Clifford Chance advises largest cross-border Islamic facility in Indonesia

Clifford Chance advises PT Natrindo Telepon Seluler (AXIS), the Indonesian based subsidiary of Saudi Telecom Company (STC), on a USD1.2 billion multi-sourced Shariah compliant Islamic financing.

 

The transaction is made up of three distinct facilities: a USD450 million dual currency syndicated facility arranged by Deutsche Bank AG Saudi Arabia Limited and HSBC Saudi Arabia Limited and funded by Deutsche Bank Luxembourg S.A. and The Saudi British Bank, a USD400 million facility to fund equipment purchases and civil works from Huawei, funded by China Development Bank and a USD350 million facility to fund equipment purchases from Ericsson, arranged by HSBC, funded by AB Svensk Exportkredit (SEK) and backed by EKN, the Swedish Export Credit Agency. The deal also included the largest Islamic hedge transaction ever carried out in Asia, with the hedge being provided Saudi British Bank and Deutsche Bank AG, International Islamic Banking, Malaysia Branch.

 

Ameen Al Shiddi, STC chief financial officer, says that "This deal is one of the largest Islamic financing deals in Asia and one of the largest international financing deals in East Asia. This financing will help fund Axis’ expansion and growth strategies for the next five years, which in turn will result in higher financial returns for the STC group."

 

He adds: "The size of the financing deal demonstrates the confidence that the financial markets have in the ability of Axis to achieve its business goals. The involvement of different financial institutions and vendors is a clear indication of the strong and long-term partnerships that exist between these organizations and STC".

 

Noman Ansari, STC director of funding and investments comments: "It is part of the strategic vision of STC to ensure that all global funding for STC group companies is carried out in a Shariah compliant manner. We are delighted that we have been able to implement this in Indonesia with the support of our partners, banks and suppliers."

 

This deal was groundbreaking in a number of respects including:

·         the largest private sector Islamic financing to date in Indonesia

·         the largest Shariah compliant telecom financing in Asia and one of the largest globally

·         the first Islamic financing carried out by EKN and SEK

·         the first Islamic trade in Indonesia and telecoms trade in Asia to be supported by political risk insurance provided by MIGA

·         first Islamic finance transaction supported by the China Development Bank

·         the largest Shariah compliant hedge to be undertaken by an Asian corporate  

 

The Clifford Chance team was led by partner and global head of islamic finance, Qudeer Latif, supported on the financing documents by counsel Greg Englefield, senior associate Sandeep Puri and associates Shauaib Mirza, Yiting Xu and Lauren Priest in Dubai, Deborah Christian in Hong Kong in relation to the Islamic hedge and partner Andrew Gambarini and associate Benjamin Toh in Singapore in relation to Singapore law issues.

 

The syndicated facility financiers were advised by Baker & McKenzie, the Huawei facility financiers were advised by White & Case and the Ericsson facility financers were advised by Norton Rose. Local counsel advice in Indonesia was provided by Mochtar Karuwin Komar as legal advisers to Axis, Hadiputranto, Hadinoto & Partners as legal advisers to the syndicate facility financiers and Ericsson facility financiers and Wiriadinata & Saleh as legal advisers to the Huawei facility financiers.

Date

30 May 2011

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