Business | General
Sabic set to raise $1.33b through its third sukuk
Saudi Arabian Basic Industries Corporation (Sabic) is set to raise a capital of 5 billion Saudi riyals ($1.33 billion) through its third sukuk, subscriptions to which started on Saturday for 10 days.
- By Mariam Al Hakeem, Correspondent
- Published: 00:27 May 5, 2008
Riyadh: Saudi Arabian Basic Industries Corporation (Sabic) is set to raise a capital of 5 billion Saudi riyals ($1.33 billion) through its third sukuk, subscriptions to which started on Saturday for 10 days.
Marketing and sales of Sabic sukuk will take place in the kingdom and select Gulf Cooperation Council (GCC) markets to eligible GCC investors, with the final size and pricing determined after the completion of the book building process
The sukuk will be available for subscription for a minimum of 10,000 riyals for a five-year period.
The CMA has given the green light for the marketing of Sabic's third sukuk.
Sabic appointed Calyon Saudi Fransi Limited (CSFL) and HSBC Saudi Arabia Limited (HSBC) as joint lead managers and bookrunners of the sukuk, Saad Al Saif, senior manager, Investment Banking, HSBC, announced at a joint press conference in Riyadh on Saturday.
Firas Y. Chakra, CEO of Calyon Saudi Fransi Limited and Hissam Kamal Hassan, director of Islamic Banking, HSBC were also present.
Investors
The sukuk has a 20-year life, said Hassan.
He said after five years, investors, who would be mostly companies and entrepreneurs, may liquidate their sukuk and regain the principal amount.
Some of the institutional investors in sukuk are pension funds, insurance companies, mutual funds and banks, he said.
The price of the sukuk will be announced this week and the final price early next week, he said.
A sukuk is very different from how an initial public offering (IPO) is marketed, he said, adding that the actual response to the Sabic sukuk would be known on the last day of subscriptions.
Sukuk is the Arabic name for a financial certificate but is widely defined as an Islamic bond.
Hassan said, "The profit on the Sabic sukuk will be fixed depending on the demand, but its minimum price will remain at 10,000 riyals."
However, he added that the profit will be based on the Saudi Interbank Over-night Rate plus a certain margin depending on demand.
This sukuk comes nine months after Sabic's second sukuk that employed a similar structure originally developed by HSBC for the previous sukuk and approved by the respected SABB Amanah Sharia Supervisory Committee.
The sukuk, which will be listed on Tadawul, is denominated in 10,000 riyals for a 20 year duration with a put option for investors after every five-year period.
The denomination and minimum subscription size of the sukuk is 10,000 riyals.
The profit on Sabic sukuk will be fixed depending on the demand but its minimum price will remain at 10,000 riyals."
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