FWU Group closes first tranche of USD100 million sukuk programme

European based multinational insurance group FWU Group has now closed the US$20 million first tranche, which was oversubscribed, of its US$100 million sukuk al-wakala programme.

 

This transaction is a securitization of takaful (Sharia'a-compliant) insurance policies and provides an opportunity for investors to participate and invest in sukuk certificates backed by Atlanticlux Lebensversicherung, a BBB rated, multinational insurance provider. The sukuk has been assigned an investment grade credit rating by Fitch and will be issued in amortizing tranches, each with a term of five years, and an average life of about 2.5 years. Distributions will be made quarterly to investors on a fully amortizing basis and the profit rate is expected to be 7.00% per annum.

 

The sukuk sponsor, FWU, is a European based financial services group which offers unit-linked life and annuity assurance products, with operations across Europe, the Middle East and Asia. The sukuk will fund, in a fully Sharia'a-compliant manner, a set of retakaful (or re-insurance) transactions for one of FWU's five main subsidiaries, Atlanticlux. The sukuk is asset-backed, representing a true ring-fencing of assets, and the amount raised will be used to fund sales commissions on unit-linked life insurance policies.

 

The lead arranger and bookrunner for this issuance, EIIB-Rasmala, comprises the AIM-listed European Islamic Investment Bank Plc (EIIB) and Rasmala Group. The transaction was led by Anwar Abu Sbaitan, CEO at Rasmala (Dubai) and Harris Irfan, managing director at EIIB (London).

 

Harris Irfan said: "The arrangement and issuance of this unique sukuk offering represents exciting new ground for the Islamic finance industry. This issuance is unique in that it facilitates investor exposure to a quality, fully Sharia'a compliant and rated European credit. Moreover, the issuance is asset-backed rather than asset-based, due to its securitization of takaful insurance policies - a movement in the right direction for the Islamic finance industry by linking the financial economy with the real economy. We are excited to be the lead arranger on this industry leading transaction, as well as by the future possibilities that it opens up."

 

Markus E. Fischer, chief financial officer of FWU Group, said: "FWU has been a leading life takaful provider in both the Middle East and Asian markets for many years. This issuance represents an important step for FWU to expand its funding sources into the Sharia'a compliant capital markets. This issuance also further strengthens FWU's "SALAM" brand in the Islamic finance market. As a company, we are proud to be part of such a dynamic and fast growing market."

 

An application was made to CISX Guernsey for the Certificates to be listed and to be admitted for trading.

 

Morgan Lewis & Bockius acted as counsel to FWU, and as transaction structuring counsel. Bedell Cristin Guernsey Partnership acted as Guernsey counsel to the Issue and Issuer, and Amanie Advisors acted as Sharia'a advisors to FWU.