Sipchem to raise SR1.5bn from sukuk issue
Sipchem Chief Executive Officer Ahmad A. Al-Ohali, center, speaks at a conference in Riyadh on Saturday
Saudi International Petrochemical Company (Sipchem) launched Saturday the offering of a mudaraba sukuk in the Kingdom in a move aimed at diversifying its sources of funding and finance new production initiatives.
Sipchem Chief Executive Officer (CEO) Ahmad A. Al-Ohali said his company expects SR1.5 billion to SR2 billion from this launch.
He said the Capital Market Authority has approved the offering of the sukuk on June 12.
“It will benefit the company, its shareholders and increase the percentage of Islamic financing of companies and will also contribute to the growth of the Saudi Stock Exchange and the national economy,” Al-Ohali told a press conference at the Faisaliah Hotel in Riyadh.
He indicated that among the positive aspects that the investors will gain through the issuance of this Mudaraba Sukuk is the diversification and distribution of their savings in investments that are Shariah compliant in addition to creating more stability in the prices of their investments and the earnings of their regular returns.
The final issue size of the mudaraba sukuk will be determined after the close of the subscription period.
The Mudaraba Sukuk will be issued in denominations of SR100,000 subject to a minimum initial subscription amount of SR1 million.
It was also announced that Sipchem has appointed Riyad Capital and Deutsche Securities as Joint Lead Managers for the offering, issuance and receipt of subscriptions for the mudaraba sukuk.
The mudaraba sukuk has been approved by the Shariah supervisory Committee of Riyad Capital and is expected to be offered to financial institutions, mutual funds, insurance companies, and pension funds as well as individuals, who will be able to subscribe for the mudaraba sukuk as per the subscription terms and conditions.
The offering, sale and delivery of the mudaraba sukuk is limited solely to Saudi nationals or other legal persons with a permanent establishment in the Kingdom holding a current commercial registration number.
The returns on the Mudaraba Sukuk shall be payable by reference to the Saudi Interbank Offered Rate for three months (three months SIBOR) plus a margin, calculated as an annual percentage to be paid quarterly each year.
The investor presentation and offering period for the Mudaraba Sukuk will extend for a duration of 10 days beginning Saturday (June 18).
Investors who wish to purchase the Mudaraba Sukuk have been requested to submit the duly perfected application to any of the Joint Lead Managers, such as Riyad Capital or Deutsche Securities, before the close of this period.
Raed Al-Barakati, manager of Investment Banking Department of the Riyad Capital, expressed his pleasure for the opportunity made available to them by Sipchem to be involved with its maiden venture.
“We will make this offering accessible to all sectors of investors,” Al-Barakati said.
Tamim Jabr, vice president, of Deutsche Bank indicated that the Sukuk issuance is a landmark transaction for Sipchem and it will contribute positively to the development of the debt capital market in Saudi Arabia.
Saudi International Petro-chemical Company was established on Dec. 12, 1999 and has a current paid-up capital of SR3.6 billion.
It also actively invests in the petrochemical and chemical industries.