Beyond starting 2017’s Sukuk activity, the AFC is the first African multilateral to issue Sukuk. Representing the aspirations of the continent, the Lagos-based entity enjoyed high demand and the deal was increased from a planned US$100 million to US$150 million. Rated ‘A3’ by Moody’s, it is among the highest-rated Sukuk ever issued by an African institution.

One important factor is that the AFC deal demonstrates that multilateral organizations are not necessarily tied to the economy or the rating of their host country. And, like the IDB, Asian Development Bank and others, the AFC has investment grade credit, even if many of its members do not.

he deal is based on Tawarruq delivered through the NASDAQ Murabahah platform as follows:

1. The SPV uses the issuance proceeds to acquire illiquid portfolio certificates listed on the NASDAQ Dubai Murabahah platform.

2. The SPV then, through a Wakeel/agent on-sells such portfolio certificates to the obligor at their cost price plus profit on a spot and deferred payment basis.

3. The obligor then immediately on-sells such portfolio certificates to market participants for an amount equal to the Sukuk issuance proceeds.

On the one hand, the Tawarruq deal is the easiest point of entry for a conservative multilateral body to enter the Islamic finance market. On the other hand, the transaction itself demonstrates the effectiveness of the NASDAQ Dubai platform.

Honorable mention: Société Burkinabé des Fibres Textiles and Chad Industries Company

In difficult times, the ABG Sukuk reaffirm confidence in Bahrain and its international Islamic finance sector. Al Baraka, a holding company in all but name, not only issued the first Bahraini Tier 1 US dollar Sukuk, it issued the first non-investment grade Sukuk from the GCC.

Honorable mention: Alba and Viva

One of Scatec’s missions is to deliver affordable solar power. In Egypt, Scatec achieved this by guaranteeing a diverse multilateral and multisource (there is a conventional tranche) coalition including the IDB and its affiliate the ICD, as well as a Dutch fund and the Green Climate Fund. The Green Climate Fund’s contribution of US$48 million is their largest to date and its first under its agreement with the European Bank for Reconstruction and Development. The solar projects form part of the 2 GW solar FiT program launched by the Egyptian government in 2015, and represent the largest portfolio of projects developed by the same sponsor group as part of that Egyptian Phase 2 FiT program.

Honorable mention: Al Marasem and Alfanar

Sumberdaya Sewatama had three creditor groups in the restructuring. The creditors were mostly bilateral conventional lenders and Bank Shariah Mandiri, and Sukuk and bondholders. The bilateral lenders were restructured into a single syndication. The three classes did not cost at the same time, which required non-discriminatory undertakings and a standstill period to ensure that the creditors who signed first have the right to amend the terms of the deal on the basis of discriminatory treatment and to freeze certain cross defaults from occurring until all restructuring phases were completed.

As much as the creditors were predominately conventional, the process included Indonesia’s first restructuring of a Shariah financing and a Sukuk issuance. This should set precedents for future restructuring of Islamic deals whether stand-alone or part of multi-party financings with conventional and Islamic financiers.

Honorable mention: Perusahaan Penerbit SBSN Indonesia III and Perusahaan Listrik Negara (Persero)

Warba Bank came to market twice during the year with a US$400 million syndication and its inaugural regulatory capital issuance. The five-year non-callable subordinated Sukuk qualify as additional Tier 1 capital under the Central Bank of Kuwait’s Basel III framework.

The Mudarabah certificates are listed on the Irish Stock Exchange and NASDAQ Dubai. Not only did Warba open the Tier 1 issuances in 2017, but it demonstrated the viability of a smaller, newer regional bank as well as global investor confidence in the Kuwait market. The structure includes a unique approach to the mechanics of non-payment events and definition of distributable funds based on the youth of the bank.

Honorable mention: Equate, Americana, and Delivery Hero

Bank Islam sponsored the CMC transaction on the platform as part of its adjustment to the Islamic Financial Services Act 2013. The Act requires Musharakah, Mudarabah and Wakalah ‘deposits’ to reflect the underlying investment performance. This moves these transactions to be more like investments than deposits. Nonetheless, even on the IAP, these investments reflect the reputation of the sponsoring bank and Bank Islam still pays attention to the transactions as if it was a traditionally intermediated transaction.

