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ANZ has been involved in Islamic finance since the early 1980s. When banking in Pakistan was converted to a non-interest based Islamic system, ANZ played a leading role in the transition and was heavily involved in the development of the Islamic finance documentation utilised by all the banks.
In 1987, ANZ successfully launched "First Grindlays Modaraba", an Islamic leasing company in Pakistan. This listed entity attracted substantial investments from the Middle East and Europe, and quickly established itself as one of the most successful lessors in Pakistan. ANZ was the first large conventional bank to establish a wholly Islamic entity within its group.
ANZ's Global Islamic Finance unit was established in London in 1989 to undertake cross-border Islamic financing. Since its inception, the team has arranged and structured transactions well in excess of US$2 billion.
We have an established reputation in arranging and structuring Islamic financing and has developed an expertise in structuring transactions according to Islamic financier's Sharia (Islamic law) requirements.
CROSS BORDER FINANCING
1. Corporate Funding:
For specific corporate exposure, whether it is trade finance (Murabaha) or cross-border leasing (Ijara or Ijara-Wa-Iqtina), we structure the transaction and prepare the necessary documentation within the parameters specified by the obligor. Generally distributed to one or two investors these transactions tend to have a financing period of a maximum of five years and are usually credit enhanced (either by a bank or governmental guarantee). The size of a typical ‘one-off’ deal is in the US$5 million to US$20 million range.
2. Structured Funding:
Due to the increased demand for large, single funding requirements, Global Islamic Finance has developed products to cater for investor needs including securitisation.
- Short-term Islamic Investments:
Based on trade finance and leasing structures, we regularly arrange large, short-term investment opportunities for Islamic Financial Institutions on a syndicated or stand-alone basis. These facilities need not necessarily be credit enhanced and tend to be for tenors of up to one year. Short-term Islamic investments can be structured simply to satisfy a repeating financing requirement, assist in reducing the size of the working-capital or be structured to reduce the total size of the balance sheet of the beneficiary. We customise each facility to the exact requirements of the beneficiary and through the mediation of ANZ, the beneficiary can be shielded from distribution specific documentation. The size of a typical ‘one-off’ deal is in the US$25 million to US$200 million range.
Together with a number of Islamic financial institutions, we have recently launched a structured version of this product, aiming to offer a revolving short-term investment structure for blue chip corporations, which is comparable to a Commercial Paper programme.
- Islamic Securitisation:
A recent development is the securitisation of investments in equipment and other fixed assets. On the back of a single-asset (or pool of assets) cross-border leasing structure, the team can super-impose a share issue of the leasing vehicle and distribute the underlying securities to its Islamic investor base. The continued presence of an underlying asset facilitates trading of the securities.
Under this structure, the lease rental streams are converted into periodic dividend payments to the holders of these shares. Islamic securitization focuses on large size transactions and allows for medium-term, off-balance sheet structures for the lessee.
3. Funds Management:
In 1997, Global Islamic Finance launched a cross-border leasing fund; “First ANZ International Modaraba” (FAIM). FAIM was established to make investments in accordance with Sharia (Islamic law) in a diversified portfolio of transactions providing medium term asset finance. ANZ acts as Investment Adviser and a special Sharia Committee comprising leading Sharia scholars has been appointed to monitor the activities of FAIM to ensure strict compliance with Sharia.
FAIM was introduced to meet demand for medium term asset-based finance in selected countries in the developing markets. Its medium-term investment objective is achieved by financing assets required for use in a spread of primarily developing market countries. It provides finance predominantly to the private sector.
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