International law firms Allen & Overy and Latham & Watkins recently advised Saudi Arabian telecom Etihad Etisalat (Mobily) on its 10 billion riyal ($2.7 billion) syndicated Islamic financing. The financing is one of the largest general syndicated Islamic financing transactions to date.

While Allen & Overy advised the lead arranging banks on the deal, Latham & Watkins advised Mobily on the transaction.  The Al Rajhi Banking & Investment Corporation, the Banque Saudi Fransi, the Riyad Bank, the Samba Financial Group, the Saudi Hollandi Bank, the National Commercial Bank, and the Saudi British Bank acted as lead arrangers of the deal.

The financing, which was structured using a mixture of murabaha and airtime facilities, will be used to refinance Mobily’s existing outstanding long, medium and short-term facilities. Murabaha is a sharia-compliant structure which involves the purchase of an item, which is then sold to the customer at a higher price, in compliance with Islam’s ban on charging interest. The airtime facility, meanwhile, involves the purchase of minutes of airtime by the financiers from Mobily, and the subsequent sale of the airtime by the telecom company to its customers. Mobily had used the same structure for its 2007 long-term financing, which will now be refinanced.

“We are very pleased to have been involved on [in] such a landmark transaction. The fact that Mobily was able to raise such significant sums solely from the Islamic finance market against the backdrop of continued turmoil in the international financial markets speaks volumes about the strength of the Islamic finance market, particularly in Saudi Arabia,” said Atif Hanif, senior associate and head of Allen & Overy’s European Islamic Finance Group.

The Allen & Overy team was led by Hanif, and was supported by UK associate James Godfrey with involvement from London partner Michael Duncan. Riyadh-based partner Julian Johansen advised on Saudi Arabian law with help from associates Jonathan Marshall and Hosam Ghaith.

Latham & Watkins’ team was led by partners Mohammed Al-Sheikh in Riyadh and Craig Nethercott in Dubai and London, with support from associate Harjaskaran Rai, who splits time between Riyadh and Dubai. ALB

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