Meridian Funding 2025-1 brought Islamic home finance back into a part corner of the European capital markets where it has rarely appeared: public residential mortgage-backed securities (RMBS).
The transaction issued £307.6 million of class A-F home purchase plan (HPP)-backed certificates, backed by a portfolio of UK HPPs originated by StrideUp. It used the familiar architecture of a mortgage-backed securitisation while adapting the cashflows, documentation and legal mechanics to fit Shariah principles.
For StrideUp, a specialist non-bank Islamic home finance provider, the deal created access to institutional capital at a scale that can support further origination.
The most distinctive feature was the way the transaction translated Islamic finance concepts into securitisation technology. Investors held profit-bearing certificates rather than conventional interest-bearing notes, while the issuer’s bank-account structure used murabaha-based profit mechanisms.
It was the first public securitisation of Shariah-compliant HPP assets since 2018, as well as the first UK public Shariah-compliant RMBS issued by a non-bank lender
The transaction also incorporated Islamic hedging through a profit-rate swap documented under Shariah-compliant derivatives arrangements, helping manage the mismatch between the economics of the underlying HPPs and Sterling Overnight Index Average (Sonia)-linked investor payments.
That made Meridian Funding 2025-1 more than a funding exercise: it was the first public securitisation of Shariah-compliant HPP assets since 2018, as well as the first UK public Shariah-compliant RMBS issued by a non-bank lender. It showed that HPPs could be packaged for mainstream RMBS investors while retaining their faith-aligned character.
The pool was backed by Islamic property financing assets across owner-occupied and buy-to-let plans, giving the transaction technical novelty and an inclusive finance rationale in a market where many Muslim households have historically had limited access to suitable home finance.
Standard Chartered acted as joint lead manager on the transaction. Standard Chartered also provided the Shariah-compliant account bank framework.
