HBFC declares financial close of RS. 1.5 BN Sukuk issue

The House Building Finance Corporation Limited has declared financial close of its RS. 1.5 billion Sukuk Issue, which is Pakistan’s first mortgaged backed Sukuk Issue. The funds being so raised will be utilized for company’s business expansion.

HBFC had mandated the consortium of Standard Chartered Bank (Pakistan) Limited, AMZ Securities (Private) Limited and Emirates Global Islamic Bank Limited to act as Advisors & Arrangers of the said sharia compliant Sukuk which offers attractive return to its investors payable on semi-annual basis and the Musharaka Units will be re-purchased by HBFC Ltd in equal installments starting from the 18th month of first drawdown.

HBFC Ltd’s Sukuk Issue is being hailed as a landmark achievement in the development of Islamic finance industry in Pakistan.

In order to provide funding to its business growth plan, HBFC intends to rise market based funding through instruments like Sukuk, Securitization and REITs etc.

HBFC welcome the announcement of REIT laws by SECP and in all act to announce country’s first Islamic REIT for which real estate assets are already available with HBFC in prime location at Lahore, Islamabad & Peshawar. BMA is acting as HBFC Advisor on REITs while NESPAK are the design consultants.

HBFC was established in 1952 under the HBFC Act, to provide financial facilities for the construction, re-construction, repair, and purchase of houses, particularly to the low and middle-income groups of the economy.

The Government of Pakistan and the State Bank of Pakistan jointly hold the share capital of the Corporation. In July 2007, it has been corporatized and is incorporated as a public limited company.

HBFC Ltd has presence in more than 90 Districts with a network of 60 branches and 34 Representative offices spanning across the country, managed through 3 Provincial Chiefs and 12 zones with headquarters at Karachi. The HBFC Limited disbursed RS.

2.5 billion and RS. 3.5 billion during the years 2006 and 2007, respectively, for the construction, purchase, and renovation of houses.

During the year 2008 it has plans to disburse Rs. 7.5 billion, to be funded through launching of two more Sukuk Issues of Rs 3 billion each. Unlike other financial institutions engaged in housing finance business, the bulk of the loan disbursements of HBFC Ltd are to low income group, and for construction of houses, as against outright purchase and renovation.

Under its new mission, the HBFC Ltd aims to be the housing bank for Small & Medium Housing (SMH) finance.