Trading in sukuk certificates of BankIslami Pakistan commenced on Friday at the Pakistan Stock Exchange (PSX) with a striking of the gong.

The certificates have a floating expected profit rate of 3-month Karachi interbank offered rate plus 275 basis points and their face value is Rs5,000 per certificate.

The certificates are fully paid-up, rated, perpetual, unsecured, subordinated, non-cumulative and contingent convertible mudaraba sukuk, which will qualify as additional tier-1 (ADT) capital. The sukuk issue is of Rs2 billion inclusive of a green shoe option of Rs500 million. The pre-IPO amount was Rs1.7 billion, whereas the initial public offering (IPO) amount was Rs300 million. The pre-IPO portion was subscribed by 27 institutional investors and 45 individual investors.

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The instrument has been rated A- (A minus) by Pakistan Credit Rating Agency Limited.

BankIslami CEO Amir Ali said the sukuk is the country’s first-ever listed ADT-1 modaraba sukuk.

“The popularity of the 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,” Ali said. “The Ehad sukuk IPO witnessed a remarkable response from online subscription channels with more than 80 percent applications received via e-IPO platforms.”

PSX Managing Director Farrukh Khan said 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.

“Pakistan Stock Exchange is at the forefront of providing new avenues of investment, whether conventional or shariah-compliant,” Khan said. “We aim to provide a transparent and robust trading platform for investors and issuers alike.”

PSX said the listing of the shariah-compliant instrument would generate significant interest from investors, traders and the general public.

The consultant to the issue is Next Capital Limited whereas the market maker, joint advisor and arranger is JS Global Capital Limited.

Next Capital CEO Najam Ali said investors’ response to the IPO during the ongoing pandemic was very encouraging.

“We managed to conclude the IPO with 127 applications, resulting in oversubscription,” Ali said. “The success of this IPO is testament to investors’ confidence in BankIslami which has delivered impressive performance during the last year.”

The issue amount would contribute towards additional tier 1 capital of BankIslami for capital adequacy ratio as per guidelines set by the State Bank of Pakistan. The funds raised will be utilised in the bank’s financing and investment activities.

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