International legal practice Norton Rose has advised Gatehouse Bank, the London based Shariah compliant investment bank, on its UK real estate based sukuk, the first sukuk of its kind to be issued in the UK.
The London office of Norton Rose advised Gatehouse Bank on the sukuk, which has an innovative structure involving an ijara (lease) with a sale and purchase undertaking that gives noteholders recourse to Gatehouse Bank in addition to security over the sukuk asset, in effect acting as an Islamic covered bond.
Farmida Bi, partner and European head of Islamic finance, Norton Rose, who advised Gatehouse Bank, commented:
“There has been extensive debate in Islamic finance circles as to whether sukuk need to be asset-based or asset-backed. This structure allows investors to have recourse to the originator pursuant to the purchase undertaking but, in the event of a shortfall, the investors are entitled to enforce their rights against the underlying asset.”
“Covered bonds have become a very popular means of financing since the global financial crisis. The availability of a Shariah compliant form of this structure has been watched keenly by the market. This deal demonstrates that sukuk issuers are continuing to innovate and respond to investor demand.”
“The deal also demonstrates that Islamic finance remains buoyant and active in the UK and is providing a source of liquidity at a time when conventional liquidity remains constrained.”
The Norton Rose team was led by Farmida Bi, together with senior associate Andrew Coote and associates Jordina Walker and Sara Faraj. Partner Angela Savin and senior associate Julia Lloyd advised on tax and partner Wasim Khan and associate Simon Bailey advised on the real estate aspects of the transaction.
On 29 January Norton Rose will participate in an Islamic finance reception hosted by Khalid Mahmood MP at the House of Commons entitled Islamic finance: a source of growth for the UK economy.
