Euromoney innovations in Islamic finance 2016: Employees Provident Fund
£132 million ($187 million) secured Islamic facility
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This is the sort of complicated deal that has structuring advisers salivating: multi-jurisdiction, multi-structure, and many complexities to be resolved. At Standard Chartered, the sole arranger, the deal involved six different product groups from leveraged finance to commercial real estate.
But there was more to it than complexity for the sake of it. Though small, this was an interesting real estate financing deal and an important part of the Malaysian retirement scheme’s transition towards Islamic finance, which is in itself an important step.
The point of the deal was to refinance the acquisition of five commercial property assets in the UK. That, in turn, was intended to help the EPF improve the yield on its investments so that committed capital could be redeployed on other overseas investments. Alongside that, the EPF wanted a hedge against exchange rate movements, since returns will be generated in sterling but the payment obligations potentially would not. Finally, there needed to be a hedge on profit-rate risk.
“This transaction is in line with EPF’s strategy to grow real assets and build relationships with partners that could support growth,” says Dato’ Mohamad Nasir Ab Latif, deputy chief executive officer (investment) at the EPF.