Americas

Goldman Breaks Drought With Saudi Property Bond: Islamic Finance

Goldman Sachs Group Inc. (GS) led its first sukuk in more than three years after helping a Saudi property developer raise $450 million. The bank was a lead arranger on Dar Al Arkan Real Estate Development Co. (ALARKAN)’s sukuk on May 21, reforging links with the Riyadh-based real estate company after helping arrange the sale of its $450 million five-year bonds in February 2010. The New York-based bank is seeking to catch up with U.S. competitors as demand accelerates for securities that conform to Islamic principles. Increased competition in the industry could work in banks’ favor, as lower fees increase the chances borrowers will come to market and more banks means a greater profile for the Islamic industry.

Arcapita Fights $70 Million Claim as Plan Confirmation Nears

Last week, Arcapita took on Tide Natural Gas Storage LP's contention that Arcapita's bankruptcy plan shouldn't be approved by a judge because of $70 million it says it is owed.The $70 million lies in an escrow account and stems from Tide's 2010 purchase of natural-gas storage facilities from an Arcapita subsidiary. Tide has been fighting for the money in U.S. district court in Manhattan for two years saying its claim to the $70 million shouldn't be placed behind the claims of other creditors. In its filing made last week, Arcapita says the $70 million claim by Tide should be subordinated to those of other creditors. The filing comes as Arcapita tries to finalize its exit from Chapter 11. Tide lawyers have said they will most likely fight the plan at a hearing next month.

Muslim Immigration Fueling “Islamic Banking” in Canada

The majority of Muslim-Canadians strive to lead productive lives and contribute positively to their country. The rising profile of the “Islamic banking” industry is one of these ways. However, Islamic financial instruments are often very similar to interest-based lending, leading some to criticize it as dishonestly advertised for profit, or to promote Islam. The sector’s supporters say it provides a means by which people can bank in accordance with their values by avoiding lending at very high interest rates or providing funding to activities they are religiously and/or ethically opposed to. Canada’s Islamic banking sector is still relatively small compared to that of other Western countries, but it is likely it will continue to see growth in the coming years given the rising population of Canadian Muslims, which now number nearly one million.

Treasury Sanctions UAE-Based Evaders

The U.S. Treasury Department has placed sanctions on Al Hilal Exchange and Al Fida International General Trading, both based in Dubai. The two institutions were targeted for their role in providing financial services to Bank Mellat, which is itself under U.S. sanctions for being involved in Iran’s nuclear program. Both the exchange house and the trading company helped Iran maintain access to foreign currency Exchange. Moreover, Al Hilal also provided services to Bank Melli, which is also under U.S. sanctions. Representatives from each firm couldn’t be reached.

Goldman Bests Fortress In Arcapita Bank Loan Battle

Goldman Sachs International on Wednesday outbid Fortress Investment Group LLC to provide exit financing to Arcapita Bank BSC worth up to $350 million, money that will allow the Bahraini bank to meet outstanding obligations and work its way out of bankruptcy. U.S. Bankruptcy Judge Sean H. Lane noted that the bank was in the unusual position of having two institutions fighting over which would be able to provide the financing.

Azzad Hosts Leader in Turkish Finance

Azzad Asset Management recently hosted Dr. Mehmet Yesilyaprak of Turkiye Finans Bank at its headquarters in Washington, D.C. Yesilyaprak gave the Azzad staff an update on the banking sector in Turkey and met afterwards with Azzad management to discuss areas of future collaboration. The Azzad Wise Capital Fund invests in deposits and notes from Turkiye Finans Bank, among other Islamic banks. The Fund also invests in sukuk. As of March 31, 2013, deposits from Turkiye Finans Bank represented approximately 13% of the Fund's holdings. Portfolio Manager Jamal Elbarmil recently highlighted the contribution of Turkey's Islamic banking sector to the Azzad Wise Capital Fund's first quarter results, stating that exposure to bank deposits from the four Turkish Participation Banks, including Turkiye Finans Bank, helped the Fund outperform its benchmark for the period.

