The current awards have been affected by COVID-19. Firms that we hoped to see are focused on survival. Deals that should have been done have been deferred. COVID-19 is the trend that we do not know how to evaluate. Will its impact on business mean that arbitration, insolvency and restructuring becomes a more crowded area in 2021? Will it bring a faster impact on the Islamic finance industry to merge? We ‘Zoom’ and ‘Teams’ to our office and client meetings. Is COVID-19 the end of traditional real estate? Has COVID-19 rung the bell signaling the demise of oil? For Islamic finance and the lawyers papering away our deals, COVID-19 is largely asymptomatic. We are told to prepare for COVID-19 to be a soliton wave over the next generation, or to be part of a climate change-induced pandemic cycle, so we can only imagine that COVID-19’s impact on our business, our regulators and our legal advisors is simply unknown.
Fintech was always going to be important. The vast majority of Muslims live in underbanked countries. A disproportionate number of refugees and migrant workers in the eastern hemisphere are Muslims. Remittances, mobile banking and online finance are needs that remain surprisingly underserved. Even in countries that appear to have squared the fintech circle to deliver rich offerings, cybersecurity and low-tech data theft remain issues. Layer COVID-19 onto this and we can only expect to see the demand for fintech to increase.
At a major event in 2019, a Dubai-based pundit pooh-poohed environmental, social and governance (ESG) investing. To his amazement, a representative from a major global asset manager offered a clear rebuttal: “Our stakeholders, pensions, retirement account holders, staff and board of directors are demanding more ESG.” On the one hand, this trend is deeply reflected in the IFN Law Awards 2020. Malaysia, Pakistan and the UAE are all increasingly engaged on the clean-energy front. Governance is improving across the IFN reader footprint. And market shapers like the IsDB Group are joining the governments of Malaysia and Indonesia in sustainable financing.
On the other hand, from Nigeria to Kalimantan, oil and gas are the greatest generators of revenues for most Muslim-majority countries. For the rest, coal, oil and gas are the quickest fixes for reliable, scalable energy. As a result, law firms were just as often documenting deals that were clean and green as they were projects that are sooty.
Historically, the UAE and Malaysia are the best represented in our awards. This reflects the status of these two countries as key Islamic finance centers. London-headquartered firms are often busiest with Islamic finance from their UAE and Kuala Lumpur offices. The sheer size of the Saudi market assures that Saudi firms have plenty of work. As in previous years, the merger and acquisition work in the Kingdom continues at mind-boggling levels. Surely this is a sign of the Kingdom reshaping its economy.
When reviewing the work of law firms, one must recall that the client often calls the shots. This may mean that innovation is now always a high value. Indeed, a great many of the deals that were completed in 2019–20 were Tawarruq-based. Despite academic calls for its cessation, Tawarruq proves a durable solution to many financing problems. One might call it the coal of Islamic finance.
What makes a law firm stand out? This question has no clear answer. Magic Circle and white-shoe firms are present on the most prestigious and often complex deals. They might even see more deal flow. Mid-market firms and regional champions pierce their armor with spectacular achievements, fresh ideas and a growing market presence. Each year, we step back, clear our lenses and hear from the leading personalities, observe the great teams and read the abundant submissions and elaborate arguments about the fascinating achievements of each firm.
Asset Management & Islamic Funds
Overview: Asset Management & Islamic Funds are among the most important and underestimated segments in Islamic finance. The business has long focused on cross-border flows, even if Malaysia has a deep domestic market, Saudi Arabia is rapidly rising to the challenge and the US hosts the largest public Islamic equity mutual fund. What is unclear is what will break the mold? Significant funds are invested in equities, real estate and REITs and private equity. Infrastructure funds have come and gone. Debt and trade funds are re-emerging, and one wonders if these will be key trends. Certainly, the constant retreat of banks from trade finance and certain subsectors creates new possibilities.
Allen & Overy’s fund team serves this market segment with over 50 lawyers operating in centers as diverse as London, NewYork, Luxembourg, Paris, Frankfurt, Dubai and Hong Kong. The team has developed particular expertise in structuring and advising on joint venture funds, fund restructurings and Dubai International Financial Center (DIFC)- and Abu Dhabi Global Market-domiciled funds.
King & Spalding, the reigning champion, is always competitive with its cross-border fund work. Typically, King & Spalding is the strongest, representing GCC investors and the private wealth management sector. A landmark deal for King & Spalding was its Dubai office’s work on the ITFC Sovereign Energy Fund which launched in December 2019. Led by James Stull, Macky O’Sullivan and Sayf Shuqair, the team represented the International Islamic Trade Finance Corporation (ITFC) and Federated Investors (US) in the launch of the ITFC Sovereign Energy Fund.
Herbert Smith Freehills demonstrated a global spread of deals. The firm represented an ASEAN pension scheme on the formation of a Shariah compliant private equity vehicle. The firm was well represented in GCC deals. Notable among these was its advice for SHUAA Capital on the formation of a Shariah compliant private debt fund focused on the GCC.
Winner: Herbert Smith Freehills was engaged in two fund activities that let it step just in front of King & Spalding and Allen & Overy. The first is the ASEAN pension structuring deal. This was one of the few ‘out of market’ deals done by our leaders. And the SHUAA Capital debt fund may well be part of a growing trend in the GCC and elsewhere as banks reduce their financing.
