 In this module, we shall look at a real life example of a Sukuk. The Sukuk which we are going to look into that was actually issued by the government of Pakistan to raise some funds. The underlying asset was M2 motorway. The government of Pakistan, as you know, owns all the roads and motorways. M2 motorway is not an exception. So, government decided to raise some money by way of issuing a Sukuk which required an asset and this M2 between Lahore and Islamabad was used as an underlying asset for this Sukuk issuing. Of course, government of Pakistan had an option to issue a bond, a conventional bond. But at that point in time, the government decided to use a Sharia compliant means of raising more money. Hence, it was decided by Ministry of Finance to issue a Sukuk. Now, government of Pakistan, as I said, owns the motorway M2. In order to structure the deal, an SPV was set up. This SPV was actually named the Third Pakistan International Sukuk Company Limited. In previous modules, I mentioned that the SPV is normally domiciled in an offshore jurisdiction. But in this case, Pakistan decided to set up this company onshore. So, this was not an offshore structure. So, government of Pakistan set up an SPV and named it the Third Pakistan International Sukuk Company Limited. The motorway asset was actually sold to this SPV. I must clarify that this SPV was not owned by the government. These SPVs, Special Purpose Vehicles, they are run in accordance with a trust deed. The trustees have complete control over them. And the SPV trustees, they work for the benefit of the investors and not for the benefit of the obligors. So, they do not work for the government of Pakistan and they do not work for the interest of the investors. So, this motorway was sold to this SPV, which was effectively controlled by the investors. And this motorway, of course, government of Pakistan wanted to continue to use motorway. So, this motorway was leased back to the National Highway Authority, which is a government body. So, this is how this Sukuk was structured. Let's talk about the light path. Some people said in the media that the Pakistani government was selling its assets to foreigners. It was not the case. We will see how this would work. The third Pakistan International Sukuk Company Limited actually issued the Sukuk certificates. And these Sukuk certificates were bought by the investors. Most of them, they were international investors. So, technically speaking, the investors, international investors included, they became owners of the motorway. That is why they made a noise. However, this issue was discussed in detail when the Sukuk was being structured. Sharia committee's view was that from Sharia viewpoint, the international investors, they should own the asset. However, a new clause was put in the documents which said that although investors would own the asset, but they would not have full recourse to it. What does full recourse mean? If the government of Pakistan does not return the money, then the investors will not be able to sell the motorway and complete their own money. In fact, there is no other way. So, in this case, in this Sukuk, 1 billion dollars were raised from investors, mainly international investors and that money was used by the government of Pakistan. In this process, of course, the international investors, they benefited from the rental of the motorway M2, which actually was their return on their investments. So, this is actually a structure in which an asset is used. This company would sell this asset to another company. A would sell and then, of course, after some time, it would buy it back. After the financing period is over, it would buy back that asset. But around this structure, what would happen? Effectively, these investors, see, they would be giving money to this party A and they would be receiving that money plus something back. So, this is a very short kind of summary of this Sukuk structure. There is a movement of the asset and there is a movement of the money around it. When people see this, some people say, what happened? You sold the asset and then you bought it. You took 1 billion and returned 1 billion plus return. So, this is like a sham. Actually, this is not like a sham. This is a genuine transaction. Why the asset is sold? Asset is sold because it serves as a collateral. Collateral also becomes a big thing. In case of collateral, the ownership of the asset remains with party A. If default occurs, then they are sold to that collateral and then they are paid. This meant to give added kind of assurance to the investors. The party A obligor sells that asset, puts that asset in an SPV, which does not have any control on it. And it says that if we can return the money, then you can sell this asset and fulfill your money. So, from this viewpoint, from financial and legal viewpoint, this is a very tight structure. In many ways, it is a lot better than our conventional bond structure, which doesn't give that kind of assurance to the investors.