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Powered by: IdealRatings® alternatives...7 COVER STORY 20th January 2016 (Volume 13 Issue 3) Iran: Phoenix from the ashes?

Economic sanctions on Iran have fi nally This interest has been met with alacrity “Iran is the biggest Islamic banking been lifted, with Implementation by Iran itself, with insiders confi rming system in the world and the sanctions Day on the 16th January ending over a that the authorities are keen to welcome lifting should have a benefi cial impact decade of international isolation. But outside investment and eager to smooth on the economic system – which should as Iran rejoins the global markets, what the path for foreign companies and have an equivalent eff ect on the local will the impact be – both on the Islamic benefi t from their expertise, talent and Islamic banking industry.” fi nance industry itself and for countries knowledge. “From my discussions eager to reconnect with the Islamic with the Iranian commercial elite, they This is good news for the overall Republic? The second-largest economy are determined to make things work,” industry. S&P in its most recent forecast in the MENA region and the biggest explained Sarosh Zaiwalla, a sanctions predicted that growth would drop to Islamic banking system in the world, expert and a senior partner at UK-based single digits this year but Iran should Iran has the potential to revolutionize Zaiwalla & Co, to IFN. “The government hopefully bring some new opportunities global trade and fi nance – but, as recently brought in a new regulation on for development – especially in the LAUREN MCAUGHTRY discovers, the joint ventures which makes sense – so if capital market space. “When it comes to reality could be a litt le more complex… a fi rm wants to invest in Iran, they need the Sukuk market, our outlook is that a local partner. They are taking things issuance for 2016 will be US$50-55 billion Excitement abounds step by step.” but again Iran could off er opportunities With around 80 million people and a for this to grow,” confi rmed Mohamed. GDP of almost US$400 billion, Iran is A new dawn for Islamic “We expect that accessing the Sukuk a signifi cant economy whose return to ϐinance? market might help Iran raise funding the global stage has set the business for its projects and be seen by global So what impact and opportunities will Islamic investors as a diversifi cation world alight with opportunity. With this new dawn of economic opportunity the fourth-largest oil and second- opportunity. The Islamic fi nancial bring to the Islamic fi nance industry? market could also benefi t from volume largest natural gas reserves in the The Islamic Republic already accounts world, fi rms are champing at the bit eff ects as post-sanction investment for around 40% of global Islamic banking projects are reportedly high. This could to access this long-buried treasure – assets, and with its economy on and while the general consensus is support market growth in the medium the verge of an international term.” to tread cautiously, there is certainly boom, this predicted growth no shortage of interest. “The phone combined with an inevitable These steps could be the precursor to has not stopped ringing, and we need for fi nancing should have provided, and no doubt will an explosion in Islamic fi nancing as theoretically provide a major investors clamor to access the market continue providing, advice to a number boost to the market. of clients on this development,” – especially as currently neither the banking system nor government confi rmed Jawad Ali, the managing Mohamed Damak, the global partner of King & Spalding’s Middle reserves are expected to be head of Islamic fi nance high enough to fi nance Iran’s East offi ces and the global deputy head at S&P, is optimistic. of the fi rm’s Islamic fi nance practice “The impact is clearly continued on page 3 group, speaking to IFN. positive,” he told IFN. Opening doors to PARTNERPARTNER WITHWITH USUS new opportunities

Contact for more information: François-Xavier Chenhalls-Walker Email: [email protected] IFN RAPIDS

Volume 13 Issue 3 Department of Islamic MARC affi rms Horizon DEALS Development Malaysia Hills Development’s IMTN IFN Rapids ...... 2 EKVE to launch RM1 proposes establishment of program at ‘AAAID(bg)’ national Halal council IFN Reports: billion (US$226.99 million) No rating action warranted • Will Donald trump Islamic fi nance? • CIMB Sukuk Murabahah issuance; Angkasa to enhance on TNB Northern Energy’s makes lodgment under personal fi nancing segment RM1.63 billion (US$369.57 Islamic targets Muslim faithful with new Hajj LOLA framework with Sedania As Salam million) Sukuk following bancaTakaful solution • Jordan – an upcoming Emaar Sukuk to make Capital’s Shariah compliant recent development, contender • Young Singaporean Muslims calling periodic distribution trading system according to MARC for Shariah compliant investment alternatives • payment of US$21.25 RAM assigns ‘AAA(bg)/ million in February Stable’ rating on EKVE’s Islamic banking benefi ts from the diversifi cation ASSET Indonesia receives IDR7.94 proposed Sukuk search • Sovereign Sukuk: A regular week • trillion (US$562.15 million) MANAGEMENT Murabahah Islamic investors eye capital gain opportunities in bids from recent Bahana TCW Investment sovereign Sukuk auction; arising from greying population in the US • Management plans off shore MOVES awards IDR4 trillion Shariah mutual fund in fi rst Second wind for Omani Sukuk market – fi rst listed Bank Negara Indonesia (US$283.2 million) quarter of 2016 non-sovereign Islamic paper on the horizon • IFN appoints Haryadi A Central Bank of Investment House appoints Sarwono as new chief Global Trendswatch • IFN Weekly Poll: How would Bahrain’s Sukuk Ijarah Amwal as fund manager commissioner Iran’s liberalization on foreign banks in its free zones oversubscribed by 185% for its Al-Beit Al Mali Fund DLA Piper names Ben aff ect the Islamic fi nance industry? ...... 5 Putrajaya Holdings to Gillespie as head of make Sukuk redemption on TAKAFUL corporate of its Middle East th the 26 January 2016 offi ce Women in Islamic Finance: PowerTalk: Meezan Bank partners with IDB plans Sukuk off ering in TPL Direct Insurance to Al Rajhi Bank Malaysia Farmida Bi ...... 12 fi rst quarter of 2016; invites provide Takaful coverage appoints Mahfi zan IFN Analysis: banks to bid for arranger for Car Ijarah customers Muhammad as director of roles treasury UK and Ireland: Western hubs for Islamic Bermuda-based Armour Khazanah Nasional fi nance? ...... 13 Investment purchases Elian welcomes Lisa mandates banks to market stake in the UK’s Cobalt Mclauchlan and Mari Islamic pensions: A problem waiting to US dollar Sukuk off ering Underwriting Hietala-David to recently surface ...... 14 Special Power Vehicle launched commercial team Case Study: makes partial redemption RATINGS CIMB appoints group CEO of Sukuk of RM11.98 Jimah East Power Sukuk: One of 2015’s largest....15 to lead CIMB Bank million (US$2.71 million) Oman Telecommunications Column: Company’s Sukuk receives Makkah & Madinah International Islamic ‘(P)A3’ rating from Moody’s Holdings’s fi nancial Daud speaks ...... 16 Liquidity Management director quits Special Report: reissues US$860 million short- Jimah Energy Ventures term Sukuk; fi rst for 2016 retains ‘AA3/Stable’ Sukuk Meezan Bank renews Misconceptions about Islamic banking: Some rating CEO’s contract for another preliminary issues ...... 17 Sunway Treasury Sukuk three years issues RM100 million Special Power Vehicle’s Country Feature: (US$22.7 million)-worth of Sukuk rating maintained at Watania names Gutam Data ‘A1/Stable’ as CEO Sunny days ahead for Islamic finance in Islamic one-month papers Canada ...... 19 Diffi cult operating Former Lloyd’s chairman environment prompts call now chairman of Cobalt NEWS from Central Bank of the Underwriting Islamic Finance news ...... 20 Abu Dhabi Islamic Bank UAE to exercise prudent Axis REIT’s non- to enhance customer dividend policies Deal Tracker ...... 27 independent director accessibility via branch TTM Sukuk’s Sukuk resigns; Ng Choy Tip REDmoney Indexes ...... 27 redistribution plan; to add Murabahah secure ‘AAAIS’ promoted to fi nancial Eurekahedge data ...... 29 three new branches rating controller Performance League Tables ...... 31 PBDAC participates Cahya Mata Sarawak ZICOlaw network in power company’s Events Diary...... 36 proposes RM1 billion welcomes new regional syndicated fi nancing (US$226.73 million) Sukuk managing partner Company Index ...... 37 arranged by Abu Dhabi Ijarah program; receives Subscription Form ...... 37 Islamic Bank ‘AA3/Stable’ rating

Disclaimer: IFN invites leading practitioners and academics to contribute short reports each week. Whilst we have used our best endeavors and eﬀ orts to ensure the accuracy of the contents we do not hold out or represent that the respective opinions are accurate and therefore shall not be held responsible for any inaccuracies. Contents and copyright remain with REDmoney.

Iran: Phoenix from the ashes? Continued from page 1

investment needs. A reported US$29 exports, and making the best use of Jawad agrees that billion has already been unfrozen (with fi nancial assets,” he said. And the pragmatics could some reports claiming up to US$50 country has lost no time in putt ing its take precedence billion) and this could go up to US$150 money where its mouth is. Bank Mellat over principles: billion – but this is unlikely to meet the has already announced plans to issue “Iran is entering country’s requirements, which may IRR650 billion (US$21.78 million) in the global lead players to tap the capital markets Sukuk to fi nance the purchase of drilling economy. instead. “Investment needs are high rigs for Dana Petro Rig Kish Company, It will be and at some stage the entities looking Ali Qasemi, a manager at the bank was interesting to fi nance will have to look at available quoted as saying according to a report to see if they insist on doing business options. For Iran, the possibility of doing from SHANA news agency on the 4th their way from the outset, or whether conventional fi nancing is not possible as January. This week also saw the reported they will accept compromise in order to it is an Islamic Republic so the fi nancing purchase of 114 Airbus planes for Iran get it done quickly and effi ciently and will need to be Shariah compliant, Air at an estimated US$7 billion. While resurrect old business relationships and whether Sukuk or syndicated fi nance. the government may have paid upfront build new ones.” Domestically, we are of the view that the this time, future purchases could easily local banking system and capital market be funded through debt issuance and, Either way, the local market has a long alone cannot absorb all the fi nancing as we know from last year’s Emirates way to go before it can meet the needs needs so they will certainly need to Sukuk, the structures to do so are of global investors or match its overseas go and tap other international capital already in place. counterparts. The Islamic fi nance markets,” agreed Mohamed. industry in Iran is still in its infancy However, Iran will need to implement and while it has created its own Islamic Iran is regulatory changes to make it more banking and fi nance system in isolation, friendly to international Sukuk issuance it remains very diff erent to the current entering the - primarily in terms of aligning the global framework. “Any company going structures currently used in Iranian there and requiring in-country fi nancing global economy. It Sukuk issuance with those currently will have a bit of a shock because it accepted in Islamic fi nance today – won’t be like in the UAE, Riyadh, Kuwait will be interesting to before it can fully take advantage of this or London,” noted Jawad. “They will potential. fi nd that the instruments they use see if they insist on have stayed at a rudimentary level. Baby steps “It will take some time for the Iranian doing business their And not everyone is so positive – Islamic fi nance industry to notch up the especially in terms of the potential sophistication to compete with the GCC- way from the outset, opportunity for Islamic fi nancing and based regional banks and certainly the structures. international banks that provide Shariah or whether they will compliant fi nancing who have been accept compromise Firstly, the Islamic fi nancing doing this for a long time and have the requirements themselves may not be as relationships and the expertise.” in order to get it high as initially expected. “Iran is not strict on Islamic fi nancing and at the Regional race done quickly and moment it does not seem as if foreign While Iran has an urgent need companies will need Islamic fi nancing,” of investment within key sectors efϔiciently confi rmed Sarosh. “They want to take a including consumer goods, industry, very practical and pragmatic approach. infrastructure, energy and fi nance, For the enquiries and potential deals it may also fi nd that some countries we are seeing, there are no Islamic are keener than others to get structures in place at the moment.” involved. Europe and the UK are in a good position to benefi t, while key President Rouhani announced on the An Iranian entity doing business within trading partners are also likely to be th 17 January that Iran aimed to Iran will of course have to raise enthusiastic. “I think Asian institutions att ract US$30-50 billion of domestic fi nancing on a Shariah may be more motivated to participate foreign capital over the next compliant basis, while it will also earlier,” suggested Hooman Sabeti, a fi ve years with the goal of have a strong incentive to adhere director at SDF Partners in Singapore. 8% growth – making the to Islamic principles even for “The fi nancial institutions participating country an att ractive target off shore activities. But foreign in new markets are usually from the in any language. “Iranian companies are more likely to raise countries where the trade is happening. government policies in the fi nancing off shore through their In Iran’s case ,those are China, Turkey, post-sanctions era will usual channels rather than tap India, Korea and so on.” focus on att racting the local market, meaning litt le foreign investment, need for Islamic structures. On the other hand, the ongoing expanding non-oil continued on page 4

