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Islamic structuring & consultinG

Khalij Islamic boasts an Islamic structuring team with a skill-set that is rare in the modern day Islamic financial universe, which is clearly struggling for want of adequate resources and expertise on that front. This unique pool of talent and experience gives Khalij Islamic a cutting edge that enables its structuring team to consistently help an increasingly global client base to develop innovative Islamic financial structures. We provide our clients the benefit of end to end solutions ranging from retail banking products, real estate financing and fund management to structured investment products, capital market activity and Islamic private equity. We have also successfully assisted a number of our clients in developing effective risk management tools and solutions.

Structuring Track Record

The Structuring team at Khalij Islamic has many years of investment banking experience (both Islamic and conventional). During our time in the industry, and as a function of the various positions we have held so far, we have been responsible for numerous breakthroughs in Islamic finance. Some examples of what we have achieved in both our current and previous roles include:

  • Development of landmark sukuk structures.
  • Pioneered true Shari’a compliant “off balance sheet” structures.
  • Developed effective Islamic risk management solutions for global clientele.
  • Successfully brought to the market one of the first Islamic structured repo transactions.
  • Structured the first publicly distributed Islamic structured product to be issued by a non-Saudi entity in Saudi Arabia.
  • Developed the technology for Islamic profit rate swaps and credit default swaps.
  • Developed an Islamic issuance platform for the issuance of Sharia compliant securities.

These were transacted with varied clientele whose attitude toward Islamic finance ranged from extremely conservative to very liberal, as well as being based across diverse jurisdictions hence also requiring consideration of the different legal, tax and regulatory frameworks.

Select Sukuk Structuring Transactions

Khalij Islamic’s structuring team members have been involved in structuring and arranging the issuances of a number of landmark Sukuk transactions, including those illustrated below.


Sukuk al-Ijara Sukuk al-Mudaraba / Musharaka

Nakheel

USD2.2 billion 5-year Sukuk al-Ijara Programme

August 2011

Dar Al Arkan

USD1.0 billion 5-year Sukuk al-Ijara

July 2007

Jabal Ali Free Zone

AED7.5 billion 5-year Floating Rate Sukuk al-Musharaka

November 2007

Dubai Ports World

USD1.5 billion 10 year floating rate Sukuk al-Mudaraba

July 2007

DIFC Investments

USD1.25 billion Sukuk al-Mudarabah

June 2007

 

First ever USD issuance for non-FI Saudi issuer

First ever AED denominated

 

First ever structured according to DIFC law


Exchangeable Sukuk Convertible Sukuk Sukuk al-Murabaha

Khazanah Nasional

USD850 million Exchangeable Trust Certificates into Plus Expressways

July 2007

Khazanah Nasional

USD550 million Exchangeable Trust Certificates into Parkson Retail Group

March 2008

Aabar Petroleum

USD460 million Sukuk al-Mudarabah

June 2006

Goldman Sachs

USD2 billion Sukuk al-Murabaha Programme

October 2011

 

First international issue post-2008 AAOIFI resolutions

First ever MENA convertible

 

Complete Shari’a Advisory Services

Khalij Islamic provides all-inclusive Shari’a Consulting services, Shari’a Monitoring services and Shari’a Compliance Review services. We focus on fully understanding the requirements of our clients while advising on Shari’a related matters. Throughout the process, Khalij Islamic adheres to applicable Shari'a standards and ensures continued quality assurance through monitoring under close supervision of our Shari'a scholars.

Deal sourcing & placemenT

Given the background of the Khalij Islamic management team who has been active and well known within the Islamic finance industry for many years, we have close connections with various (Islamic and conventional) counterparties and utilize these relationships to assist with the sourcing of transactions and placement of Islamic financial products.

High Quality Asset Based Islamic Products

It is evident that the Islamic markets, compared to the conventional markets, lack product diversification. Local Islamic banks do not always have the access to the multiplicity of assets or simply lack the structuring capacity or vision to create good investment products, whilst on the other hand traditional investment banks and asset managers also fail to fill the gap.

Islamic liquiditY

The Current State of the Islamic Money Markets

The commodity murabaha dominates the Islamic money markets. However, as a structure it is contested from a Shari’a point of view, is illiquid, inefficient and costly. Khalij Islamic can, via our Islamic Issuance Platform, offer a better, efficient and liquid alternative.

Complete Shari’a Advisory Services

Shari’a Consulting
  • Khalij Islamic’s extensive Shari’a consulting services have supported its clients’ initiatives in developing a wide range of Islamic products.

Shari’a Monitoring
  • Due to the Khalij Islamic Teams’ understanding of complex Islamic financial products and instruments, it has been retained as a Shari’a monitor for a vast variety of Islamic products including Islamic funds, Shari’a-compliant structured notes, Islamic indices, Shari’a compliant ETFs, etc.
  • Khalij Islamic provides periodic or proactive Shari’a Monitoring, depending on the requirements and the product type, and advise clients on Purification Strategies in relation to any potential non-compliant streams of income.

