Al-Zamin Leasing Modaraba, based at Karachi, is to
sell first ever bonds being issued by the Modaraba Sector of the
country on the Islamic principles by next month worth 250 million
rupees having a maturity of five years, said Chief Executive of Al-Zamin
Leasing Modaraba Mr. Basheer A. Chowdry.
While the module and modalities of the instrument
have been vetted by the religious scholars and approved by the
Securities & Exchange Commission of Pakistan, Al-Zamin is in the final
stage of completing all regulatory and operational technicalities to
sell bonds commonly known as Term Finance Certificate (TFC) worth one
billion rupees, said Mr. Chowdry said in an interview.
"We will float these bonds in three or four
tranches and plan to list them at the Karachi Stock Exchange by next
month", he said.
Out of 250 million rupees, 200 million rupees are
for banks, mutual funds, financial institutions and corporates while
50 million rupees for public subscription with a green shoe option for
another 50 million rupees. An overwhelming demand has already been
registered for the private placement far in excess of 200 million
rupees from the financial and corporate sector which, according to Mr.
Basheer Chowdry, reflects the confidence of the investors in the
quality of the instrument and the Issuer and confirms that the public
floatation will also be substantially oversubscribed.
The investors will get six-monthly profits on the
proposed five-year Islamic bond. An interim profit will be paid
irrespective of the actual profit or loss made by the Modaraba. If the
final profit payment determined on the basis of the annual audited
accounts was in excess of provisional profit payments then the excess
amount would be paid alongwith next six monthly profit.
A salient feature of the Musharaka-based TFC would
be the Takafful Reserve to which Al-Zamin Modaraba would contribute an
initial amount and also allocate a percentage of subsequent profits to
build a pool. This pool of fund would remain available during the
tenure of the bond to take care of profit distribution on due dates
and to insulate the investors from any operational losses during the
life of the bonds.
The concept of Musharaka-based bond was designed
late last year by Modaraba Association of Pakistan with technical
assistance of AMZ Securities, a local brokerage house in Karachi.
Profit-sharing under a Musharaka-based TFC will be based on an agreed
profit sharing ratio and will be decided at the inception of the bond
transaction. It is expected to be around 8.75 per cent. Trustees
functions will be handled by Saudi Pak Investment Company.
Al-Zamin Modaraba is engaged mainly in the leasing
business and has earned a respectable image of being prudent and
progressive entity managed by experienced bankers and professionals.
Commencing its operations in 1992, it has achieved a record of
consistent growth and profitability. Being a multi functional modaraba
in nature, Al-Zamin also participates in the short-term investments on
profit and loss basis, equity participations, financial advisory
services, project handling and portfolio management. The Modaraba has
also been undertaking mergers and acquisitions, which have increased
in its equity base to over 320 million rupees and assets base to over
1,200 million rupees.
The floatation of the Musharaka based TFCs will
resolve a long outstanding problem of the modaraba sector for resource
mobilization. It will not only provide direct access to Al-Zamin and
other Modarabas to individual and corporate investors, it will also
reduce their funding cost which would help their marketing efforts and
eventual profitability. The issuance of TFCs also establishes the fact
that the concepts of Islamic financial system can be effectively
implemented in the contemporary investment environment without
compromising on the fundamentals of Islamic ideology.
The TFCs' like floatation is for mid August through
a formal subscription to be opened at the Karachi Stock Exchange for
50 million rupees, as the pre-public floatation placement of 200
million rupees has already been substantially been over subscribed. In
the mean time further details are available with the issuers (firstname.lastname@example.org)
and AMZ Securities (email@example.com).
Pakistan is the only Islamic country where the
concept of Modaraba has been implemented through a comprehensive
legislation and regulatory infrastructure to implement the
relationship between the investors and the professional managers. In a
broader sense, it is a customized version of a mutual fund in which
the admissible mode of business are determined on the true profit and
loss sharing principles. Modaraba sector in Pakistan is a significant
component of the financial institutions of the country, having total
equity of about 9,000 million rupees and total assets of about 18,000
million rupees. There are 34 modarabas currently operating mostly
handling Ijara (Leasing) business.
AL ZAMIN LEASING MODARABA
Al-Zamin Leasing Modaraba (Al-Zamin) is a
multipurpose perpetual Modaraba engaged mainly in the leasing of
varied nature, equity market operations, project financing, arranging
syndication and financial consortiums and providing consultancy and
advisory services. Its clients include financial institutions, medium
to large sized commercial organizations and industries, trading
entities and professionals. Its sponsors include reputed financial
institutions of the country and well-known businessmen and
professionals. Al-Zamin is distinguished by the fact that its Board of
Directors and Management include senior bankers having rich and varied
experience in domestic and international banking and investment, which
has ensured a highly professional operation of the Modaraba resulting
in prudent planning and continued growth over the last 11 years.
As a part of its growth strategy, Al-Zamin has been
going through a process of acquisitions and mergers. Over the last
three years, it acquired Ghandhara Leasing Co. Ltd. and First
Professionals Modaraba which increased Al-Zamin's equity to Rs.320
million and assets base to over Rs.1,200 million. JCR-VIS Credit
Rating Co. has assigned a rating of A- (Single A Minus) to Al-Zamin's
The Chairman of the Modaraba, Mr. Zafar Iqbal is a
reputed professional and has served in the Civil Service of Pakistan.
He was the Chairman, National Development Finance Corporation,
Agricultural Development Bank Chairman, Pak Arab Investment Bank
Limited and Chief Executive of Al-Faysal Investment Bank Limited.
Besides heading a Board of Al-Zamin, he is currently the Chairman of
National Refinery Limited and Social Marketing Pakistan (Guarantee)
Limited which is an NGO.
Mr. S. M. Farooq, Vice Chairman of the Modaraba is
a well-known industrialist and Chairman of Daikin Industries, Karachi,
Daikool Airconditioners, Dubai and "AAA" Textile Mills, Farooq Silk
Mr. Basheer A. Chowdry, Chief Executive is a
professional banker, having 40 years of experience to his credit.
Being a gold medalist from Punjab University, he holds a diploma in
banking and is a member of British Institute of Management, British
Institute of Directors and Institute of International Affairs, London.
He has served as the Chairman of the Modaraba Association of Pakistan
and is presently Vice Chairman of Leasing Association of Pakistan. He
is a Director on the Board of Karachi Stock Exchange as a nominee of
Securities and Exchange Commission of Pakistan and also member of
Steering Committee of the United Nations Development Program Project
and Corporate Governance. He is an independent professional Director
of Saudi Pak Commercial Bank Limited as well. He has held senior
assignments with Bank of Credit and Commerce International, United
Kingdom and is a founder member of Al-Zamin.