Iran: Phoenix from the ashes? Continued from page 3 sanctions from the US (on Iran’s economic relations missile program) and long-standing between Iran and its ambivalence toward involvement with Gulf neighbors. UAE the Islamic Republic is likely to result exports to Iran stood at in a more cautious approach from US around US$33 billion fi rms – while over in the Middle East, in 2014 and accounted political tensions between the GCC and for around a Iran were exacerbated earlier this month third of the following a dispute between Iran and country’s Saudi Arabia which has led some to total suggest that Gulf banks and businesses imports; could be in less of a hurry to enter the while Dubai market. “If you are a European company “Despite low oil prices and a bleak as a regional hub stands to benefi t from and you have a product or expertise forecast, there will certainly be the increased trade and investment to sell to Iran, from the most basic to investment in the energy sector as Iran fl ows. “If there was ever an Islamic trade the most sophisticated industries, you will need to increase its capability to fi nance opportunity presenting itself are in a good position,” agreed Jawad. produce oil to meet allowed quota and with the right mass and economies of “But if you are a Gulf-based fi nancial recapture lost market share. So the scale, this is the one – it is Iran,” agreed institution or company, there are other biggest rush will be that area to start Jawad. “Due to decades of sanctions, considerations to take into account. The with – as it is seen as the lowest-hanging Iranians don’t have wide global business relationship between Iran and the GCC fruit,” noted Jawad. Yet while Iran’s relationships yet – they cannot base countries is not the best and even with vast oil reserves and sending the world transactions on trust as they and the sanctions lifted, I do not think this will into a tailspin with the potential knock- counterparty don’t know each other. result in a huge amount of bilateral trade on eff ect on oil prices, competition of Everyone is going to need documentary fl owing between the Gulf and Iran just production and diversifi cation of supply, credit and trade fi nance and this will be yet. There are political issues that have the country will need a lot of help to a big opportunity for banks, including to be overcome before that trust can achieve its goals. Claudio Descalzi, CEO Islamic banks.” be rebuilt and commerce, fi nance and of Italian energy fi rm Eni, suggested trade can fl ow between the two regional that Iran would need to invest at least Great expectations blocks.” US$150 billion in infrastructure in order There are still signifi cant challenges to become a major producer. “In today’s and inhibitions, and it might be a slow “The GCC banks are in an interesting market, fi nding $150-200 billion to invest burner, but the potential of Iran to situation. There is some political tension in Iran is not something that can be done infl uence the global Islamic market is and that could have a deterring eff ect in a second,” he told Reuters. very real – and the opportunities are on their participation. They are likely to immense. “Iran accounts for around 40% take their cue from government policy,” If there of total global Islamic banking assets – agreed Hooman. Dubai Islamic Bank, almost half a trillion dollars – and this which maintained a representative offi ce was ever contribution is likely to increase going in Iran prior to the sanctions, is certainly forward due to economic activity and in no hurry to race back into the an Islamic trade the growth opportunity in the banking market. “It is too early to comment on system – at a time when the Islamic it. We will wait and see how the whole ϔinance opportunity banking system elsewhere in the world thing transpires before looking at any is experiencing a drop in growth,” opportunity,” Naveed Ali, the chief of pointed out Mohamed. corporate banking, told IFN. “At present, presenting itself we are not thinking to set up a physical with the right mass This growth will inevitably be boosted presence anytime in the near future.” by the enormous international interest. and economies of “At the moment, the mood is very Outlook and opportunities upbeat. UK and European companies So what can we expect from Iran in the scale, this is the one are putt ing everything into gear, and coming year? While Islamic fi nance is an some of them are saying that Iran is as obvious choice, the industry is likely to – it is Iran interesting as China for investment,” develop on the back of industrial said Sarosh. “We are already working activity rather than leading the with a UK company on a joint energy way. However, the potential security venture in Iran.” is enormous – especially in the areas of government and Trade fi nance is another golden It might take time, but Iran has its own infrastructure fi nance, trade goose, and this could be the key to role to play and its own path to follow. fi nance, investment funds, unlock Islamic potential in a sector The coming year could see the global private equity – and of so far largely untapped by the Islamic market change beyond course, oil and gas. industry – and boost trade and recognition. For bett er or worse? Who yet

Will Donald trump Islamic ϐinance?

As president Barack Obama’s offi ce term “In the race to become the next president, himself, this may not have a big impact comes to an end this year, Americans he’s been gaining support with a on Islamic fi nance in the US and will select their new president for the political manner that can be described globally,” Kavilash Chawla, a partner at next four years this November. This time, as blunt directness,” British lawmaker Baton Global, told IFN. the election has captured the world’s Philip Davies was quoted by CNN as att ention largely due to Donald Trump, a saying. The campaign, which experts In May, the Trump Organization was Grand Old Party (GOP or the Republican) see as mainly rhetorical, has somewhat reportedly eyeing potential project candidate who promises to make America triggered concerns among investors in opportunities in Abu Dhabi, Qatar great again in his most controversial yet Muslim-majority countries to reassess and Saudi Arabia. Monem Salam, the fl amboyant way. Curious, NURUL ABD their investments with the billionaire and president of Malaysia-based Saturna, is HALIM asks, in the interest of Islamic also raised the question of whether this of the opinion that no drastic change is fi nance, what will the future hold for the could further paint a bleak picture on expected to be seen in the global trade industry if Trump wins the election? Or is Islamic fi nance development in the US. under a Trump administration except for it too early to tell? the further image deterioration of the US Mixed reactions in the eyes of the world. According to “You’re ϐired!” There were mixed reactions coming available data, the US had US$215 billion From the Trump Organization to from wider audiences on Trump’s view in total (two-way) goods trade with ‘The Apprentice’, Trump has had no on China, immigrants and Muslims, MENA countries during 2008 with the diffi culty stealing the spotlight for the which earned him the top spot in the UAE, Saudi Arabia, Egypt and Qatar its 2016 election. Aiming to fortify the party poll. Particularly, Trump’s call top export markets. US’s economy and sovereignty, Trump to ban Muslims from entering the is adamant that his campaigns, which country has somewhat agitated several The fact that the election is still a long mostly centered on race, religion and investors and entrepreneurs in Muslim- way off makes it too early to predict diplomacy, will make America great majority countries, with some reportedly Trump’s victory. Even if the Republicans again. By exploiting major issues in the exploring legal means to sever ties with manage to take over the White House, country and around the world, most the magnate. However, some experts it would be an uphill batt le for Trump signifi cantly the series of terrorist att acks see his campaign as mostly rhetorical. to realize his campaign agendas. As the by the Daesh Islamic militant group Drawing a line between his business and government provided for the system of which prompted Trump’s call to ban all political agenda, Dubai-based Damac checks and balances to form an important Muslims from entering the US, Trump’s Properties, who earlier strongly criticized part of the US Constitution, it would be campaign has not only earned the Trump for his off ensive statement, impossible for one to unilaterally pass popular vote in the party (according to has resumed business with Trump any law. “At this point, it is just rhetoric. the Wall Street Journal/NBC News poll), and stressed that it will not comment What matt ers is if Trump’s rhetoric but also enthused mixed reactions from further on American’s political agenda. becomes offi cial US policy and law,” wider audiences. “As Trump is a pragmatic businessman added Kavilash.

CIMB Islamic targets Muslim faithful with new Hajj bancaTakaful solution

CIMB Islamic Bank has joined the alike position themselves among Muslim out RM9,980 (US$2,265.39) to perform throng of Islamic fi nancial institutions faithful who may be required to wait as the Hajj – a subsidized fi gure from the tapping the signifi cant Muslim market long as 20 years to be able to complete original RM16,000 (US$3,631.88) but aspiring to complete their religious the mandatory religious duty expected of nonetheless a hefty amount for the obligations. In partnership with Sun every physically and fi nancially capable average citizen. GDP per capita for Life Malaysia Takaful, CIMB Islamic – adult Muslim. the nation of some 30 million was at one of the world’s largest Shariah banks US$10,830 in 2014. with RM49.86 billion (US$11.32 billion) “As one of the fi ve pillars of Islam, it in assets as at the end of 2014 – has is compulsory for every able-bodied With the average waiting list number rolled out the country’s fi rst universal Muslim who can aff ord to perform Hajj, in decades, product developers have Takaful Hajj instrument to serve its to fulfi ll that at least once in his or her engineered a solution suited to such aspiring Hajj pilgrims in excess of 1.5 lifetime. With a journey this important, circumstances. CIMB Islamic and Sun million. VINEETA TAN reports. early and good planning is essential Life Malaysia Takaful for example to ensure one is prepared mentally, included the Badal Hajj service to its This latest bancaTakaful initiative is one spiritually and more importantly, new products allowing a registered Hajj of the many launched in recent months fi nancially to achieve the ultimate service provider to assist those covered including by Al Rajhi Bank Malaysia and destination,” shared Rafe Haneef, CEO of who are not physically able to embark Great Eastern Takaful as well as Bank CIMB Islamic. on the arduous journey to fulfi ll the Simpanan Nasional and Prudential BSN obligation. Takaful as banks and Islamic insurers Malaysian Muslims will need to fork

Jordan – an upcoming contender

Over the past few months, Jordan has made strides in revving up initiatives to stimulate its Islamic fi nance market. Despite challenges arising from regional turmoil, the Jordanian economy has managed to maintain its stability in 2015. The country this year plans to make a Sukuk off ering worth JOD150 million (US$210.61 million) and has reportedly mandated banks for the deal. The issuance could serve as a stepping stone for the Kingdom to favorably position itself in the Islamic fi nance market. NABILAH ANNUAR evaluates Jordan’s capabilities as a global player.

