A Sharia-compliant profit-sharing arrangement where one party provides capital and the other provides management, splitting profits by agreed ratio while the capital provider bears the financial loss.
Related terms
- Murabaha
A Sharia-compliant financing where the bank buys an asset and resells it to the client at a disclosed cost-plus markup payable in instalments, substituting a f…
- Musharaka
A Sharia-compliant joint venture where partners contribute capital and share profits by agreement and losses in proportion to capital; a diminishing musharaka…
- Non-recourse loan
A loan secured only by the property itself, so the lender's remedy on default is limited to seizing the asset; rarer and more expensive in emerging markets whe…
- Preferred equity
Equity that sits senior to common equity in the capital stack, receiving a fixed return and priority on distributions before common holders, but subordinate to…
- Recourse loan
A loan where the lender can pursue the borrower's other assets or guarantors beyond the pledged property if the collateral does not cover the debt — the norm f…
- Refinancing
Replacing existing debt with a new loan, often to release equity or lower cost.
- Senior debt
The first-ranking loan with priority claim on cash flows and collateral.
- Subscription line
A short-term revolving credit facility secured against LPs' undrawn commitments, used to fund deals quickly and defer capital calls; it can flatter reported IR…