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published DECEMBER 03, 2009

Ince & Co advises Islamic Shipping Fund Safeena (L) Ltd on first investment

In Singapore, international law firm Ince & Co has advised Islamic shipping fund Safeena (L) Ltd on its first investment made through an Istisna'a and Ijarah mawsufah fi zimmah structure (a deferred purchase and forward lease arrangement) in a 19,900 dwt stainless steel chemical carrier with Jimbaran AS, a Norway-based entity which owns and operates chemical carriers. Safeena, a joint venture between Asian Finance Bank Berhad and Amanah Investment Bank (L) Ltd, is the first shipping fund to enter into an investment using such a structure, which was arranged by RS Platou Finans. Ince advised Safeena in structuring the investment, ensuring the transaction was Shariah compliant and that it complied with the fund’s obligations to investors. Ince also advised on the drafting of the purchase and lease documentation, its security in a sister vessel and conformity with the conventional financing arrangements in place in respect of the sister vessel. Safeena is a private fund. It aims to raise US$300 million through equity and debt participation to invest in structures and/or acquire a portfolio of vessels. Commenting on the transaction, Safeena chairman, Datuk Abdul Latif Abdullah said: “The structure provides an opportunity for Safeena Fund to participate in the cash flow of the underlying asset and offers an additional security arrangement through a charge on Jimbaran’s vessel." He added that the transaction was structured to ensure that it was capable of "meeting the minimum return set for the Fund”. Consultant Martin Brown of Ince & Co, said: “We were delighted to assist Safeena in putting together this innovative structure, which is an effective method for mitigating the risks involved for the fund and its investors. Its application may assist other sources of equity finance to invest in the shipping industry in the future.” Ince & Co’s team, led by consultant Martin Brown in Singapore, was assisted by London partner Peter Measures and Gregory Xu, an associate in Ince & Co’s Singapore office.