October 16, 2018 / 4:52 AM / 9 months ago

Saudi-based Maalem Financing raises 100 mln riyals in debut sukuk

Oct 16 (Reuters) - Saudi Arabia’s Maalem Financing has raised 100 million riyals ($26.6 million) from a debut sale of Islamic bonds, or sukuk, as the firm seeks to develop a crowdfunding product and expand its operations, a senior executive said on Tuesday.

The sukuk from Maalem, a sharia-compliant commercial and consumer financing firm, is a small but novel deal in a market that is dominated by issuance from sovereign institutions and Islamic banks.

The three-year unsubordinated deal was sold through a private placement and Maalem could tap the market again as early as January next year, said John Sandwick, a member of Maalem’s board of directors.

“The program is for 500 million riyals and with 3.6 times oversubscription, there seems to be a lot of demand,” he said.

Additional sales of sukuk aimed to raise between 100 million and 200 million riyals, depending on market conditions, he said, adding that Maalem may consider a dollar-denominated sukuk issuance at a later stage.

The debut transaction used a structure known as murabaha, a cost-plus-profit arrangement commonly used in Saudi Arabia. The firm hoped to use an asset-backed structure for future deals, Sandwick said.

Established in 2009, Maalem received regulatory approval to operate as a non-real estate finance company in 2016 and increased its capital in 2017 to 150 million riyals.

The company plans to open several regional offices by the end 2018 and is awaiting regulatory approval for a crowdfunding license, Sandwick said.

Crowdfunding enables start-up firms to collect small sums of money from many individuals as an alternative to bank loans.

Albilad Capital, the investment banking unit of Bank Albilad, served as sole lead manager and arranger of the sukuk. ($1 = 3.7522 riyals) (Reporting by Bernardo Vizcaino; Editing by Darren Schuettler)

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