According to local reports, the country has maintained its stability in 2015 amid challenges from the regional turmoil, which aff ected the region’s economies. Issa Haidar Murad, Amman Chamber of Commerce chairman, relayed to Jordan News Agency that the region’s economies have entered a state of recession as oil prices continue to slide. National exports are witnessing ‘exceptionally diffi cult Ministry of Finance mandated the Islamic investment process. Among instruments circumstances’ due to political and Corporation for the Development of to be introduced include Murabahah, security unrest in neighboring countries, the Private Sector (ICD) as transaction Ijarah and Istisnah. prompting a complete closure of Jordan’s technical support for its planned borders with Iraq and Syria. domestic Sukuk issuance that it had Later in August the Kingdom hoped to market before the end of 2015 welcomed Ethmar, Jordan’s fi rst Islamic According to data from the chamber, — the program would be facilitated by microfi nance institution affi liated to the national exports during the January- the Japan International Corporation King Hussein Foundation, to promote September period stood at JOD3.6 Agency, under its agreement with entrepreneurship among marginalized billion (US$5.05 billion) while imports the ICD to provide technical Sukuk communities and enhancing their amounted to JOD10.5 billion (US$14.74 assistance. fi nancial and social inclusion. Ethmar billion) of imports. Local revenues, since commenced operations by providing the beginning of 2015 until the end of The government fi nished the registration three specifi c Shariah compliant products November, have totaled about JOD4.8 of the SPV for issuing the Sukuk at the and other Islamic fi nancial services, in billion (US$6.74 billion), where JOD804 Companies Control Department in collaboration with public and private million (US$1.13 billion) were taxes on November 2015 and this followed with organizations throughout Jordan. income and profi t, the data revealed. an announcement earlier this month revealing the government’s plans to issue The following month, the Jordanian S&P last October assigned a ‘BB-/B’ rating JOD150 million in Sukuk to fi nance the government signed a US$3 billion to Jordan with a stable outlook. The National Electric Power Company. All framework agreement with the rating agency said in a statement that technical and legal procedures for the International Islamic Trade Finance the Kingdom’s 2015 growth expectations issuance have been completed and the Corporation to fi nance the Kingdom’s have been revised down slightly Sukuk is set to be tendered in two equal main imports as the country’s private based on weaker regional demand; separate issuances. sector seeks to benefi t from the nevertheless, it expects low oil prices organization’s fi nancial and advisory and some upside potential for foreign Catering to the mass market, Jordan’s services. investment to support the country’s Governorate Development Fund which medium-term growth prospects. falls under the purview of the Jordan Jordan has had an accelerated year in Enterprise Development Corporation terms of Islamic fi nance triumphs. The In spite of these diffi cult circumstances, (JEDCO), in July 2015 partnered with question is, could it see a meteoric rise in the country has succeeded in putt ing the country’s Hajj Fund to off er Islamic the industry the same way as Oman did? in consistent eff orts for its Islamic fi nancing instruments. The country’s At the rate it is going, the government’s fi nance industry. The government of Hajj Fund will be assisting JEDCO eff orts bode well for the country to secure Jordan in 2014 successfully passed a in developing the required products a standing in the global Islamic fi nance legislation to regulate the issuance of and training JEDCO staff as well as market. Sukuk. Subsequently in April 2015, the implementing and supervising the entire

Young Singaporean Muslims calling for Shariah compliant investment alternatives

If the performance and dissolution of The web-based screening solution known This is the fi rst time such an instrument is Singapore’s sole fully-fl edged Islamic as ‘Boursa’, is a collection of market data available to retail investors in Singapore banking player is the barometer of of companies (including global and local and Hamisah believes that this could be health for Shariah fi nance demand in comparisons, market data and income a catalyst for those who want to invest in the city-state, then the Lion City has not purifi cation information) listed on the Shariah compliant shares. It may take a fared too well in that respect. Or are we Singapore Exchange, ASEAN Exchanges, lot more to prop up the Islamic fi nancial too presumptuous in our assumptions? Australia Exchange and the New York segment of the deeply conventional VINEETA TAN fi nds out that demand Exchange allowing investors to design market of Singapore, but as with most may still be brewing, and this time their own investment portfolio of listed cases, demand is fi rst and foremost round, among a particularly interesting Shariah compliant securities. essential; willing suppliers and strong demographic. political are subsequently integral.

Singapore’s Shariah compliant banking and investment space is lackluster to say the least especially in comparison to the vibrant markets of its neighbors Malaysia and Indonesia. Despite multiple reaffi rmations by the government of its commitment to Islamic fi nance, the Southeast Asian nation’s ambition seems to be fading with relative newcomers such as Hong Kong coming into the picture. And although there has been some promising initiatives by local fi rms in markets abroad (See IFN Report Vol 12 Issue 31: ‘Chinese state-owned enterprise chooses Islamic fi nance to fund infrastructure projects’), lack of enabling legislation and traction from its minor Muslim population (approximately 15%) have been cited as stumbling blocks to the further development of Shariah fi nancial products. China OIC Forum 22nd March 2016 Yet, despite so, it seems that there is a The Westin Beijing Financial small but growing chorus of Muslim Street, Beijing investors who are looking for investment options in line with their religious beliefs The new kid on the block, China has a substantial Muslim population and offers vast opportunities for investors. and according to Hamisah Samad, the With Hong Kong’s recent sovereign issuances opening up a gateway to the market, this sleeping giant is finally director of Al Jannah Group, the demand beginning to stir. With huge potential, we expect significant growth in years to come, and IFN is ideally placed to is coming from the younger cohort. offer access to this interesting opportunity.

“There is a rise in Singaporean In collaboration with the ICD, an introductory event is planned for 2016 to tackle specific requirements for the youngsters being sensitized and keen Chinese market including capital-raising techniques, investment opportunities, regulation, project and to investing in Shariah compliant or infrastructure finance and access to other markets. With significant international interest, IFN China Forum will be ethical shares because they appreciate the a groundbreaking introduction to Islamic opportunities in the world’s second-biggest economy. importance of Halal income,” Hamisah told IFN. “There is deﬁ nitely lots of REGISTER FREE NOW at demand, but no supply.” www.REDmoneyevents.com

To address the lack of Islamic investment avenues and to close the gap between demand and supply, Al Jannah Group ASSOCIATE PARTNERS this week signed an agreement with LEAD MEDIA PARTNER San Francisco-based IdealRatings to introduce a Shariah screening equities solution providing retail investors exposure to Shariah stocks in the region W: www.redmoneyevents.com | E: [email protected] | T: 603 2162 7800 ext. 43 | Twitter : #ChinaOIC16 and beyond.

Islamic banking beneϐits from the diversiϐication search

From small beginnings, Islamic ﬁ nance has grown up to be one of the coolest kids in class as banks across the world scramble to seek new income sources to hedge against market volatility and expected turbulence in this year’s markets. And with highly competitive oﬀ erings, existing Islamic banks are already winning retail business away from their conventional counterparts, making the sector even more att ractive to overseas institutions seeking new income sources. LAUREN MCAUGHTRY looks at the latest developments.

In the Middle East, the demand for Islamic fi nance products is up by 53% according to a new consumer report from Compareit4me, a MENA-based the impact of market volatility resulting fi nancial comparison site, along with a The main from a series of US rate hikes expected marked increase in the number of UAE throughout this year on the domestic residents choosing an Islamic loan over a attraction for market,” said a Woori Bank offi cial. conventional loan. As awareness grows “Based on its overseas branches in the and demand increases, Islamic banks are customers seeking Islamic region, the bank is planning contributing to the push factor by off ering to expand fi nancial deals with Islamic highly competitive products that match or new banking banks, and continuously take part in the undercut their conventional counterparts. products is the Islamic fi nancial market in the future.” “While UAE Islamic banks including transparent fees and The bank reportedly has the intention ADIB, Emirates Islamic, Dubai Islamic of expanding further deals with Islamic and ADNIF are continuing to off er rates which come banks and eventually sett ing up its competitive products, with fl at rates own Islamic business in the long term on loans as low as 2.36%, non-Islamic with the Shariah in countries including Bangladesh, the banks are also increasingly off ering UAE, Malaysia and Indonesia, in an att ractive Shariah compliant products,” offerings att empt to fi nd new areas of growth and commented the company. “Commercial achieve higher margins outside its own Bank of Dubai and Noor are off ering fl at overcrowded market. Last year, Woori rates as low as 2.75%, in comparison to bought a bank in Indonesia as well as other banks who are off ering up to 7%.” While estimates can vary signifi cantly a savings bank in the Philippines and a and no accurate fi gures have been microfi nance company in Cambodia. The research found that the majority recorded, the latest forecast from of customers (74%) are looking for Morgan McKinley suggests that Islamic However, the Korean government, which personal loans and credit cards, with banking assets could be worth US$6.5 owns 51% of the bank, has been trying home loans and auto loans at 9% and trillion by 2020 – a compelling prospect. to sell its share to the Middle East for 5% respectively – but suggests that the And while Islamic banking continues some time, reportedly approaching GCC religious principles behind the products to be concentrated in its traditional sovereign wealth funds among others – a could be less important than their cost strongholds of Southeast Asia and the move that could explain the eagerness competitiveness. “Once they might not GCC, the growing demand is proving to enter the Islamic banking space. The have been, but now Islamic fi nance irresistible to international interest, sale has met with limited success due to products are most defi nitely viewed and as conditions tighten in global the low oil prices reining in investment side by side with conventional bank markets, new players and non-traditional – according to Korean newspaper products,” explained Jon Richards, CEO jurisdictions are tiptoeing in to test the Chosun Iibo, the Abu Dhabi Investment of Compareit4me. “Given the trends waters. Most recently, South Korea’s Authority requested a government we’ve seen on the site, we’ve become Woori Bank became the fi rst Korean guarantee of 15% return on investment aware that most users are blind to the institution to complete a fi nancial as a condition of purchase, a demand fact a certain product is Islamic, they just transaction with an Islamic bank. On rejected by the Korean authorities. “We simply want a good rate. Therefore, the the 17th January, the bank extended have been negotiating with a number of main att raction for customers seeking US$10 million in loans to Qatar Islamic sovereign funds from the Middle East new banking products is the transparent Bank through its Bahrain branch. “The over sales of Woori Bank [but] regarding fees and rates which come with the fi nancial deal…is aimed at securing new sales terms, nothing has been decided Shariah off erings.” income sources overseas and cushioning yet,” confi rmed a government offi cial.

