IslamicFinance.de

Dear Reader,

IslamicFinance.de is still edited by myself, Michael Saleh Gassner. In the same time the website became part of the family's publishing house, Al Kitab.

Myself I moved to Geneva for professional reasons, working as Islamic private banker. IslamicFinance.de remains to be a private passion.

Best regards,

Michael Gassner

Cairo-based Ridge Islamic Capital plans to launch the first dedicated Islamic fund of funds in the Middle East by the end of this year, with an initial capital base of $150 million. The Bahrain-domiciled fund will invest across a pool of sharia-compliant funds around the world. Ridge Islamic will contribute $15 million to the fund's capital. The Ridge Islamic fund will be U.S. dollar-denominated and use controls designed to limit risk, including exposure caps by country, sector and asset class. The rules will allow up to 20 percent of the fund's net asset value to be allocated directly into sharia-compliant financial instruments; up to 40 percent of net asset value could go into cash and Islamic money market instruments. The fund has a three-member sharia board with scholars from Egypt, Saudi Arabia and Bahrain.

BIMB Holdings Bhd announced it has notified Bank Negara Malaysia that the security for its proposed sukuk will only comprise the legal assignment over the proceeds from the exercise of its proposed warrants. It includes the legal assignment and charge over a sinking fund account into which all proceeds from the exercise of the warrants will be deposited. The exchange has approved the listing of new shares, warrants and rights in relation to its proposed purchase of the remaining 49% stake in Bank Islam.

Malaysia's two biggest state-owned pension funds plan to boost holdings of dollar sukuk.
It is said that their increasing presence in the global arena will help strengthen Malaysia's position as a global Islamic hub and enhance the country's visibility. It will also encourage more local and international issuers to sell dollar sukuk in Kuala Lumpur and around the world.

Ethical investment which has similarities with Islamic based investments has reached US$32 trillion (RM105.6 trillion) in size in the US and the European Unión, according to Nicholas Kaiser, a global investment manager specialising in the issues of ethical and Islamic investment. Though the number of very wealthy Islamic investors in the US were scarce compared to investors in conventional funds, he said his Amana funds are doing very well in the US. The funds attracted American citizens from all backgrounds and Muslim investors are only a small number of the investors in the Amana fund, he added. Nevertheless, it appears that while Amana’s success is the result of the discipline of its Islamic investment nature, investing in Islamic stocks does not necessarily bring profit to the investors.

A judge has ruled that HDG Mansur Investment Services must return $5.8 million in fees it paid itself from two equity funds it managed under Islamic law. The Indianapolis real estate fund asset manager didn’t have the right to recalculate its fees to claim a higher take for itself, according to federal Judge Colleen McMahon of New York. The lawsuit contends that, starting in early 2012, HDG Mansur began paying itself fees in advance for future real estate transactions. When those deals never happened, the Indianapolis company came up with the underbilling rationale in an effort to cover up the unearned payments that they had been making to themselves. HDG Mansur was dropped as the funds’ manager earlier this year. The judge also ordered HDG Mansur to pay 9 percent interest on the fees that are to be returned.

Saudi investment firm Sedco Capital plans to register its Islamic funds in Switzerland and distribute them through tie-ups with global private Banks. This is part of efforts to diversify its client base outside Saudi Arabia. Sedco Capital has incorporated environmental, social and governance (ESG) principles into two of the equity funds, widening their appeal to include ethically minded investors in general. The firm hopes this will allow its funds to be marketed to investors beyond traditional Islamic areas in the Middle East and southeast Asia. The firm aims to be able to source two-thirds of its assets under management from outside Saudi Arabia in four to five years. One fund is to be signed by October and the second one by December.Sedco Capital's two ESG funds, launched in May last year, have $230 million in assets and are managed by Stockholm-based Informed Portfolio Management.

