Karachi October 21 2023: BankIslami to list sukuk of PKR 1 billion on Pakistan Stock Exchange to raise additional Tier 1 capital, according to the draft prospectus of Sukuk Certificates of BankIslami Pakistan Limited.
BankIslami Pakistan Limited is issuing fully paid up, rated, perpetual, unsecured, subordinated, non-cumulative and contingent convertible listed Mudaraba Sukuk Certificates to be issued as instrument of redeemable capital under Section 66 of the Companies Act, 2017 which will qualify as Additional Tier 1 Capital as outlined by SBP under the Basel III Circular. The Sukuk will be subordinated to the payment of principal and profit, to all other indebtedness of the Bank, including deposits.
The total Sukuk Issue is of up to PKR 1,000,000,000/- (Pak Rupees One Billion Only), inclusive of Green Shoe option of up to PKR 200,000,000/- (Pak Rupees Two Hundred Million Only). The Sukuk Certificates are unsecured, subordinated, rated, listed, perpetual and non-cumulative and will be offered in denominations of PKR 5,000/- or multiples thereof to the investors subject to a minimum investment amount of PKR 5,000/.
The Sukuk Certificates of PKR 850 million have been offered to investors through a pre-IPO subscription (Pre-IPO Portion) and the remaining PKR 150 million shall be offered to general public through this prospectus (IPO Portion).
The Sukuk Certificates being issued have been assigned a rating of “A” by PACRA and will carry a floating rate coupon priced at a spread of 250 BPS over 1-month KIBOR. Profit will be payable monthly (365 days in a year) in arrears on the outstanding investment amount. The first such profit payment will fall due at the end of 1st calendar month end from the Issue Date and subsequently every month end thereafter. The profit should only be paid from the relevant month’s attributable profit of the General Pool. In case the Bank reduces the expected profit (because of regulatory reasons), the same will not constitute an event of default. In that case the Bank will reduce the expected profit to 0.005% p.a. through adjustment of weightages in the General Pool. The profit payment to the Sukuk Holders will be non-cumulative in nature i.e. In case of exercise of discretion by the Bank for a particular profit payment period, Sukuk Holders will not be compensated subsequently by the Bank for that particular period in any manner. Accordingly, the profit payment made to the Sukuk Holders based on their respective monthly profit weightages will be considered as full & final payment for that particular period.
The profit payment to Sukuk Holders will be subject to the condition that any such payment should not result in non-compliance of the Bank with the applicable regulatory requirement of MCR, CAR and Leverage Ratio as determined by SBP from time to time. As per the existing instructions of SBP, in order to implement the above Lock-in Clause, the Bank will reduce the monthly profit weightages attributed to the Sukuk Holders until the Bank is in breach of regulatory capital requirements (i.e. the expected profit in this case would be up to 0.005%p.a.). Any inability to exercise the Lock-in Clause or non-cumulative feature, will subject these Sukuk Certificates to mandatory conversion into common shares at the discretion of SBP.
To bring Pre-IPO and IPO investors at par before credit of Sukuk, profit for the interim period (i.e. from the disbursement of funds by the Pre-IPO investors until the day before Issue Date) will be paid separately to the Pre-IPO investors.
Call Option may be exercised by the Issuer after obtaining written approval from the SBP at any time on or after a period of 5 (five) years from the Issue Date by giving to the Sukuk Holders and the Issue Agent at least 30 (thirty) days prior notice in writing, specifying the profit payment date on which the Issuer will redeem all of the then outstanding Sukuk or a portion of the then outstanding Sukuk by payment of the amount(s) calculated in accordance with the provisions of the Sukuk Issuance Agreement , whereupon the Sukuk Holders shall be bound to so accept the redemption. The Call Option, once announced, will be irrevocable. No Put Option shall be available to the Sukuk Holders.
Pak Brunei Investment Company Limited has been appointed as Issue Agent to secure the interests of the investors. JS Global Capital has been appointed as the Designated Market Maker for this Issue and the Sukuk shall be listed on the PSX via Initial Public Offering, thereby creating liquidity for the Issue.