ABGC DMCC, a joint venture between UAE-based Al Seer Marine and BGN, secured a US$135 million facility for the construction of two ‘Very Large Gas Carriers’ (VLGCs) on the 31st March 2022. The syndicated facility was led by Abu Dhabi Islamic Bank (ADIB).
Structured based on an Istisna–Ijarah concept, the construction of the vessels will be based on Istisna. Upon completion of the construction, the ships will be leased to ABGC DMCC based on the Ijarah concept.
According to Nathanial Armstrong, a partner at Dentons which acted as the legal advisor for ADIB, this was the first US dollar SOFR [Secured Overnight Financing Rate]-based Islamic ship financing for ADIB, requiring Dentons to deploy a first-of-a-kind Shariah structuring to accommodate that feature.
The VLGCs financed by the facility, both on order with South Korea-based Hyundai Heavy Industries, were projected to be delivered in March and June this year respectively.
Notably, the first vessel was delivered in June 2023 while the second vessel has yet to be delivered.
The vessels, which began construction in March and May last year, will be dual-fuel-efficient and are expected to be operationally, economically and environmentally efficient as a result of their liquefied petroleum gas (LPG) engines.
According to ADIB, the LPG engine technology is a step toward zero-carbon propulsion of vessels and the shipping industry achieving its greenhouse gas emission reduction goals.
Al Seer Marine attributes the reduction of its carbon emissions to the LPG-fueled propulsion machinery of the vessels.
According to Nathanial, there have been very few green vessels commissioned by Middle Eastern owners to date, making the facility a unique transaction.
Notably, the CEO of Al Seer Marine announced last year that the company was looking to acquire a further 15 ships in 2022, which it hoped to finance.
In February this year, the joint venture ordered a further two LPG carriers from South Korea’s Hyundai Samho Heavy Industries. According to a bourse filing on the Korea Exchange, the deal is worth KRW255.4 billion (US$200.07 million) with the expected delivery date of the new ships set for January 2026.
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ABGC DMCC’s Green Vessel Facility US$135 million  31st March 2022 |
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| Summary of terms and conditions | |
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Aggregate principal amount |
US$135 million |
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Type of facility |
Pre- and post-delivery financing |
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Structure |
Istisna–Ijarah |
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Use of proceeds |
To construct two ‘Very Large Gas Carriers’ |
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Bookrunner |
Abu Dhabi Islamic Bank |
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Mandated lead arranger |
Abu Dhabi Islamic Bank, Commercial Bank of Abu Dhabi and National Bank of Fujairah |
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Legal advisor |
Dentons on behalf of the lead arranger; Holman Fenwick Willan on behalf of the project financing owner |