The launch of the SHUAA Debt fund is in line with the firm’s objective of launching scalable new investment funds to strengthen its specialized corporate restructuring service, particularly in respect to distressed assets. In a swift response to the current markets, the fund will deploy over US$250 million and allow businesses to survive these challenging times and support the UAE government’s aim to diversify the economy.
The firm shared: “We believe the fund is an ideal solution to address frozen credit markets and will assist businesses in overcoming today’s complex business landscape.”
Why: Led by Zubair Mir in the DIFC office, the firm guided SHUAA on a fund to deliver financing in the UAE and Saudi Arabia. Just a few years back, the local regulators were not keen on such activities from funds. Emphasizing financing in the real estate sector, the Cayman Islands-domiciled fund is Shariah compliant. In order to deliver the fund, Herbert Smith Freehills had to deliver regulatory advice in relation to the non-bank financing regulations that apply in the UAE and Saudi Arabia. Cross-border tax issues also needed to be addressed (EY).
Banking & Finance
Overview: The Banking & Finance category is always a true slugfest. As much as one discusses innovation, the market has regulatory issues to address. The Central Bank of the UAE’s adoption of AAOIFI standards has brought Shariah Standard 59 into focus. There is concern that the traditional approach to ‘rollovers’ in syndicated Tawarruq would fall foul of the new standard. Two of our finalists were among the first firms to put solutions to the test.
Contenders: Fighting it out in this category were Abuhimed Alsheikh Alhagbani Law Firm (AS&H) in cooperation with Clifford Chance, Allen & Overy and Norton Rose Fulbright. There is a distinctive GCC flavor.
Riyadh-based AS&H advised on the Fawaz Abdulaziz Al Hokair & Co syndication completed in March 2020. This was perhaps the first effort on a major syndication involving UAE banks to address compliance with AAOIFI Shariah Standard 59 on the sale of debt. AS&H has also been advising the Saudi Arabian Monetary Authority on a bank resolution project, including redrafting the law, and also on the policy and regulatory implications for developing a comprehensive payments law in Saudi Arabia.
Allen & Overy’s Dubai office gave proof to the impact of COVID-19. Its work on the Almaty Ring Road (Kazakhstan) was signed in February and closed in August. The firm was well represented on major deals in the UAE, Saudi Arabia, Bahrain and Kuwait. Many of these deals incorporated both a conventional and a Shariah compliant tranche. It worked on Mobily’s latest export agency supported deal. This time, the export bank support expanded to Canada.
Led by Mohammed Paracha, Norton Rose Fulbright in Dubai was widely involved in complex construction models for the UAE, UAE syndications and UK property finance. It was second past the post with an AAOIFI 59 compliant transaction: the National Commercial Bank’s US$1.05 billion syndicated Murabahah facility, a three-year dual tranche Murabahah facility complying with AAOIFI.
Winner: Norton Rose Fulbright addressed the challenge of AAOIFI Shariah Standard 59 in a unique approach akin to cofinancing. Banks were able to opt into either a traditional Tawarruq arrangement which did not comply with AAOIFI or a second tranche that combined the Murabahah structure with a purchase undertaking. This strategy allowed the syndicate to draw a wide universe of banks to the deal thereby maximizing liquidity in a very tight market.
Why: Norton Rose Fulbright’s head of Islamic finance in the Middle East and Africa, Mohammed Paracha, said: “The change in approach to commodity Murabahah financing structures introduced by the UAE’s central bank required a fresh process for how commodity Murabahahs … are structured.”
Overview: The Islamic capital markets have done surprisingly well despite COVID-19. Their good performance is, nonetheless, marred by what they have not done. Corporate Sukuk remain rare. Blockchain and other fintech Sukuk have yet to fulfill their promise. And micro Sukuk are but a dream.
Contenders: Our candidates for 2020 were two national champions and two global giants.
Al Busaidy, Mansoor Jamal & Co advised on the government of Oman’s unlimited value local Sukuk, a Deal of the Year 2019 winner for Ijarah. The firm also advised the government of Oman on the Oman Investment Authority’s infrastructure fund Rakiza. A complex structure aimed at expanding international investment into Oman, the deal will surely be a 2020 Deal of the Year contender.
Clifford Chance was among the firms involved with the Arabian Centres Company, an Overall Deal of the Year 2019 finalist and Saudi Arabia Deal of the Year 2019 winner. Advising Goldman Sachs, Clifford Chance’s teams in London, Dubai and Riyad were engaged on the Reg S/144A Sukuk and its companion syndicated facilities. The firm also advised the IsDB on its green Sukuk. Clifford Chance was also advisor to Standard Chartered Bank for the QIB Formosa Sukuk.
Egypt has long teased the Islamic capital markets. Shariah compliant leasing companies have securitized portfolios under the Capital Markets Law of 1992. Helmy, Hamza & Partners (Baker McKenzie) advised Arab Company for Projects and Urban Developments, a subsidiary of Talaat Moustafa Group Holding, on the issuance of a EGP2 billion (US$126.53 million) Sukuk program maturing in 2024. The firm also acted for a leading GCC investment bank on a Sukuk program for an Egyptian issuer funded by placement in Saudi Arabia, and on a program for another Egyptian issuer funded from the UAE.
