A N A LTERNATIVE S OURCE OF C APITAL P EER G ROUP D IALOGUE ON S UKUK - - PowerPoint PPT Presentation

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I SLAMIC F INANCE : A N A LTERNATIVE S OURCE OF C APITAL P EER G ROUP D IALOGUE ON S UKUK T HE W ORLD B ANK & I NTERNATIONAL F INANCE C ORPORATION Strictly Private & Confidential June 2014 D ISCLAIMER Confidential This presentation is


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ISLAMIC FINANCE: AN ALTERNATIVE SOURCE OF CAPITAL

PEER GROUP DIALOGUE ON SUKUK

THE WORLD BANK & INTERNATIONAL FINANCE CORPORATION

Strictly Private & Confidential

June 2014

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Confidential

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DISCLAIMER

This presentation is for informational purposes only and is being furnished on a confidential basis to a limited number of recipients. The information in this document is derived from sources believed to be reliable but which have not been independently verified. Taylor-DeJongh makes no guarantee of its accuracy and completeness and is not responsible for errors of transmission of factual or analytical data, nor is it liable for damages arising out of any person’s reliance upon this

  • information. All charts and graphs are from publicly available sources or proprietary data.

This presentation does not constitute an offer of, or invitation to purchase or subscribe for any securities in any jurisdiction, including the United States of

  • America. This document is intended to be distributed in its entirety. No part of this presentation may be reproduced in whole or in part or provided to others

without the prior written permission of Taylor-DeJongh. No consideration has been given to the particular investment objectives, financial situation or particular needs of any recipient. The purpose of this presentation is to ascertain levels of interest in Taylor-DeJongh and to assist recipients in deciding whether they wish to proceed with a further investigation of Taylor-DeJongh. No representation is made, or assurance given, that the statements, projections or forecasts are correct or that the objectives of Taylor-DeJongh Inc. or any of its affiliates will be achieved. All information in this presentation is subject to amendment, rescission, and updating in due course.

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TABLE OF CONTENTS

I. GLOBAL TRENDS IN SUKUK II. SELECT LANDMARK DEALS

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  • I. SUKUK AS A CAPITAL SOLUTION

Sukuk are financing structures, analogous to conventional asset-backed securities, that have been used for over 20 years

  • Suitable assets include “hard” assets such as

equipment, natural resources, oil & gas reserves, production and infrastructure of almost all kinds

  • Structured as a Regulation S and Rule 144A

transaction with a rating by international agencies

  • Secondary market has rapidly developed,

thus dramatically multiplying liquidity

  • The global Sukuk market exceeded USD 120

billion in 2013

Source: Standard and Poor’s

Today Sukuk are:

  • Instruments that may be Publically Traded

and Rated

  • Fresh and Highly Liquid Pools of Capital that

can be tapped through asset-backed finance structures for North American and European assets

  • Priced at an Advantage Compared to

Conventional Markets

  • An excellent fit for Infrastructure and

Natural Resource Firms

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INTERNATIONAL ISSUANCE MARKET

  • Retail investors
  • High net-worth investors
  • Islamic financial institutions
  • Non-bank financial institutions
  • Pension funds
  • Endowment funds
  • Central banks
  • Investment agencies
  • Governments
  • Local governments /Municipalities
  • Insurance/Takaful companies
  • I. SUKUK INVESTOR BASE

SUKUK VOLUME BY ISSUER NATIONS IN 2013

82.4 14.7 7.1 5.6 4.1 2.4 1.7

10 20 30 40 50 60 70 80 90

Malaysia KSA UAE Indonesia Turkey Qatar Bahrein

Source: : Bloomberg, IFIS, Zawya

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  • I. WHY USE SUKUK AS AN ALTERNATIVE CAPITAL POOL?
  • Substantial source of capital that attracts

liquidity from a wide pool of investors in the Middle East and South East Asia, in addition to conventional markets

  • Highly competitive in pricing and tenor to

asset-backed structured finance, including bonds

  • In high demand with institutional investors,

who are actively seeking asset-backed instruments

  • Well-established track record for Sukuk,

which has been developing since 1990s

178 230 255 426 528 714 100 200 300 400 500 600 700 800

2007 2008 2009 2010 2011 2012

Number of Issuances

Increasing Number of Sukuk Issuances

38 20 32 54 85 131 122 20 40 60 80 100 120 140

2007 2008 2009 2010 2011 2012 2013

USD Billions

Increasing Value of Sukuk Issuance

Source: KFH Research, Thomson Reuters Zawya Sukuk Perceptions and Forecast Study 2013

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45 51 85 105 131 122 50 100 150 200 250 300 350

2008 2009 2010 2011 2012 2013

  • I. EXCESS DEMAND FOR SUKUK

Demand Gap of

  • ver USD 200

billion

  • Demand in excess of USD 600 billion is projected for Sukuk by 2015
  • Large supply and demand gap insures that issuances will continuously grow

USD Billions

Source: Thomson Reuters Zawya Sukuk Perceptions and Forecast Study 2013 Ernst & Young: The World Islamic Banking Competiveness Report 2013 Thomson Reuters Global Sukuk supply/demand gap to peak in 2014 -Study

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  • II. SELECT LANDMARK DEALS

DEVELOPMENT BANK OF KAZAKHSTAN

2012 USD 76 million

DANAINFRA NASIONAL BHD

2012 USD 95 million

Sadara Petrochemical Plant

USD 19.3 billion

SABIC

2006 USD 800 million

Qatargas II LNG

2004 USD 8.5 billion

DUBAI CIVIL AVIATION AUTHORITY

2004 USD 1 billion

Alba Aluminium Smelter

2003 USD 1.7 million

EAST CAMERON PARTNERS Oil & Gas Assets 2006

East Cameron Partners, LP

USD 168 million USD 100 million

SAXONY- ANHALT

2004

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