BankIslami Sukuk certificates now trading on PSX

KARACHI: BankIslami Pakistan sukuk certificates will now be traded on the Pakistan Stock Exchange (PSX), according to a statement issued by the exchange on Friday.

BankIslami ‘Ehad’ sukuk certificates are fully paid up and rated convertible Modaraba sukuk certificates, which will qualify as Additional Tier 1 (ADT-1) capital. It is Pakistan’s first ever listed ADT-1 Modaraba sukuk.

The sukuk issue is Rs2 billion, which is inclusive of a greenshoe option of Rs500 million. The pre-IPO amount was Rs1.7 billion, while the IPO amount was Rs300 million.

The pre-IPO portion was subscribed to by 27 institutional investors and 45 individual investors. The consultant to the issue is Next Capital Limited, and the market maker is JS Global Capital Limited.

The issue amount will contribute towards ADT-1 capital of BankIslami for its capital adequacy ratio, as per guidelines set by State Bank of Pakistan. The funds raised will be utilized in the bank’s financing and investment activities, or general pool.

The sukuk certificates have a floating expected profit rate of three-months Kibor rate, plus 275 basis points. Their face value is Rs5000 per certificate. The sukuk’s profit payments will only be paid from the relevant month’s attributable profit of the general pool.

The sukuk’s listing was conducted in a minimal ceremony at the exchange, with the CEO of BankIslami, Syed Amir Ali; the PSX managing director Farrukh Khan; CFO of BankIslami, Sohail Sikandar; CEO of Next Capital, Najam Ali; and head of investment banking BankIslami, Haris Munawar. Other representatives of Next Capital and JS Global were also present.

According to Amir Ali, the publicly-placed issue was oversubscribed. “The popularity of this sukuk issue among the potential investors can be gauged by the fact that its IPO was oversubscribed by 1.07 times despite the lockdown situation amidst the Covid-19 pandemic,” he said, adding: “The Ehad Sukuk IPO witnessed a remarkable response from online subscription channels with more than 80% applications received via e-IPO platforms.”

Najam Ali echoed that sentiment, saying: “Investors’ response to the IPO during the ongoing pandemic was very encouraging as we managed to conclude the IPO with 127 applications, resulting in oversubscription.” He also said that it would help in the development of the listed debt market, which was at a nascent stage in Pakistan.

Farrukh Khan said: “Given that there is a dearth of Shariah compliant debt instruments for investors, the listing of the Ehad Sukuk is a step in the right direction for providing investors with shariah compliant investment alternatives, easily accessible through the Stock Exchange.”

The PSX, in its notice, said that it is hopeful that the listing of this Shariah compliant instrument will generate significant interest from investors, traders and the general public.

Meiryum Ali
Meiryum Ali
The author is a member of the staff and can be reached at [email protected]

1 COMMENT

  1. I APPLIED FOR THE SAME, BUT NOBODY IS AVAILABLE TO SATISFY ME. WHAT IS ITS MODE OF PAYMENT OF PROFIT TO THE INVESTOR.ANY TYPE OF STATEMNT. MODE OF WITHDRAWAL.

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