Agribusiness and soft commodity trader Olam Agri has secured its first shariah-compliant financing facility, drawing in US$625mn from a group of international and regional banks in Asia and the Middle East.

Olam Agri, a subsidiary of the Olam Group and major supplier of animal feed, edible oils, rice and cotton as well as commodity finance services, will use the financing for general corporate purposes.

The three-year facility is being extended under a commodity murabaha structure that adheres to Shariah financing principles, the trader says.

“This landmark commodity murabaha financing further diversifies Olam Agri’s funding mix with access to a new investor pool,” says N Muthukumar, chief executive of operations at Olam Agri and CFO of Olam Group.

Emirates NBD and Abu Dhabi Commercial Bank are acting as global shariah coordinators and are senior mandated lead arrangers (MLAs) alongside First Abu Dhabi Bank. FAB is also investment agent.

MLAs are Citi, Credit Agricole, HSBC, Mizuho Bank, MUFG and Standard Chartered, while Emirates Islamic Bank is a lead arranger.

The financing package is being guaranteed by Olam Group, yet Olam Agri will assume this responsibility once the long-awaited initial public offering (IPO) and demerger of the subsidiary is finalised.

Olam has been undertaking an organisational overhaul in recent years in a bid to boost long-term growth, yet plans to spin-off Olam Agri and a separate subsidiary, Olam Food Ingredients, have been delayed due to challenging market conditions.

Nonetheless, Olam has continued to source billions of dollars in financing from the bank market in recent years.

Last month, Olam Food Ingredients, which has taken over Olam’s cocoa, coffee, edible nuts, spices and dairy activities, secured a US$500mn export credit agency (ECA)-backed financing from SMBC and Citi. The deal, Olam’s inaugural ECA-covered financing, will help Italian importers secure raw coffee supplies.