KFH- Capital arranges $1.6bn sukuk issuances for FAB and DIB

Abdullah Al-Haddad

KUWAIT: Chief Investment Banking Officer at KFH Capital, an investment arm of KFH Group “KFH”, Abdullah Al-Haddad said that KFH Capital has succeeded in arranging two issuances worth $1.6 billion Sukuk for First Abu Dhabi Bank(FAB) and Dubai Islamic Bank(DIB), with a group of regional and international banks. Sukuk issuances have been fully subscribed within record time and attracted investors from the region and the world. This step reiterates KFH Group’s pioneering role in the Sukuk market, and establishes Sukuk as a vital source of finance for governments, companies and major development projects.

With orderbooks climbing above $2.8 billion, FAB has raised $850 million through Sukuk, marking it the first issuance to be announced and subscribed in a single day, which is a major achievement and unprecedented in corporate Sukuk. As a lead arranger, KFH Capital attracted the participation of more than 110 investors, where 72 percent of the participants came from the Middle East, while the remaining banks, investment companies, fund managers and wealth managers were from Asia and Europe. This reflects KFH Capital’s keenness to provide a balanced, diversified and comprehensive coverage of the issue, establishing trust and cooperation with investors, risk distribution and high prevalence and acceptance of Sukuk. The diversity of investors reflects the great trust placed in FAB and KFH Capital’s capabilities to manage the issuance process. It also reflects international investors’ interest in Sukuk products, Al-Haddad indicated in a press release.
He said that the Sukuk tenor will be 5 years with a periodic distribution amount of 3.875 percent, adding that the issuance is expected to be rated at Aa3 by Moody’s and AA- by Fitch and will be listed on the London Stock Exchange.
As a lead manager, KFH-Capital succeeded in arranging another Sukuk issuance of $750 million for Islamic Dubai Bank, in cooperation with 167 regional and international investors. The Tier 1 Sukuk are perpetual,. KFH-Capital received $3.7 billion in orders and the books were 5-times oversubscribed. DIB, rated A by Fitch and A3 by Moody’s listed the non-rated Sukuk (based on Mudarabah type) on Nasdaq Dubai, Al- Haddad added.

He said that a growing issuance trend is expected in 2019 due to increased interest and trust by companies and governments who have expressed their interest in the Sukuk product as a premier finance instrument. As many countries, corporate and financial institutions consider tapping the market in order to meet their finance needs, a growing momentum in the Sukuk issuances is anticipated.

Al-Haddad reiterated that KFH Group plays a leading role in the Islamic Finance sector by innovating new Islamic products and services which are introduced as an alternative to traditional banking products. He indicated that the vast experience of KFH Group in the Sukuk issuance has positioned it as a trustworthy and highly recognized organization by major corporates and governments globally. The various structures used by KFH Group in arranging Sukuk, Ijara, Wakala or others, have made Sukuk highly competitive against conventional finance instruments.

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