Tyneside Firm Is First to Acquire Funds under Islamic Bond Rules
Byline: John Hill
ATYNESIDE firm has become the first in the country to raise money from an Islamic bond in a move which could herald more firms across the UK taking advantage of untapped funds in Asia and the Middle East.
Gateshead-based International Innovative Technologies raised $10m (pounds 6.4m) to help it develop new technologies by issuing the UK's first-ever sukuk. The sukuk is a way of allowing institutions to invest in companies without breaching Shariah principles.
Dubai-based Millennium Private Equity are the sole investor in the instrument, which will be listed on the Cayman Islands Stock Exchange and pay out 10% a year until 2014. The sukuk pays out profits from the business rather than interest payments, which are prohibited in the Koran.
International legal practice Norton Rose LLP acted for IIT, which makes high-output mills for aggregates, construction and recycling businesses. The law firm's London-based partner Farmida Bi said: "This is a significant step forward for sukuk and for any UK company looking for alternative forms of investment.
"In other jurisdictions, we've acted on a number of high profile sukuk, but there has been no UK corporate or sovereign sukuk to date. The result has been a potentially significant source of investment into the UK being essentially cut off.
"However, this deal proves that sukuk can work to great effect in the UK. The injection of funds will help fuel IIT's ambitious growth plans as well as help it further develop new technologies and products."
Financial instruments such as these have been used in the Middle East and South East Asia for several years, but Britain's tax laws proved a sticking point to their application on these shores. …