Sovereign Sukuk: A regular week

Following last week’s spur of sovereign announcements, the past seven days Upcoming sovereign Sukuk have been rather slow in comparison. Country Amount Expected date Emirate of Sharjah TBA First quarter of 2016 This week, the sovereign markets only Jordan JOD150 million TBA saw Indonesia and Bahrain issue their Indonesia TBA 2016 regular Sukuk, while the industry Pakistan TBA Second quarter of waits on updates from other countries 2016 on their sovereign off erings. As usual, Egypt TBA 2015/16 fi scal year NABILAH ANNUAR provides a concise Kazakhstan TBA 2016 rundown of the developments in the Kenya TBA 2016 sovereign Sukuk arena. South Africa TBA 2016 Turkey US$1.1 billion TBA The Indonesian government has awarded Bangladesh TBA TBA IDR4 trillion (US$286.4 million) of its Hong Kong US$500 million to US$1 billion TBA sovereign Sukuk securities auctioned Ningxia Hui Autonomous Region US$1.5 billion TBA on the 12th January, which received Senegal TBA TBA total incoming bids of IDR7.94 trillion Niger XOF150 billion TBA (US$568.5 million), according to an Luxembourg TBA TBA announcement on the Ministry of Tunisia US$500 million TBA Finance’s website. UAE TBA TBA Shandong Province CNY30 billion TBA Over in Bahrain, the central bank Sindh Province US$200 million TBA announced in a statement that the th th monthly issue of its short-term Sukuk 14 January 2016 and matures on the 14 quarter of 2016; followed by Pakistan, in Ijarah has been oversubscribed by 185%. July 2016, is 2%. the second quarter of the year; and Egypt The BHD26 million (US$68.03 million) within the 2015/16 fi scal year. Other issue, which carries a maturity of 182 To recap on the issuances expected to countries looking to fl oat their Islamic days, received BHD48 million (US$125.6 materialize in the sovereign market bonds this year (without a targeted million) in subscriptions. The expected this year, states that have detailed the timeline) also include: Jordan, Indonesia, return on the issue, which began on the timeline of their auction include: the Kazakhstan, Kenya and South Africa. emirate of Sharjah, within the fi rst Islamic investors eye capital gain opportunities arising from greying population in the US

The greying of one of the largest Abdulmalik, CEO of Arcapita. generations in the US – the baby boomers – are drawing Shariah Confi rming that more opportunities investors into the senior housing in the US real estate sector which off er living sector as opportunities for investors stable income streams will institutional nursing and assisted be pursued, the Colorado acquisition living grow in appeal on the back of represents the fi rm’s fi rst in a series increasing recognition of value by of purchases of such facilities and premium communities and the broader this specifi c portfolio consisting of residential market recovery. VINEETA three assisted living and memory care TAN explores. communities in Denver and Colorado Springs is a calculated strategy. As the US ageing population inches closer to doubling in numbers to 98 million by Marvin Tan, Arcapita’s chief investment 2060, global Islamic investment manager offi cer, explained: “The target age group Arcapita, which has concluded over for senior living facilities in Colorado US$1.5 billion-worth of transactions in the is projected to grow by almost twice sector in the US and the UK, is building the national average over the next fi ve another portfolio of senior living in North years.” America to capitalize on the lucrative “The Arcapita team has extensive segment. The fi rm has recently acquired experience in investing in the senior Latest offi cial data show that the ageing a privately-held portfolio of senior living living sector, having previously managed population – those over 65 years of age – communities in the state of Colorado and exited fi ve successful senior living accounted for 14.1% of the US population worth approximately US$85 million in transactions, all of which have returned of some 320 million and this fi gure is a joint venture with MorningStar Senior att ractive IRRs and cash-on-cash expected to grow to 21.7% in 2040. Living. multiples to investors,” shared Atif A

Second wind for Omani Sukuk market – ϐirst listed non- sovereign Islamic paper on the horizon

Oman’s largest telecom company is taking the lead in injecting vibrancy in the country’s corporate Islamic debt capital market following the government’s inaugural sovereign Sukuk three months ago. VINEETA TAN writes that this is an encouraging sign for the youngest GCC Islamic fi nance player’s nascent, but rapidly- growing, Shariah fi nance industry. We hope that it will set a new benchmark among corporate Sukuk issuances Development Co with its OMR50 million the subscription period. The Sukuk will and further facility in 2013. be listed on the Muscat Securities Market. Standard Chartered Bank is acting as the strengthen the “We are confi dent that the Omantel deal’s sole structuring advisor and will Sukuk issuance will help contribute also act as a joint placement agent for country’s capital positively to the government’s objectives the issue along with HSBC and National of enhancing the liquidity in the fast- Bank of Oman. market and wider growing Islamic fi nancial sector in economy Oman, and we hope that it will set This landmark deal will be discussed a new benchmark among corporate at the inaugural IFN Oman Seminar Sukuk issuances and further strengthen on the 8th March 2016 at the Grand the country’s capital market and wider Hyatt Muscat. Supported by the economy,” expressed Talal Al Mamari, Capital Market Authority of Oman, this CEO of Omantel. seminar will focus on the opportunities For the fi rst time ever, investors from available today in the Omani market both domestic and foreign shores will Omantel has decided to follow in the for both capital-raising and investment have the opportunity to buy and trade a footsteps of Tilal Development Company in the Shariah compliant space with the corporate Islamic bond through Oman to privately place the off ering among executive president of the Central Bank Telecommunications Company’s OMR50 local and international investors. To of Oman, Hamood Sangour, to deliver million (US$129.45 million) fi ve-year increase the appeal of the facility, the the keynote address. Sukuk – one that has been assigned an telecom service provider has engineered As an IFN reader, you’re entitled ‘A3’ provisional rating by Moody’s. While the instrument to be dual-currency to att end on a complimentary the Omantel Sukuk will be the nation’s (Omani rial and US dollar); the profi t rate basis. Please register at: htt p:// fi rst listed corporate Sukuk, it is however on the Sukuk will be decided through a redmoneyevents.com/main/event. not the fi rst non-sovereign Sukuk out uniform price auction and fi nalized on asp?IFN=OmanSeminar2016. th of Oman – that honor belongs to Tilal the 26 January upon the conclusion of

IFN Global Trendswatch

What’s been going on in the world this • Economists push back time frame for promises regional integration week? LAUREN MCAUGHTRY brings UK rate hike. but doubts remain and SMEs you an update of the most signifi cant unconvinced, says FT. economic, regional and global events, • Kenya considering international bond issues and trends. issuance, which could include soft • Emerging markets face ‘new reality’ loan from China Development Bank of lower growth, says Christine • US oil industry sinking and strong or from Islamic fi nancing. Lagarde. dollar aff ecting overseas sales, says FT. • ASEAN Economic Community • Bahrain and Oman raise fuel prices.

IFN Weekly Poll: How would Iran’s liberalization on foreign banks in its free zones affect the Islamic ϐinance industry?

Prior to the lifting of Iran’s sanctions, banks would join hands with Iranian How would Iran's liberalization on foreign the director of banking and insurance counterparts, while another 33% was bans in its free zones aěet te Islai aff airs of the Supreme Council for of the opinion that the market would ęnane industr¢ǵ Iranian Free Zones was reported to have witness an increase in Shariah compliant More foreign Islamic branches in Iran stated in the second week of January fi nancing deals. More joint ventures with Iranian that all legal obstacles in the way of counterparts opening branches of foreign banks The foreign banks are allowed to off er all ȱ ¢ȱęȱ have been lifted, advising such banks regular services similarly provided by to focus on off ering services including Iranian banks, as well as extra services 33% 34% fi nance deals. On the back of such such as off ering fi nance deals, bringing exciting news – the re-opening of one to the country foreign currencies at of the largest Islamic markets – one lower costs, deciding their interest, loan, cannot help but ask the industry of and partnership rates freely and their their opinion on how this could aff ect banking charges in accordance with the the Islamic fi nance sector. NABILAH free market rules. IRNA, a local news ANNUAR reports. agency recently reported that at least 20 foreign banks revealed intentions Following the implementation of the Iran to cooperate with the country over nuclear deal – the Joint Comprehensive international transaction issues as soon Plan of Action – Iran saw the lifting as the sanctions against Tehran are lifted. 33% of sanctions on the 17th January 2016. According to IRNA quoting the Central Leading up to the lifting of the sanctions, Bank of Iran (CBI)’s governor Valiollah since the start of the year several of China will be assisting the Islamic Seif, the move will also see its frozen countries as well as global institutions Republic’s fi nance and treasury assets worth US$30 billion to be released have created partnerships with Iran operations, according to Hussein Yaqoui, and handed over to the CBI. According in providing fi nancial and economic the deputy for international aff airs at the to local industry reports, the country’s assistance. Iran and Azerbaijan in early CBI, as quoted by the Financial Tribune. banking regulators have provided January signed agreements to initiate a Bank Muscat is also reportedly ready to the legal prerequisites required for correspondent banking relationship by issue lett ers of credit of between US$200- foreign banks’ presence in Iran. These the end of January, with prospects for 250 million for Iran. foreign bank branches are to be set up a currency swap agreement also being in regions outside the Iranian Customs discussed. China proposed a currency In terms of Islamic fi nance, Iran is Organization’s domain, operating outside swap agreement with Iran as the former looking to collaborate with the IDB to the Iranian mainland and inside the plans to use it for trade activities with harmonize Islamic banking principles country’s free zones. the Islamic Republic. The two countries between the country’s Shia jurisprudence were reportedly in discussions over and the Sunni jurisprudence of IDB Seemingly unpredictable, the re-opening the scheme but have yet to work out its member countries. Valiollah has of the Iranian market is likely to have related technicalities. Later in the month, proposed that experts from both sides equal eff ects in many aspects. The poll Russia was reported to have entered use commonalities as a basis for equal results this week indicated various into a currency swap agreement with Islamic banking principles. Iran is in all possibilities for the growth of the Islamic the country as part of its eff orts to boost aspects evidently a market that is ripe fi nance sector in Iran: 34% believed that bilateral transactions. for the picking. Following the lifting they would see more foreign Islamic of sanctions, the industry can expect a bank branches being established in Global banks and institutions have fl ood of activity in the country’s fi nancial the country, another 33% opined that also stepped up to off er assistance. market. instead of sett ing up individually, Islamic The Industrial and Commercial Bank

IFN ONLINE DIRECTORY

Over 6,727 individual companies directly involved in the Islamic ﬁ nance industry

PowerTalk: Farmida Bi

It may not have been in Farmida Bi’s plan to become an Islamic fi nance lawyer, but this dynamic and pragmatic personality nonetheless rose up the ranks in the Shariah fi nance legal circle to head the European Islamic fi nance practice for one of the world’s largest international law fi rms. Successful yet humble, Farmida has over the years built a repertoire of groundbreaking Islamic fi nancial transactions which have earned her high regards among her peers. How does she do it? VINEETA TAN learns from Farmida herself in this interview where she also spoke of her hopes, dreams and thoughts on her journey so far and how we as an industry should move forward.

“I had always wanted to be a lawyer this is refl ected in both her work and Farmida Bi although I had imagined I would life choices. “Opportunities present Head of Islamic Finance – Europe be fi ghting for the underdog in the themselves at the oddest times and you Norton Rose Fulbright criminal courts rather than a banking have to grab them. I had not planned to lawyer!”shared Farmida. Trained at be an Islamic fi nance lawyer but a few Cliff ord Chance, the Cambridge-graduate initial deals developed into a steady “People face all kinds of challenges such soon qualifi ed into the debt capital fl ow and I found the fi nancial crisis gave as culture or class as well as gender. I markets team and never looked back. “I rise to restructuring and refi nancing sometimes think that the focus on gender started doing Islamic fi nance work much opportunities which have kept me very too easily overwhelms discussions on later. It was a natural development to busy.” what diversity should mean which for work on Sukuk transactions as a debt me is a mix of people that refl ects society capital market lawyer working for clients Maintaining her fl exibility in as a whole,” she observed. who were based in the Middle East.” manoeuvring both life and the markets, Farmida is also anticipating changes in Farmida, in recognition of the dearth Combining both her broad debt capital what has been a tumultuous year and is of women in Islamic fi nance and market knowledge and specialization gearing up in preparation to embrace and most certainly in senior positions, has in the niche segment of Islamic fi nance, adapt what is to come. “I am going to be welcomed the legislative decision by Farmida has advised on various interested to see if the arrival of Iran in certain jurisdictions to implement a landmark and pioneering deals with the Islamic fi nance market might change minimum participation of women in core deep impact in the Shariah space structures and the drop in the oil price, management and senior roles in fi nancial including the Tamweel securitization if sustained, may change the volume or institutions and large companies as which is recognized as the fi rst true nature of work we do,” she mused. a necessary move to enact cultural Islamic securitization and the PCFC change in the short term. “I hope this Sukuk issue to fund Dubai World’s So has being a woman in a male- will also be considered by the Islamic purchase of P&O. dominated industry – both in the legal fi nance industry, which for example, world and Islamic fi nance universe – runs too many events with litt le or no “The mixture [conventional and Islamic] is presented any challenges to Farmida? participation by women.” really helpful as Islamic fi nance does not operate in a silo and I fi nd it very helpful to “I try to focus on the opportunities rather Yet, while the picture for women in do both conventional and Islamic fi nance than the challenges and I think that it Islamic fi nance is far from perfect, work,” she said. As the head of Islamic helps me now that I am older and more Farmida insists that: “There has never fi nance – Europe at Norton Rose Fulbright, self-confi dent,” said Farmida who also been a bett er time to be a working Farmida has big plans for the fi rm this shared that she derives motivation from a woman and the culture will only change year including working on deals in new strange combination of guilt and need to once enough women are participating in markets and developing new products justify herself. While acknowledging that the system.” with the aim of expanding the market. “We we are a long way from parity despite the are working on a number of transactions environment being signifi cantly easier And true to her words, Farmida – who which if completed, would achieve that,” for women in fi nance, she cautioned that says she cannot imagine retiring or revealed Farmida. an overconcentration on one dimension slowing down and is hopeful that the of diversity – gender – could overshadow peak of her career is still to come – is Adaptive is probably a word many the rest of the spectrum. doing her part by continuously engaging would associate with Farmida and the industry and moving forward.

