Herbert Smith last week closed an innovative sharia-compliant acquisition financing transaction for Royal Bank of Scotland (RBS).
The firm advised the Edinburgh arm of RBS' Corporate & Structured Finance Group of RBS in connection with the financing of the acquisition of Scottish target Downhole Products Limited by Bahrain-based Arcapita, Inc and members of the target's management team.
The LBO financing was structured as a murabaha metals trading facility, the form of which was approved by Arcapita's sharia scholars.
Malcolm Hitching, who co-led the Herbert Smith team, commented:
"The use of a murabaha facility in an LBO context is a relatively new phenomenon in the UK, but may well be a significant one given continuing liquidity pressures in the traditional western debt markets. This deal is a rare example of sharia-compliant financing being provided directly by a UK bank for the acquisition a UK company, whereas most previous deals of this type have used offshore vehicles. It was a pleasure working with RBS on such an innovative transaction."
Downhole Products Limited designs and manufactures centralisers, reamer shoes and well completion products deployed on casing, liners and screens used in oil and gas exploration and extraction.
The Herbert Smith team was led jointly by acquisition finance partner Malcolm Hitching, assisted by Dominic O'Brien, Katherine Fortey and Heather Woodward (London Finance Division) and Paul Williams (London Tax Division); and Nadim Khan, a finance partner in the firm's Dubai office, assisted by Qazim Aslam.
Maclay Murray & Spens and Hughes Hubbard & Reed provided RBS with Scottish and US advice, respectively. King & Spalding advised Arcapita, with Brodies providing Scottish law advice.
Notes to editors
- Herbert Smith LLP is an international legal practice with 1200 lawyers (including over 240 partners) and a network of offices in Europe and Asia. It has a formal alliance with leading German firm Gleiss Lutz and leading Dutch and Belgian firm Stibbe. On 1 April 2005 Herbert Smith became Herbert Smith LLP, a limited liability partnership. www.herbertsmith.com
- For further information please contact Michael Evans in the communications team on +44 (0)20 7466 3190 or michael.evans@herbertsmith.com