Alrajhi bank announced the launch of its Tier 1 Sukuk
denominated in Saudi Riyals on Sunday, October 30th, 2022. Alrajhi Capital, was
appointed as the financial advisor and lead manager in connection with the
offering, post receiving the Capital Markets Authority approval for the public
offering on October 20th, 2022.
On the back of the bank's successful previous private
issuance in January 2022, and the significant turnout by investors at that
time, Alrajhi Bank decided to make this a public subscription. Due to this, it
will be listed on the Saudi Stock Exchange (Tadawul), and hence investors will
be able to actively trade and invest in the Sukuk. This will create liquidity
for the Sukuk and provide a greater opportunity for investors in general, and
retail investors in particular.
The bank determined a minimum investment amount of 5,000
Saudi Riyals, representing the value of five Sukuks, with each unit having a
face value of 1,000 Saudi Riyals, and set the annual return on the Sukuk at
5.50%. According to the bank, Sukuk profits will be distributed to investors on
a quarterly basis (every three months). The Tier 1 Sukuk shares many
characteristics with equity instruments, such as ordinary shares in companies,
including Zakat treatment.
Sukuk subscriptions and offerings will begin on Sunday,
October 30th, 2022, and will end on Thursday, November 10th, 2022. Investors
will be able to subscribe to Sukuk during this time period using the means
available through the receiving banks, including their digital channels. Alrajhi
bank, Saudi National Bank, Riyad Bank, Alinma Bank, Banque Saudi Fransi,
Aljazira Capital, Arab National Bank, and Bank Albilad are among the
recipients. It is also worth noting that the Tier 1 Sukuk is Shariah-compliant,
with no maturity date (perpetual), and callable in five years by the bank. The
purpose of issuing the Sukuk is to improve the bank’s ability to expand its
business. Moreover, Sukuk is one of the main investment instruments for
generating consistent income on a regular basis for investors.
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