UK and Ireland: Western hubs for Islamic ϐinance?

From the GCC to Asia, VINEETA TAN turns the att ention to the heart of Islamic ﬁ nance in the Western world.

Regulatory landscape 2007), QIB-UK (2008), and Gatehouse Bank Sukuk (See Case Study Vol 12 Issue 15: Economic substance and legal form over (2008). In general, these Islamic banks ‘World’s fi rst export credit agency-guar- Shariah compliance – that is the stance showed a stronger balance sheet in 2014 anteed Sukuk: Emirates Airline’). Another taken by the UK government in its ap- (2015 fi gures not yet available). transaction concluded in 2015 worthy of proach to Islamic fi nancial transactions. mention is the Shariah compliant secured While there is not a special regulatory 2015 was a year of changes for many of helicopter pre-delivery payment funding framework for Islamic banking and Taka- the banks including the rebranding of by Libra Group’s LCI, the world’s fi rst. ful in the UK, however, Shariah compliant EIIB to Rasmala to focus on real estate mortgages are exempted from double and asset management, and the change of Takaful taxation. The abolition of the double leadership in Gatehouse which saw chief The Islamic insurance market in the UK, Stamp Duty Land Tax on Islamic home investment offi cer Abdulaziz Al-Duweesh while small, is growing steadily with fi nancing in 2003 boosted the UK Islamic promoted to the position of acting CEO London-based Cobalt Underwriting – as retail market, and from then on, regular following the departure of Henry Thomp- the sole Takaful and re-Takaful provider changes were made to the Finance Act son as CEO. in the market and coverholder of Lloyd’s – to benefi t alternative fi nance (not Islamic driving market activities. In 2015, the fi rm fi nance specifi cally). In 2007, diminishing Islamic capital markets in collaboration with XL Group launched Musharakah mortgages were regulated Although the Irish Islamic banking sector the fi rst Shariah compliant product to under the ambit of Home Purchase Plans may not be as robust as the UK’s, but its be available through Lloyd’s of London, with the same levels of consumer protec- stock exchange is a leading international secured a major property portfolio placed tion as conventional mortgages. exchange for the listing of both Sukuk and by Lockton’s Real Estate and Construction conventional bonds. Six Sukuk were listed practice and was selected as the insurer The Irish’s legal landscape may not be as on the Irish Stock Exchange: Albaraka of preference for the UK’s fi rst commer- sophisticated as its UK counterpart with Turkey 2025, Majid Al Futaim 2025, Qatar cial Nationally Signifi cant Infrastructure regards to Shariah compliant fi nance; Islamic Bank 2020, Dubai Islamic Bank Project (See IFN Report Vol 12 Issue 34: however, the government continues to (DIB) 2020, Sharjah Islamic Bank 2020 and ‘Proposed Hollywood-backed venture build on the momentum created in the DIB Tier 1 Sukuk (2). leaning toward Takaful insurance). More Finance Act 2010 to support and provide a recently, the Shariah underwriting agency level-playing tax fi eld for Islamic fi nance. The London Stock Exchange (LSE) is in January 2016 received a new investor – In 2015, the International Financial Ser- another popular global exchange for Bermuda-based Armour Group Holdings vices Strategy (IFS 2020), which Shariah Sukuk. The fi rst Sukuk was listed on the – and reconstituted its board. fi nance is a part of, was launched as part LSE in 2006 and according to the bourse, of the fi nance ministry’s drive to elevate it has raised over US$51 billion through 57 The Takaful market also welcomed in its position as an international fi nancial issues to date and is home to four Islamic 2015 the Islamic Insurance Association sector. exchange-traded funds. of London (IIAL) which was launched to support Takaful players in the UK by pro- Banking and ϐinance Out of the two countries, the UK is the viding its members with a platform to ex- While no banks in Ireland off er Islamic only one which issued a sovereign Sukuk pand their network as well as to create an banking products, at least 20 international – becoming the fi rst western country to avenue for market players to put forward banks operating in the UK off er Islamic fi - do so. The GBP200 million (US$285.45 and into motion initiatives to develop the nancial products; out of these, six are fully- million) Sukuk Ijarah issued in 2014 was segment further. The IIAL also intends to fl edged: Al Rayan Bank (formerly IBB/Is- heavily oversubscribed, receiving orders leverage from its position and network lamic Bank of Britain, established in 2004), of approximately GBP2.6 billion (US$3.71 lay the groundwork for an international Abu Dhabi Islamic Bank (representative of- billion). The landmark issuance was fol- standard for the Takaful industry. fi ce, established in 2013), European Islamic lowed by another groundbreaking deal in Investment Bank-Rasmala (EIIB-Rasmala, March 2015: a UK Export Finance-backed Outlook established in 2005), Bank of London and Sukuk for Emirates Airline – the world’s It is encouraging to see the UK govern- The Middle East (BLME, established in fi rst export credit agency-guaranteed ment continuing to drive Islamic fi nance growth and development beyond its Table 1: Financial performance of UK Islamic banks in GBP inaugural Sukuk off ering across a wider spectrum of the industry such as fi nancing Bank 2014 profi t vs 2013 profi t 2014 total assets vs 2013 total assets and Takaful. On the other hand, Ireland Al Rayan Bank 1.22 million vs 5.51 million loss 647.97 million vs 367.96 million is also making steady progress evident by BLME 973,341 vs 4.31 million 1.39 billion vs 1.23 billion it launching the Islamic Finance Council of Ireland in May 2015. With the industry Gatehouse 4.1 million vs 4 million 264 million vs 216.84 million growing at a burgeoning rate globally, the Rasmala 600,126 vs 27,434 loss 138.41 million vs 153.6 million UK has positioned itself as the western ADIB UK 3.74 million loss vs 2.44 million loss 94 million vs 81.63 million hub for Shariah fi nance with its Irish neighbor standing to tap immense oppor- QIB-UK NA NA tunities as the world becomes increasingly Source: Respective banks’ 2014 annual reports aware of its potential.

Islamic pensions: A problem waiting to surface

Shariah compliant pensions can simply be defi ned as long-term investments specifi cally allocated for retirement purposes with complementary benefi ts such as tax relief on contributions. The Islamic pension sector is currently viewed as a market segment that is lagging behind due to the lack of demand and understanding, but nonetheless an area that bears signifi cant potential. Acknowledging the necessity and prospects of this growing fi eld, NABILAH ANNUAR analyzes the developments and challenges encountered in Shariah compliant pensions.

Long-standing predicament Much has been writt en about the need for a functional pension system across the Islamic world. According to Pew Research, fertility rates have been falling across most Muslim majority countries in recent decades and this trend is expected to continue, with the average total fertility rates for all OIC countries dropping from 4.3 in 1990-95 to just 2.9 in 2010-15 and expected to reach 2.3 by 2035. Milliman estimated that by 2030 many Muslim countries will see a drop in the old age support ratio (number of persons aged 15 to 64 per person aged 65 or over). If not well planned, this will create fi nancial and social problems similar to what we are witnessing in countries like Italy and Japan. funds including six Islamic investment aims to introduce uniformed regulation options, which accounted for around 29% for various Islamic products including Nevertheless, in spite of these daunting of total PRS assets as of December 2014. Islamic pension funds for the country. statistical projections, pensions have failed to secure a standing in the Islamic With the government expecting the Europe fi nance sector. Industry observers have moves to create a private pension sector Al Rayan Bank and Pointon York in att ributed this to a limited product range, of around RM73 billion (US$16.55 billion) December 2015 launched the fi rst Shariah lack of diversifi cation and low levels by 2020, the strong support of both public compliant pension fund in the UK, of public awareness. More often than and private Shariah compliant pension allowing investors to save and self-invest not, the working population in Muslim development is not only ensuring the in a range of Shariah compliant assets countries naturally save in their home post-retirement provision for Muslims including cash, funds and property. markets. In these markets, the only way but also providing a signifi cant boost to to encourage and stimulate a healthy the Islamic capital markets. pension cycle is to set up a regulation- Middle East based pension scheme to jump-start the In the same month, the IDB and A report by the United Nations suggests segment. Indonesia’s Pertamina Pension Fund that the number of people over 65 in agreed to establish a joint venture private the MENA region will triple from 10.6 equity fi rm to support the fi nancing million in 2000 to 32 million by 2030 Asia and up to 70 million by 2050. Across In April 2014, Malaysian prime minister of infrastructure and other projects in Indonesia. Pertamina Pension Fund, a the GCC, public pension funds amount Najib Razak announced an Islamic to US$397 billion, representing nearly investment option for the US$160 billion subsidiary of state-owned oil and gas company Pertamina, was chosen by a quarter of GDP and US$15,000 per state pension fund, the Employees national, according to EY’s GCC Wealth Provident Fund (EPF), which is set to the IDB Group for its experience and performance in managing funds invested and Asset Management 2015 report. The make it the biggest Shariah compliant UN has recommended funded pension fund of its kind in the world by 2017. in the capital market as well as other assets. The IDB had committ ed to the plans as a solution, but the region has The fund already invests around 30% been slow to take up this option. PwC of its portfolio in Shariah compliant future company having a total paid- up capital worth around US$100-200 predicts that pension fund assets in the instruments, and has been working MENA region could grow by 8.8% per on the creation of a state-backed fund million in the fi rst year, with the help of two other investors from the UAE year reaching US$5 trillion by 2020 (from focusing 100% on Islamic investments US$2.4 trillion in 2012) — compared to since 2014. and Bahrain. It is hoped that other state pension funds such as Telkom Pension global growth of 6.6%. Estimates also suggest that if institutional pension Malaysia implemented a wide range Fund and Bank Indonesia Pension Fund will eventually join the fund. fund investors allocated even 20% of of pension reforms in 2012 including their current portfolios toward Islamic a liberalization of the market and the The Securities and Exchange investments, the sector could see infl ows introduction of a voluntary private of over US$36 billion. retirement scheme (PRS) off ering 30 Commission of Pakistan in its Islamic capital market roadmap issued in 2015

Jimah East Power Sukuk: One of Jimah East Power RM8.98 billion 2015’s largest (US$2.04 billion) Sukuk

