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Tuesday, June 18, 2024

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Turkey Wealth Fund issues sovereign green Sukuk Istisnah to develop Istanbul Financial Center

Turkiye Emlak Katilim Bankasi (Emlak) carried out the world’s first sovereign green Sukuk Istisnah worth TRY600 million (US$38.69 million) to contribute to the development of the Istanbul Financial Center. Issued in December 2021, it is the first tranche of a TRY1.5 billion (US$96.74 million) green Sukuk Istisnah program. The proceeds will be used to finance eligible green buildings in the Istanbul Financial Center under the Turkey Wealth Fund (TWF).

The TWF is Turkey’s strategic investment arm and equity solutions provider. It is an asset-backed development fund that focuses on the growth targets of its portfolio companies through value creation programs and investment to support economic development. TWF Istanbul Financial Center (TWF IFC) was established in May 2020 as a subsidiary of the TWF. The IFC is projected to launch in 2022 and targets to establish Turkey as a hub for Islamic finance.

Arda Ermut, CEO of the TWF, said: “The opening of the Istanbul Financial Center is an important milestone both for Turkey’s growing and dynamic economy, and wider regions. Located in Istanbul, already a global hub, the IFC will further facilitate and support capital flows at a global level.”

The TWF IFC acts as the agent on behalf of Sukukholders to manage the proceeds and evaluate and approve green buildings with Leadership in Energy and Environmental Design (LEED) certification in the IFC. LEED is a green building rating system. The impact report of the green Sukuk is published annually.

While Emlak has experience in the green Sukuk space issuing the first green Sukuk in Turkey in November 2021, the long-term Sukuk Istisnah posed a challenge for the bank. “The average maturity of Sukuk (Istisnah) issuances in Turkey is around three to four months except for Turkish Treasury’s Sukuk/bond issuances. Although the long maturity of the issuance made it difficult for us, the issuance was completed successfully,” Esma Karabulut, the head of investment banking and investor relations at Emlak, shared.

Turkey Wealth Fund Istanbul Financial Center Green Sukuk Al Istisnah
TRY1.5 billion (US$96.74 million); first tranche TRY600 million (US$38.69 million)

24th December 2021
Summary of terms and conditions
Issuer Emlak Varlik Kiralama (subsidiary of Emlak Katalim Bankasi)
Obligor TWF IFC
Structure Istisnah
Size of issue TRY600 million (US$38.69 million)
Purpose Financing eligible green LEED Gold-certified green buildings in the IFC
Maturity date 22nd December 2023
Bookrunner Turkiye Emlak Katilim Bankasi
Pricing Benchmarked against two-year Turkish government bonds
Listing Borsa Istanbul Stock Exchange
Governing law Turkish Law
Second party opinion Altensis Managing Sustainability
Legal advisor Mutlu Avukatalik Ortakligi
Investor breakdown Islamic pensions and investment funds and institutional investors

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