Oman Shipping Company borrows $80m from ADIB for new vessels

Asyad unit will expand its fleet through purchase of two very large crude carriers

Navigating one of Oman Shipping Company's vessels. The Muscat-headquarted company has a fleet of 49 vessels, according to its website. Image courtesy of Oman Shipping Company

Oman Shipping Company, a unit of the state-owned logistics company Asyad Group, raised $80 million (Dh293.6m) through a Sharia-compliant facility as it looks to expand its fleet.

The Ijara facility from Abu Dhabi Islamic Bank will allow the shipping company to buy two more very large crude carriers.

The facility will help OSC to improve its debt position by reducing overall financing costs and removing refinancing risk.

OSC’s latest deal follows close on the heels of another agreement it forged with Standard Chartered last year for a $110 million re-financing facility to purchase three tankers and two VLCCs. Founded in 2003, the shipping firm has a fleet of 53 modern vessels (owned and chartered-in).

“ADIB has significant experience and expertise working on Middle East shipping deals across the full range of industry segments. Over the years we have been able to add significant value to partners across a wide range of innovative structures in terms of both bilateral and syndicated facilities,” said Christopher Phillips, head of ship financing at ADIB.

The Islamic finance market is continuing to gain traction in the Middle East. In 2019 alone, Abu Dhabi-headquartered ADIB said it concluded over 15 high-profile transactions across structured and syndicated finance, sukuk, mergers and acquisitions and advisory products. Some of its most significant sukuk, or Islamic bond, transactions last year include Majid Al Futtaim’s first-ever green corporate sukuk, as well as facilities for Kuwait’s Warba Bank and Aldar Investments in Abu Dhabi.

But Abu Dhabi’s biggest sharia compliant lender has also been slowly muscling its way into shipping finance in the last few years. In 2013, ADIB the lender set up a specialist financing unit to focus on structured shipping and other marine sectors. A year later, it arranged a Dh1.55 billion deal for UAE-based Zakher Marine.

Last year, ADIB saw its Q3 net profit grow 5.2 per cent to Dh620m. Revenue rose by 5.5 per cent to Dh1.5 billion in the same period, while operating income margin increased by 8.7 per cent.