Islamic finance in Jersey
25 April 2017
The Islamic finance sector has grown in recent years from being a specialised niche to a multi-billion dollar global mainstream industry. It has proved dynamic and innovative and has provided an increasing range of sophisticated products. It now offers a real alternative to more established financing techniques and whilst not immune from the turmoil in the financial markets remains highly relevant.
The sector offers products designed to meet the needs of Islamic investors but the appeal of such investments has proved to be significantly wider as investors globally look to invest in products expressly designed to meet the ethical requirements of Shari'a law.
As the industry has developed, Jersey has established itself as the jurisdiction of choice for sophisticated institutions looking to develop Shari'a compliant products. Jersey, with its convenient time zone, political stability and tax neutrality, and its flexible statutory and regulatory environment, has won great favour with arrangers, investors and intermediaries active in this sector. It has also benefited from recent endorsement by supra-national bodies such as the OECD, IMF and FATF.
Bedell Cristin is a leading offshore law firm and is recognised by the Legal 500 and Chambers directories as "top tier" and acknowledged by the legal press as an "offshore magic circle" firm. Headquartered in Jersey, the firm also has offices in Guernsey, London, BVI and Singapore.
Bedell Cristin is a leading provider of Jersey legal advice to the Islamic finance sector as illustrated by the sample of deals set out below in which we have acted. We have also been well placed to exploit existing close relationships with clients and intermediaries in London which is emerging as a key global hub for Islamic finance.
Bedell Cristin aims to work increasingly closely with its business partners in the Middle East, sharing our knowledge and experience to help further develop the range of Shari'a compliant products to meet the needs of our clients.
Aldar Properties PJSC – Atlantic Finance Limited
Aldar Properties is a public joint stock company located in Abu Dhabi and the leading property development company in terms of the number of its ongoing projects and the size of the land owned by it and available in respect of its announced projects in Abu Dhabi.
Tamweel PJSC – Tamweel Funding Limited
Tamweel is a public joint stock company located in Dubai and active in the home finance market.
Tamweel Funding Limited, a Jersey public company, issued US$300,000,000 trust certificates which are listed on the NASDAQ Dubai (convertible into Ordinary Shares of Tamweel). The proceeds were used to purchase a portfolio of Shari'a compliant assets.
Aldar Properties PJSC – Sukuk Funding (No. 2) Limited
Sukuk Funding (No. 2) Limited, a Jersey public company, issued AED 3,750,000,000 trust certificates which are listed on the London Stock Exchange. The proceeds were used to acquire a "musataha interest" being the grant of a right to use and develop certain land located at Aldar Properties' Al Raha Beach development for a term of 50 years.
Dana Gas PJSC – Dana Gas Sukuk Limited
Dana Gas is a public joint stock company located in Abu Dhabi and active in the natural gas market.
Dana Gas Sukuk Limited, a Jersey public company, issued US$1,000,000,000 trust certificates (convertible into shares of Dana Gas) which are listed on the London Stock Exchange. The proceeds of the issue of the certificates were used by the issuer as capital of a mudarabah agreement entered into with Dana Gas as mudarib.
Aldar Properties PJSC – Aldar Funding Limited
The first Aldar Properties deal we acted on involved the issue by the Jersey issuer, Aldar Funding Limited, of US$2,530,000,000 trust certificates (convertible into shares in Aldar Properties). The certificates were listed on the London Stock Exchange. The proceeds of issue were applied by the issuer (as trustee and rab al maal) as the capital of a mudarabah agreement entered into between the issuer and Aldar Properties as mudarib. The mudarib invested the capital of the mudarabah in accordance with an agreed investment plan comprising a number of Shari'a compliant activities, including certain investments in Aldar Properties' business activities.
International Investment Group K.S.C.C. – IIG Funding Limited
IIG Funding Limited, a Jersey public company, issued US$200,000,000 trust certificates (Sukuk Al-Mudarabah) which are listed on the Kuwait Stock Exchange. The proceeds of issuance were applied to acquire Mudarabah interests.