Sharia Compliant Funding
Article Overview
Large multi-billion dollar funding deals based on Islamic finance contracts have been announced by Saudi Electricity Company (SEC), and China-Pakistan Economic Corridor.
Saudi Electricity Company
SEC added US$2 billion to its revolving credit facilities tapping domestic (Saudi riyal) and international (dollar) markets in two separate facilities.
The domestic funding took the form of a Sharia compliant revolving murabaha facility arranged by the National Commercial Bank and Samba Financial Group who provided SAR2.5 billion domestic financing. SEC were advised by Clifford Chance.
The international facility consisted of a US$1.4 billion facility. The Coordinators, Bookrunners and Mandated Lead Arrangers were The Bank of Tokyo – Mitsubishi UFJ, Ltd., Mizuho Bank, Ltd. and Sumitomo Mitsui Banking Corporation (SMBC), and the Mandated Lead Arrangers were HSBC, JPMorgan, Crédit Agricole and Deutsche Bank.
China-Pakistan Economic Corridor
Pakistan and China signed financing agreements amounting to approximately US$1.95 billion for the development of the Thar Block II 3.8 MT/A coal mining project and associated 2x330MW coal-fired power plant to be developed in the Thar region of Pakistan.
The financing package includes U.S. dollar, Pakistani rupee and Islamic Sharia-compliant tranches.
The sponsors of the mining project include the Government of Sindh, Engro Powergen Limited, Thal Limited, Hub Power Company, Habib Bank Limited and China Machinery Engineering Corporation (“CMEC”). The sponsors of the power project include Engro Powergen Limited, Habib Bank Limited, CMEC and Liberty Mills Limited. CMEC will also serve as the construction contractor for the projects.
Linklaters acted for the lender syndicate, comprising Chinese banks led by China Development Bank Corporation, Industrial and Commercial Bank of China Limited and China Construction Bank Corporation, and Pakistan banks led by Habib Bank Limited, United Bank Limited, Bank Alfalah Limited, Askari Bank Limited, Sindh Bank Limited, The Bank of Punjab, NIB Bank Limited, Habib Metropolitan Bank Limited, Faysal Bank Limited and Meezan Bank Limited.
