Brazil makes debut with first Islamic agri-financing deal (By IFN)

Brazil makes debut with first Islamic agri-financing deal

Daily Cover

GLOBAL: Brazil has now joined the ranks of emerging Islamic finance markets with the closing of the country’s first Shariah compliant agriculture financing deal. The deal, which was mobilized by Abu Dhabi Equity Partners (ADEP), a Cayman-registered Emerging Markets Shariah compliant investment house combined a mix of asset-backed financing, capital and profit protection from ‘A’-rated global investment banks and involved global trading houses as counterparties. The transaction was used to finance a leading sugar and ethanol producer in the agriculture state of Mato Grosso do Sul, and was structured as a combination of Wakalah and Murabahah agreement; enabling investors to buy and own the title from an unnamed alcohol chemical producer to allow the sale of ethanol at a principal plus agreed profit-rate to global petrol distribution companies on collateralized payment against a delivery basis. The deal’s advisors include White & Case, Macquarie Bank, Deutsche Bank, Khalij Islamic and Peterson Control Union Group, which will oversee monitoring and inspection. Muneef Tarmoom, managing partner at ADEP said: “By combining back-to-basics physical asset backed financing with global ‘A’-rated banks’ capital and profit protection features, it was possible for ADEP to originate financing opportunities yielding five to ten times current US Dollar Murabahah rates, from the world’s largest agri-business source and trading companies; for the benefit of Shariah conscious Gulf investors looking for compelling short-term risk-adjusted returns.”