Africa & Sukuk Deal of the Year
Ivory Coast on the 28th December 2015 debuted its Sukuk issuance worth CFA150 billion (US$253.34 million), a major milestone in the West African nation’s effort to embrace Islamic finance. Speaking to Hogan Lovells, the legal advisor of the landmark deal, NURUL ABD HALIM has the exclusive.
Utilizing the Ijarah structure, two government buildings located in Abidjan were chosen as the underlying assets for this transaction. The structure utilized for this transaction is said to have replicated that of the Sukuk issued by the government of Senegal.
Offered at a profit rate of 5.75%, proceeds from the five-year Sukuk will be used to finance the government’s social and economic projects. The deal, which was arranged by the ICD, was subscribed by investors from West Africa (56%), North Africa (6%) and the Middle East (38%).
Commenting on the unique feature of the deal, the firm highlighted: “This was a debut issuance of Sukuk by the government of Ivory Coast. As such, it represents a major milestone in the development of that country’s push to encourage Islamic finance. It’s also only the second African sovereign Sukuk issuance to adopt a fund structure as the conduit through which investors’ interests are represented.”
The landmark deal also demonstrated the support for Islamic finance in Africa as the market is set to focus more on infrastructure and social development. “These are sectors which lend themselves very well to the whole ethos of Islamic finance,” added the firm.
The transaction proceeded very smoothly with relatively few challenges, said the firm, adding that updating the disclosure relating to the government was one of the hurdles; however, the firm maintained that it was not as intricate as it could have been.
The deal was a stand-alone offering and the maiden Sukuk issuance by the West African nation.
Summary of terms & conditions |
|
Issuer |
FCTC |
Obligor |
State of the Cote d’Ivoire |
Size of issue |
CFA150 billion (US$253.34 million) |
Mode of issue |
Public offering through the management and intermediation companies (SGI), the management and collective investment in transferable securities companies (SGO) and the heritage management companies (SGP), as approved by the Regional Council of Public Savings and Financial Markets (CREPMF). |
Purpose |
Financing projects of economic and social development |
Tenor |
28th December 2015 – 28th December 2020 |
Issuance price |
CFA10,000 (US$16.89) per part |
Profit rate |
5.75% per year |
Currency |
CFA francs |
Maturity date |
31st December 2020 |
Lead manager(s) |
Islamic Corporation for the Development of the Private Sector (ICD) |
Principal advisor(s) |
Deloitte (auditor) |
Bookrunner(s) |
ICD |
Governing law |
Laws of the state of the Ivory Coast |
Legal advisor(s)/counsel |
Counsel to the state of the Ivory Coast: Cleary Gottlieb Steen & Hamilton Lead counsel to the ICD: Hogan Lovells (Middle East) Counsel to the ICD as to matters of the Ivory Coast/WAEMU: Cabinet ADKA |
Underlying assets |
Usufruct of two building complexes in Abidjan, Ivory Coast |
Shariah advisor(s) |
IDB Group Shariah Committee |
Structure |
|
Investor breakdown |
West Africa – 56%; North Africa – 6%; Middle East – 38% |