First SR Sukuk by a private company in Saudi Arabia

This was a debut issue for Taajeer Company for Vehicles, Equipment & Real Estate, which is a rapidly growing leasing company in the Kingdom. Saudi Hollandi Bank acted as the sole Lead Manager and Bookrunner in this landmark deal.

This innovative sukuk is based on a Shariah compliant structure known as Sukuk ak-Istithmar which was approved by the Shariah Board of Saudi Hollandi Bank. The Sukuk is a Floating Rate Note (FRN) with tenure of five years. The investors will receive a return of SIBOR plus 2.5% bi-annually.

The principal investment amount will be paid as a bullet payment on maturity in year 2012.

Sukuk is a relatively new instrument for Saudi investors, but it offers an alternative Islamic investment opportunity. This Sukuk allows investors to diversify their portfolio and still invest in a local corporate. For Taajeer, it provides an alternative source of financing for its growing business. In a difficult credit environment, which has resulted in other potential issues being delayed, the company was able to successfully close this issue at a competitive price. In fact this issue was oversubscribed by over 50% compared with the final amount of SAR 250 million Taajeer decided to raise.

Dr. Saleh Malaikah, chairman of Taajeer said, "We are gratified by the investors' response to our first Sukuk offer, which testifies to their confidence in Taajeer's performance."

Dr. Malaikhah also thanked Saudi Hollandi Bank for the hard work in making the issue a great success.

Taajeer Sukuk provides the local market another innovative structure that could be used by companies to raise financing from debt capital market in a cost effective manner, stated Kamal Mian, head of Islamic Banking at Saudi Hollandi Bank.

Taajeer's objectives are to be the leading leasing company of the Kingdom by being innovative and setting the standards for the market. Saudi Hollandi Bank is also seeking to be a leader in offering Islamic solutions in Saudi Arabia which is one of the fastest growing markets for Islamic Finance. This groundbreaking sukuk allows both institutions to achieve their objectives.