Malaysian national electric utility company Tenaga Nasional (TNB), in 4th December 2015 partnership with Mitsui & Co, on the 4th December 2015 successfully closed a RM8.98 billion (US$2.04 billion) Sukuk Issuer Jimah East Power Murabahah in nominal value through their SPV, Jimah East Power (JEP). In Size of issue RM8.98 billion (US$2.04 billion) in nominal value an exclusive interview with Mohamad Safri Shahul Hamid, the senior Mode of issue Book-building and private placement basis managing director and deputy CEO of Purpose The proceeds of the CIMB Islamic, NABILAH ANNUAR Sukuk Murabahah shall provides a comprehensive insight on be utilized for the Shariah the deal. compliant purposes in connection with the fi nancing, design, engineering, procurement, The Sukuk construction, installation, testing, commissioning, Murabahah ownership, operation and maintenance of a 2,000 MW was issued in one coal-fi red power plant in Kuala Lukut Mukim Jimah, lump sum during Negeri Sembilan. Tenor Up to 23 years challenging Issuance price 100% market conditions. Payment Semi-annual basis Currency Malaysian ringgit Managing the Maturity date 3rd December 2038 Lead CIMB Investment Bank, investors was 2013 by 1MDB and Mitsui & Co as an managers and HSBC Amanah Malaysia SPV, the power plant was scheduled bookrunners and Maybank Investment key in ensuring to be operational in the second half of Bank 2019. JEP’s 70% stake was acquired by Principal CIMB Investment Bank and the successful TNB for approximately RM46.98 million advisors HSBC Amanah Malaysia (US$10.66 million) in July 2015, with Governing law Laws of Malaysia and implementation Mitsui’s 3B Power holding the remaining exclusive jurisdiction of the 30% stake. courts of Malaysia of the Legal advisors Adnan Sundra & Low Commenting on the challenge faced in – solicitor to the joint principal arrangers, transaction the process of fi nalizing the transaction, lead advisors and lead Safri relayed: “The Sukuk Murabahah managers. Zaid Ibrahim & At the option of the issuer, the Sukuk was issued in one lump sum during Co – solicitor to the issuer. was structured according to the Shariah challenging market conditions. Listing May be listed on Bursa contract of Murabahah (via Tawarruq Managing the investors was key in Malaysia Securities under arrangement) utilizing soybean as ensuring the successful implementation the exempt regime if the the underlying commodity. Proceeds of the transaction.” Att racting Malaysian issuer so decides from the Sukuk will be utilized for the investors, the Sukuk was raised via a Underlying Shariah compliant fi nancing of the 2,000 MW coal-fi red book-building and private placement assets commodities (soybean) power plant project and associated exercise. Rating ‘AA-IS’ by MARC facilities, including the transmission Shariah CIMB Islamic Bank and line and interconnection facilities, to be “The Sukuk Murabahah will further advisors HSBC Amanah Malaysia located at Kuala Lukut, Negeri Sembilan, contribute to the growth of the Structure Murabahah (via a south of Malaysia. Islamic fi nance industry, particularly Tawarruq arrangement) substantially increasing the amount of Tradability Tradable and transferable JEP was established to fund the corporate Sukuk issued in 2015 based on Investor Via book-building and development of the power plant which it the sizable RM8.98 billion issue amount,” breakdown private placement basis earlier procured from the controversial highlighted Safri. The Sukuk is a one-off Face value/ RM8.98 billion in nominal sovereign wealth fund, 1Malaysia issuance and has been conferred a rating minimum value Development (1MDB). Incorporated in of ‘AA-IS’’ by MARC. investment

Daud speaks

Welcome to a new year of 2016 the year, we need to continue to strive to everyone. I do hope all of you have a ensure that there is a clear diff erentiation successful, happy and accomplished in what the Islamic fi nance world can We must year. off er when compared to the conventional environment. One approach to this, ensure that There is no doubt that 2016 will be a which is gaining some momentum, challenging one and I do not think that is in the area of risk-sharing and the paths are beaten the Islamic fi nance industry will escape diff erentiation between equity and debt toward alignment the fi nancial, economic and political fi nancing. To further support these implications of all the anticipated concepts, more research needs to with the corporate negative activity that will be done so as to demonstrate occur during the year. I the benefi ts clearly. social responsibility never fi nd it particularly constructive to dwell Another area which appears and ethical ϔinance on or to speculate on to be growing in traction is outcomes that are that of responsible fi nance. community, to beyond one’s control. We have all known for some What is worthwhile time that Islamic fi nance is demonstrate that doing, however, is to inherently ‘responsible’, but focus on what you and we must assume, sadly, that there are vast areas your organization can this is a well-guarded secret actually do…and to do it within our own community. of commonality to the best of your ability. That eff ort may, in turn, We must ensure that paths are between us that have some infl uence on the beaten toward alignment with eventual outcome. the corporate social responsibility can be explored and and ethical fi nance community, to As I have often writt en in this demonstrate that there are vast developed column, we must continue areas of commonality between to provide demonstration us that can be explored and further eff ects and empirical developed further. evidence that Islamic However, there is much to do and not a fi nance does provide a bett er Together, we can make 2016 the moment to lose! ! value proposition to all. During most successful yet. RESEARCH

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Misconceptions about Islamic banking: Some preliminary issues

It is observed that various misconceptions about Islamic banking are disseminated by many who criticize Islamic banking. Islamic banking is becoming an important part of today’s banking industry with increasing market share across the globe. It is therefore essential to know the basis of such misconceptions about this growing industry. In this article, CHOWDHURY SHAHED AKBAR att empts to discuss to a greater extent about some issues which are relevant to the origin of the misconceptions.

ISLAMIC BANKING as categorically Haram and the modern and occurrence of losses with the banking interest does not resemble prospect of making a profi t while interest By Chowdhury Shahed Akbar what was really meant in the Quran is predetermined and certain irrespective and Sunnah as Riba. On the contrary, of the outcome of the business. Some of the ideas that are cultivated and in accordance with the consensus of the often argued by skeptics about Islamic majority of jurists without any exceptions Contemporary scholars have pointed out banking include mainly the following: (Al-Harran, 1993), Riba has the same four fundamental diff erences between • Riba and banking interest are not meaning as interest. Renowned Islamic trade and Riba. Firstly, in trade, the the same thing. economist and scholar Dr Umar Chapra buyer and seller exchange on the basis of • There is no diff erence between Riba pointed out that, in the case of lending, equality where the purchaser derives a and trade. it technically refers to the ‘premium’ profi t from what he has purchased and • The Islamic prohibition of Riba is that must be paid by the borrower to the the seller gets a profi t in consideration valid only for consumption loans. lender along with the principal amount of the work he has done and the time • Whether fi nancing contract can as a condition for the loan or for an he spends on obtaining the commodity be implemented through a sale extension in its maturity. According to his for the purchaser. In a Riba-based contract. view, Riba is a predetermined excess or transaction, the lender gets a defi nite surplus over and above the loan received amount of money for his loan while the In order to fully understand the Islamic by the creditors conditionally in relation borrower only gets the time to use the banking concepts, the following to a specifi c period. Other scholars hold money. Therefore, there is no division discussions are essential. the same view that Riba is an increase or of the profi t on the basis of equality as excess which, in an exchange or sale of a time does not generate the borrower The meaning of Riba commodity, accrues to the owner (lender) any profi t. Secondly, in trade, the seller The term Riba is derived from Raba without giving in return any equivalent can demand a profi t from the buyer which means excess, addition, increase, counter-value or recompense to the other only once while in a Riba-based deal, expansion, augmentation or growth. party. the lender can demand for his interest A majority of Islamic scholars assert as long as the principal is not returned. that the same meaning has been used Riba versus trade (Bai) Thirdly, in trade, the deal completes as in the holy Quran on several occasions. There is another view taken by some which soon as the commodity is exchanged According to them, the essence of Riba in suggests that trade and Riba are both the for its price while in a Riba-based Islam is excess whether it is a commodity same. But the opponents to this view do transaction, the borrower spends the or money. They accept Riba as an not subscribe to this notion and claim that borrowed amount and has to return increase in one of two homogeneous there is a fi ne diff erence between trade and the same with an addition by way of equivalents being exchanged without this Riba which the Quran itself confi rmed. interest. Lastly, in trade, a person gains increase being accompanied by a return. According to them, trade has been ethically a benefi t after providing the work, time a recognized activity in human society and expertise whereas in the case of an The Hadith states that: “If gold, silver, for ages and all major religions approved interest-based deal, the lender benefi ts wheat, barley, dates and salt are it. Trade was the backbone of the Meccan without providing anything in return. exchanged against themselves, they economy in the pre-Islamic era and even should be exchanged on the spot and Prophet Muhammad himself was a trader Consumption versus be equal and alike.” According to before assuming his responsibilities as a Dr Nejatullah Siddiki, out of the six production loan prophet. specifi ed commodities, gold and silver One of the arguments about the unquestionably represent money as prohibition of Riba is whether the Trade (Bai) occurs when there is a Arabs in those days did not have their prohibition is for consumption or purchase and sale which is a lawful own currency. They also used Roman investment loans. Some modernists tend real economic activity where something dinars, gold coins, Persian dirhams, silver to diff erentiate between these two and is exchanged (money or goods) for coins and unmined gold and silver as a argue that the former is unlawful while something (goods) which creates value. medium of currency while the other four the latt er is lawful. Their claim is on the Riba implies that money is loaned for represent staple food items. basis that the Quran prohibits Riba for an increase in itself without any real those who borrow to fulfi ll basic human economic activity of sale. In trade, an Some scholars such as those of the Al- needs such as food, clothes and shelter, entrepreneur also shares the possibility Azhar University of Egypt view Riba etc, as the Quran’s intention is to protect

