USA

QInvest and GCC investor launch “Magnolia Fund” to invest in #US #residential #market

#Qatar's QInvest announced its collaboration with a GCC institutional investor to create the Magnolia Real Estate Fund. The fund has already completed its first acquisition of an asset in Colorado, USA. The acquisition was funded using an Ijarah property debt structure. The Magnolia Fund is focused on investing in the fast-growing, income-generating multifamily residential market in the US. The Fund is building a portfolio of assets in the sector and plans to make more acquisitions during 2017. The newly acquired asset is located in Fox Creek, Thornton, a northern suburb of Denver, Colorado. The asset is projected to yield net cash in excess of eight per cent on annual basis and a net IRR in the range of 12-13%. The multifamily manager TruAmerica has co-invested in the asset and will oversee the day-to-day operations of the property.

In the Trump era, one US Muslim #investor tries a louder voice

Bashar Qasem is the most outspoken voice among Muslim investors in the United States. He was the only Islamic financial representative among religious shareholder advocates who sent a letter in February to protest U.S. President Donald Trump’s travel ban. Qasem's Azzad Asset Management firm started its work in 2005, weighing in on issues like worker safety, climate change and lobbying disclosures. This direct advocacy will test whether U.S. Muslim investors will support the sort of faith-based shareholder activism common among other religious groups. Qasem's strategy appears to be helping to differentiate his firm from other asset management firms. Azzad's assets increased 11% in 2016 to US$487 million (£393 million) at year-end. Growth included US$5.7 million into the firm’s mutual funds, the third consecutive year of inflows.

#American #Muslims Grapple With Interest-Based Borrowing

Samantha Lord-Konare converted to Islam six years ago and then she found herself in a quandary because of a student and credit card loan that her new religion prohibited. Lord-Konare vowed not to use her credit card but resolving the issue of her student loan was more challenging.
She consulted the imam who presented her with four options. She could pay off her loan in one lump sum, obtain an interest-free loan, receive the money as a gift, or do her best to pay off her student loan as quickly as she could. "Of course, I had to choose the last. I could never ask someone for that amount of money," said Lord-Konare.
Islamic scholars say there is a clear prohibition on usury in the Koran. The Shariah also stipulates that Muslims should acquire wealth in a legal and ethical manner; any element of usury, gambling or chancing is forbidden.

Qatar- Islamic finance making inroads into the #US

Islamic finance is increasingly making inroads into the US in a variety of forms, but widely out of the radar of the broader public. In the recent past, there has been a rise in the number of Islamic financial service providers. There are now about three dozen official Islamic finance providers in the US. Among the top institutions offering Islamic financial services in the country in terms of asset size are Lariba American Finance House and the associated Bank of Whittier in Los Angeles, as well as University Islamic Financial in Michigan. In terms of skills training, Harvard University has an Harvard Islamic Finance Program and the Franco-American Alliance for Islamic Finance is organising Islamic finance seminars this summer. On the consumer side, Islamic finance in the US is mostly prevalent in the real estate market.

Massive gold-backed #ETF certified as sharia compliant

US-based State Street Global Advisors announced that a huge exchange-traded fund for investment in gold has been certified as being sharia compliant. The question of whether ETFs themselves comply with Islamic law has not been addressed. The fund, called SPDR Gold Shares, is one of the world's largest ETFs, having a net asset balance of more than $30 billion. Managed and marketed by State Street Global, it is listed on the New York Stock Exchange. The World Gold Council paved the way for certification by asking the Accounting and Auditing Organization for Islamic Financial Institutions to determine criteria for gold trading. The AAOIFI announced standards for gold trading in December 2016. Joseph Cavatoni, who is in charge of ETFs at the World Gold Council, said the certification is an important step toward meeting demand for gold in the Islamic financial market.

Azzad joins coalition asking CEOs to oppose Pres. Trump's refugee and immigrant ban

Azzad Asset Management has joined other socially responsible investment institutions in signing a coalition letter to the 19 CEOs who are members of President Trump's Strategic and Policy Forum. The letter asks to oppose the president's recent executive order barring refugees and certain immigrants from seven majority-Muslim countries. In addition to public outcry against the ban on humanitarian and constitutional grounds, many have pointed out the negative impact of barring international workers on the economy. The letter was signed by 64 socially responsible investment firms and human rights and religious organizations. The Strategic and Policy Forum's first meeting is scheduled for February 3.

Charles Haresnape to leave Aldermore

Charles Haresnape, Aldermore’s group managing director of mortgages, is leaving the real estate company after six years. Haresnape will be joining shariah-compliant Gatehouse Bank as chief executive. An Aldermore spokeswoman confirmed that Haresnape was leaving and said he had been instrumental to the growth of the company's mortgage business. She added that Charles Haresnape would remain in the business whilst Aldermore searched for his replacement.

