Leveraging Islamic Finance for the benefit of UK businesses in Saudi Arabia

UKEF Secures $700 million largest ever maiden Middle Eastern Regional Murabaha deal


Story: Mohammed A. Abu

The UK Export Finance(UKEF) has guaranteed the country’s largest ever Murabaha facility for USD700.00 in a maiden landmark Middle Eastern deal signed by Qadiyya Investment Company supported by the Public Investment Fund of the Kingdom of Saudi Arabia, to finance the construction of the Six Flags City Theme Park in the country.

The project, the financing of which is based on procuring goods and services from UK exporters, is being undertaken by a joint venture led by Bouygues Bâtiment International and Almabani General Contractors in a move that helps UK exporters gain wider access to the opportunities being created by PIF’s investment in large-scale infrastructure development.

UKEF’s involvement has secured opportunities for UK exporters delivering key equipment and services to the project.

Reinsurance Collaborating Parties

UKEF was supported by reinsurance from the Dutch ECA Atradius Dutch State Business N.V., the Italian ECA SACE S.p.A., and the German ECA Euler-Hermes Aktiengesellschaft.

Collaborating Banking Institutions  

Crédit Agricole CIB acted as exclusive ECA Coordinating Bank, Structuring and Documentation Bank and Investment Agent, and, together with a syndicate of banks comprising HSBC and BNP Paribas, as Mandated Lead Arranger (MLA).

These were contained in a Press Release issued by UKEF in London, Wednesday.

The release quotes the UK Export Finance Chief Executive, Tim Reid to have said: “Saudi Arabia’s ‘Vision 2030’ is hugely ambitious, and UKEF is determined to ensure that British businesses can benefit from the enormous exporting opportunities it offers”.

“This new landmark deal not only creates exciting business for UK suppliers, but demonstrates UKEF’s ability to unlock new sources of commercial finance to make transformative projects possible around the globe.”

Oliver Christian, His Majesty’s Trade Commissioner for the Middle East and Pakistan, on his part said, “UK-Saudi Arabia bilateral trade stood at over £17bn last year, and our trading relationship goes from strength to strength. This is clearly demonstrated by today’s announcement that UK Export Finance has secured another strategic win by supporting this record-breaking Islamic financing deal – its largest ever Murabaha. This transaction will help UK exporters access even more of the valuable trading opportunities being created by Saudi investment in infrastructure and socio-economic transformation”

Murâbaḥah which has since become the most common form of Islamic compliance trade financing facility is derived from the Arabic word, ribh, meaning profit, is originally a term of Islamic jurisprudence for a sales contract where the buyer and seller agree on the markup (profit) or “cost-plus” price for the item(s) being sold with deferred payment allowed for the goods.

Murabaha financing is similar to a rent-to-own arrangement in the non-Muslim world, with the intermediary (e.g., the lending bank) retaining ownership of the item being sold until the loan is paid in full.









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