Norton Rose Fulbright has advised Al Rayan Bank Plc (Al Rayan) on a £250 million Shariah-compliant securitisation of home purchase plans (HPPs). The firm acted as structuring and documentation counsel.

The transaction, Tolkien Funding Sukuk No. 1 Plc (Tolkien), is the first Shariah-compliant public HPP backed securitisation in the UK. It is also the first public securitisation in the UK to be issued under the UK’s “alternative finance arrangements” regime designed to facilitate Shariah-compliant securitisations.

Tolkien is issuing certificates backed by a portfolio of HPPs originated by Al Rayan to customers in England and Wales. The intention of the originator and the lead managers was to structure a transaction that, while Shariah-compliant, also replicated as far as possible a conventional UK residential mortgage backed securitisation (RMBS).

HPPs are a Shariah-compliant alternative to residential mortgage loans and regulated in a similar manner to mortgage lending in the UK.

David Shearer, partner, Norton Rose Fulbright, comments:

“Tolkien involves the innovative use of securitisation techniques, while delivering a structure that is recognisably a UK RMBS transaction. We are delighted to have been able to field such an experienced, cross disciplinary global team to assist Al Rayan in the structuring and successful completion of this transaction.”

The Norton Rose Fulbright team was led by securitisation partner David Shearer and tax partner Angela Savin in London, and Islamic capital markets partner Gregory Man in Dubai. Additional Islamic finance support was provided by partner Mohammed Paracha in Dubai. US law support was provided by capital markets partner Patrick Dolan and counsel Kathleen Scott in New York, and Darius Ravangard in Austin.

Real estate partners Wasim Khan and David Stevens, and regulatory partners Marcus Evans and Imogen Garner, also provided specialist advice.