DUBAI, May 13, 2014: Global law firm Morgan Lewis today announced that it has advised European-based multinational insurance group, FWU Group (“FWU”) on a US$40 million issuance, representing the second tranche of their US$100 million Sukuk Al-Wakala program.
The transaction was structured to fund the operations of one of FWU’s five main subsidiaries, Atlanticlux Lebensversicherung S.A. (“ATL”), Luxembourg – a ‘BBB’-rated multinational insurance provider. The Sukuk has been assigned an investment grade credit rating of BBB- by Fitch and is being issued in amortizing tranches, each with a term of five years, and an average life of approximately 2.5 years. Distributions will be made quarterly to investors on a fully amortizing basis, with a profit rate of 7.00% per annum. The first tranche of the program, for US$20 million closed in October 2013, and was oversubscribed.
This transaction is a securitization of Shari’a-compliant life insurance policies, where the Sukuk is asset-backed, representing a true ring-fencing of assets. The specific nature of the underlying assets justified the use of a covered Sukuk Al-Wakala structure. The structure has the additional benefit of allowing for tradability of the Sukuk. A large portion of the assets securitized for the second tranche were made up of the asset management fees of the investment portfolios associated with the insurance policies from France, Germany and Italy, hence attracting a diversified set of institutional investors from the Middle East and Europe, while also providing the opportunity for investors to participate in European rated credit.
Morgan Lewis Business and Finance Practice partner Ayman Khaleq and associate Amanjit Fagura (both resident in Dubai) acted as FWU’s lead counsel on the transaction. London-based Business and Finance partner Bruce Johnston assisted in the provision of an English law opinion.
The lead arranger and bookrunner for this issuance, EIIB-Rasmala, comprises the AIM-listed European Islamic Investment Bank Plc and Rasmala Group.
Bedell Cristin Guernsey Partnership acted as Guernsey counsel to the Issue and Issuer, and Amanie Advisors acted as the Shari’a Supervisory Board to FWU.
The program was recently named 2013 Europe Deal of the Year by Islamic Finance News.