Contact Financial Holding, which first started offering financial services including corporate finance and insurance in 2001, has issued the first Sukuk facility out of Egypt’s private sector this year through its Sukuk arm Sarwa Capital. NESSREEN TAMANO reports.
The Islamic paper — also the fourth corporate Sukuk to come out of Egypt since April 2020 — was structured under the concept of Mudarabah with a seven-year tenor and raised EGP2.5 billion (US$159 million). It is also rated ‘A-’ by Middle East Ratings and Investors Service.
Proceeds from the facility will be used by the company to further expand its consumer financing arm Contact Credit as well as its other affiliate companies.
The issuance closed with strong demand from a wide range of investors, Contact said, with its subsidiary Sarwa Promotion and Underwriting acting as the lead manager and arranger of the transaction, and Misr Capital and Banque Misr as the underwriters. Commercial International Bank and Ahli United Bank were the co-underwriters, Alieldean Weshahi & Partners was the legal advisor and Elite Consulting Group was the independent financial consultant of the deal.
“The issue underlines the group’s financial position and its ability to diversify its funding sources to capture growth opportunities and solidifies its strategic position in developing innovative financing structures in the Egyptian debt capital market,” Contact said. The company had introduced the first securitization bond in Egypt in 2005.
Contact first issued Sukuk through Sarwa in November 2020, a facility worth EGP2.5 billion, bringing the total Sukuk issues of the company to EGP5 billion (US$317.99 million) to date. IFN previously reported on the company’s debut Sukuk facility, which was also the country’s sophomore Sukuk issuance. Notably, Sarwa was the first company to secure a Sukuk issuance license from the regulator in 2019.
At least six other companies are expected to issue Sukuk before the end of 2021, with Abu Dhabi Islamic Bank-Egypt, Rawaj, Hassan Allam, Palm Hills Development and Wadi Degla having announced intentions to tap the local Islamic capital market.