RAKIA Sukuk (continued...) - Islamic Finance News

Deals of the Year 2007 Handbook
Aldar Properties US$2.53 billion
Exchangeable Sukuk
ISSUER
Aldar Properties is one of the largest listed UAE property
development companies by market value (US$6.4
billion as at December 2007). Its substantial shareholders
are predominantly drawn from Abu Dhabi institutions,
founder-shareholders and individual investors — including
Mubadala Development Company, The National Investor,
Abu Dhabi Investment Company, Abu Dhabi National
Hotels Company, and the National Corporation for Tourism
and Hotels.
Aldar was incorporated as a private joint stock company
in October 2004, and subsequently listed on the
Abu Dhabi Securities Market (ADSM) on the 4 th April 2005.
It is a leading real estate developer in Abu Dhabi by virtue
of the size of its land bank (it owns over 30 million
sq m of land valued at US$10.4 billion) at strategic locations
across the city of Abu Dhabi.
Its planned developments, worth approximately US$60 billion,
include the construction and management of offi ces,
residential properties, retail sites, hotels, tourist attractions,
leisure facilities, luxury resorts and schools.
OBJECTIVES FOR THE ISSUER
The objectives of Aldar’s maiden Sukuk issuance were to:
• Raise funds via the Islamic capital markets at a competitive
rate
• Achieve flexibility in the management of the proceeds
• Tap a wider investor base
• Increase the profi le of the company regionally and
internationally.
TRANSACTION HIGHLIGHTS
National Bank of Abu Dhabi (NBAD), Barclays Capital and
Credit Suisse were mandated by Aldar in November 2006
to arrange its maiden Sukuk issuance. On the 20 th February
2007, via its global roadshow, Aldar announced the fi nal
terms for its 4.75-year, US$2.53 billion exchangeable Sukuk
(including a 15% increase option) from a special purpose
vehicle, or SPV, into its ordinary shares.
The profi t rate used to calculate the periodic distribution
amount is 5.76% per annum on a quarterly basis, equivalent
to a margin of 0.65% above the fi ve-year US dollar midswap
rate at the time of pricing. The exchange price was
set at US$1.55, refl ecting an initial exchange premium of
37% above the arithmetic average of the volume weighted
average price (VWAP) of Aldar’s ordinary shares on each
trading day from the 4 th February 2007 to the pricing date,
the 20 th February 2007.
The Sukuk issuance entrusted Aldar to act as Mudarib
(Islamic investment manager) for investors in the Abu Dhabi
property sector. The exchangeable Sukuk issuance was
well received by regional and international investors, and
was about 10 times oversubscribed at the initial transaction
size of US$1.3 billion. The order book exceeded US$13
billion. Favorable response and strong demand resulted
in improved terms for Aldar’s exchangeable Sukuk, where
periodic profi t distribution was set 10 basis points (bps) below
the initial price guidance of 75 to 85 bps, and premium set
at the top end of the range at 37%.
The proceeds from the transaction were utilized to invest
with the Mudarib, which formed the Mudarabah capital in
continued...
Aldar Properties
“Mortgagor”
(1) Benefit of mortgage held by local
security agent on behalf of Issuer
Sukuk Investors
Periodic Dist. and
Red. Amount
Proceeds
4
7
1
Aldar Funding
“Issuer”
Mortgage (1)
Mudarabah Profit
Distribution
Proceeds
3
2
Aldar Properties
“Mudarib”
Sukuk (“Certificates”)
Purchase and
Sale Undertaking
Relevant
Mudarabah
Exercise
Assets
Price
5 6
Aldar Properties
“Obligor”
Mudarabah
Green arrows: cash-flows at inception
Grey arrows: cash-flows at maturity
Dashed black arrows: contractual arrangements
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