Shari'ah-Compliant Project Finance: A Structural Overview

The Chancellor Guide to the Legal and Shari`a Aspects of Islamic Finance, Forthcoming

45 Pages Posted: 8 Jun 2013

See all articles by Michael J. T. McMillen

Michael J. T. McMillen

Curtis, Mallet-Prevost, Colt & Mosle LLP; University of Pennsylvania Law School

Date Written: October 1, 2009

Abstract

This article focuses on the development and implementation of modern Shari'ah-compliant project and infrastructure finance structures and techniques.

The definition and history of project finance are summarized, as are some of the essential institutions, practices, premises, methodology and traditions of modern Shari'ah-compliant finance.

The article then turns to explanations of some of the generic structures that are used in Shari'ah-compliant project and infrastructure financings. These include bifurcated ijara (lease) structures that incorporate both conventional interest-based financing and Shari`ah-compliant investments and operations, bifurcated istisna'a-ijara (construction-lease) structures, single Islamic tranche structures that are used in tandem with conventional financings, istisna'a-parallel istisna'a construction financing structures, sukuk al-ijara (lease securitization structures), mudaraba (service-capital partnership) stuctures and sukuk al-mudaraba, musharaka (partnership, particularly diminishing partnership) structures and sukuk al-musharaka, and other structures. The Bahrain Financial Harbour Sukuk is considered as an exemplary case study.

Keywords: Islamic finance, project finance, infrastructure finance, sukuk, bonds, securitizations, ijara, lease, musharaka, partnership, mudaraba

JEL Classification: F00, F02, F23, F30, F34, F36, G15, G21, G32, K11, K12, K33

Suggested Citation

McMillen, Michael J. T., Shari'ah-Compliant Project Finance: A Structural Overview (October 1, 2009). The Chancellor Guide to the Legal and Shari`a Aspects of Islamic Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2275530

Michael J. T. McMillen (Contact Author)

Curtis, Mallet-Prevost, Colt & Mosle LLP ( email )

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University of Pennsylvania Law School ( email )

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