Products – Project
Project Financing/Raising cash
(There are other forms)
Project Company
(Customer - private company, public entity… )
- Offers assets (property, plant, airplanes, ships, port etc.) as a back up to raise capital
- Sets up a Funding Company or a Special Purpose Vehicle (for tax, technical, and risk management reasons)
- Sells assets to the Funding Company at a set price for a certain period
- Pays lease rent to Funding Company periodically
- Repurchases asset from Funding Company at the end of the fixed term or tenor at an agreed price
Funding Company (Special Purpose Vehicle)
- Purchases assets from the Project Company on agreed terms
- Raises capital by issuing Islamic bonds (Sukuk) to investors with the help of specialist firms (investment banks, brokerage firms, law firms etc.)
- Pays the Project Company the asset sale price agreed
- Leases assets back to the Project Company
- Receives lease rent periodically from the Project Company
- Pays the investors periodically from lease rent received
- Sells asset back to the Project Company at the end of tenor
- Redeems the Islamic bonds issued (sukuk) from investors
Investors (Financial institutions, wealthy individuals…)
- Purchase bonds issued (sukuk) from the Funding Company
- Receive period payments (profit) from Funding company
- Relinquish bonds and get back principal (original capital invested) from the Funding Company