Clifford Chance, White & Case, Norton Rose, Mochtar Karuwin Komar, Hadiputranto, Hadinoto & Partners, Wiriadinata & Saleh and Baker & McKenzie have advised on a US$1.2bn multi-sourced Shari’a compliant Islamic financing deal – the largest cross-border private sector Islamic financing into Indonesia to date.
The deal launched by PT Natrindo Telepon Seluler (AXIS), the Indonesian arm of Saudi Telecom Company (STC) comprises three distinct facilities: a US$450m dual currency syndicated facility; a US$350m facility to fund equipment purchases and civil works from Huawei; and a US$350m facility to fund equipment purchases from Ericsson.
This deal also the largest Shari’a compliant telecom financing in Asia and includes the largest Islamic hedge to be undertaken by an Asian corporate. It also registers as one of the largest global Shari’a compliant telecom financing deals thus far.
The first-ever Islamic financing transaction to be carried out by the Swedish Export Credit Agency AB Svensk Exportkredit (SEK), and backed by Swedish government-linked credit institution EKN; the deals also marks the first time the China Development Bank has supported an Islamic finance transaction. This deal also conveys the growing confidence in the market, recording the first time Islamic trade in Indonesia and telecoms trade in Asia have joined hands in partnership, receiving support from the Multilateral Investment Guarantee Agency (MIGA), underwriting the deal’s political risk insurance guarantee.
Dubai-based partner and head of Islamic finance Qudeer Latif leads the Clifford Chance team – who were the lead international counsel to AXIS. Singapore-based CC partner Andrew Gambarini worked on Singapore law issues and Deborah Christian in Hong Kong advised in relation to the Islamic hedge aspects of the transaction.
"The deal involved a number of innovative and challenging features from a legal, Shari'a and regulatory perspective to bring together a number of parties who had not participated in Islamic finance deals before," Latif said.
"Each tranche required some innovation - the dual currency syndicated Islamic facility had to be structured to accommodate Saudi regulatory concerns and also World Bank requirements for political risk insurance. The Huawei Islamic vendor facility required a careful consideration of Chinese regulatory requirements to enable China Development Bank to be involved, while the Ericsson Islamic facility required innovative structuring to comply with SEK/EKN (Swedish Government) policy requirements to allow the facility to benefit from an EKN guarantee".
According to STC chief financial officer Ameen Al Shiddi, this financing will help fund Axis’ expansion and growth strategies for the next five years, which would lead to higher financial results for the STC Group. This view is supported by Noman Ansari, the director of funding & investments at STC who said it was part of the company’s strategic vision to ensure all global funding for its group companies to be Shari’a compliant.
The CEO of Axis Eric Aas expressed a vision to grow its market share and revenues nationally. “With this milestone funding in place, AXIS is well placed for its expansion into mobiles broadband and improved coverage nationwide. This financing will fully support our expansion plans or the next few years.”
The syndicated facility financiers were advised by Baker & McKenzie, the Huawei facility financiers were advised by White & Case and the Ericsson facility financiers were advised by Norton Rose.
Local counsel advice in Indonesia was provided by Mochtar Karuwin Komar as legal advisers to Axis. Hadiputranto, Hadinoto & Partners advised as local counsel to the syndicated facility financiers and the Ericsson facility financiers. Wiriadinata & Saleh acted as local Indonesian advisers to the Huawei facilitiy financiers.
The US$450m dual currency syndicated facility was arranged by Deutsche Bank AG Saudi Arabia and HSBC Saudi Arabia, funded by Deutsche Bank Luxembour S.A. and the Saudi British Bank.
The US$400m Huawei facility was funded by China Development Bank and the US$350m Ericsson facility was arranged by HSBC, funded by AB Svensk Exportkredit (SEK) and backed by the Swedish Export Credit Agency (EKN).ALB
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