Linklaters is always strong in the GCC. The firm advised on Riyad Bank’s Tier 2 Sukuk as well as transactions for Emaar and Boubyan Bank. Led by Jonathan Fried, Linklaters advised QIB on its annual update of the US$4 billion program with the first Sukuk listed on the Taipei Exchange, a Formosa Sukuk facility.
Winner: Helmy, Hamza & Partners advised Arab Company for Projects and Urban Developments, a subsidiary of Talaat Moustafa Group (TMG) Holding, on its inaugural Sukuk program. Arab Company for Projects and Urban Developments is a private company operating within the real estate sector under TMG Holding, providing real estate property investment, development and management. The first issuance of EGP2 billion matures in 2024. EFG Hermes Promoting and Underwriting acted as the arranger and financial advisor.
Mohamed Ghannam, the managing partner and head of capital markets said: “This is the first Sukuk issuance in Egypt which makes it a landmark transaction in particular given its successful and timely closing despite the global COVID-19 situation.” Mohamed Ghannam’s team included his partner Lamyaa Gadelhak — the co-head of banking and projects — as well as Mostafa El Sakaa, the counsel of capital markets.
Why: The Arab Company for Projects and Urban Developments demonstrates that the Egyptian Islamic capital market is stirring to life. One hopes that the most populous Arabian country now has a roadmap for Sukuk success.
Energy & Natural Resources
Overview: Over the past five years, the awards have reflected the reality of the Islamic finance market. Oil and gas, coal and many shades of green define the nominees in Energy & Natural Resources. Green energy is only held back by the fundamental importance of oil and gas to many countries in the IFN footprint, and the urgency that coal resolves in delivering power to low- and moderate-income countries. The second split is on the Malaysia–rest of the world fault line. Overwhelmingly, the GCC and South Asian energy deals are syndicated. In Malaysia, Sukuk prevail to finance energy and natural resource deals.
Contenders: Our contenders reflect the divide perfectly. Clifford Chance advised the cofinancing of wind-powered projects in Pakistan. Norton Rose Fulbright advised on syndicated deals in the GCC and Jordan. In Malaysia, Adnan Sundra & Low advised on green energy Sukuk. The subtheme in Malaysia is that the Sukuk almost universally apply Tawarruq.
Clifford Chance advised on the NASDA wind-powered projects in Pakistan. An Overall Deal of the Year 2019 finalist and winner of the Pakistan and Green Energy categories, NASDA is cofinanced with a US dollar Istisnah forward lease facility and a Pakistani rupee (PKR) diminishing partnership facility. Financiers included the Islamic Corporation for the Development of the Private Sector for the US dollar leg and Meezan Bank for the PKR leg.
Norton Rose Fulbright advised widely across the GCC and Jordan on energy projects. One of the major projects was ACWA Power’s Taweelah independent water project in Abu Dhabi. The US$1.2 billion project has conventional and Islamic facilities including a Shariah compliant equity bridge facility. The sustainable deal qualifies under Green Loan Principles and Social Bond Principles.
Adnan Sundra & Low reflected the dirty vs. green dichotomy. Deals included medium-term note programs for Edra Solar and Leader Energy as well as mergers in the oil and gas and water sectors. Among the acquisitions was a complex cross-border deal for ADNOC’s acquisition of a 10% stake in Vitol Tank Terminals International involving assets governed by 20 national legal systems. Adnan Sundra & Low advised on Malaysian law.
Winner: Adnan Sundra & Low acted for OCBC Al-Amin Bank on the Malaysian ringgit medium-term note program for Edra Solar. In August 2019, Edra Solar published its own Sustainability Sukuk Framework. This deal followed rapidly to the close.
This Tawarruq financing is an eligible SRI project under Malaysia’s Lodge & Launch Framework, an eligible green project under the ASEAN Green Bond Standards and social project under the ASEAN Social Bond Standards. An intriguing element of the transaction incorporates the grant of property for commercial agricultural development as part of socioeconomic development under a profit-sharing arrangement with local farmers at the site. The team working on this included Edward Ng Foo Yuen (lead), Priya Sirisena, Chui Jun Wei, Lim Pei Yin and Shazni Hamim.
Why: Adnan Sundra & Low continues to show ASEAN leadership in Shariah compliant project finance underwriting. This ASEAN Sustainability SRI Sukuk transaction is also the country’s first issuance with the distinction of carrying no less than three different types of ratings from RAM ratings: a credit rating of ‘AA2/Stable’, an environmental benefit (EB) rating of Tier 1 EB and a social benefit (SB) rating of Tier 3 SB. The deal was at the front of a wave of new Malaysian green projects. The firm stated: “As sustainable financing transactions are attracting a lot of interest with the incorporation of environmental, social and governance initiatives and the UN Sustainable Development Goals, we do expect to see more green/social Sukuk coming to market, with the support from Bank Negara Malaysia, Securities Commission Malaysia and the financial institutions in Malaysia.”
