Winner: Al Rajhi Bank
Of the four biggest project finance deals in the world last year, Saudi Arabia’s Al Rajhi Bank participated in two: the $10 billion Saudi Kayan Petrochemical Complex and the $5.6 billion Ma’aden-Sabic Fertilizer Complex Project.
The deals showed why Al Rajhi is the leading Islamic project finance house. For the Kayan project – a vertically integrated, greenfield, downstream petrochemicals complex – Al Rajhi was the exclusive initial mandated lead arranger for the working capital Islamic facility and underwrote the entire $646 million tranche.
For the Ma’aden phosphate project, the Saudi bank acted as exclusive underwriter of $625 million in Islamic ijara facilities through its ijara mawsufa fi al dhimmah (forward lease) structure. The facility helped moderate the risk to the lender and at the same time conformed to the basic Shariah principle of ‘he who takes the risk shares the reward’.
Under the structure, Islamic banks and the project company (the Ma’aden Phosphate Company) enter into a forward lease/specified lease agreement through which the former agree to finance the procurement of assets, to be owned and subsequently leased to Ma’aden on completion of the project. The lease only becomes effective from a specified forward date, when the assets are in a useable state.