On the one hand, CMC accesses the IAP as an alternative means to secure financing. CMC is able to access a broad range of investors. On the other hand, the investors gain financial exposure to a specific CMC lead project in Vietnam.

Honorable mention: Tadau Energy, Quantum and Ihsan

The Islamic Republic returned to the market with a new international Sukuk. The ITFC was active in the hydrocarbon sector. And Meezan Bank sustained their traditional high level of activity.

WAPDA is a continuous participant in the financial markets as it expands power and water access throughout Pakistan. WAPDA — DASU — I is a dual tranche conventional and Islamic sourced project financing.

The Islamic portion of the facility was structured with two tranches. The first was a privately placed government of Pakistan-backed Sukuk of PKR52.8 billion (US$478.3 million). The second was an asset-backed syndicated Islamic facility of PKR33.6 billion (US$304.4 million) structured as a diminishing Musharakah.

Through this, the syndicate purchases undivided ownership shares from time to time in the underlying Musharakah assets and pays the purchase price to WAPDA. This creates the staged project financing.

Honorable mention: The Third Pakistan International Sukuk Company and Power Holdings

Qatar Islamic Bank provided project facilities including goods Murabahah letters of credit, Musawwamah and commodity Murabahah. The Al Jaber facilities demonstrate the key role that Islamic finance plays in the real economy.

Honorable mention: Ezdan Sukuk Company and QIB Sukuk (Qatar Islamic Bank)

The transaction is based on the hybrid Mudarabah/Murabahah structure. This avoids identification and transfer of asset ownership. The structure is designed to be scalable and allow for new issuances without changing the asset structure. The deal was well received by the scholarly community and the investor community. The latter assured that the deal would have the largest-ever orderbook for a two-tranche deal. One of the important investor issues was management of new US asset retention rules.

The deal was followed in July with the largest-ever domestic Sukuk issuance.

Honorable mention: Dar Al-Arkan and Saudi Aramco

An important development for the domestic Turkish Islamic finance market is the launch by the Turkish Grain Board – Toprak Mahsulleri Ofisi’s first Sukuk. This shows a growth of agriculture-related activities supported by Islamic finance (the ITFC has pioneered transactions with Turk Eximbank). It also shows the greater acceptance among government agencies to apply Islamic finance in their capital structures and purchasing activities. The Toprak Mahsulleri Ofisi is structured as Wakalah Bil Istithmar. The deal represents continued expansion for domestic Sukuk beyond the participation banks.

Honorable mention: Hazine Mustesarligi Varlik Kiralama Anonim Sirketi (Republic of Turkey) and GAP Insaat Yatirim ve Dis Ticaret

Honorable mention: Emirates REIT and Tabreed

Competing for honors was the Mazoon Assets Company deal. Each would stand out were it not for the first-ever international public Sukuk issuance by the Sultanate of Oman. The deal is also the second-largest US dollar Sukuk issued out of the GCC since July 2012.

The Ijarah certificates were the Sultanate’s first-ever trust certificates issuance program. The Sukuk assets comprised a share of the government’s interest in a plot of land earmarked for development. The assets were selected after extensive due diligence by the legal counsel and Shariah advisors.

As with similar cases, the structure required consideration of restrictions on the sale of national assets.

The deal was issued in 144A and Reg S forms. Despite S&P’s recent downgrade of Oman to sub-investment grade, the certificates were well received.

This demonstrates the attractiveness of Oman for future transactions and helps to support Omani agencies and corporates should they wish to approach the global market.

Honorable mention: Meethaq Islamic Banking and Mazoon Assets Company

Danajamin Nasional is Malaysia’s only monoline guarantor and first financial guarantee insurer. Danajamin is regulated under the Malaysian Financial Services Act 2013. Danajamin issued Tier 2 subordinated Sukuk Murabahah in the company’s inaugural Sukuk issuance. The transaction is part of a RM2 billion senior and subordinated Sukuk Murabahah (Tawarruq) program. The subordinated Sukuk facility has a tenor of 10 years and a callable option from Year 5.