Overview: Poverty, mobile telecommunications and COVID-19 assure fintech is here to stay. Even if some bankers view it as a brownfield in countries like Malaysia, the uptake for e-wallets is still not as promised. Moreover, the security of fintech tools remains an important issue. Conflict is another concern: Protection of intellectual property is weak in emerging markets: the lawsuits have begun.
Simmons & Simmons continued its extensive work in digital payments in Saudi Arabia and the UAE. The firm is the lead counsel on the UAE Ministry of Finance’s e-Dirham project. The firm is also working with First Abu Dhabi Bank and Emirates NBD on various payment and online marketplace activities. In collaboration with the Arab Monetary Fund, Simmons & Simmons is working on the Arab Regional Payment System. One of its most important actions was to win a payment claim in the Saudi Court of Appeal for the UAE Banks Federation. The firm has worked with KADASA Law Firm in Riyadh and Saudi advocates to appear in person relating to matters of Saudi patent procedural law.
King & Spalding worked on a fascinating transaction that digitized Permian Basin (US) oil rights. It continued its work for Riyad Capital’s Riyad Taqnia Fund which invested in Souqalmal, Beehive and Foodics. And it added Global Ventures to its client list working on deals like Paymob, Pyppl and Derayah Financial’s Shariah compliant enture capital fund with knock-on investments in Saudi Arabia. Their flagship deal was the formation of KISP Ventures as the venture capital tech fund for KFH Capital.
Clifford Chance worked with Wethaq Capital Markets on the first ‘Smart Sukuk’. The concept is based on smart contract technology and is meant to allow efficient and cost-effective issuances in Wethaq’s market space.
Winner: Simmons & Simmons takes back the crown — litigation plus 10 years of effort across 22 Arab nations! Its standout fintech project this year has been the contractual completion of the Arab Regional Payment System project.
Under the auspices of the Arab Monetary Fund (AMF, representing 22 member countries), Simmons & Simmons helped fulfill the request of the Council of Governors of the Arab Central Banks and Monetary Authorities to build a cross-border payment system for the entire Arabian region. The project involved each of the Middle Eastern jurisdictions as well as each country’s financial regulators and their respective executive and Shariah advisory committees. The nature of the underlying stakeholders meant that critical aspects of the solution needed to be considered from a Shariah perspective.
The project has long-term significance as it will change the backend of regional cross-border payments across the Islamic world. The appointment of Simmons & Simmons by the AMF’s fintech partner was to provide end-to-end legal, commercial and regulatory support relating to the design and build of the platform. Its team is routinely required to demonstrate a mastery of complex multi-jurisdictional laws and regulations and an operational understanding of emerging technology system architecture and topologies. However, on this unique project, Simmons & Simmons also had to deploy the highest forms of diplomacy and cultural/political awareness. Driving intense negotiations and trying to find common ground with representatives of 22 Arab countries, multiple subcommittees and downstream independent application developers were phenomenal challenges.
Raza Rizvi, the firm’s fintech partner said: “We adopted an ‘agile’ methodology (more commonly seen in software development projects) enabling ‘sprints’ of collective brainstorming with room for trial and error-based progress. Such a methodology runs counter to the style deployed by most law firms but for us to execute this project and truly add value as integrated business partners rather than conventional third-party consultants, we embraced this bold way of working.”
Why: But there is one more element in this story. Simmons and Simmons won the first round in the litigation between Saudi Arabia and the UAE over digital payments. The result should pave the way for a patent-free payment landscape and upend the assertion of monopoly rights. Although subject to appeal, the case will have a wide implication beyond Saudi Arabia.
The firm stated: “Our case, while still going through a judicial process, hopes to clear the way for digital wallet-related intellectual property to be used without fear of infringing patent rights which we maintain should be invalidated.”
Arbitration, Insolvency & Restructuring
Overview: This category has been quite narrow over the years. A big issue pops up like Arcapita-related litigation. A massive blow-up was caused by Dana Gas. But one should expect that we are in the calm before the storm. One can only imagine that COVID-19 will give birth to a plethora of disputes in every field, including Islamic finance. 2020 is still reflecting the less turbulent pre-pandemic situation.
Contenders: Simmons & Simmons is engaged in ongoing litigation for an open payment environment. K&L Gates enjoys a Qatari and European presence for litigation, restructuring and arbitration. Allen & Overy has deeply engaged in significant GCC restructurings as well as the Garuda Sukuk restructuring.
Allen & Overy worked on a global slate of restructurings including Gulf Marine Services and Garuda Indonesia. Gulf Marine is notable as ‘covered Ijarah’ facilities were among the various facilities that were addressed. Garuda required an extension of its Sukuk by three years and an adjustment of the covenants. Garuda may be the first known restructuring of travel rights available tonne kilometer (ATKM)-based Sukuk. Clifford Chance also worked on the Garuda transaction representing the committee of certificate holders.
Winner: Allen & Overy has been present in most of the notable Middle Eastern debt restructurings including Dana Gas, Al Jaber, Dubai Group, Almak and more. Along with Clifford Chance, the firm worked on the Garuda ATKM restructuring.