Trump policies, higher rates may spark emerging market #debt crisis

US President Donald Trump has been accused of courting international trade friction and a new international debt crisis. There were already signs given the huge debt built up over a decade of record low interest rates, and that rates had begun rising. The next international debt crisis could well be in the emerging market corporate sector. Global debt has reached US$217 trillion, equal to a record 325% of global gross domestic product. Investors in Brazil, South Korea, Thailand, Chile, Czech and Malaysia especially have been big borrowers. While most of this has been in local currencies, corporates in India, Saudi Arabia, Turkey and Russia as well as Hong Kong and Singapore have borrowed heavily in foreign currency. This creates a currency mismatch situation.

Gassner's picture

Update on the topic of Interest deductibility

Dear Reader,

Two obstacles blocking the substance of Islamic finance and destabilsing the economy, one is the risk weighting of Basle regulation discouraging banks from giving equity finance, the other the interest deductibility as cost factor discouraging corporates from taking equity finance.

At least the latter may slowly be resolved, reports FT Alphaville:

"US tax reform now contemplates ending the tax “subsidy” for interest. Ultimately, we concluded that the favoured tax treatment for debt and interest was unjustified, a position that inspired the primary private equity lobbying group to issue a 2,422 word press release assailing the FT piece."

https://ftalphaville.ft.com/2017/02/06/2183520/what-lbo-modeling-suggest...

It is worth reading completely; and I still wonder why Muslim majority countries are so slow to show any action to this adverse piece of damaging taxation.

Best regards,

Michael Gassner
www.islamicfinance.de

Seminar: Credit Risk and Recourse in Sukuk on February 27th in San Francisco, USA

Sukuk Analysis: Dissecting Risks & Recourse - CFA Continuing Education

Asset based Sukuk (Islamic bonds) are the most popular Sukuk in the market. In terms of recourse,
these are unsecured Sukuk. Covered and asset backed Sukuk are less widely used.

In this course, we will analyze the risks of different sukuk structures. The cases guide the delegates to clauses in Sukuk documentation that explain the recourse in deals.

At the end of the course, the delegates will be able to:

• Evaluate how sukuk are distinct from traditional fixed income.
• Analyze credit, legal, and Shariah issues in different types of Sukuk.
• Compare the recourse in asset based, covered and asset backed Sukuk.

Session 1: Sukuk Anatomy and Risk Issues for Asset Based Sukuk: 1 hour. This session
will analyze how regulation, credit and Shariah drive Sukuk structuring.

Case Studies:

• Government of Dubai - This transaction demonstrates how unsecured recourse is
achieved in one of the most common Sukuk structures - Ijarah or lease based. What are
the governing laws for the different documents, and what drives their application?

#New major #sources of #capital #emerge #from the #Middle #East

Middle Eastern syndicate and real estate asset management platforms are emerging as major and increasing sources of outbound capital from the region with new figures showing an increase in volumes.
“Typically, they exist to pool equity from multiple private and medium-size institutional investors to real estate assets on a deal-by-deal basis,” said Fadi Moussalli head of JLL’s International Capital Group, MENA. “In the first three quarters of 2016 the volume has already reached $5.1bn and we expect the end-year figure to reach around 7bn.”

US Senator refutes fake press release targeting Kuveyt-Turk bank

An unknown group of people have purposefully leaked new allegations surrounding the Turkey-based bank Kuveyt-Turk. A press release published on Nov. 19 claimed that US Senator Dick Durbin would hold hearings to investigate two key banking institutions in Kuwait and whether they helped fund terrorism. The press release read that Durbin would target Kuwait Finance House and its subsidiary in Turkey, the Kuveyt-Turk participation bank. A spokesman at Senator Durbin's office flatly denied the report and said it was completely false. The fake report has surfaced amidst an ongoing court case in California against the two banks on the terror funding charges. Kuveyt-Turk's lawyers dismissed the charges by saying the allegations have no merit because banks are not responsible for the allegations. President Recep Tayyip Erdogan said the allegations over Kuveyt-Turk and Kuwait Finance House were proof of Western double standards.

Faith-Based Investor Group Calls for Drugmakers to Be Transparent on Pricing

Members of the Interfaith Center on Corporate Responsibility (ICCR) are asking 17 American drug companies to be more transparent about when and why they raise prices. The investors say rising costs are putting prescription drugs out of reach for many patients. The ICCR hopes the proposals are listed in company proxy statements and put to shareholder votes at annual meetings in spring 2017. Some state legislatures have already introduced bills requiring companies to justify price increases. ICCR member Catherine Rowan hopes they get enough votes to prod companies to adopt pricing-transparency policies. She added that congressional committees have called some pharmaceutical chief executives to testify and the legislative pressures are going to persist.

