Herbert Smith has advised RBS on another innovative Shari'ah-compliant leveraged buyout, the second that the firm has completed with RBS in the space of eight weeks.
The firm is advising on the financing of the LBO of Motherwell Bridge Limited, a consultancy company focused on the oil industry, by Kuwait Finance House, an Islamic sponsor headquartered in Kuwait.
The deal uses an innovative structure similar to that used on the recent LBO of Scottish oil and gas drilling parts company Downhole Products by Bahrain-based Arcapita, Inc which was also funded by RBS.
Both deals used a commodity-based Murabaha agreement (a tawarruq) to effect the acquisition financing, something that is very unusual in the European LBO market.
Malcolm Hitching, who co-led led the Herbert Smith team from London, commented:
"We are at the cutting edge of this area of market practice, and consider it likely that further Shari'ah acquisition finance will take place. A number of Islamic sponsors are increasingly looking to acquire European assets and want to tap into local debt markets to do so. Western banks are also attracted by the prospect of structuring deals which appeal to Middle Eastern lenders, many of whom have greater liquidity than their western counterparts. We are working with various interested parties on further deals."
Herbert Smith fielded an international team co-led by London finance partner Malcolm Hitching and Dubai partner Nadim Khan, with the London and Dubai teams working in close cooperation. They were assisted by Dominic O'Brien (London), Qasim Aslam (Dubai), Katherine Fortey, Heather Woodward and Paul Williams (London), and Leontine Brandt Corstius (Dubai).
Scottish legal support was provided by Dundas & Wilson, and KFH was advised by Clifford Chance.
Notes to editors
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