Allen & Overy’s signature effort in the past year has been the Gulf Marine Services FZE (GSM) restructuring. Allen & Overy advised the participants on restructuring and providing new debt to the London-listed company. GSM’s US$600 million of debt included: Islamic Ijarah facilities, conventional facilities, existing capex facilities that were collapsed into existing term facilities, Shariah compliant working capital (covered drawing) facilities and letter of guarantee facilities. Allen & Overy spent time with the in-house teams of a UAE bank to restructure the bank’s existing Islamic covered drawing documentation so that it could be used in the overall transaction. This involved suggesting bespoke and innovative solutions. Allen & Overy was also obliged to advise on the warrant instrument for the transaction with a focus on the Shariah requirements of the Islamic participants.
The legal team included: in the UAE, Christian Saunders (partner–lead partner), Nicolo Harris (senior associate who led on the commercial terms), Afsha Karim (senior associate who led on the Islamic terms) and Jess Hansford (senior associate who led on the conventional terms), and in Istanbul, Jo Clinton (partner–lead partner).
Why: The restructuring was finalized in June 2020 during the UAE’s COVID-19 lockdown. Unusual for the GCC, all documents were executed remotely including certain notarial mortgage deeds that required registration. The last phase of negotiations was concluded under a tight time frame as a result of a non-binding hostile offer to take over the company made by one of the shareholders.
Mergers & Acquisitions
Overview: The single theme of mergers and acquisitions (M&A) activity in this year’s awards is consolidation. The Kingdom of Saudi Arabia is reorganizing how it owns and operates the oil and gas sector from reserves to downstream to distribution. The emirate of Dubai is also engaged in the revision of how it owns and operates assets. Elsewhere, we are seeing the slow consolidation of the GCC banking industry.
Contenders: Khoshaim & Associates has been among the marquee firms advising major M&A deals in Saudi Arabia. This year Abuhimed Alsheikh Alhagbani Law Firm (AS&H) squared up against Khoshaim in the oil and gas sector. In Oman, Addleshaw Goddard Middle East supported the rare acquisition of an Islamic bank by a conventional bank.
Saudi Arabia enjoyed a number of important M&A deals during the past year. Khoshaim & Associates was deeply involved with deals like Saudi Aramco’s acquisition of SABIC, Saudi Aramco’s acquisition of Ta’shelat Marketing Co (owners of the Sahel Mart petrol and service station network), Saudi Aramco’s acquisition of Saudi Aramco Shell Refinery Co and Sipchem’s merger with Sahara Petrochemical.
Right there, often across the table from Khoshaim, was AS&H which acts in cooperation with Clifford Chance. AS&H was engaged as well on the SABIC sale to Saudi Aramco. AS&H also advised on a host of private equity- and banking-related deals.
Clifford Chance advised Port & Free Zone World FZE (a subsidiary of Dubai World) on its cash offer for DP World. The US$2.7 billion offer required refinancing of US$8 billion of facilities which included what may be the world’s largest bilateral Islamic financing under the Central Bank of the UAE’s AAOIFI standards guidance.
In one of the more unusual deals, Addleshaw Goddard Middle East dvised Alizz Islamic Bank on its merger with conventional bank Oman Arab Bank. This required a delisting of Alizz from the Muscat Securities Market (MSM) and the integration of Oman Arab Bank’s Al Yusr business into the Alizz operation. The firm was also involved in energy-related acquisitions in the Sultanate.
Winner: Addleshaw Goddard advised Alizz Islamic Bank (AIB) on its merger with Oman Arab Bank (OAB). This was the first case under Oman’s Takeover and Acquisition Regulation which was issued in 2019 (utilizing the ‘squeeze out’ provisions in particular). The deal is unique as a conventional bank — OAB — acquired 100% of the shares of an Islamic bank — AIB. The merged bank boasts US$8.4 billion in assets.
The deal resulted in AIB delisting from the MSM. At the same time, OAB transferred its Al Yusr Islamic banking business to AIB. OAB was listed on the MSM. OAB will continue to operate its conventional banking business and AIB, now a wholly-owned subsidiary of OAB, will operate its Islamic banking business.
Partner Oliver Stevens led the team which included Kae Searle and Ma’athir Al Busaidy.
Regarding the first Omani banking merger in eight years, Stevens shared: “We have been advising AIB on this landmark deal for nearly two years. We were able to use our experience of being one of only a few law firms in Oman to have previously advised on a successful bank merger. It was fantastic to see the banks, shareholders, advisors and regulators working so closely together, during lockdown, to complete a complex merger of two of the largest banks in the Sultanate and the first-ever takeover under Oman’s new Takeover Regulation.”
Why: Completed during the lockdown, this deal turned the past approach to Islamic finance on its head. Banks, including OAB, had preferred to open Islamic windows. Sometimes, the windows become subsidiaries. But this is only the second time that a stand-alone Islamic bank was acquired to be the Islamic banking subsidiary of a conventional bank. As GCC banks continue to merge, one may now imagine that conventional banks may skip the window process and buy a subsidiary.
Overview: Offshore finance is a curious category. The submissions are divided between those demonstrating the art of structuring and those who offer excellent service. Periodically, the artful deals are unique, even market-changing.
Contenders: Maples was the leading firm among high-quality service providers. Malaysian firms like Zaid Ibrahim and Zul Rafique often address particular issues in cross-border deals. Al Busaidy, Mansoor Jamal & Co engaged on the complexities of bringing offshore investment into Oman.
