On 25 March 2025, a new, this time long-term, transaction was implemented on the STATUS-INVEST investment platform (Moscow) for a digital mudarabah product with a conditionally fixed income. The deal was concluded between LLC ‘Sheikh Zayed Fund for Entrepreneurship and Innovation Support’ (Grozny) (hereinafter referred to as the Sheikh Zayed Fund) and GC ‘AS SALYAM’ (Kazan) (hereinafter referred to as AS SALYAM).
Together with the Sheikh Zayed Fund, our company is systematically developing a product line for the capital market. This time, through joint efforts, we have replicated the classic structure of sukuk al-murabaha (the Islamic equivalent of bonds), adapting it to the format of an investment platform. Funds were raised to finance the activities of the product company ROYAL MARKET LLC through a murabahah transaction.
By analogy with the sukuk issue, the participants in the transaction perform the following functions:
– Sheikh Zayed Foundation – bondholder;
– AS SALYAM – SPV (special purpose vehicle);
– ROYAL MARKET LLC – beneficiary of the attraction/issuer.
The specifics of the transaction are as follows:
– First, the investor knows in advance their future expected income. Naturally, in accordance with Sharia requirements, the investor bears risks within the framework of the transaction, but the uncertainty regarding income – its absolute value – has been eliminated by us in cooperation with the head of the AS SALYAM Sharia Council;
– secondly, income is paid monthly, similar to a traditional deposit;
– thirdly, the contractual obligations of the transactions include collateral. The sequence of transactions is structured in a way that links them to the collateral, where the first transaction is mudarabah, which serves as the basis for attracting financing, and the second is murabahah, which serves as the basis for directly financing the client (collateral agreements are concluded after the delivery of goods under the murabahah agreement).
At the same time, the general structure of the transactions includes a basic element of collateral under an installment sale agreement (murabaha). A key and innovative feature of the implemented format of collateral application is that we have made it end-to-end for all transactions. This creates two levels of protection for the investor:
– first level protection – in the form of collateral for the nominal amount of the investment (protection against general economic risks in the activities of AS SALYAM as a whole),
– second level protection – in the form of second level collateral for the client’s obligations under the instalment agreement (protection against the risk of non-payment by the client under the instalment agreement).
It is precisely the format of joint interaction within the framework of the mudaraba agreement that allows the investor and the SPV to make collegial decisions on the level of protection to be applied. At the same time, the decisive vote in this decision belongs to the investor, who sees and assesses the risks of both the SPV and the client who has received financing.
This transaction continues the development of a new sector of partnership (Islamic) capital market instruments – an Islamic alternative to fixed-income deposits. At the same time, the resulting product also provides protection against borrower default in the form of collateral.
We would like to express our sincere gratitude to the Sheikh Zayed Fund for Entrepreneurship and Innovation, Status JSC and the authorities of the Republic of Tatarstan for their comprehensive support of initiatives in the field of partnership finance.
Welcome to the world of innovative Russian Islamic investment banking products.
AS SALYAM Group (Nos. 19, 20 in the Central Bank of Russia register in accordance with No. 417-FZ) https://as-salam.info/, https://ас-салям.рф/
STATUS-INVEST investment platform (STATUS JSC) (in the Central Bank of Russia’s register of investment platform operators since 22 January 2021) https://platform.rostatus.ru/
Sheikh Zayed Fund for Entrepreneurship and Innovation LLC (established in 2017 as a result of an agreement between the Head of the Chechen Republic, R.A. Kadyrov, and the President of the UAE, Sheikh Khalifa bin Zayed Al Nahyan) https://zayedfund.com/