Not necessarily. It would depend on the success of the issuance. In addition, it also depends on the particular country in Europe because not every European country is excited about Islamic finance.
MOHAMED RIDZA:
Yes, there will be more Sukuk issuance as the market becomes more familiar with the structure and terminology, and Sukuk becomes a more mainstream choice for corporate treasurers. Bank of London and The Middle East is working with several borrowers at this time. HUMPHREY PERCY CEO, Bank of London and The Middle East
The International Innovative Technologies Sukuk rings all the right bells as its arranger, Millennium Private Equity, has attracted capital from the Gulf in the past, and Norton Rose has more experience of structuring Sukuk than any other law firm. It is encouraging that a Musharakah structure has been adopted, as I have advocated this for some time as being optimal for private equity. Since the election of the new government in the UK the outlook for private equity has improved considerably, so expect more Musharakah Sukuk, especially for high technology ventures which are inherently Shariah compliant. Given the experience of those involved, and the anticipated success of the issuance, other high technology firms in the Eurozone may well choose to use the same team to facilitate their financing. PROFESSOR RODNEY WILSON Durham University, School of Government and International Affairs
The Sukuk market is ready for exponential growth in western markets. Many treasuries have conventional investment grade paper and are looking for comparable Sukuk in the western market. Many Sukuk discussions are occurring in boardrooms for western companies who are ready to execute at the right time. In Canada, our firm is currently in discussion on four Sukuk whose dollar value is in excess of US$2 billion. Many are waiting for UK’s sovereign US$2 billion Sukuk. The recent UK Sukuk has helped boost the Sukuk market after the world economy comes out of the recent credit crisis. OMAR KALAIR President and CEO, UM Financial Canada
The recently announced UK Sukuk issue is a private placement for a value of GBP6 million (US$9.3 million) which, at the moment, is not intended by the holder to be available for sale, particularly since it allows the holder to take equity stake in the company. What the transaction clearly shows though is that Islamic financial instruments attract a wide range of clients and are not restricted to Muslims only. It is, however, relatively small and is the first published issuance of a UK corporate Sukuk which might not be sufficient yet to attract the attention of larger corporations. Nevertheless, it is certainly a good start.
DR NATALIE SCHOON Head of product research, Bank of London and the Middle East
While the first UK corporate Sukuk is significant in some regards, I think it is unlikely to lead to many more Sukuk from the UK and Europe, mainly because it was a small Sukuk and not from a recognizable issuer. The closest analogy I can think of is the East Cameron Sukuk out of the US, which was also small (US$166 million) and was not a well known issuer. In addition to being small — just US$10 million — the International Innovative Technologies (IIT) Sukuk was placed with just one investor, Millennium Private Equity. Despite my skepticism that this Sukuk will lead to other European corporate Sukuk, I do think that there will be other corporate Sukuk issued by European companies. If one of those is notable, either because the issuer is well known or it has a unique structure, then it could lead to Sukuk from other European issuers. However, just as the East Cameron Sukuk failed to spark follow-on Sukuk from other US based issuers, I think the IIT Sukuk will also fail to bring new issuers into the Sukuk marketplace. BLAKE GOUD Principal, SharingRisk.org
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