Islamic finance awards 2012: Most innovative deal
HSBC Middle East this year issued the first sukuk to employ a dual structure consisting of both wakala and mudaraba elements. This innovative structure has already been emulated by other institutions, including First Gulf Bank and Abu Dhabi Commercial Bank.
The dual structure was developed in response to amendments to UAE laws dealing with foreign ownership and transfer of real estate. The new UAE law creates a registration cost that the new structure serves to avoid: Islamic real estate assets can be transferred into a sukuk portfolio without incurring the new registration cost. The new structure is able to comply with Shariah law while also being economical for Islamic investors.
The dual structure’s ability to accommodate the new regulations is particularly important given the sizeable amount of real estate assets that many Islamic financial institutions have on their balance sheets.
The transaction is the first dollar-denominated benchmark sukuk issued by a conventional financial institution with a full Islamic finance business.
The deal attracted interest from a number of regions, with Middle Eastern investors taking 58% of the book, Asian investors 29% and European investors 10%.