Abu Dhabi Islamic Bank raises $750m from sukuk issuance

The tier-one Sharia-compliant issuance was nine times oversubscribed

ADIB's sukuk offers a profit rate of 7.25 per cent per annum and will be listed on the London Stock Exchange. Khushnum Bhandari / The National

Abu Dhabi Islamic Bank has raised $750 million through the issuance of Sharia-compliant bonds as the biggest Islamic lender by assets in the emirate continues to diversify its funding base.

The five-year non-call, tier-one perpetual sukuk offers a profit rate of 7.25 per cent per annum and will be listed on the London Stock Exchange, the lender said in a statement on Wednesday to the Abu Dhabi Securities Exchange, where its shares are traded.

The deal, which attracted interest from more than 240 global and regional investors, was nine times oversubscribed as the final order book exceeded $7 billion.

The deal highlights “the tremendous demand and confidence from global investors in ADIB's asset quality”, group chief executive Nasser Al Awadhi said.

“The overall success of this raise can be attributed to ADIB's clear ESG [environment, social and governance] framework and our strong track record of both growing market share and delivering sustainable returns.”

ADIB, which is rated “A2" by Moody’s and “A+” by Fitch, with a stable outlook, said the issuance received broad investor interest, with final allocations of 83 per cent going to Mena investors, 13 per cent to Europe and 4 per cent to Asian investors.

By investor type, private banks subscribed to 70 per cent of the total allocation while asset and fund managers accounted for 16 per cent, commercial banks for 10 per cent and other investors for 4 per cent.

ADIB said the sukuk issuance will maintain the bank’s “optimised capital structure” and its strong common equity tier-one position, a yardstick of a lender’s financial strength.

The perpetual sukuk was structured to comply with the Basel III regulatory framework, which includes detailed criteria for capital and liquidity.

HSBC and Standard Chartered Bank were the joint global co-ordinators and structuring agents for the deal, while ADIB, Citi, Emirates NBD Capital, First Abu Dhabi Bank, and JP Morgan acted as joint lead managers and joint bookrunners.

In April, ADIB reported a 48 per cent surge in its first-quarter net profit on the back of higher revenue and fee income.

Net profit attributable to equity holders of the bank for the three months to the end of March climbed to Dh1 billion ($272 million), compared with Dh715 million for the same period last year, the lender said at the time.

Revenue for the reporting period jumped 81 per cent annually to Dh1.42 billion, while fees and commission income rose 4 per cent to Dh300 million.