Latham & Watkins Advises Abu Dhabi Islamic Bank PJSC on US$1 Billion Tier 1 Sukuk

Region's first perpetual and Basel III compliant tier 1 sukuk issuance more than 30 times oversubscribed.

November 22, 2012

Latham & Watkins advised Abu Dhabi Islamic Bank PJSC, one of the leading Islamic banks in the Middle East, in connection with the region's first perpetual and Basel III compliant tier 1 sukuk issuance. The initial benchmark size for the issuance of US$500 million was more than 30 times oversubscribed, with an order book of US$15.5 billion, and the expected profit rate of 6.375% is the lowest ever coupon for an instrument of this type. The transaction has allowed Abu Dhabi Islamic Bank PJSC to strengthen and diversify its capital base in line with international best practice in capital management.

Abu Dhabi Islamic Bank PJSC, HSBC Bank Plc, Morgan Stanley & Co. International plc, National Bank of Abu Dhabi P.J.S.C. and Standard Chartered Bank participated in the transaction as joint lead managers, and Barwa Bank P.Q.S.C. and Sharjah Islamic Bank P.J.S.C. participated as co-lead managers. The transaction signed on 14 November 2012 and closed on 19 November 2012.

Abu Dhabi partner Nick Collins, who co-led the deal team commented: “The successful closing of this landmark transaction represents a significant milestone for the Middle East sukuk market. This is the first public hybrid Tier 1 capital issuance by a Middle East issuer and, so far as we know, is the first ever public Shari’ah-compliant hybrid Tier 1 capital issuance. The transaction structure demonstrates the increasing range of products in the Islamic finance market in the Middle East and creates a benchmark and precedent for future issuances by Abu Dhabi Islamic Bank as well as other banks in the UAE and the wider gulf region. In closing this transaction, Abu Dhabi Islamic Bank has further cemented its reputation as an innovator in Shari'ah-inspired solutions and as a leader in structural simplicity (a characteristic that greatly appeals to international investors).”

Dubai counsel Dipti Thakar commented: “The success of this transaction and the level of investor appetite is a strong endorsement of Abu Dhabi Islamic Bank PJSC from the international capital markets and demonstrates the ever-increasing attraction of Shari'ah compliant products from strong issuers in the Middle East. Latham’s involvement on this landmark transaction showcases the strength and depth of the firm’s Islamic finance and capital markets practice in the Middle East.”

The Latham team was led by Abu Dhabi partner Nick Collins and Dubai partner Kai Schneider, who were supported by Dubai counsel Dipti Thakar and associate Lee Irvine. The team also included London partner Lene Malthasen and associate Theo Kalic. Regulatory advice was provided by New York partner Courtenay Myers Lima and Milan associate Roberto Luis Reyes Gaskin.