KARACHI: Meezan Bank, has played a leading role in successfully concluding the issuance of Pakistan Energy Sukuk (PES) II worth approximately Rs 200 billion by Power Holding Limited (PHL), a public sector entity fully owned by the Ministry of Energy and Government of Pakistan.
The milestone transaction, powered by the key Islamic finance players of the country was concluded successfully in May 2020.
The Sukuk aims to help the Government in addressing the challenges for resolving circular debt in the country’s power sector. Meezan Bank acted as an investment agent and trustee for this issue. In addition, Meezan Bank was also the joint financial advisor along with Dubai Islamic Bank Pakistan and Bank Alfalah Islamic.
This is the second issuance of this series of sukuk, bringing the total size of shariah-compliant energy sukuk to approximately Rs400 billion.
National Bank Limited along with Taurus Securities Limited led the book building process to conduct Pakistan’s first and largest book building for a sukuk issue through Pakistan Stock Exchange (PSX).
The sukuk issue was 1.7 times oversubscribed. The sukuk issuance is a strong indicator of the potential and feasibility of Islamic finance and promises immense potential for delivering large ticket deals to the government for the benefit of the economy.
It is also expected to enable the government to move away from interest-based borrowing and shift towards shariah-compliant financing as per the requirement of the constitution of Pakistan.
The underlying shariah structure of the sukuk is based on ijarah sale and lease back. Transaction is structured for ten years, with six monthly profit (rental) payments at a rate equivalent to 6 Month KIBOR -10 bps, as determined through the book building process.
The entire issue would be redeemed at maturity i.e. after the completion of 10 years.