Islamic Finance Daily Brief — Tuesday, October 20, 2026

What to learn: The fund owns Palantir because it copies an index. The fund tracks the S&P Global 1200 Shariah Select Index. Palantir passed that index's screens, so a passive fund bought it automatically. Shariah screens check what a company sells and how much debt and interest income it carries. The screeners might not look into the internal details of the company's customers. Due to this gap, a screening will pass a company whose main business looks clean while its contracts sit with a military.

Removing one company from a passive fund is not simple. The manager either departs from the index, which breaks the promise of tracking it, or the index provider itself removes the company. This is why investor pressure matters. Pension schemes listen when members write in. Nest confirmed its senior leadership began talks with HSBC after a small number of member inquiries. For the ordinary worker whose retirement savings sit in one of these schemes, the lesson is direct: your provider acts when you ask, and the holdings list is public, so you can see exactly where your money goes.

🔗 Source: TradingPedia (attributed to the Financial Times)

What to learn: A company can raise new sukuk money before an old sukuk matures because each issue stands on its own. The 2027 certificates have their own terms, their own payment dates, and their own maturity date. Nothing in those terms stops Arada from selling a new issue alongside them. Companies refinance this way all the time: sell the new certificates, use the money to retire the old ones, and push the repayment date further out.

Arada followed a fixed sequence of steps to run this swap:

1. Ask the existing holders for permission. In September, Arada ran a consent vote. The holders passed an extraordinary resolution on September 17 that changed the old terms and gave Arada a call right: permission to buy back the remaining certificates at face value.
2. Set up the new programme. Arada created a new issuing company, Arada Sukuk 2 Limited, and a new $1 billion issuance programme — a pre-approved framework for selling certificates in batches, as covered in the Oct 16 edition (for more detail).
3. Publish the offering document. On October 15, Arada published the programme's base offering circular. This legal document describes the new certificates, the risks, and the terms. Investors read it before they decide anything.
4. Launch the tender offer. On October 20, Arada published a formal tender offer memorandum: the price fixed at 100 percent of face value, the deadline set at October 26, and one condition — the buyback goes ahead only if the new certificates sell first.
5. Sell the new certificates. Banks acting as dealer managers price the new certificates and sell them to professional investors. Holders who tender their old certificates get priority when the new ones are handed out.
6. Settle and cancel. At settlement, expected November 2, Arada pays the tendering holders in cash, face value plus any distributions due, and cancels the old certificates it bought. If fewer holders tender than Arada targeted, the call right from step 1 covers the rest.

Regulation controls each step. The certificates are listed, so market rules required Arada to announce the offer publicly, to everyone at the same time. The old terms could only change by a holder vote. The new programme could not sell a single certificate before its offering circular was published. UK and EU rules limit the new certificates to professional investors, so they cannot be sold to the general public.

For the investor holding one of these certificates, the choice is simple. Tender and take the full face value in cash now, or keep holding and collect the periodic payments until 2027.

The tender does not pay the old investors extra return. A holder who tenders gets the face value back — $1,000 for every $1,000 of certificates — plus the periodic distributions due up to the settlement date. That is the same face value the holder would receive at maturity in 2027, paid early. Whether it counts as a gain depends on the price the holder paid. A holder who bought at a discount, say $950 for a $1,000 certificate, locks in the difference now. A holder who bought above face value takes a small loss, and the call right can force that same outcome. In exchange for tendering, the holder also gives up the distributions that would have run through to 2027. A holder who wants to stay invested can apply for the new certificates, and tendering holders get priority when the new ones are handed out.

🔗 Source: Investegate (RNS)