N10bn 15% Series 1 Sukuk issuance by TAJ Bank begins

Interest free banking is a narrow concept denoting a number of banking instruments or operations which avoid interest. A non-interest lending institution in Nigeria named TAJ Bank has announced the start of its N10 billion (15%) Series 1 Sukuk issuance program, which will last from Tuesday, September 20, 2022, to September 28, 2022.

Sukuk are Sharia-compliant financial certificates through which investors gain partial ownership on an issuer’s assets until the Sukuk maturity date. While Bonds are financial certificates through which investors lend money to the issuer, indicating an obligation for repayment at maturity date.

TAJ SUKUK ISSUANCE PROGRAMME SPV PLC, a Special Purpose Vehicle formed for the program, is making the subscription offer.

The N100 million Sukuk Issuance Programme of TAJ is responsible for its issuance, the bank stated in a statement on Tuesday.

The announcement noted that the offer price is N1,000 per units, subject to a minimum order quantity of 100 units and multiples of 50 units moving forward.

According to TAJ, the Trust Sukuk Certificate that will be given to investors has a perpetual tenor but is callable after a minimum of five years.

The statement states that the offer’s proceeds will be utilized to increase the Bank’s Tier 1 Capital. According to TAJBank, the profits will be shared in the ratio of TAJBank – 75% Trust Sukuk-holders – 25.

The Bank said, “The Issue proceeds of the Sukuk will be remitted by the Issuer to the Mudarib (TAJBank) towards the Capital of the Mudarabah pursuant to the terms of the Mudarabah Agreement in a form which meets the requirement of Additional Tier 1 capital under the capital regulation and will be used by the Mudarib to support its Tier 1 capital for the purpose of maintaining its capital adequacy and for its general corporate business activities.”

Further more, the profit will start to grow the day the issuer receives the capital contribution from Mudarabah.

The Bank’s gross earnings rose from N56m in 2019 to N3.33b in 2020, and N7.24b last year. Using data from the Bank’s offer document, profit before tax rose from a loss of N80m in 2019 to a gross profit of N297m in 2020, and N1.63b in 2021.


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