GCC equity funds bounce back along with market

In a recently published quarterly report by Kuwait Financial Centre "Markaz", which aims to analyze the performance of over 150 equity funds across the region, GCC markets were positive in the third quarter as all markets saw gains following a lackluster summer and slow Ramadan month. The Dubai World debt issue was resolved with creditors coming on board for the restructuring.
Fund managers continue to favor Saudi Arabia, with an allocation of 42% though down from 45% in June 2010.

Tata Targets Gulf in India Shariah Stock Fund: Islamic Finance

Tata Group’s investment unit is seeking to attract about $100 million within three years to India’s first Shariah-compliant fund aimed at global investors, targeting equities in a country that lacks regulations for establishing an Islamic debt market.
The Tata Indian Shariah Equity Fund has $3 million after being set up in June to tap investment mainly from the Middle East.
India has no Islamic finance policies, restricting sales of Shariah-compliant bonds in a nation with 157 million Muslims, according to Paris-based BNP Paribas SA and Standard Chartered Plc.

End to Sukuk Freeze Spurs Pakistan Fund Buying: Islamic Finance

Pakistan’s largest Shariah funds plan to bid for the 80 billion rupees of Islamic debt the government will offer in coming weeks after a 14-month suspension of sales.
Pakistan is selling the debt as the nation’s Islamic banking assets increased an average 30 percent in the past four years. Investors might prefer securities due in a year or less after record floods in August pushed up prices of goods and forced the central bank to raise its benchmark interest rate to the highest level in 17 months, according to Al Meezan and NBP Fullerton.

Mideast banks, funds seek to tap women’s wealth

Emirati housewife Sarah Alzarouni brushed past a group of women clad in traditional dress to enter through the frosted doors of one of Dubai Islamic Bank’s women-only branches.
Alzarouni greeted the female tellers and sat down to do business.
Many affluent Muslim women share Alzarouni’s sentiments and they are increasingly turning to Islamic banks to manage their money. These women are looking beyond basic banking services to sophisticated products to grow their wealth while complying with Islamic principals that include a ban on interest.
Financial institutions in the Gulf Arab region, where many women are reluctant to mix with men outside their families, are tapping into the niche, with women-only bank branches and investment funds mushrooming. Saudi Arabia is leading the charge.
Abu Dhabi-based Al Bashayer Investments, a conventional wealth management firm geared towards women investors, is also looking to launch Islamic products to address the needs of women in the region who prefer investments that are in keeping with their religious beliefs.

Distressed Deals Lure Shariah Funds Managing $10 Billion: Islamic Finance

Islamic private equity funds in the Persian Gulf plan to take advantage of lower asset prices after the property market in Dubai tumbled as much as 50 percent from its peak in 2008.
Middle East and North Africa investment groups have about $10 billion available after raising a record $5.4 billion in 2008 that they haven’t been able to spend, Gulf Venture Capital Association said in a July 20 statement. Mid-sized businesses in the Gulf may need as much as $1 billion from investors, Jalil said. The Bloomberg GCC 200 Index of regional stocks has declined 26 percent since the end of September 2008 after credit markets collapsed.

Distressed Deals Alluring for Shariah Funds: Islamic Finance

Islamic private equity funds in the Persian Gulf plan to take advantage of lower asset prices after the property market in Dubai tumbled as much as 50 percent from its peak in 2008.
The National and Kipco Asset Management Co., a Kuwaiti investment bank, started a $200 million Shariah-compliant fund this month, Yahya Jalil, director of private equity at Abu Dhabi-based investment and advisory company The National Investor, said. Bahrain’s Capital Management House plans to complete a transaction and buy stakes in companies specializing in aviation and energy, Chairman Khalid Al Bassam said.

Use sovereign funds to invest in syariah-compliant products: Regent

MUSLIM countries should allocate a fraction of their sovereign funds to financial institutions which have the expertise to invest in syariah-compliant investment funds and instruments.
Perak Regent Raja Dr Nazrin Shah said one of the driving forces for Islamic finance to prosper is for large investment organisations such as sovereign wealth funds of Muslim countries to take a developmental view when determining their asset allocations.
Initiatives such as the commodity trading paltform Bursa Suq Al-Sila can be utilised to facilitate liquidity management of Islamic financial instituions.
Saudi Arabia's Al Rajhi Bank and Cagamas Bhd also collaborated to issue an innovative sukuk which aims to meet the syariah demands of investors in the Middle East as well as in Asia.

