Allen & Overy (A&O) has acted for two Western banks in the first non-government financing of a power project in Saudi Arabia.
The unique financing, which has laid a precedent for Western parties navigating Saudi law, is expected to spark more financings in the region.
Traditionally, financing has come from Saudi government banks. The use of Western money and English law raised a conflict with the Sharia law that governed the arrangement side. A main source of conflict was that Sharia law bans lenders making interest on loans. An effective bridge had to be built between the two laws so that the banks could accrue interest.
The $170m (£105.8m) of loans by Credit Agricole Indosuez and Banque Saudi Fransi for the new power plant is to be repaid over 15 years, which is the longest period of repayment in Saudi history.