High Demand for Turkeys First Project Financing Sukuk

Lease Certificates, a financial instrument developed for Istanbul International Financial Center representing the first Sukuk issuance.

Lease Certificates, a financial instrument developed for Istanbul International Financial Center representing the first Sukuk issuance in Turkey for project financing purposes for the first time, attracted huge interest from investors. The issuance with 1 year maturity and a nominal amount of TRY100 million ended up with a demand above TRY300 million in the very first day. 

The issuance of Lease Certificates (Sukuk), tailored by Aktif Bank, inventor of new generation banking, for the Istanbul International Financial Center project, has taken place. The issue of Lease Certificates of TRY100 million, being a ‘first’ in Turkey’s with regards to project financing, attracted high interest from investors and was fully sold in the very first day with a 3-fold oversubscription vis-a-vis the issue. 

Aktif Bank plays an active role in diversifying Turkish financial markets, pioneering the sector Aktif Bank General Manager, Dr. Önder Halisdemir, said in his statement about the Lease Certificate issue: “Aktif Bank is our country’s largest investment bank with private capital. Our Bank, as a reflection of its new-generation banking concept invented by itself, plays an active role in diversifyingTurkish Capital Markets, as well as pioneering the sector. To date, we brought many innovations to life from bank bonds to asset backed securities as well as participation certificates. We have a specific background with regard to securitization and we are experts on this field. And as part of the development of Istanbul International Financial Center project, which is of major importance for Turkey, we developed investment instruments specifically tailored for this project. It is our desire that investment in Istanbul International Financial Center is made in such diversity and with such new generation instruments as it fairly deserves. The Mudaraba Sukuk issuance developed for project financing purposes is the first step which we took towards this direction. This is a significant development for Turkish financial markets, which also promises a significant financing alternative for real estate projects, as well. May it be fruitful for our country. Thanks to the strong cooperation between us and Ağaoğlu, our partner in this project, we made another ‘first’, leaving a tire mark behind for others to follow”. 

International Investors are in a Rush for Taking Their Place in Istanbul International Financial Center

Hasan Rahvalı, CEO of Agaoglu Group of Companies, making his comment on the Sukuk issuance, stated: “The launch of new financial instruments in our national markets would play a major role in a growing national economy. These new financial instruments, like Sukuk and real estate rent certificates, likely to attract attention from the Gulf region, are encouraging for the sake of channeling those funds into Turkey which are accumulated, or even anchored, in the Gulf region. In this sense, the Sukuk issuance which we made along with Aktif Bank for Istanbul International Financial Center is a significant step towards channeling funds of international investors into Turkey.”

Underlining that Istanbul International Financial Center would pave the way for the rise of Istanbul as a worldwide capital city and as a new international financial market center, Mr. Rahvalı added: “This project attracts huge interest from different parts of the world although it is currently under construction stage. A group composed of investment bankers from the USA paid a visit for an on-site analysis. Lord Mayor, President of London Financial Center, and the accompanying group analyzed this project at the same period and stated that they are willing to take their place here and to share their experience with us. Thereafter, a group from London Chamber of Industry and Commerce also paid a visit. Khaled Mohammed Al-Abood, CEO of Islam Development Bank, contacted us at MIPIM, a real estate fair held in Cannes, said that they are willing to take their place in this project. There is an intensive interest in this project, and we witness at all international fairs and congresses that international investors are in a rush for taking their place in Istanbul International Financial Center. Therefore, we’d like to share investment opportunities of this project with institutional and individual investors by means of this Sukuk issuance.”

Aktif Bank enabled investors to participate in Turkey’s project Istanbul International Financial Center 

The Mudaraba Sukuk has been issued within the framework of a revenue-sharing partnership agreement made between the issuer, Aktif Bank Sukuk Varlık Kiralama A.Ş., founded as a special purpose vehicle, and İFM İnşaat Taahhüt A.Ş., the sourcing partner (Mudarib), wherein one party provides capital, while the other party provides its know-how on construction/real estate project development. According to this partnership agreement, the issuer provides the source company with funds raised from capital markets for realization of the construction and, at the end of the 1 year tenor, profits generated from pre-sales are paid back to investors along with the principal amount on the redemption of Lease Certificates. Long-term National Scale Rating for Lease Certificate has been set as “AA- ( Trk ) by JCR Eurasia Rating, putting the certificate on a high investment grade category”.