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Al Islami Shipping Fund
Summary Terms:
Product: Fixed income investment with an estimated yield of 8.5% p.a.
Tenor: 4 years with unit holder’s option to extend for a further 2˝ years. Full redemption of Investment Units at final maturity via exercise of Put Option to sell the vessels to the Charteree.
Investment Units: 1,293 units of US$ 25,000 totalling US$ 32,325,000.
Minimum Investment: US$ 25,000 (And Multiples).
Lease Rent: Quarterly rental payments providing an estimated yield of 8.5% p.a.
Underlying Investments : Ocean going vessels on bareboat charter to major shipping groups with purchase obligations.
Pre-mature Redemption: Only at the Bank’s discretion in exceptional circumstances.
Upfront Fees: Arrangement fee - 1% of the investment amount. Structuring fee - 1% of the investment amount.
Investment Manager: Tufton Oceanic Finance Group Limited.
Exclusive Distributor: Dubai Islamic Bank PJSC.
Sharia Advisor: Fatwa and Sharia Supervisory Board, Dubai Islamic Bank.
Executive Summary:
Alislami Oceanic Shipping Company Limited (“AOSC”) is a Jebel Ali Free Zone company owned by Dubai Islamic Bank PJSC (“DIB”). AOSC has invested in three ocean going vessels, which have been given on lease to regional shipping
companies for periods up to 6 ˝ years.
Investment Strengths & Considerations
The vessels are leased at pre-determined bareboat charter rates and the prices at which they will be purchased by each lessee at the end of the lease are pre-agreed, which provides certainty of income and redemption. The lessees’ guarantors are financially strong shipping companies and the vessels are modern assets with expected working lives considerably in excess of the lease periods.
The return on the Investment Units is dependent on the income derived from the leases of the vessels. The relevant investment considerations are as follows:
1. Stability of the shipping market
2. Solvency of the vessel lessees (and their guarantors)
3. Existence of senior priority liens on the vessels