Not only does the program provide new capital resources to the company, it supports Danajamin’s mandate to assist new and viable companies to participate in Malaysia’s debt capital market.

Honorable mention: AFC Sukuk Company and Daewoo Engineering and Construction

But the tech frontier comes to the fore with Delivery Hero’s ongoing expansion in the MENA region. King & Spalding has guided Delivery Hero previously. They advised the German group on the acquisition of Foodpanda, Kuwait’s talabat.com and Turkey’s Yemeksepeti.

King & Spalding advised Delivery Hero, one of Europe’s largest and fastest-growing tech start-ups, on its acquisition of the online and mobile food ordering and delivery company Carriage. This significantly builds Delivery Hero’s competitive position opposite its competitor Deliveroo. Delivery Hero CEO Niklas Östberg said: “Carriage is an innovative player in the Middle Eastern food delivery market with an excellent management team. It will be a perfect addition to our current offering under the Talabat brand and strengthen our foothold in this region, where we see significant growth potential.” This is because Talabat is an app without its own delivery and Carriage includes delivery service.

trycarriage.com itself is a great story as the company was founded just in 2016 by Abdallah and Musab Al Mutawa, Jonathan Lau and Khaled Al Qabandi. Musab and Lau met during their studies at Stanford University.

The transaction had a complex earn-out mechanism. The Mudarabah was structured through the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Center. The ADGM tranche provided flexibility to entrench a redemption right of certain management shares following the completion of the earn-out.

Honorable mention: Kuwait Food Company (Americana) and Toprak Mahsulleri Ofisi (Turkish Grain Board)

Adl Capital of Sri Lanka successfully secured a US$10 million funding line for LOLC Finance’s Islamic business unit, Al-Falaah, from the ICD. This was the single largest bilateral transaction between an Islamic financial institution based overseas and an Islamic finance unit in the non-banking sector in Sri Lanka.

King & Spalding advised its client RTF as leader of the US$10 million Series B round for souqalmal.com, one of the leading financial services comparison websites in the Middle East. Souqalmal Holding, based in Mauritius, received the funds in the form of common and preferred share issuances.

RTF is a venture capital fund established by Riyad Capital (the investment banking subsidiary of Riyad Bank) and TAQNIA, which is owned by the Public Investment Fund (PIF, Saudi Arabia’s sovereign wealth fund). In addition to the PIF, the investors in RTF include the Saudi Arabian Public Pension Authority and Saudi Credit and Savings Bank. Co-investors in the transaction included UK financial services comparison website GoCompare which is listed on the London Stock Exchange and regulated by the UK Financial Conduct Authority; UAE Exchange, the largest financial exchange and remittance company in the UAE; and Hummingbird Ventures, the Belgium-based venture capital firm.

The transaction is a key Shariah compliant Middle Eastern fintech transaction. It brings together UK, European, Mauritian, Saudi and UAE counterparties, most of which are regulated, into a cutting-edge transaction geared toward the GCC’s tech literate millennials. The transaction funds the growth of operations in the UAE and planned expansion into Saudi Arabia, where the company has entered into an MoU to launch a branch which would be regulated by the Saudi Arabian Monetary Authority.

Honorable mention: KIA Distribution and Al Falaah

Alpha is Malaysia’s first Shariah compliant private REIT, dealing with purely education-related properties. Most REITs are listed, but the Malaysian REIT Guidelines allow for the establishment of unlisted REITs. The Securities Commission Malaysia allows the establishment of unlisted REITs based upon the management company’s purpose, as well as demonstration that the REIT managers are able to scale up their portfolio of income-generating assets. The market typically views unlisted REITs as illiquid and less transparent than public-listed REITs.

Alpha as a private REIT was distributed to institutional investors only. The Alpha REIT has been established to invest in Shariah compliant income-producing real estate used substantially for education or education-related purposes. Alpha is unusual in that its assets are sourced from multiple vendors, not the REIT’s sponsors.