Maples continues to be the leading provider of offshore structuring and advice for global Sukuk, funds and cros- border acquisitions. The volume speaks for itself. If trust is the only criteria, Maples has demonstrated that it has garnered the markets’ trust by the volume of deals that it advises on offshore factors.
Zaid Ibrahim worked on Serba Dinamik (SD)’s SD International Sukuk II issued through Labuan. Zul Rafique & Partners advised Halpro that required managing English law elements for a project investment into Malaysia.
Al Busaidy, Mansoor Jamal & Co was the Omani law counsel for the State General Reserve Fund (now Oman Investment Authority) and Rakiza Fund 1 (Guernsey) as the sponsors, Oman Infrastructure Investment Co as the investment and issue manager and Equitix Investment Management as the international fund manager.
Winner: Al Busaidy, Mansoor Jamal & Co worked on the Rakiza Fund 1. This was the first time that an infrastructure fund was established in Oman where the vast majority of investments would be injected through offshore feeder funds. Al Busaidy, Mansoor Jamal & Co was required to work closely with international counsels to structure such feeder funds and their investments into the Rakiza Master Fund in a manner acceptable to the Capital Market Authority (CMA) and not in contravention of the Capital Market Law and its Executive Regulations.
At another level, the transaction was required to be structured in such a manner that foreign investment manager Equitix Investments could be permitted to advise on investments made by the Rakiza Master Fund in Oman without being registered and licensed under the Omani fund regime.
The US$2 billion fund is registered with the CMA. Al Busaidy, Mansoor Jamal & Co was responsible for liaising with the Muscat Clearing and Depositary Company and the Muscat Securities Market to procure allotment of the Rakiza Fund units to investors and listing of the same on the Third Market of the Muscat Securities Market.
Why: We are long used to GCC money going out in funds for private investment. Rakiza is designed to attract global investors into Oman. Despite its complexity, the fund may prove a model for other GCC and emerging market countries to finance infrastructure.
Project & Infrastructure Finance
Overview: There can be only one observation when observing infrastructure, power and water in Muslim-majority countries: not enough. There can be no foreseeable slowdown in project finance lest those who are behind fall further back. The two distinctive trends are for Islamic banks to play a role in any new project, and for Malaysia to find funds in its capital markets.
Contenders: Each of our finalists played a distinct role in project finance. One might say that Al Busaidy, Mansoor Jamal & Co built the legal infrastructure for foreign investment into Omani projects. Adnan Sundra & Low was the best in a deep Malaysian market for Sukuk-driven project funding. And Clifford Chance played a key role across multiple markets.
Clifford Chance advised the Islamic Corporation for Development of the Private Sector on the US dollar leg of NASDA, an Overall Deal of the Year 2019 finalist and winner of the Pakistan and Green Energy categories. It also acted as the international counsel for the banking consortium on the Northern Marmara Motorway (winner of the Deal of the Year 2019 for the Turkey and Project & Infrastructure Finance categories ).
Adnan Sundra & Low proved the monarch of capital market financing for energy and project finance, advising Edra Solar and Leader Energy. Although the power capacity for solar projects is not the same as for ‘dirty’ energy, the uptick in alternative energy and its embrace by the Malaysian capital markets are keeping Adnan Sundra & Low busy.
Al Busaidy, Mansoor Jamal & Co did yeoman service, providing the Omani law bits to bring the Oman Infrastructure Fund to life. This entailed managing complexities of local law with respect to foreign fund managers and investors acting in the Sultanate. This is certainly a model for many other countries.
Winner: Clifford Chance represented the bank on the Northern Marmara Motorway, a build–operate–transfer project for Turkey’s General Directorate of Highways. The multibillion dollar deal was executed in the shadow of Turkey’s initiative to expand its infrastructure network under debt assumption legislation that includes risk-sharing arrangements between the sponsors, financiers and the Undersecretariat of Treasury of Turkey. The finance documents and financial close were both signed in September 2019, with separate finance documents relating to the European and Asian sections of the Northern Marmara Motorway respectively.
The bank consortium consisted of the offshore branches of many of Turkey’s leading banks and other major regional and international banks and included both a conventional and Islamic tranche. The Islamic tranche was a fixed Istisnah/Wakalah (agency), allowing for modifications to the repayment dates and amounts under a specified limited set of circumstances. This required extensive cooperation and adoption of the Shariah requirements of the Islamic financiers, which consisted of Kuwait Turkish Participation Bank Bahrain Branch and Al Baraka Islamic Bank.
The work drew on Clifford Chance’s offices in London, Istanbul, Dubai and Singapore and required its expertise in project finance, Islamic finance, construction, infrastructure, tax and hedging. The team was led by Qudeer Latif, a Dubai partner and included: Timothy Cleary (partner, London), Nicholas Wong (partner, Singapore), Jared Grubb (partner, Istanbul), Sait Eryilmaz (counsel, Istanbul), Ahmed Choudhry (senior associate, Dubai), Daniel Deacon (senior associate, London), Anthony Matsis (associate, Dubai), AliCan Altiparmak (associate, Istanbul); Tanner Phaovibul (lawyer, London) and Tom Ward (lawyer, London).
