AUSTRALIA: Islamic finance has been slow to pick up pace in the country, but investment advisory Sustainable Capital Luxembourg is planning to launch a Shariah compliant forestry fund on the 23rd July 2012.
The firm is reportedly looking to raise US$100 million for the fund, which will invest in the agricultural, biomass and forestry sectors. Michael Young, the investment advisor for the fund, is quoted as saying that Sustainable Capital aims to leverage strategic partnerships to access markets in Asia, Europe and the Gulf; while seeking at least two distributors in the Gulf.
The growth of Islamic finance has lagged in Australia; with MCCA Group making up the only local fully-fledged Shariah compliant institution providing financial services. This year, news also emerged that National Australia Bank is considering issuing the country’s first Sukuk.
Nonetheless, hurdles remain; particularly for firms such as Sustainable Capital aiming to develop the country’s Shariah compliant investment market.
In Volume 9, Issue 28 of Islamic Finance news, Gerhard Bakker, our IFN Correspondent who is a director at Madina Village, wrote that: “With a large appetite for capital, Australia is an ideal destination for Islamic finance investment funds. However, tax laws are proving an impediment. The additional costs and potential legal challenges of a taxation system that does not recognize Islamic finance principles are impeding transactions.”
He also noted that there is no federal taxation recognition of Islamic finance principles; although laws do recognize Murabahah contracts.
As noted by Young in a news report, Sustainable Capital’s forestry fund may take anything from three months to three years to reach its US$100 million targeted fund size. With plans for the fund to ultimately raise US$250 million, the firm may have another long wait ahead of it to see its new fund taking off.
See: http://redmoney.newsweaver.co.uk/u8v8vp18o17h38rwoni3wx?email=true&a=6&p=25963544&t=21681404
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