of lawyers from a number of jurisdictions who are both derivatives and structured finance experts and Islamic finance experts. It also benefits from the support and broad expertise of our wider top tier global derivatives and structured finance practice.
Our team has advised on some of the most innovate Shari'a-compliant OTC derivatives transactions as well as Shari'a-compliant transactions as well as Shari'a-compliant structured products and has extensive experience in structuring such products.
Whilst most of the deals in this area are of a private nature, examples of types of Shari'a-compliant transactions on which we have advised can be found below.
Key Islamic Derivatives and Structured Finance contacts
We have advised on a wide range of Shari'a-compliant equity derivatives products, including puts, calls, collars and total return swaps on shares, share baskets and indices both on a standalone basis and as part of wider financing transactions. We have also advised on Shari'a-compliant equity-linked and index-linked certificates.
We have drafted template Shari'a-compliant derivatives and collateral documentation for a number of institutions, including local and international banks and corporates.
Rates and FX
We have advised a number of financial institutions on profit rate swaps and Shari'a-compliant FX transactions on a standalone basis and as part of wider financing transactions (including Shari'a-compliant securitisations). We have also advised on rates and FX products under Shari'a-compliant structured products platforms.
Structured Products Platforms
We have advised a number of banks, including Deusche Bank, Standard Chartered and HSBC on setting up their Shari'a-compliant structured products platforms which cater for the full range of structured products payoffs in a Shari'a-compliant format.
We have advised on a variety of Shari'a-compliant commodity derivatives products including commodity based indices.
We have advised on variety of Shari'a-compliant credit-linked notes, including swapsm credit-linked notes and credit-linked repos.
We have advised on a number of Shari'a-compliant repo transactions based on the collaterised murabaha structure.
- The 6 March 2010 edition of International Financing Review includes an article on the ISDA/IIFM Tahawwut Master Agreement in which associate Yusuf Battiwala is quoted commenting on the development of the market.
- The 1 March 2010 edition of Risk Magazine includes an article on the ISDA/IIFM Tahawwut Master Agreement in which Allen & Overy is quoted commenting on the close-out mechanism.
- The 29 June 2009 edition of Financial News includes an article on the development of the Islamic Finance market in which partner Anzal Mohammed and associate Yusuf Battiwala are quoted.
- The 17 January 2009 edition of International Financing Review includes an article on the Al Miyar programme, a Shari'a-compliant structured products programme developed by Deutsche Bank, in which associate Yusuf Battiwala and partner Andrew Sulston are quoted.
- The 14 November 2009 edition of International Financing Review includes an article on Shari'a-compliant derivatives in which partner Richard Tredgett and associate Yusuf Battiwala are quoted commenting on the Master Agreement for Shari'a-compliant derivatives. Access by subscription only.
- Profit rate swap - The market for Shari'a-compliant derivatives products is at a fascinating juncture and we are witnessing the embryonic stages of an OTC derivatives market.
- Case study published in Derivatives Week.
Our investment funds team regularly advises on the establishment and on-going operation of a wide range of Shari'a-compliant investment funds.
Our investment funds team has developed a range of Shari'a-compliant fund structures across a range of sector including advising on Shari'a-compliant real estate, hedge, fixed income, private equity and SME funds. We also advise on acquisitions and disposals for, and investments into, Shari'a-compliant funds.
“ ...a superb profile in the investment funds environment...”
- Legal 500 UAE 2009
Key Islamic Funds contacts
We advised Abraaj Capital on the establishment of ASAS, a pan-MENA real estate fund, structured by way of Cayman Islands exempted limited partnership, with Shari'a-compliant investment projects across the MENA region, which had its first closing in 2010.
National Bank of Abu Dhabi
We advised National Bank of Abu Dhabi on certain of its Growth Funds.
A US hedge fund manager
We advised on the establishment of its Shari'a-compliant hedge fund.
A Dubai real estate company
We advised on its investment in shares in a DFSA regulated Shari'a-compliant real estate investment trust.
Gazeley (a subsidiary of Economic Zones World)
We advised Gazeley on its Shari'a-compliant development pre-let of 63,000 square metres of warehouse space to be constructed in the Jebel Ali Free Zone (Dubai) to CEVA, a major international distribution company, and subsequent sale of the property to a Middle Eastern private equity fund.
Our Islamic finance taxation specialists have experience of providing a wide range of taxation advice, both on domestic and multi-jurisdictional transactions. We provide a high level of service, whether on a stand-alone basis or as an integral part of the full legal service offered by Allen & Overy's Global Islamic Finance Group.
Drawing from over 100 tax specialists across our international tax practice, our Islamic Finance Taxation team includes lawyers in London, Luxembourg, New York, Paris, Rome and Sydney.
Advising on the tax aspects of Islamic finance transactions requires an appreciation, not only of the Shari'a constraints that are likely to apply, but also of general principles of domestic tax law. Members of our Islamic finance taxation team are also familiar with any relevant legislation or guidelines which have been implemented to ensure that Islamic finance transactions operate in as tax neutral a way as possible.
We advise on a wide range of Islamic finance transactions, with both domestic and multi-jurisdictional dimensions, including ijara, istisna'a and murabaha financing transactions, sukuk issuances and securitisation transactions. We have also advised banks such as HSBC and Standard Chartered on the tax implications of their own products.
Our Islamic Finance Taxation team has also been involved in consultations and discussions with revenue authorities and governments in various jurisdictions in connection with the development of tax legislation and practice aimed at facilitating Islamic finance transactions.
- Providing advice on Islamic finance real estate transactions in France, including a murabaha financing in connection with the purchase of commercial real estate in Paris
- Advising on various murabaha financing transactions, including a portfolio refinancing
- Advising on a murabaha facility structured through a securitisation company
- Establishment of a shari'a-compliant regulated investment fund
- Advising on the UK and US tax implications of sukuk issuances.
Key Islamic Taxation contacts
- Christopher Harrison
- David Hughes
- Mark Middleditch
- Vimal Tilakapala
New York, USA
The Global Islamic Finance Group consists of Islamic finance experts across Europe, including in London, Paris and Luxembourg; the Middle East, including in Abu Dhabi, Dubai, Qatar and Saudi Arabia; and Asia, including in Singapore and Hong Kong, who have a detailed understanding of the religious and legal background to Islamic finance, the evolving principal financing techniques and range of services offered by Islamic banks, and the issues affecting the development of Islamic finance.
Allen & Overy is a supporting member of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and an observer member of the International Islamic Finance Market (IIFM).
Recognition for our work
Ranked Band 1 - Islamic Finance (Middle East) - Chambers Global 2013
Ranked Band 1 - Islamic Finance (Asia-Pacific Region) - Chambers Asia-Pacific 2013
Ranked Band 1 - Islamic Finance (London) - Chambers UK 2013
Ranked Band 1 - Islamic Finance (United Kingdom) - The Legal 500 United Kingdom 2012
Allen & Overy is the only law firm in the world to be ranked in the top tier across each region.
International Financial Law Review (2010) and Islamic Finance News (2012) recognised 12 Allen & Overy lawyers respectively in their surveys on 'the world's leading Islamic finance lawyers', more than any other law firm. This demonstrates the reputation and the strength in depth of Allen & Overy's global Islamic finance practice and our ability to offer a truly integrated global service regardless of where our clients are based or the nature of the specialist advice that they require.