Honorable mention: Eco World and Orient

Another hybrid is more common in the construction sector and demonstrated by Tadau Energy. This pairs Istisnah with a described lease (Ijarah Mawsufah Bi Dhimmah).

EQUATE represents the largest-ever corporate Sukuk issued out of Kuwait and the largest-ever international eurobond wholly guaranteed by Kuwaiti entities. It is also the first Sukuk for a Kuwaiti corporate. In itself, the transaction is unique as a hybrid.

Most hybrids are ‘asset invisible’ with a Wakalah, Mudarabah or Musharakah in some business operation and then Tawarruq to raise funds and guarantee the transaction repayment in the flow. In this transaction, the Sukuk are based on Ijarah Muntahiya Bil Tamleek (lease ending in ownership) for 52% and Tawarruq for the remainder. As a result, the company receives funding from both sale and leaseback as well as Tawarruq. But the Ijarah wing produces a clear claim on capital from the obligor’s promise to purchase. And the Tawarruq wing’s Murabahah outstanding covers the remainder. Therefore, there is no need to stretch the Murabahah debts to cover all of the capital and periodic payments.

Honorable mention: Sunway and Tadau

Listed on the Irish Stock Exchange, Mazoon Assets Company marks the first international corporate Sukuk issue out of Oman. The deal is the first corporate Sukuk with Reg S and 144A tranches out of MENA since May 2016.

The deal is the first-ever Sukuk from the regulated electricity distribution sector which required structuring the transaction within the restrictions of the Sector Law of Oman. This law limits creation of security interests and subsidiaries by licensed distributors like Mazoon Electricity Company. The transaction required intense discussions with the regulator on structuring the transaction such that it was compliant with the Sector Law.

The deal also demonstrated the efficacy of Oman’s Sukuk law, which uses an SPV in lieu of a trust. The concept and structure were not deterrents to global and US investors who respectively took up 30% and 13% of the deal.

Honorable mention: Airport Finance Co and ABTEC

The Sukuk finance three solar photovoltaic plants of 50 MWac each in Gurun (Kedah), Merchang (Terengganu) and Jasin (Projects) on a ‘build-own-operate’ scheme. With a combined capacity of 150 MWac, QSP Semenanjung will be the largest solar power producer in Malaysia. The Projects are expected to be instrumental in helping Malaysia reach its ambition of 1 GWac from large-scale solar by 2020 and contribute toward sustainable electricity supply and the reduction of carbon emission in Malaysia in line with the National Renewable Energy Policy and National Green Technology Policy of Malaysia.

Even if the method of finance is Tawarruq, the QSP Semenanjung Green Bond Framework received a Dark Green shading from the Center for International Climate Research. The Dark Green shading is for projects and solutions that entail zero emission solutions and governance structures that integrate environmental concerns into all activities.

Honorable mention: Scatec, Tadau, Airport Finance

Ihsan Sukuk returned with a new issuance of RM100 million (US$25.67 million). This included a retail tranche. This is the first-ever to be offered via reward crowdfunding platforms, allowing participation from the Malaysian public with investments as small as RM10 (US$2.56). Ihsan demonstrates that socially aware investing can succeed in the retail market among small investors. The Ihsan model is a pay-for-performance model under which the investors earn less if the underlying schools perform to specified key performance indicators. Otherwise, the investors are entitled to the full value of their investment at maturity.

Honorable mention: Orient Rental Modaraba and ADNOC

Footnote:
‘Initially, Eco World International was announced as the winner of this category. However, after further due diligence, it was determined not to be fully Shariah compliant and the accolade passed to the rightful winner.’

Warba acquired, through a newly established offshore holding structure, 100% of the issued share capital of the corporate owner of the property known as the KIA Distribution Center, Immingham. Trowers & Hamlins represented the bank. The deal was financed on a Shariah compliant basis by the National Bank of Kuwait (London branch).