Representatives from Azzad Asset Management met with His Excellency Ebrahim Rasool, Ambassador of the Republic of South Africa to the United States, to discuss potential investment in South Africa as part of the portfolio held by the Azzad Wise Capital Fund. The Azzad Wise Capital Fund is America's first halal fixed-income mutual fund and invests in Sukuk as well as deposits and notes from Islamic banks that comply with specific socially responsible and halal financial guidelines. In recent years, South Africa has made strides in Islamic finance although the Muslim community represents only 3% of the population. Ambassador Rasool noted that South Africa's regulatory and legislative structures, strict risk management frameworks, as well as governance and compliance structures make it a possible springboard for companies into the rest of the continent.

The UK government's national savings scheme, NEST, recently announced that HSBC was its choice of fund manager for its Sharia investment mandate. Chris Gower, head of European consultant relations at HSBC, said the fund follows a quantitative passive method. What is unusual it that the fund can have no exposure to financials. This practice leads to the Islamic index being overweight in the oil and gas sector and the healthcare sector. In terms of expectations of the fund Gower explains that HSBC works with a large number of UK defined contribution (DC) pension schemes. It opens up an investment universe to investors who would maybe otherwise not have the possibility to save for their retirement. Gower says the fund is looking forward to working together with NEST.

Barwa Bank’s investment banking division, The First Investor (TFI) and Investra Investments have announced the first two property acquisitions of their UK joint venture fund. The fund invests in income-generating property in the distribution, logistics and light-industrial sector of the UK, targeting net quarterly dividends of 7%-9% per annum and capital appreciation over three years. Both TFI and Investra have seeded the fund with approximately QR56mn capital from their respective balance sheets. TFI and Investra have put together an institutional grade investment programme in collaboration with Pelham Associates as well as internationally renowned lawyers, tax advisors and administrators to deliver best in class governance, investment management and risk management. TFI and Investra will be continuing their investment programme in the UK distribution, logistics and light-industrial sector until Q1, 2014.

In India, there are only two fund houses, namely Tata MF and Taurus MF, which offer Shariah-compliant funds. Industry experts say that the major challenge in ethical funds is product awareness and its marginal market demand. These funds only cater to a particular section of society. Some experts also believe that the returns in Shariah funds are not very astonishing as compared to equity funds. Experts believe that creating awareness about these funds will help attract investors. Not only Muslims but also Hindu, Jain and other community might show interest after knowing the significance of these products, they added. The Taurus Ethical Fund was launched in 2009 and has benchmark of CNX 500 Shariah. The scheme has generated annualized returns of 20.97 percent since inception. The Tata Ethical Fund Plan A-G was launched in April 2001 and has given an annualized return of 21.36 percent. The benchmark of the fund is CNX 500 Shariah.

Luxembourg-based SEDCO Capital Global Funds (SCGF) has announced the first ever Shariah-compliant funds managed according to environmental, social and governance (ESG) principles. The SEDCO Capital US Equities Fundamental Indexing® Fund and SEDCO Capital Global Higher Dividend Yield Fund are screened for compliance with international conventions and guidelines on environment, human rights and business ethics such as UN Global Compact and OECD Guidelines. Non-compliance is dealt with through a process of engagement and exclusion. The funds are targeted at institutions, high net worth individuals, family offices, and qualified distributors wishing to invest in a socially responsible manner, while complying with Shariah principles. The funds can also be distributed by banks who wish to offer this investment opportunity to customers.

Luxembourg-based SEDCO Capital Global Funds (SCGF) has announced the first ever Shariah-compliant funds managed according to environmental, social and governance (ESG) principles. The SEDCO Capital US Equities Fundamental Indexing Fund and SEDCO Capital Global Higher Dividend Yield Fund are screened for compliance with international conventions and guidelines on environment, human rights and business ethics such as UN Global Compact and OECD Guidelines. Non-compliance is dealt with through a process of engagement and exclusion. The funds will also incorporate proxy voting according to best corporate governance standards in its ESG programme. The funds are targeted at institutions, high net worth individuals, family offices, and qualified distributors wishing to invest in a socially responsible manner, while complying with Shariah principles.

