Standing out from the crowd

Rapids • Deals • News • Takaful • Asset Management • Ratings • Moves
8th October 2014 (Volume 11 Issue 40)
Standing out from the crowd Islamic finance has always been unique, with its own characteristic traits driving development and growth. But society can be as important as singularity, and sometimes collaboration takes precedence over differentiation. Our issue this week focuses on the importance of cooperation – both across borders and between sectors – with a cover story highlighting the astonishing growth of the crowdfunding concept; and the exceptional potential this could hold for the Islamic world through unlocking the latent potential of the private investor. Our IFN reports follow this lead: with a look at the way crowdfunding platforms are assisting in new product innovation such as Islamic student loan assistance in the UK; a review of the relationship potential between Islamic and ethical financing in terms of product development; an exciting new Takaful model from the UK; and an exploration of the up-and-coming opportunities in Africa as the continent leverages international assistance to grow its capital markets. Our country analysis looks at Libya this week, while our sector analysis features the forever popular asset class of property. IFN Correspondents come to you from Bangladesh, Brunei and the UAE with our sector correspondents discussing the regulatory role of scholars and the advantages (and disadvantages) of Takaful windows. Our case study this week focuses on the recent US$750 million Sukuk issuance from the Government of Sharjah while we also bring you a round-up of key trends in Islamic hedge funds from Eurekahedge. Nabil Issa of King & Spalding contributes an outline of recent activity in Saudi Arabia, while Paul Jarvis and Helen Munroe of Dentons discuss the issue of ownership in structured finance in our sector feature, and Rafael Morales gives us a special report on Islamic finance in the Philippines. We trust all our readers relished a rewarding and relaxing Eid Mubarak, and are ready and raring to return to work following the break! Cover Story Grassroots revolution: The relentless rise of compliant crowdfunding Crowdfunding is the latest catchphrase in capital formation, and these days it seems as if everyone is jumping on the bandwagon. With a profit-sharing model in close alignment to Shariah principles and a structure enabling unparalleled access to funding for entry-level players, LAUREN MCAUGHTRY looks at the astonishing growth trajectory of the sector — and asks whether this latest fashion could truly translate into the Next Big Thing for Islamic finance… IFN Reports • Top of the class: New funding platform teaches student loans a lesson • Bridging the gap: Finding middle ground for Islamic and conventional finance • Easy entry to Takaful: OAC offers a new model • IFN Dealogic roundup • Sovereign Sukuk: Asian wave on the horizon • IFN Global Trendswatch • IFN Weekly Poll: Will the recent spate of sovereign issuances in non-Muslim majority countries spur corporate Islamic issuances? • Philippines Stock Exchange moves ahead with plans to launch Shariah compliant sub-index • Shariah compliant financial operations providing major boost to Oman’s banking landscape • Africa: A destination for long-term growth investments • Luxembourg prices long-awaited Sukuk • Country first for Al Baraka Bank Pakistan • US market welcomes Shariah compliant NYSE-listed ETF IFN Country Correspondents • Refinance facility for Islamic banks opens a new era • Retail banking focus in the Bruneian Islamic finance industry • UAE: Leading the way in the Middle East IFN Sector Correspondents • More room for religious scholars? • Takaful window: Advantages and disadvantages IFN Country Analysis • Islamic finance in Libya: Taking a step back? IFN Sector Analysis • Real estate remains a fundamental accessory in the Islamic finance landscape Shariah Pronouncement During the recent economic crisis, an Islamic bank faced a number of defaults in financial commitments by its clients. As a result, the Islamic bank is required to allocate a part of the current income as provision for bad and doubtful debts in its fiscal year. What is the Shariah position in this regard, keeping in view that Islamic banks work on a different model than their conventional counterparts? Case Study Maiden sovereign Sukuk: Emirate of Sharjah Emirate of Sharjah, the third-largest emirate in the UAE, successfully auctioned its debut Sukuk offering on the 17th September 2014. The US$750 million 10-year facility was more than 10 times oversubscribed receiving an orderbook of US$7.85 billion. Special Report The Philippines: A latent opportunity Though not a Muslim-majority nation, the Philippines has demonstrated a strong commitment to developing its Islamic finance capabilitie. Features Saudi Arabia: An economy on the up Saudi Arabia continues to be a booming and stable economy that continues to be buoyed by high oil prices and a thriving private sector. While oil prices have fallen from record highs down to US$95 a barrel, such price exceeds the amounts required for another expected budget surplus. Structured Islamic finance and the issue of ownership For a structure to be Shariah compliant, an Islamic financier needs to have a direct or indirect ownership interest in an asset or a business. PAUL JARVIS and HELEN MUNRO explore the challenges and benefits of the various structures used for Shariah compliant structured financings. The vast majority of structured Islamic financings incorporate an Ijarah. Book Excerpt The Eurekahedge Report: Key trends in Islamic hedge funds With Muslims forming a quarter of the world’s population, global Islamic finance assets made of Islamic banking, Sukuk, Takaful and Islamic funds, are projected to breach the US$2 trillion mark by the end of 2015.  CONTACTS Editorial: Sasikala Thiagaraja Direct Line: +603 2163 7800 ext 34 Finance: Faizah Hassan Direct Line: +603 2162 7800 ext 26 Sales: Dubai: Geraldine Chan Direct Line: +971 4 427 3628 Kuala Lumpur: Steve Stubbs Direct Line: +603 2162 7800 ext 55 Subscriptions: Dubai: Mithun Gangolli Direct Line: +971 4 427 3638 Kuala Lumpur: Siti Amilia Amir Amzah Direct Line: +603 2162 7800 ext 27