Dubai investment deal for manufacturer

International Innovative Technologies, a maker of industrial milling machines in the North-East, has raised $10m through a private-equity-style sukuk to help develop new products, its legal adviser, Norton Rose, said.

Dubai-based Millennium Private Equity Ltd will be the sole investor in the sukuk, which will be listed on the Cayman Islands Stock Exchange. The sukuk will pay 10 per cent a year and will expire in 2014.

The sukuk is using a so-called musharaka structure, also known as profit-and-loss sharing, allowing Millennium an option to take a stake in IIT.

Sukuk are generally certificates of ownership of either an asset or a project, or a business venture.

In musharaka, parties contribute capital to a venture with profits to be shared in an agreed ratio, while losses are generally divided in line with capital contributions.

Before the credit crisis, Islamic finance had been touted as a more reliable source of capital for companies because of its use of tangible assets, but the sector suffered a dent in the wake of the Dubai debt crisis.

Britain is viewed as the most advanced Islamic finance centre in Europe, having changed its legislative and tax frameworks to accommodate the tenets of Islamic law.