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International legal practice Norton Rose has acted for Kuwait Finance House ( Bahrain ) B.S.C.(c) as mandated lead arranger on the issue of US$200 million trust certificates by Diyaar Sukuk Company. Diyaar Sukuk Company is a Cayman incorporated special purpose vehicle. The Originator is Diyaar Al Muharraq W.L.L., a Bahraini incorporated company. The trust certificates are due 2011.
The Islamic structure deployed was Sukuk-al-Musharaka and involved the Issuer and the Originator entering into a Musharaka Agreement under which the Issuer contributed the sukuk proceeds received from investors and the Originator contributed certain reclaimed land to be used to develop a mixed used island real estate development. In line with a number of recent sukuks in the market, the Issuer's ownership interest in the musharaka assets will be leased to the originator (as lessee) and the rental income received by the Issuer from the Originator under the lease agreement will be used to pay the periodic distributions to the investors under the trust certificates.
The Diyaar Al Muharraq development, once completed, will be the largest real estate development project in Bahrain.
Neil D. Miller, Global Head of Islamic Finance, Norton Rose commented: "The Diyaar Al Muharraq sukuk is one of a number of high-profile sukuks which we have closed recently and demonstrates our growing strength in this area. Investor appetite and market liquidity are likely to ensure that sukuk continues to be a popular finance raising tool for middle eastern corporates."
The Norton Rose team was led by partner Neil D. Miller with assistance from Aziza Atta in London and Mark Morris in Dubai. Maples & Calder provided Cayman Islands legal advice. Al Mahmood & Zu'bi provided legal advice in Bahrain.
