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

Adhi Karya US$13.6 million
Sukuk Mudarabah
Deals of the Year 2007 Handbook
TRANSACTION DESCRIPTION
In June 2007, Mandiri Sekuritas acted as sole lead
underwriter for the Sukuk Mudarabah bond issue of Adhi
Karya, an Indonesian-owned construction company.
The Sukuk, which were oversubscribed, raised IDR125
billion (US$13.6 million) and were issued with a maturity of
fi ve years. The money raised was used for working capital
needs and ongoing and future projects fi nancing.
The deal is considered one of the few attractive Sukuk
Ijarah issues deals in 2007 amid several other corporate
bonds issued within the same period as PLN Bonds and the
downtrend of the interest rates.
The success of Mandiri Sekuritas’ lead in Islamic
financing is an example of innovation in a rapidly
growing market.
“The deal is considered one
of the few attractive Sukuk
Ijarah issues deals in 2007
amid several other corporate
bonds issued within the same
period as PLN Bonds and the
downtrend of the interest rates”
TRANSACTION OVERVIEW
The Adhi Karya Sukuk Mudarabah transaction is a landmark
transaction in many respects:
• The fi rst Sukuk Mudarabah by one of the leading
construction companies that’s government-owned
• The Sukuk Mudarabah of Adhi Karya were specially
structured to effect a profi t-sharing principle in
order to do away with the interest-bearing coupons
that are prohibited by Islamic law. The successful
execution of this Sukuk has set a platform for future
Islamic construction company fi nancings in the
country.
• The Sukuk Mudarabah of Adhi Karya was not only
one of the attractive Islamic fi nancings in the country
during 2007, the issue was structured and executed
with intensive interactions with local regulators and
Shariah boards.
• The transactions introduced Adhi Karya to the Islamic
investor base, and enabled the company to diversify
its funding to a new investor base, which was a key
objective of Adhi Karya’s management.
• The offering was competitively priced in comparison
with others at that time, and has set a new benchmark
for the company’s subsequent fi nancings.
TRANSACTION STRUCTURE
a
Investors
Adhi Karya
a. Investors purchased the Sukuk from Adhi Karya
b. Adhi Karya used the monies received for working
capital include fi nancing ongoing and future
projects
c. Profi t shared
b
c
• The transaction was structured as Mudarabah, a
profi t-sharing arrangment between investors and
issuer where the ratio is 76.39% for investors and 23.61%
for Adhi Karya
• The profi t shared will be paid quarterly and taken from
“Gross Profi t After Joint Venture Project” whereas the
amount is not lower than IDR4.5 billion (US$489,391)
quarterly. In case the amount exceeds IDR4.5 billion,
the excess will go to the company.
• The Sukuk is secured with existing or future company
receivables from projects handled by companies with
a minimum value of 125% from the Sukuk fund.
c
Projects
This case study was written by
Juni Hendry of Mandiri Sekuritas.
For more information, he can be
contacted at +6221 1526 3445 or
via email juni.hendry@mandirisek.co.id
www.IslamicFinanceNews.com
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