#Bahrain's Ibdar Bank buys $78M prime #housing complex in Maryland, US

Bahrain-based Ibdar Bank has announced the acquisition of a $78-million multi-family housing property at Montgomery county in Maryland, USA. The area boasts the third-largest commercial downtown in the USA, being home to the headquarters of the White House, World Bank, and the International Monetary Fund. Ahmed Al Rayes, acting chief executive of Ibdar Bank, said the acquisition was the Bank's first successful foray into the USA and was aligned with the Bank’s strategy to diversify its international real estate portfolio. Bassam Kameshki, the director of Real Estate at Ibdar, said the Bank has selected a straight forward asset class in a strategic location. The investment holding period will be up to 5 years. Besides real estate, Ibdar Bank is also engaged in private equity, capital markets and investment advisory activities.

The World Bank-IFSB High-Level Seminar on Islamic Finance Attracts Large and Enthusiastic Audience

More than 100 participants participated in the World Bank-Islamic Financial Services Board (IFSB) High-Level Seminar on Islamic Finance and the Sustainable Development Goals (SDGs) on October 6. The Seminar was highlighted by a keynote address by his Royal Highness Muhammadu Sanusi II, the Emir of Kano and former Governor of the Central Bank of Nigeria. The Emir stressed the potential of Islamic finance to mobilise much needed capital to achieve the SDGs. Ms. Arunma Oteh, the Vice President and Treasurer of the World Bank, similarly stressed the importance of Islamic finance as an agent for financial inclusion and for mobilising private investment in infrastructure. The panel discussion examined how countries are increasingly using Islamic finance to support developmental goals, and innovative sukuk structures supporting both physical and social infrastructure.

Religious investors lose faith in Wells Fargo after scandal

A group of nuns and other religiously-affiliated investors have lost faith in Wells Fargo and filed a shareholder resolution calling on the bank to report on a fake accounts scandal that led to a $190 million settlement. The bank employees opened as many as 2 million checking, savings and credit card accounts without the customers' permission in order to meet sales quotas. The San Francisco-based bank said it would provide more specifics on areas like its risk controls, but that did not happen. Wells Fargo's board has taken some steps since the settlement to address concerns, but the religious shareholders now say they need more changes. For instance another resolution filed by the Unitarian Universalist Association calls on Wells Fargo's board to study how to connect executive pay with ethical conduct.

From the CIA to the GFE

The United States needs to shift its spending from war to education, from CIA-backed regime change to a new Global Fund for Education (GFE). The current imbalance in US spending on global education and military-related programs is staggering: $1 billion per year on the former, and roughly $900 billion on the latter. Several recent international reports show that annual global development assistance for primary and secondary education needs to rise from around $4 billion to around $40 billion. Only this ten-fold increase can enable poor countries to achieve universal primary and secondary education (as called for by Goal Four of the new Sustainable Development Goals).

Elizabeth Warren wants feds to answer for lack of Wall Street prosecutions

Elizabeth Warren wants the FBI and Justice Department to explain why no bankers were prosecuted for the 2008 financial crisis. She wants the agencies to explain why they didn't act on the recommendations from the Financial Crisis Inquiry Commission to prosecute top Wall Street executives. The commission was charged with investigating the cause of the 2008 financial meltdown. Warren said the commission recommended actions against 14 Wall Street firms including Citi, Fannie, Merrill and AIG, as well as Freddie Mac, Goldman Sachs, JPMorgan, Credit Suisse, UBS, Societe General, PriceWaterhouseCoopers, Moody's, Washington Mutual and Lehman Brothers. Some of those firms reached civil settlements with authorities, but none faced criminal charges.

Gassner's picture

Equity finance in form of Merchant Banking in the US under pressure

In the New York Times Deal Book, Professor Steven Davidoff Solomon writes about new steps to disapprove merchant banking by the FED to reduce risk but at high cost. From an Islamic point of view, it just looks like another door for equity investments by the banking sector is about to be shut down, while the contrary makes sense in times of an ongoing debt crisis.

Professor Solomon defines Merchant Banking as ""simply the practice of buying operating companies. The risk to a bank holding company is twofold. First, the bank could lose its money — as with any investment. Or second, it could be held liable for the debts of that company." Already he outlines that "banks are penalized for these investments by having a charge applied to their allowable capital. Second, the bank must sell the investment within 10 years, a period that can be extended by application to 15 years. These investments are monitored heavily these days to ensure they are not unduly risky."

Guidance Residential Hits $4 Billion Milestone in Delivering Islamic #HomeFinancing

Guidance Residential announced that it has reached the $4 Billion milestone in home financing. This $4 Billion threshold is more than the cumulative production of all other providers in the market. Guidance Residential has helped approximately eighteen thousand families to date, buy or refinance their homes. The company has grown into the largest Islamic finance employer in the United States. The workforce is diverse, 20% of the employees are Muslim Americans. Guidance Residential offers home financing products and services for Muslim Americans through their Shariah-compliant, Declining Balance Co-ownership Program.

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