Why: Clifford Chance put itself at the front of renewable energy with the NASDA deal blending cross-border, project and Islamic finance. The complexities of the Northern Marmara Motorway also demonstrated the elite skills that Clifford Chance brings to bear on a project.
Overview: One wonders whether in the post COVID-19 world, real estate will be quite the same. When it comes to 2020, we are finishing the deals that reflect our long-standing experience with real estate. Within this, GCC and Malaysian investors appear to agree that the UK is an ideal target. Given the risk of an election throwing the US into deeper travails, the UK is an isle of tranquility and a familiar stop. But the vagaries of UK tax law and banking regulations have driven the UK property finance market to Tawarruq. Whatever the reformulation of real estate post-COVID-19, expect investors to look away from the US for safe havens, or to double down at home.
Contenders: Baker McKenzie Wong & Leow and Trowers & Hamlins worked different sides of the same deal relating to Permodalan Nasional (PNB), one of the largest government-linked fund investment companies in Malaysia. Allen & Overy shone in the UAE.
Baker McKenzie Wong & Leow advised the arrangers — Oversea-Chinese Banking Corporation and Sumitomo Mitsui Banking Corp – on the GBP340.4 million (US$433.7 million) Islamic (Tawarruq) and conventional facilities for PNB Jersey, in relation to the refinancing of existing facilities involving certain London properties.
On the other side of the table was Trowers & Hamlins acting as the counsel to the obligor, PNB Jersey. It advised PNB, its wholly-owned Jersey subsidiary PNB Jersey and three of its SPVs to refinance PNB’s office investments in London. Trowers & Hamlins also advised SOYO Property Company on a GBP300 million (US$382.22 million) development project in Leeds which enjoyed co-investment from Shariah compliant investors. It continued its close relationship with Warba Bank on the acquisition of the Tesco Extra building in Yeading, London.
In the UAE, Allen & Overy executed joint Islamic/conventional financing for Merex Investment Group, the joint venture between Meraas Holding and Brookfield Asset Management as well as Aldar on its Wakalah/Murabahah dual tranche Sukuk issuance.
Winner: Trowers & Hamlins has enhanced its positioning among Malaysian and GCC cross-border real estate investors. In the PNB deal, Trowers & Hamlins’s mandate included assisting PNB’s team, located in Malaysia, in liaising with the relevant building surveyors and valuers in London to obtain updated reports and valuations on each property required for the completion of the refinancing in the midst of the COVID-19 lockdown on central and wider London. The firm further assisted the PNB team in negotiating the renewal of the latter’s engagement terms with the respective managing agents of each property. Trowers & Hamlins’s team included Nick Edmondes, Nicol Ong, Neill Gibson and Sam Folley.
Why: Trowers & Hamlins delivered two unique benefits to the parties in this situation. The firm is a true full-service legal advisor for property in the UK and Ireland. It observed: “As a firm, we are focused on delivering results for our clients. We specialize in cross-border real estate transactions. Moreover, as a top 10 UK real estate practice, with offices in the Gulf and Malaysia, we are regularly asked to assist clients from these two key Islamic regions who want to move investment capital into the UK and Europe.”
ESG, Green & SRI
Overview: ESG, Green & SRI nominations have been slowly crescendoing in the awards. Two factors drive our expectation that this category will sustain well into the future. Apart from the US Department of Labor, which governs US pension investing standards, regulators and investors globally are demanding better governance, socially-minded sustainable investing and constructive investment to combat the effects of climate change. This year our leaning is more toward the environment. Sustainability was noted in a number of submissions.
Not only did Clifford Chance work on the NASDA transaction, the firm also worked on Majid Al Futtaim’s MAF Sukuk’s green Sukuk. Majid Al Futtaim stands out in light of the firm’s Green Finance Framework to finance or refinance eligible projects within the categories of renewable energy, energy efficiency, sustainable water management and/or green buildings.
Adnan Sundra & Low’s advice on Sukuk for the solar projects of Edra Solar and Leader Energy brings life to the Securities Commission Malaysia’s commitment to environmental and sustainable finance. The deals also fit under the ASEAN sustainability and green bond frameworks.
Winner: Dentons advised the IsDB on its first sustainable Sukuk issuance of US$1.5 billion, issued under the IsDB’s US$25 billion Trust Certificate Issuance Programme. The IsDB is the first ‘AAA’-rated institution in the world to have issued a sustainable Sukuk facility. The Reg S issuance was listed on Euronext Dublin, NASDAQ Dubai and Bursa Malaysia. The deal closed in June 2020 with the proceeds being used exclusively to finance social projects to assist member countries with managing the impact of the COVID-19 pandemic. As such, the transaction also represents the first Sukuk aimed at raising proceeds to tackle the effects of the pandemic.
The IsDB put together a sustainable finance framework, with Sustainalytics providing the ESG rating and CICERO Shades of Green the second-party opinion. The IsDB had previously issued a EUR1 billion (US$1.16 billion) green Sukuk facility under its sustainable finance framework in December 2019.
The team working on the deal was led by Alex Roussos and included Katie Phillips and Sana Siddiqui. Dentons’s Middle East managing partner (Abu Dhabi) is Paul Jarvis.
