Geert Bossuyt of Deutsche Bank notes: “In the investment product area, our competition is not that tough. In sukuk, where the local banks are more active, competition is tougher.” As ever, the key to success is innovation. “We’re more expensive”, he explains. “To justify our fees, we have to bring innovation. We go for the bigger projects, which tend to be more complex, and we tend to be able to come up with solutions where the local market fails.”
Deutsche Bank has not, however, been the only one to participate in impressive deals. Indeed, a number of other industry majors have been involved in pushing back the boundaries of Islamic finance over the past year:
The first issuance programme for sukuk securities: The Islamic Development Bank’s $500 million FRN was the first drawdown under its $1 billion trust certificate issuance programme. The order book was 1.5 times oversubscribed, allowing the transaction to be priced at the lower end of guidance at 12 basis points over dollar Libor. The deal was joint lead managed by CIMB and Dubai Islamic Bank (DIB and winner of best Islamic bank in the Middle East), while Deutsche Bank acted as joint arranger and joint bookrunner.
A platform for sukuk al mudaraba: The Safa Tower, Al Haram Real Estate project was possibly the most complicated mudaraba transaction on record. Dar al-Istithmar, winner of the 2006 award for best Islamic advisory service, served as global shariah advisor, while Deutsche Bank was mandated as advisor to the Saudi Binladin Group. The deal’s complexity stemmed from: the need for shariah compliance; different jurisdictional issues in Saudi Arabia, Bahrain and the UK; regulatory issues relating to Sama, the CMA and BMA; and the fact that the client wanted finance and real estate sales to run concurrently.
World’s first international sukuk al musharaka: The Dubai Metal and Commodity Centre’s $200 million sukuk was lead managed by DIB. The transaction introduced a new sukuk structure for the Islamic fixed-income capital markets. The format of the sukuk adhered to Eurobond standards and did not require the provision of any unusual terms or conditions.
Largest Islamic securities financing issuance of 2005: The innovative two-tier financing for Malaysia’s Jimah Energy Ventures’ M$4.847 billion ($1.28 billion) senior Istisna MTN facility involved the issuance of up to M$895 million of mezzanine debt. This allowed for aggressive gearing compared with the industry norm of 80:20 (debt:equity ratio) for IPPs. It was also the first floating rate Islamic debt securities in Malaysia.
Largest Islamic oil and gas facility in history: Lead arrangers for Dolphin Energy Limited’s $1 billion Istisna Ijara in Qatar included Citigroup and BNP Paribas. Citigroup was sole international bookrunner. Almost 70% of the deal was distributed in Europe, and its structure allowed floating rate rentals during the advance lease period, allowing for structuring of the facility without the complicated and controversial true-up mechanism.
