Siraj Capital (Dubai) announces first major sukuk to be based on Canadian assets

A sukuk is hybrid between a share and a conventional bond and is used by Islamic investors to avoid the payment of interest which is forbidden in Islam.

The announcement of the Bear Mountain Resort sukuk is the first major corporate sukuk of 2009 from a first time issuer, and in a country (Canada) that has not yet seen a major sukuk, a rated sukuk or a sukuk that has attracted international investment interest.

The Bear Mountain sukuk will raise approximately $350m for the expansion and further development of the Bear Mountain Resort on Vancouver Island in Victoria, Canada.

Bear Mountain is the only resort in Canada with 36 holes of Nicklaus Design golf. It has consistently been ranked as one of the top resorts in Canada and some of its tees are the most spectacular vistas in all of golf.

Siraj Capital (Dubai) Ltd, is a Merchant Investment Company regulated by the Dubai Financial Services Authority with offices in Dubai and Jeddah, and is committed to the expansion of the Islamic Finance industry by providing international best in class practice and service in its Islamic debt capital markets, private equity and business development groups.

Siraj Capital received interest in the Bear Mountain sukuk from attendees at the show and from conventional and Shariah compliant investment firms in North America, London, the Middle East, Malaysia and Nigeria. Many attendees at the London Sukuk Summit agreed with Siraj Capitals General Counsel Jonathan Strum when he stated that, in order for sukuk to become a truly international asset class some sukuk need to have both the underlying assets and at least some of the investment come from outside the GCC and Malaysia.

The owner of Bear Mountain Resort, Len Barrie was greatly encouraged by the response the Bear Mountain sukuk received which strengthened his resolve to close the transaction using Islamic finance.

Mr. Barrie, who also owns the Tampa Bay Lightning of the National Hockey League, attended the London Sukuk Summit at the invitation of Siraj Capital. As he continued to learn more about sukuk from the conference, Mr. Barrie came away believing that sukuk could have wide spread application in North American for financing transactions with a solid underlying hard asset.

Further, both Mr. Strum and Mr. Barrie agreed, that as an asset class, sukuk made sense for investors wary of coming back into the conventional bond market in the aftermath of the global economic crisis. Mr. Strum noted that given a choice between a conventional bond and a sukuk, the sukuk made more sense as the sukuk holder had an ownership interest in the underlying asset as opposed to conventional bond holders who only held a promise to pay and in the current crisis that is not always good enough.

Siraj Capitals CEO, Ibrahim Mardam-Bey told the summit that he expected the Bear Mountain sukuk to close in mid-October shortly after the end of Ramadan and that it would mark the true beginning of sukuk as an asset class in North America as Siraj Capital has a pipeline of deals in the U.S. and Canada.

The Siraj Capital team of 22 investment professionals has extensive regional and international experience spanning investment banking, private equity, commercial banking, and venture capital, with specific know-how in the emerging markets.