S&P BSE 500 Shariah First Index Launched By Bombay Stock Exchange And S&P Dow Jones Indices Strategic Partnership

Bombay Stock Exchange (BSE) and S&P Dow Jones Indices have announced the launch of the S&P BSE 500 Shariah index, the first new index resulting from the strategic partnership formed between the two companies in February of this year. The S&P BSE 500 consists of 500 of the largest, most liquid Indian stocks trading at the BSE. The index represents nearly 93% of the total market capitalization on the BSE and covers all 20 major industries of the economy. S&P Dow Jones Indices has contracted with Ratings Intelligence Partners (RI) to provide the Shariah screens and to filter the stocks. BSE and S&P Dow Jones Indices announced on February 19, 2013, a strategic partnership to calculate, disseminate, and license the widely followed suite of BSE indices.

Gatehouse Bank's associate realises $71m real estate investment in San Francisco with a 100% return on equity

London-based Gatehouse Bank plc (Gatehouse) has announced that its associate has successfully completed the sale of a real estate investment located in San Francisco's South Financial District in California. The total amount of the sale reached $71m (£46.4m), which yielded a profit on equity of 100% post costs and taxes. This real estate investment consists of two office buildings situated on a 15,306 sq ft parcel of land and is adjacent to the proposed Transbay Redevelopment Project. Gatehouse Bank and its associate were assisted by Arch Street Capital Advisors, L.L.C. and SKS Investments in this transaction.

Woodbridge University’s Effective MBA Program in Islamic Banking Draws More Than 1,500 New Students

In response to the exponential growth of Islamic Banking as a field, Woodbridge University has introduced its MBA program in Islamic Banking. The program is designed to equip executives with the specialist knowledge required for professional development in the international finance sector. It follows many of the same core modules as the Banking and Finance MBA, but also includes specialist modules in Islamic Banking and Finance. The MBA Program has attracted over 1,500 new students so far.

‘US, UK banks refusing Islami Bank’

Banks in the United Kingdom and the United States are not accepting transactions made through the Islami Bank Bangladesh Limited after allegations surfaced about its alleged funding of militant groups across the globe. The matter came to light when a team of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) met the central bank Governor. According to BGMEA, banks in the United Kingdom and the United States are not accepting export bills and documents through the Islami Bank Bangladesh. Apparel sector’s apex body has requested Bangladesh Bank Governor Atiur Rahman to resolve the issue, saying many of its members were facing troubles. The bank posted a clarification on its website and denied the charges.

Nicholas Kaiser: Fund that targets U.S. Muslims has wider following

Nicholas Kaiser, chairman of Saturna Capital Corp., has been managing the shariah-compliant Amana Funds which target Muslim investors in the U.S. since 1994. Mr. Káiser can't invest in companies that derive a significant part of their business from activities unacceptable to the principles of Shariah law. Another challenge is managing his cash because earning interest is prohibited. He currently holds 4.3% of the fund's assets in cash. The fund has a 10-year average annual return of 12.2%. It now has $2.2 billion in assets, and Mr. Kaiser estimates that only about 10% to 12% of investors in it are Muslim.

Arcapita creditors irked by offer to pay legal fees in failed IPO

Creditors of bankrupt Arcapita say the investment bank should not be allowed to foot the legal bills of lawyers from Linklaters and Freshfields who ran a failed initial public offering last year of Arcapita's real estate assets. Arcapita has so far paid $1.5 million in professional fees associated with the IPO, but last month submitted court papers looking to pay another $6.8 million to Linklaters, $1.1 million for Freshfields Bruckhaus Deringer, and $2.76 million to KPMG, which served as auditor on the IPO effort. However, Arcapita's creditors argue that the IPO's failure prevented anyone from benefiting from the professionals' work. A hearing on the matter, initially scheduled for March 18, was postponed until April 30.

Press Release: Gatehouse Bank completes US acquisition of GSA tenanted office building

London-based Gatehouse Bank plc (Gatehouse) has completed the acquisition of a 163,000 sq ft, state of the art office building in Salt Lake City, Utah. The deal is expected to return a stable and healthy yield over the investment period. The property is 100% leased to theGeneral Services Administration (GSA) for a fixed term of 20 years. The Class-A office building has been built specifically to meet the critical security requirements of the tenant. Gatehouse Bank was assisted by Arch Street Capital Advisors and sister company GSH in this transaction.

