Islamic Finance News – Special Dividend for Siemens Investors & Sukuk Race

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Special Dividend for Siemens Investors

The independent board of Hill Top UK, the SPV owning Siemens Gas Turbine Division HQ, has declared a 1.5% extraordinary dividend to shareholders for 2013. Investors have received a total cash yield of 9.25% during last year, consisting of 7.75% yearly ordinary monthly yield payments as well as the special 1.5% dividend mentioned. The acquisition of Siemens was partially financed in a Shariah compliant manner by a German bank. Dubai-based Arzan Wealth is the strategic advisor on the acquisition and ongoing management of the property while UK-based 90 North Real Estate Partners acts as the property advisor.

Sukuk Race: Will the UK Lose Out if it Doesn’t Take Home First prize?

South Africa is nearing the finish line with Hong Kong hot on its heels, leaving the UK (and Luxembourg) far behind. Unfortunately, this casts a dark cloud over UK’s word to the world that it intends to become the first non-Muslim sovereign Sukuk issuer — a promise that ignited the whole Sukuk race buzz in the first place. So was the UK’s promise made up of empty words? More importantly, has this thrown Shariah-seeking investors’ confidence in the British sovereign out the window?

“Whilst it would be a great statement to be able to report that the UK was the first non-Muslim country to issue a sovereign Sukuk, I don’t see this having any impact on investor sentiment towards the UK if it isn’t,” said Philip Churchill, the founder partner of Shariah compliant 90 North Real Estate Partners, to Islamic Finance news (IFN). And it seems that Churchill’s sentiments resonate with the wider industry.

“Notwithstanding domestic appetite and requirement, if the UK is not the first to issue it will have no impact whatsoever on the appetite for the Sukuk from abroad, given the UK’s rating and it’s position and profile within the global financial marketplace,” Stella Cox, the managing director of DDCAP Group, told IFN. “I am aware that extremely strong interest is being expressed in the Sukuk by both Islamic and conventional institutions,” Cox revealed. “In fact, to date, the only regret that has been expressed to me by potential investors is that issuance size is not greater.”

According to Roshan Madawela, CEO of Research Intelligence Unit, investor would not be deterred “so long as the UK keeps on moving in its current direction” as London still leads when it comes to financial know how.

Imam Qazi, a partner with legal firm Foot Anstey, concurred with the popular opinion. He added however, that: “I think it is crucial for the UK government to make the Sukuk issuance a reality, to boost London’s status as a global capital for Islamic finance.”

Like Imam, John Dewar, the chair of the Islamic Finance Group at Milbank Tweed Hadley & McCloy, also remains confident that London’s firm footing in the global capital markets will anchor the country’s lead as a Western Islamic finance hub. Nevertheless: “There is some speculation that a reason for the delay to the UK’s first sovereign Sukuk is the relatively low yield currently being offered on UK treasury bills,” he noted. “So, will a UK Sukuk prove attractive enough to Islamic investors, when yields from other potential sovereign issuers are materially higher?”

Speaking to countless industry insiders on the matter, the popular opinion is one favorable to the UK. IFN has however also encountered a few sceptics who opine that the UK’s delay in issuing a sovereign Sukuk despite already having a robust regulatory framework in place and the necessary talent within reach, weakens its aspirations towards becoming an essential component in the Islamic finance growth story.

“Were South Africa or Hong Kong to issue a government Sukuk prior to the UK this would be a devastating blow to the UK based Islamic financial institutions, and is likely to take some time to overcome,” opined Dr Natalie Schoon, the principal consultant of Islamic finance advisory firm Formabb.

Scepticism aside, an authoritative industry source defends the UK by assuring that the country is simply working apace to get the facility delivered in good order — and that “perhaps it will come sooner than some people expect!”

Article from Islamic Finance News