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Allen & Overy advises on largest sukuk of the year to date

RIYADH and LONDON - Allen & Overy LLP and its affiliated office in Riyadh, Abdulaziz AlGasim Law Firm, have advised Saudi Electricity Company ( SEC ) on the issuance of a SAR7 billion (USD1.87 billion) sukuk, the largest sukuk issue globally in 2010 to date.

The issuance, which is the third by SEC , is the first public offering of the year in Saudi Arabia, and is also the first corporate sukuk with the equivalent of a seven year maturity to be offered in the Kingdom.

The deal involves the transfer by SEC of a portfolio of assets to a custodian, Sukuk Electricity Company, a wholly-owned subsidiary of SEC . In common with SEC 's 2009 sukuk issuance, the asset portfolio comprises the rights granted to SEC under a Saudi Arabian Council of Ministers Resolution to provide electrical service connections and to levy and receive a one-time charge for each connection. HSBC Saudi Arabia Limited and Samba Capital were joint lead managers on the deal, with the securities receiving an indicative 'AA-' rating from Fitch.

Proceeds raised through the issue will be used by SEC , in part, to fund an investment programme designed to expand its generation capacity and enhance the efficiency of SEC 's transmission grid.

Commenting, Riyadh-based associate Jonathan Marshall, who also advised on SEC 's first two sukuk issuances in 2007 and 2009, said: " SEC has once again shown that it is able to tap into the large pool of Saudi investors looking for investment grade Shari'ah compliant securities while at the same time pushing the boundaries by offering an equivalent seven year term in comparison to the shorter term sukuk previously offered in the Kingdom. With a number of other public and private offerings likely in Saudi this year we anticipate that the Saudi sukuk market will continue to grow and diversify".

London-based senior associate, Atif Hanif, who has advised SEC on all of its sukuk issues, added: "This deal shows that the Saudi sukuk market is maturing with investors seeking to hold longer term instruments. It also showcases the continued strength and depth of the domestic Saudi market".

Allen & Overy fielded a multi-jurisdictional team for this deal, spanning both London and Riyadh. The team was led by senior associate Atif Hanif in London, together with partner Zeyad Khoshaim and associate Jonathan Marshall in Riyadh, assisted by Bilal Mahmood (London) and Hosam Al-Ghaith (Riyadh). Allen & Overy partners, Roger Wedderburn-Day (London) and Julian Johansen (Riyadh) also advised.

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Notes to editors

www.allenovery.com

1. Allen & Overy is an international legal practice with approximately 5,000 staff, including some 470 partners, working in 35 major centres worldwide."

2. Allen & Overy has been at the forefront of developments in the burgeoning Islamic finance market having worked on a large number of international sukuk issues to date including what is generally recognised as being the first ever internationally marketed sukuk issue - the Government of Malaysia global sukuk issue in 2002.

3. In this press release 'Allen & Overy' means Allen & Overy LLP and/or its affiliated undertakings.

4. The term 'partner' is used to refer to a member of Allen & Overy LLP or to an employee or consultant with equivalent standing and qualifications or to an individual with equivalent status in one of Allen & Overy LLP's affiliated undertakings.

5. Abdulaziz AlGasim Law Firm is a leading Saudi legal firm known for its expertise and specialisation in Islamic finance, corporate matters, capital markets, and cooperative insurance in the Saudi law context. With lawyers who have experience and a deep understanding of the legal and Islamic law (Sharia) environment in the Kingdom, legal services are provided covering a broad spectrum of capabilities.

For further information please contact
Caroline Livesey,
Tel (London) +44 20 3088 4380.
Email: caroline.livesey@allenovery.com

© Press Release 2010

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