Fitch affirms Qatar Islamic Bank's ratings

Fitch Ratings has affirmed Qatar Islamic Bank's Long-term Issuer Default Rating (IDR) at 'A' with a Stable Outlook. Fitch has simultaneously affirmed QIB's Short-term IDR at 'F1', Individual rating at 'C', Support rating at '1' and Support Rating Floor at 'A'. At the same time, QIB Sukuk Funding Limited's $ 750m Sukuk issue of senior unsecured trust certificates has been affirmed at 'A'.
QIB's Individual Rating also considers the bank's well-established and strong domestic franchise, together with an environment reflecting high levels of economic activity. Fitch considers that the trend of rapid credit growth could negatively affect the bank's financial performance indicators as the loan book seasons or if there were further stresses in Qatar's real estate segment.

Agha & Co Inaugurates New Office in Dubai

Agha & Co (the Firm), a Shariah compliant legal consultancy established by Oliver Ali Agha, commenced operation in Dubai in May 2010 and is scheduled to have a formal office inauguration on October 25, 2010. Previously, Agha and Dr. Saeed Mohammed Al-Shamsi established Agha & Shamsi, an affiliated firm, in Abu Dhabi. The Firm and its affiliate are said to be the first Shariah compliant legal consultancies established globally.
Agha & Co’s strategic position in the UAE, fast becoming a major commercial hub for the Gulf Cooperation Council (GCC), includes a network of affiliation arrangements with leading law firms both internationally.
Agha & Co’s partners have previously lead practice areas at top Am Law 50 and top tier English firms, and are well-respected in the fields of Islamic Finance, Islamic Law, Corporate (including cross-border M&A), Projects, Project Finance, Energy, Public-Private Placements (PPPs), Commercial Transactions, Capital Markets, Islamic Funds & Private Equity, Restructuring, Insurance (Takaful), Arbitration and Dispute Resolution.

GFH planning to raise $500m in fresh funds

Bahrain-based Gulf Finance House (GFH) plans to reduce its capital and raise up to $500 million in fresh funds to plug the holes a regional property crunch cut into its balance sheet.
The Islamic investment house said in August it would hold a shareholder's meeting in October to approve plans to raise up to $300m through a murabaha, an Islamic equity-linked money market instrument.
GFH is one of the Bahraini investment houses that relied on fees charged on investor money raised for private equity and property projects, a market that collapsed when the global financial crisis triggered a regional property crash in 2008.
It posted a $728m loss for 2009 and has since struggled to pay back its debt as it failed to sell down illiquid property assets and find a new business model.
It narrowly escaped default in February when it reached a last-minute deal with lender to roll over a $300m loan and now needs to find fresh fund to finish the property projects it started from Morocco to India.

Gulf Finance House in $500m bid for funds

Gulf Finance House (GFH), the troubled Islamic investment bank based in Bahrain, wants to raise up to US$500 million (Dh1.83 billion) from investors after declines in Gulf property prices and the fracturing of its business model led to huge losses last year.
GFH was among the hardest hit in the region by the financial crisis and is one of many in Bahrain and Kuwait forced to restructure debts and rethink their methods for raising money, making investments and borrowing.
Shareholders are also to vote on a consolidation of shares through which four old shares would be exchanged for one new.
And the bank will seek a reduction in capital, which observers say will allow it to swallow accumulated losses and start paying dividends immediately after raising new capital. The consolidation would reduce the number of shares on the market but would not affect the company's market value.
Hit by a lack of revenues to finance its operations and pay debts, GFH was forced to reach new terms with creditors on hundreds of millions of dollars of debt.

Gulf asset managers looking for regional partners

Asset managers in the Gulf Arab region are looking to partner with regional players and third-party providers to break the bottleneck of distributing their offerings solely through banks.
The industry, still at its nascent stage, is heavily dependent on banks, but as the funds grow in size and get international focus, better distribution methods are in demand.
The challenge is even bigger for small regional players who do not have the ability to market their products effectively to international players or comply with global regulations like Ucits III, a European Union (EU) framework for funds that can be sold across borders.
For smaller players, the operational cost of complying with global regulations like Ucits III are too high, forcing them to set up partnerships with others in the region. Local fund managers are also looking to set up funds domiciled in off-shore locations to attract global clients.

Al Rajhi Capital launches Luxembourg Fund for investment in Saudi Arabia equity market

Al Rajhi Capital, the investment-banking subsidiary of Al Rajhi Bank and a leading asset manager in the Kingdom of Saudi Arabia, announced the launch of the Al Rajhi Saudi Equity Fund, a Specialized Investment Fund (SIF) established under Luxembourg law.
Al Rajhi Capital Company is the independent, wholly owned investment subsidiary of Al Rajhi Bank, the world's largest Islamic bank and the largest commercial bank in the GCC region in terms of market capitalization.

