Al-Marzouq: Kuwait KFH-Capital's role in arranging EQUATE Sukuk affirms keenness to support national economy

05 March 2017

Kuwait – Chief Executive Officer -KFH Capital, affiliated to Kuwait Finance House Group, Abdulaziz Nasser Al-Marzouq said that KFH Capital acted as a global coordinator and book runner for EQUATE SUKUK SPC Limited’s (“EQUATE SPC”) in collaboration with different global institutions. In addition, KFH Capital also acted in collaboration with HSBC, as Program Arrangers for its debut US$ 500 million Sukuk offering under the US$ 2.0 billion Trust Certificate (“Sukuk”) Issuance Program. Equate issuance is rated Baa2 by Moody’s and BBB+ by Standard & Poor’s. It has been listed on the Irish Stock Exchange.

Al-Marzouq added in a press release that EQUATE Sukuk is the first issuance approved for a Kuwaiti Corporate by Capital Market Authority as per the new CMA law. He applauded the cooperation between the CMA and the issuance participants. He voiced hope that this move is a starting point for further issuances from Kuwaiti Corporates, and a call for taking advantage of Sukuk product as a significant financing tool in the global markets. Sukuk receive huge investors’ interest and turnout as they play a key role in boosting the expansion and growth plans.

Al-Marzouq stated that the 7-year Sukuk offering will mature in February 2024. The issuance was well received by banks, financial institutions and fund managers globally, with 7 times oversubscription and an order book of US$ 3.7bn.

He said that the issuance witnessed the participation of 270 investors from Middle East, Europe and Asia, indicating the pricing was very competitive to the conventional bonds. This affirms the importance of Sukuk at the global level.

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The 7-year Sukuk were priced competitively with a profit rate of 175 basis points over the 7-year mid-swap rate arriving at a coupon of 3.944%. During the book building process the initial price thoughts were released at MS + 210a which was later revised to MS+187a and finally the Sukuk was priced at MS+ 175 bps on the basis of strong demand from investors. This affirms the robust financial position of EQUATE.

Mohammad Husain, EQUATE Group’s Chief Executive Officer commented: “We are very proud of our debut Sukuk issuance which marks our second successful transaction in the global debt capital markets. We are especially proud of the strong investor reception, which is a true testament to the quality of EQUATE Group’s credit.” He expressed his thanks to KFH Capital in recognition of the efforts exerted to take approvals and for the coordination with the CMA and concerned authorities to make the issuance successful.

Al-Marzouq indicated that this success is a continuation of KFH effort in boosting the industrial sector in the country, particularly the petrochemicals. KFH is keen on supporting the national economy by offering financing services. KFH participated previously in offering credit facilities to different projects of EQUATE. Al Marzouq affirmed that KFH stands as a strategic partner in projects in the oil and gas sector, and petrochemical and other important sectors

It is worth noting that Citigroup Global Markets Limited, HSBC Bank plc, J.P. Morgan Securities plc and KFH Capital Investment Company KSCC and NBK Capital acted as Global Coordinators. Citigroup Global Markets Limited, HSBC Bank plc, J.P. Morgan Securities plc, KFH Capital Investment Company KSCC, NBK Capital, MUFG Securities EMEA plc, Mizuho International plc, National Bank of Abu Dhabi P.J.S.C. and SMBC Nikko Capital Markets Limited acted as Joint Lead Managers

About the EQUATE Group
With operations in various global locations including Kuwait, Canada and Germany the EQUATE Group is the largest producer of petrochemical products in Kuwait and one of the leading producers of petrochemical products in the Middle East by sales and production volume, according to market reports. EQUATE Group produces, distributes and markets ethylene glycol, polyethylene and their co-products globally, including to Asia, North and South America, the Middle East, Turkey, India, Pakistan and Europe, and produces, distributes and markets polyethylene terephthalate in Europe with production facilities in Kuwait, Europe and North America. As of and for the year ended 31 December 2015, the EQUATE Group was the world’s second largest producer of ethylene glycol by capacity according to PCI and the world’s second largest distributor of ethylene glycol by sales volume. The EQUATE Group is 85% owned by the Petrochemical Industries Company and The Dow Chemical Company.

About KFH Capital
The Company was incorporated on March 17th, 1999 under the name of Muthanna Investment Company as an investment company carrying on business in accordance with the Noble Islamic Sharia’a. Pursuant to the ordinary assembly resolution dated December 29th, 2013, the Company name was changed to “KFH Capital Investment Company” (KFHC). The Company roots extend to several decades ago with the incorporation of the main shareholder and parent company, Kuwait Finance House, in 1977 as the first Islamic financial institution in Kuwait. KFH Capital Investment company is considered as the main investment arm of Kuwait Finance House. The company’s paid up capital is 100,000,000 Kuwaiti Dinar.

© Press Release 2017