IslamicFinance.de

Saudi Arabia is joining forces with Japanese telecom firm Softbank (SFTBF) to form a tech investment fund worth as much as $100 billion, making it one of the largest on the planet. Softbank CEO Masayoshi Son said that over the next decade the fund would be the biggest investor in the technology sector. Saudi Arabia's sovereign wealth fund will put up as much as $45 billion of the money, with Softbank throwing in at least $25 billion. Neither partner appears to be deterred by warnings of potential bubbles in the valuations of big startups and established tech companies in the US. Funding for startups has also plunged recently in India. Earlier this year, Saudi Arabia announced an ambitious plan to create a huge sovereign wealth fund that would be worth 7 trillion riyals ($1.9 trillion) by 2030, which would make it by far the biggest in the world.

Muslim NGOs in India will be able to make use of Islamic Development Bank’s Awqaf Properties Investment Fund (APIF) to develop their endowments and generate funds for their various community development projects. According to Zafar Javeed, IDB’s national convener for India, APIF is in the process of identifying viable endowment projects. Javeed commended IDB group for financing about 300 educational and health-related projects across India over the past three decades. He said that the IDB was a big blessing for the Muslim community in India and there were many projects in the pipeline awaiting IDB aid. Referring to ongoing efforts to introduce interest-free banking in India, Javeed said former RBI governor Reghuram Rajan had hinted at introducing the system to achieve inclusive development.

Khazanah Nasional, the Malaysian sovereign fund, is considering selling as much as $500 million of exchangeable sukuk. The state-owned firm is currently choosing banks for the potential offering. Khazanah has been reducing stakes in listed Malaysian companies through Islamic debt offerings that can be converted into shares. The fund last sold $500 million sukuk that can be exchanged into shares of Tenaga Nasional, the country’s biggest power producer, in 2014. It is also the largest shareholder of IHH Healthcare, Asia’s biggest hospital operator. Sales of Islamic bonds in Malaysia surged 60% this year to 45.8 billion ringgit ($11.4 billion), while offerings of global sukuk climbed 19% to $28.1 billion.

Australian Islamic investment company Crescent Wealth and KAF Investment Funds have jointly launched the KAF Australian Islamic Property Fund (KAIPF). Crescent Wealth corporate strategy director Omar Khan said the fund would achieve 9-10% annual return to investors, a target driven by the appetite of Malaysian investors for Australian property. The KAIPF is Malaysia’s first fund that provides non-institutional investors direct access to Australian commercial property. The launch of KAIPF brings the total number of funds under KAF to 18, with close to RM2.3 billion worth of assets under management.

Malaysia’s second-largest pension fund plans to buy more bonds to hedge against another interest-rate cut as it moves further toward becoming a full-fledged Islamic entity. CEO of Kumpulan Wang Persaraan, Wan Kamaruzaman Wan Ahmad said the fund is considering lowering its 5% minimum return target because of the uncertainty in global markets. He also added that this low interest-rate environment, low corporate returns, lower dividend yields will prevail for a much longer period. KWAP bought 30-year Malaysian government bonds at a yield of 4.613% on June 29, days after the UK voted to leave the European Union. Wan Kamaruzaman said the fund will likely keep its 2% allocation to UK assets, despite the results of the referendum, because it adds diversification to the portfolio.

It would be interesting to see just how large the actual appetite is for the Employees Provident Fund’s new shariah-compliant fund, EPF-i, which does not have the minimum 2.5% annual return guarantee and is relying only on the EPF’s track record.
The demand factor from the 6.8 million active and contributing EPF members could well determine just how big a mover EPF-i will have on the local market, experts say. According to a recent survey by the EPF, 71% of members surveyed agreed there should be a shariah-compliant option for their retirement savings. And among the 71% who agree, 46.1% say they would choose to switch to a shariah fund if given the choice, 33.2% have yet to decide and the remaining 21.7% would not switch out of the conventional savings.
It is not known how much EPF savings the 46.1% have but at parity, their asset base would be about RM224 billion — double the intended initial fund size of EPF-i, which is slated to be launched in January next year. The other wild card for actual demand are the fence-sitters (see accompanying story).

Azerbaijan and Islamic Corporation for the Development of the Private Sector (ICD) will discuss the opportunities of financing the country's agriculture. The topic will be discussed by ICD's general driector Khaled Al-Aboodiin during his visit in Baku on May 31. The agricultural projects will be financed through the new Food and Agribusiness Fund with an authorized capital of $600 million. The fund will mainly focus on the production optimization of the companies working in agriculture and a decrease in their logistics inefficiency.

#Malaysia could find fame for triggering a new, more effective level of regulatory cooperation between the financial centres of the world. This can be the positive result from landing at the centre of the world’s biggest money-laundering investigation. Investigators are working closely to trace the US$7 bn gone missing from the 1MDB fund into a network of off-shore companies before emerging once again in the bank accounts of politically connected Malaysians. Meanwhile, the Government of Malaysia is continuing to act as if nothing has happened. Prime Minister Najib has been impeding investigations at home, but worldwide he is a smaller player. His political connections cannot save him from the independent justice departments of the various financial centres involved.