Qatari Shard investor to avoid Europe this year -exec

The real-estate arm of Qinvest, the Qatari investment bank will focus on the United States and its home market and avoid Europe this year. This is because competition makes the European market tougher. With targeted returns of up to 6 percent and over, the bank's plan is to focus on assets in U.S. retail - such as single-tenant units on New York City's Fifth Avenue - and in the less liquid and less crowded Qatari market. Qinvest is in the process of taking over Egyptian investment bank EFG Hermes , though regulators have yet to approve the deal.

Natural Gas Co. Wants Trustee For Arcapita Subsidiary

Tide Natural Gas Storage I LP, which paid $515 million for natural gas assets from a subsidiary of Bahrain's bankrupt Arcapita Bank BSC, asked a New York bankruptcy court Monday to appoint a trustee of the subsidiary's bankruptcy because of conflicts of interest. Tide asked to convert Arcapita subsidiary Falcon Gas Storage Co. Inc.'s bankruptcy from Chapter 11 to Chapter 7 and for the court to appoint a trustee because Arcapita reorganization's plan will give the Bahraini bank and its creditors too much power.

Can top corporations develop needed water solutions?

Nearly 300 asset managers, water infrastructure and energy sector executives attended the event ‘Water: Emerging Risks and Opportunities' in New York to learn about opportunities for investing in water and the growing water demands of the United States’ booming unconventional energy sector. The event was sponsored by Goldman Sachs, GE and the World Resources Institute. On the other hand, the Interfaith Center for Corporate Responsibility convened a roundtable on the obligations of companies to respect the human right to water. Seventy religious investors, major water-intensive companies, and grassroots activists came together to tackle the question of what companies can and should do to ensure their operations “do no harm” to water supplies of local communities. Investors at the Goldman event very well may be driving the green technologies that can help the industrial companies at the ICCR session clean up their acts. But the problem for companies is that in most places, water is so cheap that investing in these solutions can sometimes be hard to justify on a traditional ROI basis, if not on a moral one.

MBA Students: How Would You Solve Unemployment in the Middle East & North Africa?

Middle Eastern business leaders gathered to discuss "Economies of Freedom: Reshaping the Future of the MENA region" at the second annual Wharton MENA Business Conference on Feb. 16, which was held in Philadelphia. Iraqi entrepreneur Shwan Taha, one of the panelists at the conference, advised the young audience to invest in frontier markets in whichever sector that could serve the young generation. Joe Saddi, who heads Booz & Company added that logistics is a big opportunity. The general recommendation for young US MBA students was to invest their time and business strengths into an uncertain environment instead of worrying about the unemployment statistics from MENA countries.

Gatehouse Bank completes US acquisition of GSA tenanted office building

London-based Gatehouse Bank has completed the acquisition of a 163,000 sq ft, state of the art office building in Salt Lake City, Utah, which is 100% leased to the General Services Administration (GSA) for a fixed term of 20 years.
The deal is expected to return a stable and healthy yield over the investment period. Gatehouse Bank was assisted by Arch Street Capital Advisors and sister company GSH in this transaction.

Deloitte: Environmental, Social, Governance Performance Affects Organization's Market Value

According to a new Deloitte report, an organization's environmental, social and governance (ESG) performance can directly and indirectly impact its market valuation. The report highlights that short-term ESG issues and events, including human rights issues, product recalls, boycotts and protests often trigger the strongest and most immediate impact on stock prices. However, there is less convincing evidence that ESG performance leads to higher stock returns over the long-term. Deloitte's report highlights how and why ESG performance is expected to continue to be a consideration in financial valuation and several reasons risks may play an increasingly important role on performance.

'Halal' Financing for Muslim Entrepreneurs Gains Currency

Bank of Whittier, a community bank in Los Angeles, offers Shariah-compliant products and is one of few institutions specialized in Islamic finance in the United States. The bank, whose staffers speak more than a dozen languages, markets itself to observant Muslim entrepreneurs. Deals are structured so that the bank buys into the venture with the entrepreneur, who runs the company and buys the bank out, with payments structured so that the bank is compensated for its investment. Profits and losses are shared; the overall cost tracks with a traditional loan repayment at a standard interest rate.

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