Al-ijarah thumma al-ba'i

Dictionary term

Definition of "Al-ijarah thumma al-ba'i"

Lit: Lease followed by sale. Tech: A form of Islamic financing arrangement for infrastructure projects, under which the infrastructure company would sell the underlying project like a road to the financiers for cash. The financiers, as owners of the project, would then lease back the project (in this case the road) to the infrastructure company. The infrastructure company issues ijarah certificates (sukuk al-ijarah) in favour of the financiers. The financiers have the option of selling these ijarah certificates at stock exchange. After the expiry of the lease, the infrastructure company has the option to purchase back the asset from the financiers.

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