The fates of 1MDB bonds are diverging this month: those guaranteed by Abu Dhabi’s sovereign wealth fund have rallied, while notes with support from Malaysia’s own government have dropped. 1MDB's 4.4% 2023 notes, backed by the government, slumped 6.4% in May, set for the worst slide in 16 months. The fund’s 5.99% 2022 bonds, backed by Abu Dhabi’s International Petroleum Investment gained 1.9%. The contrast reflects growing investor concern about the Malaysian government backing as Najib grapples with an economy forecast to expand at the slowest pace in seven years amid a collapse in oil prices.

A venture capital fund based on Islamic finance principles will be initiated by the end of May. It is the result of a joint initiative of the Islamic Development Bank (IDB) and Malaysia’s state-owned investment firm Malaysia Venture Capital Management. According to Treasury secretary Irwan Serigar Abdullah the initial fund size would be $100mn and could be bulked up later. In the first stages, the venture capital fund would be utilised to finance startup companies in Malaysia and the entire Southeast Asia region and could later be extended to finance entrepreneurial initiatives in other Islamic countries.

#Malaysia’s Employees Provident Fund (EPF) announced plans to divest its stakes in tobacco businesses and focus on investing in assets deemed socially and environmentally responsible. CEO Shahril Ridza Ridzuan said EPF plans to dispose of its stake in British American Tobacco (Malaysia), despite not outlining a specific timeframe for the move. The first fully shariah-compliant fund (EPF-i) is planned to launch in January 2017 with an initial fund size of between 80 and 100 bin ringgit. Preparing for the launch of the EPF-i, the fund had increased its exposure to shariah-compliant investments covering multi-asset classes to about 40% of total investments.

In #Malaysia the Employees Provident Fund (EPF) expects 1.5 mn to 2 mn members to convert their contributions to the syariah-compliant fund in the first year of implementation. CEO Datuk Shahril Ridza Ridzuan said 71% of the members agreed on the need for the Islamic pension scheme called Simpanan Shariah. Simpanan Shariah’s initial fund size will be RM120 bn. EPF is in the process of classifying its assets as syariah-compliant and conventional, with about 40% of its assets now fully syariah-compliant.

The International Monetary Fund (IMF) has calculated that, if oil prices remain low, the fiscal deficits of the Gulf Cooperation Council (GCC) and Algeria will total almost $900 bn between 2016 and 2021. The non-oil sector in the GCC is projected to grow at an average rate of 3.25% per year over the next five years, compared to an average of 7.75% between 2006 and 2015. Thus, regional governments are being forced to review their expenditure plans. A recent PwC survey found that 75% of the more than 130 owners have already been impacted by funding constraints, while 65% forecast they will have less to spend next year.

On the annual distribution of Zakat by the Elders Consultative Forum of Supreme Council for Shariah in #Nigeria Abiola Ajimobi called on the Muslims to address the effective, efficient collection and management of Zakat fund. One of the beneficiaries of the Zakat distribution, Ridwan Olalekan, who spoke on behalf of others, promised to make judicious use of the items.

Hong Kong bank accounts belonging to several unnamed individuals have been frozen amid global investigations into the finances of the Malaysian state fund 1MDB. Owners are being probed by authorities in countries outside of Malaysia. Authorities in Singapore charged two men following investigations into their dealings with the fund. A Malaysian parliamentary committee had identified at least US$4.2 billion of irregular transactions by the fund.

Usman Siddiqui, the Managing Director of Equitable Financial Solutions (EFSOL), a Australian Islamic finance company announced the establishment of the company’s office in Singapore. The Singapore branch, which is registered as EFSOL Asset Management, will play a key role in the company’s regional strategy. EFSOL also announced the offering of its investment scheme, the EFSOL Income Fund, registered under the Monetary Authority of Singapore as a restricted Collective Investment Scheme.

Backed by sovereign funds Iqbal Khan and his private equity firm Fajr Capital invests for financial and social returns ins Muslim countries. Fajr is a union of institutions that have high credibility and share the same values. CEO Iqbal Khan sees it as his mission to broaden the educated Muslim middle class.

EthisCrowd.com, a Shariah compliant crowdfunding platform, is looking to raise up to S$1 million ($740,000) for a real estate crowdfunding initiative from senior executives and delegates present at the Global Islamic Finance Forum 5.0 in Kuala Lumpur next month. The funds will be raised for the Depok Dream Village in Jakarta. Founder Umar Munshi said he expects the projected returns to be 48 to 55 per cent over three to 3.5 years from a share of the development profits.

CEO Shahril Ridza Ridzuan announced that the Employees Provident Fund aims to open the Shariah-compliant plan in January 2017 and is targeting an initial size of as much as 100 billion ringgit ($26 billion). There’s strong demand and 1.5 million of its 6.7 million members should switch in the first year. EPF has a minimum guaranteed annual payout of 2.5 percent. The Islamic fund won’t have a minimum dividend as they can’t be guaranteed under Koranic rules.

Following the approval of the Lotus Halal Fixed Income Fund offer by the Securities and Exchange Commission (SEC), Lotus Capital Limited held the signing ceremony in respect of the Offer on April 14, 2016. The offer has an initial subscription size of N1,000,000,000.00 consisting of 1,000,000 units at N1,000 per unit. The Fund will be launched upon receipt of final approval from SEC. The primary objective of the fund is to generate returns from investments in Shari’ah compliant fixed income securities and contracts, while ensuring capital preservation. A minimum investment of N5,000 is required.