Saudi Arabia: JODC receives SR1.35b funding

Jabal Omar Development Company the leading planner and developer of the Jabal Omar mountain area, has received agreements for bridge funding collectively worth SR1.35 billion from five national banks, namely Al Rajhi Bank, National Commercial Bank, Bank Al Jazira, Saudi British Bank (SABB) and Saudi Hollandi Bank.
The bridge loan provides immediate cash flow that would serve as a working capital until the round of funding goes through and acts to bridge the gap between times when financing is needed.
The Jabal Omar development in Makkah project calls for construction of residential and commercial center in area close to the Grand Mosque in Makkah. The master plan of development covers 230,000 square meters.
The development consists of 39 commercial and residential towers, notable of which is the 50-storey Twin Tower.
The project has led other developers to follow our lead in improving and urbanizing the central area surrounding the Mosque.

Islamic fund assets remained flat in 2009

“The Islamic fund industry needs to evaluate new strategies to restimulate growth. Islamic fund assets remained flat in 2009 at $52 billion, whereas the potential wealth pool grew by 20 percent, now estimated at $480 billion,” concludes the Islamic Funds & Investments Report (IFIR) 2010.
The other key messages from the IFIR similarly are stark — the sector needs to achieve scale to ensure its long-term sustainability; the priority over the next two years is to rebuild investor trust through staying close to the investor base and to have transparency in cost and revenue structures.
The IFIR 2010 may serve a purpose to those interested in the Islamic funds industry. But it could have been much more useful if it had clarity in structure; concentration on the 3 major markets by far; in-depth analysis not only of the performances but also of the shortcomings — both regulatory, legal, management, investor knowledge, asset allocation etc; and above all a much more rigorous empirical approach in primary data collection which would have given the analysts at Ernst & Young to draw much more authoritative conclusions about the global Islamic fund and investment industry.

UK firms may opt for sukuks

Corporate sukuks by UK organisations are expected in the coming few months following the recent launching of the first corporate sukuk out of United Kingdom by Gateshead-based International Innovative Technologies, or IIT.
A major GCC-based sukuk arranger, which is reportedly working on a corporate sukuk issuance for a UK healthcare company for the last year, hopes to launch the issuance in September. A London-based Islamic bank is also working on a sukuk issuance for a UK client which is near to being finalised. Tom Wilkinson, chairman of IIT, is confident that there is potential for other UK companies to access Islamic finance including sukuk as an alternative source of funding.
The sukuk issue was placed privately with Millennium Private Equity Ltd, leading private equity firm based in the Dubai International Financial Centre and regulated by the Dubai Financial Services Authority. The sukuk is essentially a convertible sukuk, whereby Millennium Private Equity Ltd can convert the sukuk into equity.

Crisis-hit Islamic funds set for recovery

he asset management side of Islamic finance, which has been at a virtual standstill in the $1 trillion industry, is set to break out of its rut as demand rises for investment products catering to Muslim laws.
There are signs that investment managers are slowly moving to tap demand for Islamic products. Qatar First Investment Bank and Gulfmena Alternative Investments last week unveiled plans for a sharia-compliant asset management firm.
Islamic investment products are commonly perceived to underperform conventional asset classes due to restrictions on investment avenues and the overall conservatism of portfolios. But the MSCI World Islamic Index has managed to outperform the conventional MSCI World Index over the last 13 quarters due to its focus on low-debt companies and non-financial stocks.
The global financial crisis added risk aversion to the mix, with institutions becoming shy about investing in new funds.

Hyperion Launches Islamic Equity Fund, Targets Mideast

Australian investment manager Hyperion Asset Management has launched an Islamic equity fund that will initially target Middle East investors seeking to benefit from Australia's economic growth potential.
Hyperion uses a proprietary process to manage a high-conviction portfolio made up of a limited set of stocks that meet strict selection criteria, for Shariah compliance and other business attributes, the company said in a statement.

Islamic banking growth to hit $2.7tr

Abu Dhabi Islamic banking is growing at a fast pace and its size globally is expected to reach $2.7 trillion (Dh9.9 trillion) by 2015. Abu Dhabi Islamic Bank announced the launch of its wealth management service that will cater to the needs of mass, affluent and high net worth customers.
Abu Dhabi Islamic Bank Wealth Management offers a range of investment solutions such as sukuk, equity, treasuries, commodities, mutual funds, real estate advisory, trust, private equity and other Sharia-compliant opportunities worldwide.


Sharia platform created

Allfunds Bank, the business-to-business fund platform, has launched an Islamic Services Unit to comply with Sharia principles. The company, jointly owned by the Santander and Intesa Sanpaolo groups, offers over 80 sharia-compliant funds from asset management firms based in Luxembourg, Ireland, the United Arab Emirates and Saudi Arabia.
The unit has a fatwa endorsed by the Sharia'h Board of Amanie Dubai, a specialist Islamic consultancy firm, making it the first sharia-compliant platform.
Allfunds said its clients would have direct access to the largest available range of Islamic funds and it would take further opportunities to expand the service, such as setting up a dedicated website for the sector.

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