Private equity participation: New movement for Islamic finance?

Rapids • Deals • News • Takaful • Asset Management • Ratings • Moves
3rd June 2015 (Volume 12 Issue 22)
Spreading our wings A perennial call in the Islamic finance industry is the need for greater focus on real ‘investment’ activity as opposed to the typical banking structures found in the conventional industry – and this means a true participation and partnership between all players – sharing in both the risks and the rewards. While we may still be some way away, our cover story this week focuses on the path towards this aspiration and the obstacles in the way of achieving it: with a comprehensive look at the current landscape for Islamic private equity and the players pushing it forward across the globe. Our IFN reports cover Abu Dhabi Islamic Bank’s expansion plans and the Sukuk sector in light of new emerging trends, while our correspondents explore real estate, Takaful, Australia, Kenya and Hong Kong. Our features come to you from Euris Group on Luxembourg while we also have special reports from IjaraUSA.com and Cheang & Ariff as well as IIUM. Our in-house analyses cover Saudi Arabia and private banking and wealth management. As we wind down from an exceptionally successful IFN Asia event last week and gear up for the equally exciting IFN Europe Forum being held in Luxembourg on the 10th June, I am reminded of how truly global Islamic finance has become, and how wide its wings have spread from small beginnings. It is both an inspiration and an incentive to even greater achievements – long may the industry continue to grow. Cover Story Private equity participation: New movement for Islamic finance? Private equity is one of the conundrums of the Islamic finance industry. On the surface it is the ideal opportunity — equity investments based on participation, risk-sharing and profit partnerships. Yet for a variety of reasons the sector has not yet garnered the attention, differentiation or innovation that it perhaps needs in order to grow into a viable pillar — despite its vast potential as a catalyst to drive economic growth. As 2015 demonstrates encouraging signs for emerging market activity, LAUREN MCAUGHTRY looks at the current landscape. Keynote Address Keynote address by Dr Nik Ramlah Mahmood, deputy CEO of the Securities Commission Malaysia (SC) at IFN Asia Forum 2015 on Tuesday, the 26th May 2015 Let me first thank IFN for inviting me to speak at this flagship IFN Forum 2015. I am pleased to note that this event has over the years grown from strength to strength and is now a key event in the calendar of the global Islamic financial services industry. IFN Reports • Asia — a key focus for industry leaders • Sukuk sector regains ground as new trends begin to emerge • ADIB charts its course in equity, credit and retail markets, setting a precedent in the emirate • 1MDB unlikely to disproportionately affect Sukuk market • Company Focus: Bosna Bank International • New rules to bring in more business for Malaysian Islamic banks • REDmoney launches IFN Education; a facilitative medium for Islamic finance education • Sovereign Sukuk: Regular Sukuk auctions and Oman’s debut before Ramadan • IFN Weekly Poll: Is Islamic finance in the UAE becoming overbanked? • IFN Global Trendswatch IFN Country Correspondents • One belt, one road • Taking a closer look at Waratah • Takaful operational guidelines IFN Sector Correspondents • Blue for go • The importance of the Sukuk market for the Takaful industry IFN Country Analysis • Saudi Arabia: Poised for greater growth IFN Sector Analysis • Private banking and wealth management in Islamic finance Shariah Pronouncement An Islamic bank has approved a Mudarabah facility for a customer whereby the customer will receive Mudarabah capital from the bank for investment in Shariah compliant business activities. Case Study Hong Kong’s sophomore Sukuk — first Wakalah paper by a ‘triple A’ sovereign Following its historical debut last year, the Hong Kong Special Administrative Region (HKSAR) once again, ahead of its peers, tapped the global Sukuk market. Offered under the government bond program, the standalone US$1 billion five-year paper was priced on the 27th May 2015 at the tight end of the initial price guidance at 35bps over five-year US Treasuries, or 1.894%. In an exclusive interview with the Hong Kong Monetary Authority (HKMA), NABILAH ANNUAR provides a detailed account of this notable transaction. Special Reports Key consideration in making third party debt order for an Islamic banking account: An overview of the positions in England and Malaysia When the claimant in a suit obtains a monetary judgment against the respondent and the respondent refuses or fails to comply, there are several ways to enforce the judgment. In this article, ABDULLAH ABDUL RAHMAN and APNIZAN ABDULLAH provide an overview of a common method of enforcement that is known as the third party debt order. Low mortgage rates and Islamic finance: How the two work together Anyone with even a passing understanding of Ijarah loans knows this form of Islamic financing needs to have a relationship with more conventional western mortgages. Even if you have just looked at getting one of these loans or actually work in the industry, you’ll know that while Ijarah loans take great care to stay Shariah compliant and away from Riba through the use of a trust, the western concept on mortgage rates does come into play for several different and important concepts. Therefore, SHOEB M SHARIEFF attempts to bring readers in other parts of the world up to speed on the current issues with mortgage rates in North America and what they mean on the Islamic finance front. Feature Luxembourg takes steps to strengthen Islamic finance cooperation Over the past few months, several actions have been carried out by the Ministry for Sustainable Development and Infrastructure under the tutelage of minister François Bausch to develop strong cooperation between Middle Eastern countries and Luxembourg. Led by Pierre Gramegna, the Grand Duchy’s minister of finance, Luxembourg has taken actions to strengthen its relationship with the Sultanate of Oman and the UAE, both in the field of Islamic finance cooperation. AMMAR DABBOUR writes.  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