As Warba’s first entry into the UK commercial property market, the deal utilized a tax driven offshore structure to optimize the acquisition and holding of the asset. As an acquisition of an existing property-owning offshore SPV, rather than the property itself, and in view of the seller’s desire to limit its liability in respect of any warranties provided to the purchaser, the transaction required the first Shariah compliant warranty and indemnity insurance policy ever issued by a UK insurer in the London M&A market to be put in place at completion. The policy was taken out with AIG UK and its strategic partner Cobalt Underwriting.

For the first time ever, Shariah compliant investors into the UK have a Takaful product which levels the playing field with conventional investors.

Honorable mention: Airport Finance Co, Elaaj and KIA Distribution Center

Dubai Islamic Bank organized this bilateral Mudarabah financing transaction for PNC Investments. The obligor is the ultimate parent company of Sobha developers engaged in the Meydan Sobha joint venture. The deal was structured based on an assignment of the profit/dividend escrow accounts for specific real estate projects. These escrow accounts are regulated by Dubai Real Estate Regulatory Authority (RERA) and withdrawals are only allowed based on the completion of the project or through the approval of the RERA. Due to the nature of the underlying cash flows, the facility was structured with no fixed repayment schedule and the facility repayment was done through a cash sweep as and when funds are released from these escrow accounts. Additionally, the transaction was secured by mortgages and guarantees. The transaction allowed the company to monetize their future cash flows through a Mudarabah injection.

Honorable mention: ABG, Warba and Orient Rental Modaraba

Banque Misr and ADIB-Egypt co-arranged the first syndicated Musharakah deal in the Egyptian market. The deal is the first Islamic finance transaction for an Egyptian real estate developer. In this deal, the ultimate sponsor of Al Marasem is Saudi Binladen Group. The Musharakah is a co-ownership of Al Marasem which already owns two plots in the Fifth Settlement district in New Cairo structured as a bridge facility. The deal demonstrates the continued penetration of Shariah compliant finance among private sector companies.

Honorable mention: KSRM and Martin Dow

Tanjung Bin Energy raised funds via its wholly-owned subsidiary Tanjung Bin Energy Issuer, which is a financing vehicle for the owner-operator of the Tanjung Bin power plant in Johor, Malaysia.

The issue is for unrated perpetual Sukuk Wakalah of up to RM800 million (US$202.16 million). The issuer is appointed and acts as the Wakeel of the holders of the Sukuk Wakalah to invest the proceeds of the Sukuk Wakalah into Ijarah assets of the issuer and the balance to be applied to a Tawarruq transaction.

The distinct feature of this Sukuk Wakalah facility is that it is backed by an unconditional and irrevocable subordinated cash deficiency support. Generally, perpetual Sukuk are not backed by any guarantee so this ‘unconditional and irrevocable subordinated cash deficiency support’ feature makes this deal notable. Nonetheless, the Sukuk Wakalah facility is expected to be classified as equity in the financial statements of the issuer, as well as Malakoff (the ultimate project sponsor) in accordance with the Malaysian Financial Reporting Standards.

With this unique structure, the Sukuk Wakalah will not have any effect on the issued and paid-up share capital of Malakoff and/or the substantial shareholders’ shareholdings in Malakoff. The effects of the issuance of the Sukuk Wakalah on the consolidated earnings and consolidated earnings per share of Malakoff are not expected to be material.

Honorable mention: ABG and Warba

In December 2017, Emirates REIT successfully closed a US$400 million five-year Sukuk issuance. The Sukuk represent the first MENA REIT Sukuk issuance. The transaction allowed the REIT to restructure its liabilities while expanding its funding base. The REIT was able to reach investors in Europe, the GCC and Asia.

Honorable mention: Al Marasem and KIA Distribution Center

Despite Bahrain’s importance as an Islamic banking center, Al Baraka issued the first Tier 1 US dollar Sukuk from that country. This was also the first such deal by a non-investment grade issuer from the GCC. The transaction was also Al Baraka’s first international debt capital markets deal. The transaction was supported by the successful capital issuances for one of the banks of Al Baraka Group: Al Baraka Turk Katilim Bankasi.