Why: With respect to the IsDB deals, Roussos observed: “Green and sustainable finance is becoming an area of growing importance in the Middle East and demand for such paper is currently driven by both issuers and investors, all of whom want to make a positive impact on the environment and the societies we live in.” Dentons has worked on key deals across the spectrum that have required the development of sustainable or green frameworks. A key feature was shepherding the initial sustainable Sukuk directed at COVID-19 relief. It is are now possibly the leading ESG capital market firm in the Middle East.
Best Law Firm of the Year
Overview: 2020 shows the COVID-19 effect on submissions, with firms which are commonly active absent and quite a few firms downsized due to COVID-19. But we anticipate that the impact of COVID-19 will be on the 2021 and 2022 awards. Disputes, innovation and heroism are expected to be backstories for those awards.
Expect fintech to be the real deal. Simmons & Simmons’s win in the category raised the importance of payments, and its litigation in the same area demonstrates how nothing grows without pain. Intellectual property will potentially tie up many noble efforts to take finance to those who need it the most. Runner-up King & Spalding showed how technology can change and expand the Sukuk and fund markets.
Fintech is not the only pushback on the role of banks. Herbert Smith Freehills’s win in Islamic Asset Management and Funds shows how shadow banking is moving south from New York and London to the GCC.
Cracking markets open is a theme that goes beyond fintech. Helmy, Hamza & Partners (Baker McKenzie) finally helped a notable Egyptian corporate obligor across the line in Egypt. One is awaiting the Moroccan corporate Sukuk and nominations from Nigeria and beyond as we proceed.
Addleshaw Goddard reminded us of the slow progress of banking consolidation in the GCC. It also presented us with the rare case of an Islamic bank being acquired by a conventional bank.
M&A work by Khoshaim & Associates and Abuhimed Alsheikh Alhagbani Law Firm represents the current dynamic transformation in the Kingdom as economic reforms initiated by the crown prince drive a reorganization of resources. This consolidation is hoped to drive resources from the cash-rich oil and gas sector into the newly emerging national developments.
The 2020 awards were tightly contested. For the first-time ever, no firm won more than a single category. That means that our top firm had to show more than the next.
Malaysian champion Adnan Sundra & Low showed well in 2020, winning Energy & Natural Resources and contending in Project Finance and ESG. The firm led with capital market solutions for project and ESG, green and SRI finance. It also told the tale of one green hand and one grimy hand with considerable work in the oil and gas sector.
Allen & Overy was a bit ahead with one win for Arbitration, Insolvency & Restructuring. The firm is a leader in both Middle Estate and Islamic finance restructuring. They also gained notice for Asset Management & Islamic Funds, Banking & Finance and Real Estate.
Every year there is a surprise. This year, the competition was withering with new firms and expanding markets. This year’s surprise is that the perennial champion across many categories, King & Spalding, is but only a strong contender across many categories. In another year, the digitization and international trade of oil and gas rights would have been a fintech winner. That is how hot the competition was — even the best is bested.
IFN Law Awards 2020: Best Law Firm
Emerging from the scorching competition was Clifford Chance. The Magic Circle firm was a contender in many categories, including Banking & Finance; Capital Markets; Fintech; Mergers & Acquisitions; and ESG, Green & SRI; however, it stood out with their win in Project & Infrastructure Finance. One point to note is that many of the deals that vaulted Clifford Chance ahead of the competition were already IFN Deal of the Year winners.
Fintech: Clifford Chance was the runner-up for its work on Wethaq’s smart Sukuk. The project has important implications for expansion and transparency in the Sukuk market. Indeed, one can see the Wethaq model may lead to a ‘democratization’ of the Sukuk space as it opens access to a wider universe of smaller investors and issuers.
Capital Markets: The Arabian Centres Company Sukuk issuance was an IFN Deal of the Year finalist because of its far-reaching implications — a private issuer in the Kingdom of Saudi Arabia tapping global markets and a complex reorganization of a complex business’s capital structure. The deal topped the list of Clifford Chance’s work on a portfolio of significant Sukuk deals.
Banking & Finance: Abuhimed Alsheikh Alhagbani Law Firm, which cooperates with Clifford Chance in Saudi Arabia, worked on the AAOIFI Shariah Standard 59 compliant financing for Fawaz Al Hokair. This demonstrated the reach of Clifford Chance in alliance with emerging firms in important markets like Saudi Arabia.
Project Finance: Yet another IFN Deal of the Year winner (Turkey, Project & Infrastructure Finance), the Northern Marmara Motorway demonstrated how cross-border financiers and multilateral development banks respect Clifford Chance in highly complicated multisource financings.
|Table 1: IFN Law Awards 2020 — categories and winners|
|Arbitration, Insolvency & Restructuring||Allen & Overy|
|Asset Management & Islamic Funds||Herbert Smith Freehills|
|Banking & Finance||Norton Rose Fulbright|
|Capital Markets||Helmy, Hamza & Partners|
|Energy & Natural Resources||Adnan Sundra & Low|
|ESG, Green & SRI||Dentons|
|Fintech||Simmons & Simmons|
|Mergers & Acquisitions||Addleshaw Goddard|
|Offshore Finance||Al Busaidy, Mansoor Jamal & Co|
|Project & Infrastructure Finance||Clifford Chance|
|Real Estate||Trowers & Hamlins|