Continued the poor from exploitation. Their view is An analysis of an Islamic fi nancing argument is based on a misunderstanding that in the early Islamic era, the Quran tool can clarify the matt er. Take the about the principles of Shariah regarding only prohibited Riba on loans for money case of Murabahah which is the most the prohibition of Riba and the ignorance and food and anything beyond that popular fi nancing mode among Islamic of the fact that Islamic principles is accepted to be a later development. banks. Under this mode, Islamic banks draw a distinction between money They were also of the view that in the buy an asset and sell it to the clients and commodity, as far as commercial early Islamic period, borrowing for by expressing the purchase price and transactions are concerned, whereas trading or commercial purposes never adding some profi t or mark-up. The conventional banking principles treat both existed except to share in a partnership clients may pay the price to the bank at money and commodity as homogeneous to increase the stock of capital and that one go or according to an agreed term. and treat both at par. Under Murabahah in seventh century Arabia, people used principles, money is not being priced, to take loans mostly for consumption A Murabahah transaction is completed rather it is the commodity which is being purposes and not for productive through various stages and involves priced and sold. ventures. various contractual agreements which include the sale contract as well. The scholars also specifi ed some rules However, this view of the modernists has and regulations this fi nancing technique been questioned by many. The opponents should abide by from the beginning to to this view draw on historical evidence It is obligatory the end of the contract in order to be to back up their argument. For example, Shariah compliant and declared that Riba owed to Abbas Abdul Mutt alib, for the Muslim any deviation from these rules and the Prophet’s uncle, was mostly for the regulations may make the whole contract loan he fi nanced in the production sector society to fulϔill the invalid. They asserted that this technique (Siddiki, 2004). Abbas together with is suitable for commodity fi nancing and Khalid Al Waleed and Usman Aff an — basic consumption it is essential for Islamic banks to limit who later became one of the four caliphs this technique to commodity fi nancing. — used to fi nance the production of date needs of the poor crops in Madinah and Taif (Al Misri, The discussions clearly demonstrate the 1991; Al Razi, 1978). through various fact that the Islamic banking system did not develop on a whim. It has a strong During the Prophet’s era, the Muslim components such as foundation and any misconception or society became suffi ciently inspired by confusion over the Islamic banking the Islamic way of life which encourages Zakat, Sadaqah and system is not justifi able. Rather, this simple living and discourages ostentatious sector needs to be appreciated due consumption. It also became suffi ciently Qard Hasan to its eff orts to off er a system that is organized to fulfi ll the basic needs of the compatible with religious beliefs on one poor. Hence, there was no question of hand and that facilitates modern banking borrowing for consumption purposes needs on the other. (Chapra, 1984). Moreover, in implementing This fi nancing technique raises a ques- the Quranic injunction against Riba, the tion in our mind that when somebody is It is therefore essential to clear the Prophet himself also did not make any in need of money to purchase something misconceptions. The primary distinction between consumption and for himself or for his business and an in- responsibility in this regard lies in the production loans (Huq, 1987). stitution provides this facility by making hands of Islamic banks. Islamic banks the purchase on behalf of him and then should address issues surrounding these Besides, it is obligatory for the Muslim selling it to him with a mark-up, it is like misconceptions and publish and society to fulfi ll the basic consumption indirectly giving him or her the money distribute the solutions to the people. needs of the poor through various and charging interest on it when he or They should strictly follow the rules that components such as Zakat, Sadaqah she makes repayment. have been developed by Islamic bankers and Qard Hasan. Therefore, it is viewed and Shariah scholars in conducting their by contemporary scholars that the Besides, while fi xing the selling price, business. They should be able to handle argument of whether Riba is prohibited banks can consider the time they allow cases where confusion arises. As far as for consumption purposes or business a customer to make repayments and can the regulatory authorities are concerned, purposes is irrelevant and borrowing in charge a price which is higher than the they should ensure that Islamic banking a Muslim society should be largely for market price. This has raised confusion is being practiced in line with the business purposes. and many claim that Islamic banks are principles developed. not doing something diff erent than what Financing through a sale the interest-based banks are doing. Chowdhury Shahed Akbar is att ached to a private bank in Bangladesh and has a contract However, Shariah scholars who devised postgraduate degree in Islamic banking, A great many people actually wonder this technique and approved it have fi nance and management from the UK. He about how Islamic banks can provide their logical explanation that favors can be contacted at akbar.chowdhury@yahoo. fi nancing and then claim that any their deduction and endorsement of com. return on it is not confl icting to Islam. this technique. According to them, this

Sunny days ahead for Islamic ϐinance in Canada

There has been a dramatic transformation in the political leadership of Canada in the past couple of years that has the potential to make a positive impact on the prospects for the development of an Islamic ﬁ nancial sector in Canada. JEFFREY GRAHAM writes.

CANADA By Jeﬀ rey Graham

Political leadership in each of Canada’s four major provinces is progressive in nature. A new government in the province of Alberta, formed by the New Democratic Party in May 2015, and led by premier Rachel Notley, joined Liberal governments that were earlier elected in Ontario (premier Kathleen Wynne), British Columbia (premier Christy Clark) and Quebec (premier Philippe Couillard). Each of these governments are led by strong political leadership focused on growing trade and investment relationships with both traditional and emerging markets including markets where Islamic fi nance is a growing and prospering reality. All of these jurisdictions are natural partners to domestic and transit, buildings, sport and recreational real estate market, both residential international Islamic fi nancial interests facilities, stormwater, wastewater and commercial. These include Islamic and markets. and potable water infrastructure. The housing cooperatives, Islamic mortgage results indicated that much of Canada’s brokers and investment advisors at major Last October 2015, Canadians municipal infrastructure is at a critical Canadian banking institutions off ering experienced the most important change juncture. Investments in repair and Shariah investment strategies. in the Canadian political landscape in upkeep are needed in the short term to the past 10 years. The Liberal Party of prevent a rapid decline in the condition Concurrently, there are a number of Canada, led by Justin Trudeau and a very of municipal assets, according to survey eff orts underway that will lead to the dynamic team of experienced Canadians, fi ndings. creation of at least one regulated Islamic has formed a new majority government banking institution, perhaps as early in Ott awa. The new government refl ects Furthermore, the report uncovered that as the end of 2017. In the interim, there the exciting reality of today’s Canada, reinvestment rates in Canada’s municipal is growing optimism that one or more its traditional openness to innovation, infrastructure are not meeting target Canadian sovereign or major corporate its model of tolerance for diversity, rates, despite continued eff orts on the entities will successfully tap into the including its respect for all religions, and part of municipal governments. While global Sukuk market. its desire to make a positive contribution the challenge for Canada is signifi cant to the world at large. and will undoubtedly be met in time Canadians are humbled by the signifi cant from conventional sources including and continuing encouragement from The new federal government has an institutional investors and pension funds, leaders in the global Islamic fi nance agenda that will benefi t from a strong there is a real opportunity for Islamic community. We are anxious to and sustained presence of Islamic fi nancial institutions to contribute to this demonstrate that the interest is justifi ed fi nance in Canada. A major priority is Canadian challenge immediately. and that we can all together make a more to att ract capital to help enhance and important contribution to our planet and strengthen the Canadian infrastructure. At the same time, there is a growing its inhabitants by sharing with a wider In a report issued by the Canadian understanding within the Canadian audience the signifi cant benefi ts from Federation of Municipalities, it was noted fi nancial sector, including both private being able to access the products and that one-third of Canada’s municipal institutions and federal and provincial services that are compliant with the infrastructure is at risk of rapid policymakers, that Canadians, both principles of Islamic commercial law. deterioration. Muslims and non-Muslims, deserve the opportunity to elect whether they Jeff rey Graham is a partner at Borden Ladner The report entitled ‘Informing the wish to purchase fi nancial services in a Gervais and is also the head of the National Future: The 2016 Canadian Infrastructure conventional or Islamic law compliant Financial Services Regulatory and Islamic Report Card’ assessed the state of form. There is an increasing number of Finance Practices. He can be contacted at municipal roads and bridges, public Islamic fi nance options for the domestic [email protected].

its short-term Sukuk Ijarah has been mandated to arrange the roadshows, DEALS oversubscribed by 185%. The BHD26 which began on the 17th January. The EKVE to establish Sukuk million (US$68.51 million) issue, which Reg S off ering will be unrated and carries a maturity of 182 days, received issued off the multicurrency Islamic facility BHD48 million (US$126.48 million) in securities issuance program established MALAYSIA: EKVE, a wholly-owned subscriptions. by Danga Capital. subsidiary of Ahmad Zaki Resources, on the 7th January made a lodgment to The expected return on the issue, which S Power partially redeems the Securities Commission Malaysia began on the 14th January 2016 and (SC) under the SC’s new Guidelines matures on the 14th July 2016, is 2%. IMTN on Unlisted Capital Market Products MALAYSIA: Special Power Vehicle (S under the Lodge and Launch (LOLA) PJH to redeem Sukuk Power) announced on Bank Negara framework for the establishment Malaysia’s website that it made a MALAYSIA: Putrajaya Holdings (PJH) of the proposed guaranteed Sukuk partial redemption of RM11.98 million announced on Bank Negara Malaysia’s Murabahah facility of up to RM1 billion (US$2.71 million) for the secondary website that the principal redemption (US$226.99 million) in nominal value, stock code: VO050178 under its Class B for the stock code: VN060056 and the according to a bourse fi ling. Islamic medium-term notes (IMTN) of secondary note redemption for the up to RM215 million (US$48.7 million) stock codes: VN060131 and VN060107 on the 18th January 2016. Emaar Sukuk to make proϐit under its RM2.2 billion (US$501.4 payment million) Sukuk Murabahah medium- term note program, which were First Sukuk reissuance from UAE: Emaar Sukuk announced in a th fi ling to NASDAQ Dubai that it will originally scheduled on the 25 January IILM 2016 (a public holiday in Malaysia), MALAYSIA: The International Islamic make a periodic distribution payment th of its US$500 million trust certifi cates will now be made on the 26 January Liquidity Management (IILM) has due 2016 on the 3rd February. The profi t 2016 as provided in the Operational reissued its US$860 million three-month for a period of 180 days from the 3rd Procedures For Securities Services tenor Sukuk at a profi t rate of 1.0736%, August 2015 to the 3rd February 2016 issued by Malaysian Electronic Clearing marking its fi rst reissuance in 2016. will be distributed at a profi t rate of Corporation. 8.5% for the total amount of US$21.25 According to a statement, the IILM’s million. IDB plans dollar Sukuk issued and reissued Sukuk as at January GLOBAL: The IDB is planning to 2016 amount to US$14.04 billion. Indonesia’s Sukuk auction issue Sukuk, which is expected to be a surpasses target benchmark-sized off ering, in the fi rst STSSB to issue ICP quarter of 2016, according to Reuters MALAYSIA: Sunway Treasury Sukuk INDONESIA: The Indonesian quoting unnamed sources who added (STSSB) announced on Bank Negara government has awarded IDR4 trillion that the Islamic multilateral bank Malaysia’s website that it will issue (US$283.2 million) of its sovereign has invited banks to pitch for roles its RM100 million (US$22.67 million) Sukuk securities auctioned on the 12th in arranging the potential dollar- Islamic commercial papers (ICP) series January, which received total incoming denominated Sukuk. 47 on the 21st January 2016 via tender. bids of IDR7.94 trillion (US$562.15 The ‘MARC-1IS’-rated facility will million), according to an announcement mature on the 22nd February 2016. on the Ministry of Finance’s website. Khazanah holds Sukuk roadshows Separately, STSSB has issued its RM100 CBB’s Sukuk Ijarah MALAYSIA: Khazanah Nasional is million (US$22.7 million) Islamic oversubscribed holding a series of investor meetings in commercial papers (ICP) series 46 on the UAE, Hong Kong, Singapore and the 14th January 2016 via tender with the BAHRAIN: The Central Bank of the UK for its US dollar Sukuk off ering, Bahrain (CBB) announced in a Islamic papers, rated ‘MARC-1IS’ by according to Reuters. Barclays, CIMB, th statement that the monthly issue of MARC, maturing on the 15 February Morgan Stanley and UBS have been 2016.

