Al Rajhi Bank offers Tier 1, SAR-denominated Sukuk for public subscription

Logo of Al Rajhi bank

Al Rajhi bank announced the launch of its Tier 1 Sukuk denominated in Saudi Riyals today, Oct. 30. Al Rajhi Capital, was appointed as the financial advisor and lead manager in connection with the offering, post receiving the Capital Markets Authority approval for the public offering on Oct. 20.

On the back of the bank's successful previous private issuance in January 2022, and the significant turnout by investors at that time, Al Rajhi Bank decided to make this a public subscription. Due to this, it will be listed on the Saudi Stock Exchange (Tadawul), and hence investors will be able to actively trade and invest in the Sukuk. This will create liquidity for the Sukuk and provide a greater opportunity for investors in general, and retail investors in particular.

The bank determined a minimum investment amount of 5,000 Saudi Riyals, representing the value of five Sukuks, with each unit having a face value of 1,000 Saudi Riyals, and set the annual return on the Sukuk at 5.50%. According to the bank, Sukuk profits will be distributed to investors on a quarterly basis (every three months). The Tier 1 Sukuk shares many characteristics with equity instruments, such as ordinary shares in companies, including Zakat treatment.

Sukuk subscriptions and offerings will begin today, and will end on Thursday, Nov. 10. Investors will be able to subscribe to Sukuk during this time period using the means available through the receiving banks, including their digital channels. Al Rajhi bank, Saudi National Bank, Riyad Bank, Alinma Bank, Banque Saudi Fransi, Aljazira Capital, Arab National Bank, and Bank Albilad are among the recipients.

It is also worth noting that the Tier 1 Sukuk is Shariah-compliant, with no maturity date (perpetual), and callable in five years by the bank. The purpose of issuing the Sukuk is to improve the bank’s ability to expand its business. Moreover, Sukuk is one of the main investment instruments for generating consistent income on a regular basis for investors.

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