Shari’a Compliance Reviews
  • Khalij Islamic’s risk-based Shari’a Compliance Review is focused on assisting our clients to identify Shari’a non-compliance risks, both at the overall corporate level as well as at the individual product level.
  • Khalij Islamic’s Shari’a Compliance Reviews include areas such as corporate governance, human capital, product development and operations and information technology and the methodology adopted has been approved by our Shari’a scholars.

Deal sourcing & placemenT

Deal Sourcing

Khalij Islamic’s management team has excellent connectivity with corporates, institutions and asset managers across all major jurisdictions especially in North & South America, Western Europe, North Africa, the Middle East, Central Asia and the Far East.


Such connectivity provides access to unique asset classes and investment opportunities which are new for Islamic investors. Using these connections, we are able to identify investment opportunities in response to specific client requests.


We are able to identify suitable solutions from an almost unrestricted selection of products in the global financial marketplace and utilize our Shari’a structuring expertise to bring our clients a diverse range of options. As an independent party we are not tied to sourcing our transactions from any single product provider or asset manager.


Placement

Khalij Islamic’s sales team has been working with Islamic financial institutions for over two decades and has credible reach in the Islamic institutional markets consisting of a universe of more than 250 names spread over 15 countries.


The team focuses on selling our services in the European, Middle East and Far East markets as well as originating Shari’a compliant transactions and opportunities with a particular focus on placement, in association with other partner institutions.


We have been partnering with leading international investment banks in order to help meet the demands of conventional players for Islamic products and services.


Khalij Islamic is able to assist in arranging Shari’a compliant financing as well as with the placement of Islamic financial products. Collaborating closely with our clients, we establish clearly their investment and risk management needs and provide tailored solutions.

High Quality Asset Based Islamic Products


We anticipate being able to offer such products relatively easily and successfully since we have strong contacts with most Islamic banks and understand their needs and their language in terms of their investment and risk management requirements. We are able to identify established (asset) managers with a good product range but who don’t have access to, or knowledge of, the Islamic markets and we have the structuring capabilities to overcome most structuring difficulties.


Select Current Products

Some select Islamic investment products that are currently under development by us:


Asset Financing & Lease Based Products
  • Shipping Container Fund
  • Modules Lease Fund
  • Floatel Financing
  • European Solar Energy
Liquidity Management Products
  • Islamic Securitization
  • Islamic Corporate Deposit Arbitrage
  • Islamic Repo
  • US Municipalities / Counties ST Paper

Agriculture & Food Security Products
  • Moroccan Cattle Farm
  • Laos Rice Farming
  • Brazilian Soft Commodities
Corporate Finance / Long Term Investments
  • Long Term Life Settlements linked Product
  • Industrial Mill Equity Investment
  • Project Financing for various Industries

Islamic liquiditY

The Current State of the Islamic Money Markets
  • The commodity murabaha dominates the Islamic money markets. However, as a structure it is contested from a Shari’a point of view, is illiquid, inefficient and costly. Khalij Islamic can, via our Islamic Issuance Platform, offer a better, efficient and liquid alternative.
  • Presently there is no bona fide Islamic commercial paper market and so corporates depend upon banks to finance themselves. Through our Platform, KI can assist conventional and Islamic institutions to access the liquidity of Islamic investors in an easy way.
  • This lack of liquidity, and added competitive disadvantage work to impede the development of local Islamic banks and can even exacerbate a liquidity crisis. Hence, Khalij Islamic is focusing on solutions and products to improve Islamic liquidity in general and as a first step towards accomplishing this we are setting up an Islamic Issuance Platform and at the same time we are also working on solutions for a widely accepted Islamic Repurchase Agreement.

Our Islamic Issuance Platform (Al Waseelah Capital S.A.)
  • Khalij Islamic is developing a state-of-the-art Islamic Issuance Platform that allows Islamic and conventional players to be able to quickly and efficiently issue Islamic money market securities, structured notes and capital market products. Most of these products are expected to have a market maker providing secondary market liquidity and may be traded on a daily basis.
  • The Platform will be an independent issuer in Luxembourg, (in the form of a securitization vehicle) that issues Islamic transferable paper linked to various money market indices in various currencies. It is open-architecture and we will invite borrowers (Islamic and conventional) who want to tap Islamic liquidity to use this infrastructure. The Islamic papers to be issued by this Platform will be tradable OTC, for example, via a Bloomberg platform.
  • We envisage that central banks, Islamic banks and international investment banks will plug into our Platform and make use of its efficient design and will welcome this cost effective and flexible alternative to the current market offerings. We envisage the Platform to be able to use T+0 settlement cycles as well which will be achieved via the use of specific, already identified software and settlement technology.
  • All of the Platform documentation and underlying contracts will be made public for the purpose of full transparency.

Our Islamic Issuance Platform will be able to handle different product types including money market instruments, structured products, Shari’a compliant repos and securitization products. Below is a simplified illustration of the structure for the Platform.

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