Another feature of the transaction was that it was issued for a holding company. Al Baraka owns and operates 11 banks.

Honorable mention: Hong Leong, Maybank and Warba

White & Case advised UASC and its major shareholders Qatar Investment Authority and the Public Investment Fund of Saudi Arabia (PIF) on UASC’s multi-billion dollar merger with Hapag-Lloyd, a listed company headquartered in Hamburg, Germany. The new combined company is the world’s fifth-largest container shipping line, with a fleet of 230 ships and annual turnover of around US$12 billion.

The transaction required amendments and restatements of UASC’s existing debt and a significant new refinancing facility. The negotiation process for the merger, including agreeing terms that fit comfortably within Hapag-Lloyd’s overall debt financing practices, was both challenging and complicated. Two of the key facilities were the QIB commodity Murabahah facility and BLME’s container leasing program.

This deal is the largest cross-border M&A deal involving a Middle East-headquartered company in the last 10 years and the largest-ever M&A deal involving a Dubai International Financial Center (DIFC) company. The transaction involved a range of innovative structures, and even required the DIFC to amend the legislation and create a new corporate structure, the intermediate SPV regime.

In addition, to make the transaction possible, UASC was first re-domiciled from an international state treaty-created company to a regular DIFC company. This was the first ever re-domiciliation of this type.

Honorable mention: Sumberdaya Sewatama and Sime Darby.

In the case of Burkina Faso, cotton is not only the major export product, but one that touches the lives of almost every citizen. Earlier in the decade, the country had been convinced to try genetically engineered seeds in response to a serious threat to the country’s native plants. Although the pest infecting the plants was staved off, the luxuriant long-fibered Burkinabe cotton was not replicated. As a result, the country had to reinvent their industry in order to protect the livelihood of millions by restoring their lustrous cotton.

Through the introduction of pre-export finance, the ITFC ensures farmers that they will be paid on time and fairly. Consequently, motivation is enhanced and producers are ready to allocate more land to the cotton culture.

The ITFC has also customized a solution for foreign exchange risk management. On the one hand, cotton trades in the US dollar and the IDB Group operates in the US dollar. On the other hand, Burkina Faso is a CFA country and the CFA is pegged to the euro. The ITFC’s solution provided protection against USD/EUR fluctuation.

Honorable mention: Tadau Energy and Scatec

The standout deal in 2017 was the Saudi Arabian US dollar issuance in Reg S and 144A formats. Saudi Arabia’s maiden international Islamic offering is the largest global Sukuk ever launched. Counsel White & Case worked to assure that the hybrid (Tawarruq and Mudarabah) transaction would take into account the new risk retention rules affecting US investors. The Mudarabah wing allowed participating in national assets without violating foreign ownership restrictions.

Honorable mention: Oman and Toprak Mahsulleri Ofisi (Turkish Grain Board) via SPV — KT Sukuk Varlik Kiralama

This Mudarib is Turkish construction company GAP Insaat Yatirim ve Dis Ticaret. The Mudarabah invests in an office building under construction and its land in Istanbul. The well-located property is under construction. Upon completion, the building will have 30 stores as well as corporate office space. Not only is the use of a Sukuk Mudarabah for construction unusual, but Hogans Lovells also advised Aktif Bank on the first Sukuk ever to be listed on the Global Exchange Market (GEM) of the Irish Stock Exchange. While the Irish Stock Exchange has listed many Sukuk, this is the first Sukuk for the GEM, which is one of the fastest-growing debt listing markets in Europe.

Honorable mention: Equate, Aramco, Mazoon Assets and KSA Sukuk

FINCO represented a creative approach to multi-source syndicated financing for the ongoing improvements at Dubai’s two airports Dubai International Airport as well as the Al Maktoum International Airport. In May 2017, FINCO launched its debut financing with a US$1.63 billion seven-year conventional syndication and an AED5.05 billion (US$1.37 billion) seven-year Ijarah/Islamic parallel syndication. The Ijarah facility is backed by a sub–Musatahah right.

