Hogan Lovells, Norton Rose advise on Turkish sukuk issue

Hogan Lovells and Norton Rose have advised on what is reported to be the first sukuk issued from Turkey.

Norton Rose represented Kuveyt Türk Katılım Bankası (Kuveyt Türk), a Turkish subsidiary of Kuwait Finance House (KFH), on its $100m (£64.5m) sukuk – the shariah compliant investment vehicle – while Hogan Lovells acted for Citigroup Global Markets and Liquidity Management House.

The Hogan Lovells team was led by global Islamic finance head Rahail Ali. The team also included senior associate Roger Frankhauser and associates Sema Kandemir and Mark Brighouse.

“Structuring the sukuk was challenging – the parties had to reconcile requirements under Turkish civil law, English common law and Sharia principles,” said Ali. “Turkey has always been a favoured destination for Islamic financial institutions. This sukuk promises to open up a whole new market.”

The Norton Rose team was led by Rizwan Kanji, with support from Lidia Kamleh and global Islamic finance head Neil Miller.

“This is a key transaction for two reasons,” said Kanji. “First, it sets a benchmark for future sukuk issuances from Turkey – it’s hoped this will generate interest within the wider Turkish corporate community to consider raising finance through sukuk issuances in the international markets.

“Second, it highlights the fact that Turkish legislation is conducive to certain, but very limited, Islamic finance structures and can facilitate the issuance of sukuks by Turkish entities.”

Meanwhile, Norton Rose also acted on what is believed to be among the first sukuks issues in the UK. The firm advised North East-based technology development company International Innovative Technologies (IIT), while Herbert Smith acted for Dubai-based financiers Millennium Private Equity.

The Norton Rose team was led by London-based Farmida Bi. The team included associates Hasan Al-Ahmar and Hamed Afzal, with tax advice provided by partners John Challoner and Angela Swain.

Herbert Smith Dubai-based Islamic finance head Nadim Khan took a lead role on the deal, with support from London-based partner Thiha Tun.

Khan said: “This is an important transaction not only because it leads the way for other United Kingdom corporates to consider tapping the Islamic capital markets, but also because of the flexibility offered by the structure enabling the sukuk to be used as a private equity investment tool. We look forward to seeing a number of similar such transactions in the United Kingdom given the successful launch of this one.”