Saudi Fransi Capital has launched its new fund, the Saudi Fransi Real Estate Fund. The new fund seeks to achieve capital growth, by developing lands and real estate projects, along with the possibility of generating income stream by acquiring existing real estate in Saudi Arabia. It's a closed -- ended Shariah-compliant fund, with duration of four years from the day of closing, but may be extended for two successive periods of one year. The subscription period started on May 18 and will end on July 3. SFC signed a memorandum of understanding with a leading and renowned real estate developer, to be the principal real estate developer of the fund; the fund may assign other developers if needed. Yasir bin Othman Al-Rumayyan, CEO of SFC, said that the fund provides the opportunity for capital growth and generating income; since it generates cash during the development phase.

Guidance Investments (GI) has launched a RM150 million Shariah-compliant investment fund for equipment leasing for the Saudi Arabian market in partnership with Lembaga Tabung Haji (TH). This Tabung Haji acted as the capital provider, while the US-based ATEL Capital Group, the equipment leasing company is to provide the machineries for the Saudi market. TH CIO Abd Kadir Sahlan said that his company has committed a total of RM150 million in the private equity fund in support of ATEL in this venture. The funds will be disbursed in phases over the next two to three years, depending on the deployment of the portfolio in the Saudi market. At the same time, Guidance Investments has formally launched its operations in Malaysia with the opening of its headquarters in Kuala Lumpur.

Kuwait-based Asiya Investments has launched an Islamic trade finance fund with $20 million in seed capital, aiming to cater to small Asian manufacturers. Asiya aims to fill a gap left by Western banks that are scaling back their trade finance business, making credit scarce for small and medium-sized firms. Due to the world financial crisis and higher capital requirements under upcoming Basel III regulations, about 20 percent of the trade finance business could be opened up to non-bank institutions. Asiya's fund aims for a net return to investors of above 5.0 percent and it has $55 million worth of assets in the pipeline, with capacity for approximately $400 million. The firm identifies clients such as denim and latex manufacturers through its Singapore-based joint venture partner, EuroFin Asia.

Mashreq Bank has said its investment unit plans to set up an Islamic equity fund of up to $100m in the third quarter of this year to invest in stocks across the Gulf region, given lower returns in the bond market. Mashreq Capital hopes to raise between $75m and $100m for the fund, and will seed it with a $20m investment from the bank.

UBL Funds introduced the UBL Islamic Principal Preservation Fund on April 01, 2013. For the first time in Pakistan, investments can be made in a Shariah Compliant investment scheme with 100 percent exposure into the stock market while benefiting from the principal preservation advantage. According to UBL Funds' CEO Mir Muhammad Ali, the investors benefit with the fund's pioneer methodology of Constant Proportion Portfolio Insurance (CPPI) in Shariah compliant investments. The CPPI method is intended to control risk and protect capital via daily valuation of risk budget available and daily portfolio rebalancing thus aiming to preserve the principal investment.

The Kerala State Industrial Development Corporation (KSIDC) has partnered with Cheraman Financial Services Limited, a Kochi-based Islamic fund. KSIDC has 11 per cent share in the Rs. 250 crore fund which is a shariah-based entity aimed at funding selected sectors. Cheraman is the new avatar of the Al Baraka fund proposed by KSIDC two years ago. Cheraman has received the go-ahead from the Securities and Exchange Board of India (SEBI) and has been registered as a trust, despite the Reserve Bank of India stating that the Banking Regulation Act did not permit Islamic banking in the country.

Iraqi Islamic Bank for Investment and Development has teamed up with a Bahrain-based Baraka Islamic Bank to develop an investment vehicle that will target Iraq's lucrative and promising food sector. The fund has already acquired interest from Arabian Gulf and European investors, prompting the Iraqi lender to increase the size of the vehicle from US$50 million (Dh183.6m) to $75m. It will provide financial support to an affiliate company of Iraqi Islamic Bank that has a three-year track record of delivering contracts on sugar stockpile to Iraq's ministry of trade.