The final bank group consisted of 12 international and local banks which acted as joint mandated lead arrangers and joint bookrunners. The facilities were heavily oversubscribed by more than 50%, which is a continued demonstration of the support for the Dubai government initiatives and confirming the strength of the Department of Finance’s bank relationships and credit profile.

The platform is flexible and allows for the piecemeal integration of multiple Shariah compliant financing products including Ijarah, Murabahah, Wakalah and various Sukuk structures.

Honorable mention: Tabreed, Mobily and Perusahaan Listrik Negara (Persero)

Chad has not yet featured in the international Islamic market. Therefore, the ITFC’s facility to finance raw materials for Chad Industries Company’s production of carbonated soft drinks, bottled water, seasoning products and powdered milk features at the top of a well-contested group. Founded in 2012 by the Abbassi family, the company is seeking to move food processing to Chad.

Chad is a land-locked country where trading is vital for the economy. Developing its own food processing helps to control the value chain. The transaction also supports the diversification of foodstuff producers within the country. The transaction is guaranteed by Societe Generale Tchad. The sales proceeds are deposited in a collection account in the local currency (XAF) and then transferred to the ITFC in euros.

Honorable mention: Toprak Mahsulleri Ofisi (Turkish Grain Board) and Societe Burkinabe des Fibres Textiles

SkyWorld Capital is a subsidiary and special-purpose funding vehicle for SkyWorld Development. The SkyWorld transaction goes beyond the Mudarabah concept tested by DIB and applies a hybrid structure. The Musharakah covers the work in progress elements whereas a Tawarruq wing covers working capital aspects of the project.

The Musharakah note program is structured to participate in the affordable housing sector and allows SkyWorld to unlock capital relating to unbilled housing transactions. Proceeds from the Sukuk Musharakah are used to purchase the beneficial interest to the sales and purchase agreements signed in relation to the units in a development project and defray transaction expenses.

As and when required, proceeds from the Sukuk Murabahah will be used to cover cost overruns and bridge any timing mismatch between progress billing receipts and ongoing construction costs under the development project, as well as any shortfall in the payment of the Sukuk Musharakah senior profits and senior expenses, including contingent fees.

This landmark Islamic Sukuk transaction is a synthetic securitization of progress billings. The issuance is in support of a specific residential development project. Instead of the traditional approach of relying on the developer’s credit, this transaction focuses on the end user’s payments.

Honorable mention: PNC Investments and National Central Cooling Company (Tabreed)

2017 was an exceptional year for the Islamic capital market, and there were numerous deals worthy of consideration for the final shortlist. This year, the winning transaction will be announced with due ceremony at the IFN Awards Gala held at the Ritz-Carlton DIFC on the 11th March 2018.

The five included on this prestigious shortlist are:

• ABG Sukuk: This regulatory capital Sukuk for the Al Baraka Banking Group was a testament to the resilience of Bahrain. It was also an affidavit for the importance of unrated emerging market banking groups.
• Quantum Solar Park (Semenanjung): The project financing contributed to national sustainable energy goals in Malaysia as a green socially responsible Sukuk. It also won recognition as a zero emission project.
• KSA Sukuk: The GCC’s G20 champion came to market with an inventive approach to the hybrid asset-light structure. And it came out with the biggest issuance of any Sukuk ever.
• Airport Financing Company FZE (FINCO): FINCO represents an ingenious combination. The importation of platform-based syndication in tandem with the adoption of a novel Ijarah-based concept.
• Scatec Solar for six companies: Aswan PV Power, Kom Ombo for Renewable Energy, Red Sea Solar Power, Upper Egypt Solar Power, Zafarana Solar Power, Daraw Solar Power; and Banque Misr: Scatec is green-squared: solar power and Islamic finance. The deal brings European green energy investors and producers together with development banks to address Egypt’s power needs in a clean and sustainable way.

Each of these transactions represented innovation, new players, and thinking out of the box. Each brought something new to the global and local Islamic finance markets and each has a worthy claim to the crown. However, only one deal can win the ultimate honor. Find out in March which deal came top for 2017.