Afridi & Angell advises on two key convertible sukuk issuances

The firm has advised Sharjah Islamic Bank and Sharjah Cement and Industrial Development Co. PJSC in connection with convertible Sukuk, both of which were issued to the Sharjah Social Security Fund.

Afridi & Angell has advised Sharjah Islamic Bank (SIB) and Sharjah Cement and Industrial Development Co. PJSC (SCID) in connection with convertible Sukuk, both of which were issued to the Sharjah Social Security Fund (the Fund).

SIB Convertible Sukuk-Al Wakala

Afridi & Angell advised SIB in connection with the issuance of AED266,805,000 convertible Sukuk-Al Wakala certificates to the Fund and the subsequent conversion of the Sukuk certificates into the ordinary share capital of SIB. The Fund was established by Emiri Decree No. 66 of 2017, issued by HH Sheikh Sultan bin Mohammed Al Qasimi, Ruler of Sharjah, in order to fund various social security projects for UAE nationals in the Emirate of Sharjah.

The Sukuk issuance provided for the issuance of 266,805 Sukuk certificates by SIB to the Fund. The issuance proceeds would be invested by SIB, pursuant to a Wakala agreement, towards Sharia compliant investments. Profits generated from the investments would be paid to the Fund. The aim of the issuance was to secure a source of long-term funding for the Fund. SIB has been an active member in the UAE Sukuk landscape and has issued a number of Sukuk, including the USD 5 billion Sukuk issuance programme by SIB Sukuk Company III Limited, an SPV incorporated in the Cayman Islands by SIB.

SCID Convertible Sukuk-Al Murabaha

In addition, Afridi & Angell advised SCID in connection with the issuance of AED55,295,795 convertible Sukuk-Al Murabaha certificates to the same Fund and the subsequent conversion of the Sukuk certificates into the ordinary share capital of SCID. SCID is involved in promoting industrial manufacturing in the Emirate of Sharjah and has interests in cement, paper and plastics manufacturing.

The Sukuk issuance provided for the issuance of 55,295,795 Sukuk certificates by SCID to the Fund. The issuance proceeds would be applied by SCID towards various Murabaha transactions. Profits generated from the Murabaha transactions would be paid to the Fund. The aim of the issuance was to secure a source of long-term funding for the Fund.

Afridi & Angell’s role & team

For both convertible Sukuk issuances Afridi & Angell advised on all aspects of the Sukuk structuring and prepared the Sukuk documentation. Afridi & Angell also advised on the administration of the Sukuk programme, the subsequent conversion of Sukuk certificates into the equity capital and all regulatory actions required by the UAE Central Bank, Securities and Commodities Authority and ADX.

On both transactions, the Afridi & Angell team included Bashir Ahmed (managing partner) and Rahat Dar (senior associate).