AUB announces successful issuance of $600m AT1 Capital Mudaraba Sukuk
Total subscription orders for sukuk certificates exceeded $1.8 billion
KUWAIT: Ahli United Bank (AUB) announced its successful pricing and issuance of $600 million unconvertible AT1 Capital Mudaraba Sukuk, on the 9th of June 2021. The total subscription orders for the Sukuk certificates exceeded US$1.8 billion, covering 3 times the targeted issue size, which is a clear indication of the confidence and trust of the investors in the Bank’s solid performance as a leading Islamic financial institution in Kuwait. It also reflects the strong global confidence in the stable economic climate of the State of Kuwait in particular and the GCC in general.
In late May, AUB announced that it had obtained final approvals from the Kuwait Capital Markets Authority (CMA) and the Central Bank of Kuwait (CBK) to issue securities (non-convertible certificates). At the time, the Bank has declared that the issue will be treated as AT1 Capital instrument, with the aim to enhance the capital base in line with Basel III requirements and CBK instructions issued to Islamic banks in this regard. These Sukuk are perpetual in nature, and are based on Mudaraba structure and fully compliant with the principles of Shariah. The Bank has determined the optional first call-date is five years of the settlement date. The Bank succeeded in offering the Sukuk at a fair and rewarding profit rate for the Sukuk holders of 3.875 percent p.a., distributable on semi-annual basis post the settlement date. The Bank’s selection of the appropriate timing, size and terms of issue and the target markets are the success drivers of this issue, after hiring Citigroup, HSBC Bank, Standard Chartered Bank as Global Coordinators in addition to their role with KFH Capital, KAMCO Invest, Abu Dhabi Islamic Bank and Kuwait International Bank as Joint Lead Managers and Book Runners.
Unique position
On this occasion, Dr Anwar Al-Mudhaf, Chairman of Ahli United Bank, said that the Bank’s success in issuing Sukuk of this value after attracting sizable orders book in excess of 3 times of its targeted, nevertheless continued economic challenges and repercussions of COVID-19 pandemic, is clear evidence of the remarkable success achieved by AUB in various circumstances and reaffirms the quality of its assets, the experience of its executive management, the accuracy of planning and implementation, and the good reputation it has in the global markets, along with maintaining its unique position that it has gained based on its long history as the first bank to operate in Kuwait since its establishment in 1941, whereby managed to succeed further and progress over years.
He affirmed that the approval of the Bank’s board of directors to issue these Sukuk reflects its confidence in the Bank’s ability to achieve growth in its operating activities and achieve an increase in the Bank’s financing portfolio, which confirms the positive outlook of the Board of Directors on achieving growth in operating activities and expansions.
Al-Mudhaf added: “I would like to express my appreciation and gratitude for the continuous support provided by the regulatory authorities, CBK and CMA, in Kuwait and the Kingdom of Saudi Arabia, Euronext Dublin and Nasdaq Dubai, for their continuous support to the Bank, in issuing and listing these certificates which contributed in the execution of the transaction successfully as planned.
Notable success
Jehad Al-Humaidhi, the Acting Chief
Executive Officer at AUB pointed out that this issuance is not the first in which the Bank has achieved notable success in recent years, as AUB had previously won the ‘Sukuk Deal of the Year - Kuwait 2017 Award” from the prestigious International Finance Magazine for its debut issue of $200 million AT1 Capital Sukuk, which was oversubscribed more than three times of its size through the high demand from investors in the Middle East, Asia and Europe. The underlying Sukuk was subsequently listed on the Irish Stock Exchange and on NASDAQ Dubai being the third Kuwaiti listing of its kind on NASDAQ Dubai reflecting the great confidence that the Bank receives from investors over the years
Al-Humaidhi added: the oversubscription and such high turnout of investors from the GCC, Asia and Europe reflect the Bank’s success in marketing the issuance and the series of marketing meetings preceded the Sukuk offering. A ratio of 70 percent of the subscriptions was received from GCC, including Kuwait, United Arab Emirates, Kingdom of Bahrain, Kingdom of Saudi Arabia and Qatar, in addition to an international turnout from Europe and the United Kingdom of 18 percent, and 12 percent from Asia and other regions.
Al-Humaidhi has further indicated that the investor’s base was prudently diversified including financial institutions, companies, investment portfolios, asset & funds managers and investments from high net worth clients and private bankers. She emphasized that these Sukuk represent a good source of capital support for AUB, which diversifies the sources of funding and capital and boosts the bank’s financing base, as well as achieving a balance between the different components of its capital, to continue its growth. The proceeds of the Sukuk will be deployed to support the expansion strategy adopted by the Bank. This issue enhances the capital adequacy ratio to highly positive levels. Undoubtedly, the implementation of this issue in this efficiency reflects the Bank’s robust position and strength as a leading Islamic financial institution in Kuwait.
In conclusion, Al-Humaidhi said that the notable success achieved by Ahli United Bank in issuing these Sukuk, which came in the current year in which the Bank celebrates the 80thanniversary of its establishment as the first bank that operated in Kuwait in 1941& its 50th anniversary since it became fully owned by the Kuwaiti government and the Kuwaiti people in 1971, is a proof of the Bank’s ability to achieve continuity and successes, based on its long history and its ability to develop and looking ahead.