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Structured
Finance:
The Structured Finance
business of KFH embraces a wide variety of activities to suit the
financial and investment needs of the Bank and its customers. While
IID clientele ranges from individuals to multinational corporations,
the bulk of the Structured Finance services are rendered to large
institutional players seeking entry into the rapidly growing Islamic
finance and investment market. Structured finance activities of KFH
encompass direct investments, syndications, project financing,
investment placements and acquisitions.
On the securitization front, the Bank has structured a number of
securitization transactions backed by a variety of assets. The
specialty of KFH’s structured finance instruments is, the strict
compliance to Shari’a requirements, yet, being able to effectively
compete with their conventional counterparts.
Bahrain Sukuks:
KFH lead arranged the US$ 250 million sukuk issue in Bahrain in May
2003. These sukuks were issued on the back of a real estate property
leased out to Bahrain Monetary Agency. The transaction is of
particular significance due to the increasing popularity of sukuk
issues by several sovereign bodies in the Islamic world.
E’amar:
E’amar is an example of a successful KFH securitization product that
has been introduced to the market in the recent past. It has gained
wide market acceptance for its structural effectiveness and Shari’a
compatibility. This short-term liquidity product allows investors to
acquire ‘participative shares’ which are backed by a spectrum of
assets. The investors could take a position for a minimum of two days
in this dollar denominated instrument, and are protected by a currency
hedge arrangement that allows them to exit the investment at the same
exchange rate that they invested.
Millennium Aircraft Leasing Company (MALC):
KFH is currently promoting an international aircraft leasing fund. The
Bank is playing a key role in this fund by acting as the Lead Sponsor
and a key investor with a minimum initial capital commitment of US$ 50
million. The fund size is expected to be up to US$ 800 million with an
equity component of US$ 200 million. MALC has already invested in more
than ten aircraft to the tune of US$ 396 million, and is in the
process of acquiring additional aircraft for the Fund in this
ground-breaking proposition in the Islamic finance industry.
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