Mudarabah: Deal of the Year

ADIB-Capital, Abu Dhabi Islamic Bank-Egypt (ADIB-Egypt)’s investment banking arm, was the recipient of IFN’s Mudarabah Deal of the Year award for its landmark EGP2 billion (US$113.01 million) transaction for Egyptian Electricity Transmission Company (EETC).

ADIB-Capital delivers tailored financial solutions to its diverse client base, including government, private sector companies and middle market firms. Since its establishment in October 2012, ADIB-Capital has executed transactions worth EGP16 billion (US$904.07 million) and boasts a solid pipeline that has witnessed exponential growth over the past few years, contributing to ADIB Egypt’s brand image and cementing its position as a market leader, substantiated by Bloomberg rankings.

ADIB-Capital is focused on three business lines in Egypt, namely mergers and acquisitions, the debt capital market and the equity capital market, advising and arranging financing, including syndications, with an emphasis on supporting national infrastructure projects. In 2016, ADIB-Egypt ranked as the No 1 Islamic financing bookrunner in Egypt and 11th in Eastern Europe, Middle East, and Africa with a 3% market share, more than double its share in 2015.

The financing recipient – the EETC – founded in 2001, is an affiliate company of the Egyptian Electricity Holding Company (EEHC) focused on managing, operating and maintaining the electric power transmission grids on extra and high voltages across Egypt, ensuring their optimal economic usage. It also purchases electric power when and where needed and sells it to electricity distribution companies serving commercial, agricultural and residential customers.

The EETC mandated ADIB-Capital to arrange a EGP2 billion Shariah compliant term facility – a Mudarabah agreement – to drive on-ground transformation. The funds were set to finance the expansion of the EETC’s transmission network in 2016. This Mudarabah agreement proved a great success, with seven high-profile banks subscribing to provide different proportions of the funds needed. The banks included Al Baraka Bank, the Industrial Development and Workers Bank of Egypt, the United Bank of Egypt, Misr Iran Development Bank, the Bank for Development and Agricultural Credit, the Egyptian Arab Land Bank and ADIB Egypt. The duration of financing was set at 15 years, including a three-year grace period.

“We are exceptionally proud to be recognized for our efforts and progress, but what matters to us most is providing tangible support to the economy by helping secure the financing for vital infrastructure projects and domestic industries,” ADIB-Capital CEO Zeinab Hashem said.

ADIB-Capital has a long-standing track record of supporting Egypt’s energy needs. In April 2015, it had already acted as the initial mandated lead arranger and bookrunner for the EEHC for a EGP1.6 billion (US$90.41 million) syndicated Mudarabah agreement.

In 2012, ADIB-Capital acted as the initial mandated lead arranger, bookrunner, facility and security agent for the East Delta Electricity Production Company on a syndicated Mudarabah deal worth US$110 million. ADIB-Capital began financing energy sector projects early on and seeks to expand its efforts in this field, particularly with recent oil and gas discoveries promising a highly profitable future for the industry and the possibility of diversifying activities to incorporate more complex processes that will greatly benefit the economy in the long run.

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