Sukuk al-mudaraba

Glossary

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

The party seeking financing (mudareb) enters into an agreement with a special purpose vehicle (SPV) to manage certain assets owned by the SPV.
The SPV acquires the assets to be managed using the proceeds of a sukuk issuance.
The mudareb receives a fee for managing the assets but is not liable for any investment losses, which are borne solely by the SPV.
In some cases, the mudareb may also receive a portion of the profits.
The SPV uses the profits from the investments to make 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-mudaraba | Practical Law