Sukuk al-wakala

Glossary

Also known as wakala sukuk. A form of sukuk derived from the wakala structure. In a sukuk al-wakala, the:

Entity seeking capital (originator) establishes a special purpose vehicle (SPV).
SPV issues sukuk to investors.
SPV enters into a wakala (agency) agreement with the originator (in this capacity, the wakeel) pursuant to which the wakeel agrees, as the agent of the SPV, to invest the proceeds of the sukuk issuance in a pool of Sharia-compliant assets selected by the wakeel.
SPV holds the assets or investments in trust for the sukuk holders who each own a proportionate interest in the assets in accordance with the value of their investment.
SPV receives a specified amount from the profits generated from the investments. The originator, as wakeel, receives a fee for its investment management duties and any profits generated in excess of the specified amount.
SPV uses the amounts it receives to make periodic distribution payments to the sukuk holders.

For more information on Islamic finance in the US, see Practice Notes:

For more information on Islamic finance in the UK, see Practice notes:

Sukuk al-wakala | Practical Law