DEAL TRACKER Full Deal Tracker on page 27 EXPECTED DATE COMPANY'S NAME SIZE STRUCTURE ANNOUNCEMENT DATE TBA Khazanah Nasional TBA Sukuk 15th January 2015 TBA IDB TBA Sukuk 15th January 2015 TBA EKVE RM1 billion Sukuk Murabahah 13th January 2015 TBA Oman Telecommunications TBA Sukuk 12th January 2016 TBA Emirates of Sharjah TBA Sukuk 11th January 2016 TBA Tenaga Nasional US$3 billion Sukuk 8th January 2016 TBA Toprak Mahsulleri Oﬁ si up to TRY600 million Sukuk 7th January 2015 TBA Government of Jordan JOD150 million Sukuk 7th January 2015

the fi nancing of working capital, factory AFRICA ASIA construction and machinery/equipment ADIB-Egypt to redistribute Jakim proposes setting up of purchases. branches Halal council Indonesia eyes strategic EGYPT: Abu Dhabi Islamic Bank-Egypt MALAYSIA: The Department of Islamic is set to add three new branches in Development Malaysia (Jakim) will position in AIIB Alexandria, Giza and Luxor by the end of propose the establishment of a Halal INDONESIA: Indonesia is aiming January. Council of Malaysia to the Cabinet, for strategic positions in the Asian which will see the involvement of several Infrastructure Investment Bank (AIIB) as it According to Amwal Al Ghad, the bank ministries sitt ing together under one roof to seeks to optimize support for its upcoming currently has a presence in 22 of the 28 discuss matt ers pertaining to the national infrastructure projects, according The governorates in Egypt and is planning Halal industry. Minister in the Prime Jakarta Globe. The Republic will submit to redistribute its 70 branches in 2016 Minister’s Department Jamil Khir Baharom US$268 million to the development bank as the bank aims to improve customer was quoted by Bernama as saying that the for this year and plans to propose six accessibility. council would help to standardize the laws infrastructure projects, mostly concentrated and jurisdiction issues among ministries in electricity, road construction and clean ADIB arranges EETC’s in handling the process of issuing Halal water development, in need of fi nancing to AIIB through 2016 and 2017. ϐinancing certifi cates. EGYPT: PBDAC, Egypt’s main Angkasa inks deal to Government to expedite Bank agricultural bank, has taken part in the Egyptian Electricity Transmission implement As-Sidq Banten establishment Company’s syndicated fi nancing worth MALAYSIA: Angkatan Koperasi INDONESIA: The government has agreed EGP3 billion (US$377.53 million) by Kebangsaan Malaysia (Angkasa) has inked to accelerate the establishment of Bank contributing EGP100 million (US$12.58 a deal with Sedania As Salam Capital to Banten and will issue the ministerial decree million). enhance its personal fi nancing segment in February 2016, according to The Jakarta via the implementation of the latt er’s Globe quoting internal aff airs minister According to Amwal Al Ghad, the facility Shariah compliant trading system, As-Sidq, Cahyo Kumolo. Bank Panin Syariah, Bank is being arranged by Abu Dhabi Islamic according to Bernama. Pundi, Bank MNC International and Bank Bank. Windu Kencana have all been shortlisted SME Bank to provide Islamic as potential acquisition targets that may be transformed into Bank Banten. facilities to Seacera MALAYSIA: Seacera Porcelain has MBSB-Muamalat merger EUROPE accepted Islamic fi nancing off ers worth negotiations extended Austrian bank to launch RM77.5 million (US$17.61 million) from Small Medium Enterprise Development MALAYSIA: Bank Negara Malaysia Islamic account Bank Malaysia (SME Bank) for the has approved Malaysia Building Society AUSTRIA: BAWAG is set to launch following facilities: Commodity (MBSB)’s application to extend its Amana, the bank’s fi rst Shariah Murabahah Revolving Financing-i, negotiations with DRB-HICOM and compliant banking account, in February Commodity Murabahah Term Financing- Khazanah Nasional on a proposed merger to cater to the country’s growing i-I and Commodity Murabahah Term between MBSB and Bank Muamalat Muslim population, according to Financing-i-II. According to a bourse Malaysia to the 2nd February 2016, Breitbart. fi ling, the facilities will be utilized for according to a bourse fi ling. ASSET LIABILITY MANAGEMENT & 11th - 13th April 2016 RISK-BASED PRICING FOR ISLAMIC BANKS LONDON

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www.REDmoneytraining.com [email protected]

Leases, according to a statement. The fell 6.1% in the fourth quarter, capping a GLOBAL new standard, to be eff ective on the 1st 17.5% annual decline. Iran and Russia ink currency January 2019, is expected to solve issues pertaining to companies’ transparency UK leveraging on Iran’s post- swap agreement on lease assets and liabilities and GLOBAL: Iran and Russia have entered also improve comparability between sanctions economy into a currency swap agreement as part companies. The IASB has also published GLOBAL: Following the removal of eff orts to boost bilateral transactions, a separate Eff ects Analysis, which of sanctions on Iran, the UK Export according to IRNA quoting Ali outlines the costs and benefi ts of the new Finance (UKEF) has reintroduced cover Salehabadi, the managing director of standard. to support UK companies seeking to Tose-e Saderat (Exports Development) compete for business in Iran in the form Bank. Ali added that the Russian Tatarstan ideal for Islamic of a GBP50 million (US$71.26 million) government has also designated a bank facility guaranteeing payments to UK to work with the Iranian bank. window advisory service providers advising the GLOBAL: A Malaysian-Russian government of Iran on areas such as Woori makes Korea’s ϐirst consortium made up of Universiti Tun accounting standards, capital market Abdul Razak, the Islamic Banking and development, compliance with global transaction with Islamic bank Finance Institute Malaysia and the regulatory requirements, accessing GLOBAL: Woori Bank has extended Russian Islamic Business and Finance and reducing the cost of fi nancing and US$10 million in fi nancing to Qatar Development Fund, formed to conduct a facilitating new trade. According to a Islamic Bank via its Bahrain branch, feasibility study on the implementation statement, the UKEF will also consider aiming to diversify income and cushion of Islamic banking and fi nance in Russia, applications for direct lending to the impact of market volatility, according has identifi ed Tatarstan as a key region purchasers of British exports to Iran. To to The Korea Times. for the creation of an Islamic fi nance improve its trade relations with Iran, window, according to Bernama. the UKEF will work directly with the The South Korean bank is looking to Export Guarantee Fund of Iran and the expand its fi nancial deals with Islamic Islamic indexes outperform Iranian Ministry of Economic Aff airs and countries such as Bangladesh, the UAE, Finance. Malaysia and Indonesia. On its expansion conventional peers plan, Woori is seeking new areas of GLOBAL: The Dow Jones Islamic Market BBK to set up investment growth in Southeast Asian countries by World and S&P Global BMI Shariah tapping the non-banking sector, where ended the year in the red dropping 2.2% company in the UK it will start with microfi nance, merchant and 1.7% respectively. However, the index GLOBAL: BBK has clarifi ed in a banking and installment fi nancing provider said in a statement that they statement that it is in the process of services. both outperformed their conventional establishing an investment company in counterpart by 2%. Additionally, The the UK, and not acquiring a real estate IASB issues IFRS 16 Leases S&P 500 Shariah had a fl at year, but US investment company as reported in equities outperformed all major global a news article. Regarding its planned GLOBAL: The International Accounting regions, both generally and in the Shariah capital increase exercise, the bank Standards Board (IASB) has issued a space while MENA equities continued relayed that it will be decided during the new accounting standard for leasing, to be driven lower by falling oil prices extraordinary general meeting on the 28th IFRS 16 Leases, replacing IAS 17 as the S&P Pan Arab Composite Shariah January 2016.

fi ling. The fi ve to seven-year term facility Tribune. By utilizing resources from the MIDDLE EAST will be used to refi nance the company’s National Development Fund of Iran, Al Hilal Bank closes Islamic existing Islamic fi nancing liability. Bank Mellat and Bank Sepah will each allocate US$1.5 billion whereas US$1 ϐinancing deal BBK opens 17th branch billion will be extended by Parsian Bank UAE: Al Hilal Bank has concluded for the projects. BAHRAIN: BBK has inaugurated its 17th a US$175 million two-year Islamic branch in Hidd on the same premises as fi nancing deal with Commerzbank, the BBK Hidd Health Center, according Iran’s frozen assets to be Emirates NBD and National Bank of to a press release. Abu Dhabi, according to Reuters quoting released sources who declined to reveal the IRAN: Following the implementation pricing of the loan. Iranian banks to ϐinance of the Iran nuclear deal – the Joint infrastructure projects Comprehensive Plan of Action – which Islamic facility for Barwa Real is expected within the next few days, IRAN: A joint contract has been signed Iran will witness a lifting of sanctions Estate between Bank Mellat, Bank Sepah and imposed on the country. Parsian Bank to fi nance the completion QATAR: Masraf Al Rayan and Barwa of two South Pars gas development Real Estate Company have inked a According to IRNA quoting the Central phases (11 and 24) and the National US$444.3 million Shariah compliant Bank of Iran (CBI)’s governor Valiollah Gas Pipeline, according to the Financial fi nancing contract, according to a bourse Seif, the move will also see its frozen

assets worth US$30 billion to be released is expected to be launched in the fi rst next week and handed over to the CBI. ASSET quarter of 2016. Ibdar sells Bahrain-based real MANAGEMENT Amwal appointed as fund estate portfolio Bahana preparing offshore manager of Islamic fund BAHRAIN: Ibdar Bank confi rmed in a Shariah fund QATAR: Investment House has statement that it has exited from four real appointed independent asset estate investments in Bahrain for a total INDONESIA: Bahana TCW Investment management fi rm Amwal as the fund consideration of US$21.67 million. The Management is preparing an off shore manager for its Al-Beit Al Mali Fund, wholesale Islamic investment bank is also Shariah-based mutual fund after according to a press release. eyeing investment opportunities in the receiving the approval from Otoritas Jasa UK, Europe and the US. Keuangan for such assets, according to The Islamic equity fund, which is The Jakarta Globe. The fund will likely domiciled in Qatar, is open only to Saudi plans new sovereign consist of Shariah equity assets from private and institutional investors. India, Thailand and the Philippines and fund to diversify investments SAUDI ARABIA: Saudi Arabia is planning the creation of a new sovereign wealth fund and has invited banks and Cobalt receives new investor consultancies to submit proposals for the TAKAFUL GLOBAL: Bermuda-based insurance project. Meezan and TDI team up for group Armour Group Holdings has Takaful coverage made a strategic investment into Shariah According to Reuters quoting unnamed compliant Cobalt Underwriting, joining PAKISTAN: Meezan Bank has entered sources, the fund would be focusing on the fi rm’s original investors including into a strategic alliance with TPL Direct investments outside the energy industry Capita and the Bank of London and the Insurance (TDI) which will see the latt er although no fi nal decision has been made Middle East. as a range of options are being studied. provide Takaful coverage to the bank’s The size of the new fund was also not Car Ijarah customers, according to a revealed. statement.

million) reported as at the 31st December (US$94.71 million) as of December RESULTS 2014. 2015, according to Amwal Al Ghad. The Khazanah Nasional bank’s revenues reached EGP4.48 billion Bank Dhofar (US$563.78 million) in the same period MALAYSIA: Khazanah Nasional in 2015, marking an 18.9% increase from registered a pre-tax profi t (unaudited) OMAN: For the 2015 fi nancial year, the previous year’s EGP3.77 billion of RM1.18 billion (US$268.93 million) Bank Dhofar, which operates Maisarah (US$474.43 million). as at the 31st December 2015 compared Islamic Banking Services, registered a consolidated after-tax net profi t of to RM3.22 billion (US$733.87 million) Alinma Bank achieved in 2014, according to a OMR46.77 million (US$121.07 million), statement. a growth of 15.6% year-on-year. SAUDI ARABIA: For the 12-month According to a statement, the bank’s total period ending the 31st December 2015, The strategic investment fund observed assets over the reported period rose to Alinma Bank achieved a net profi t of growth in realizable asset value to OMR3.59 billion (US$9.29 billion). SAR1.47 billion (US$391.71 million), up RM150.2 billion (US$34.23 billion) for 16.3% year-on-year. According to a fi ling the period ending December 2015, from Bank Sohar to Tadawul, the bank’s total assets grew the previous year’s RM145.5 billion 9.72% to SAR88.73 billion (US$23.64 OMAN: Bank Sohar reported an after- billion) during the period compared (US$33.16 billion). tax profi t of OMR28 million (US$72.77 st to SAR80.86 billion (US$21.55 billion) million) for the period ending the 31 achieved the previous year. Bank Muscat December 2015, a 6.26% year-on-year OMAN: Bank Muscat, which operates reduction. According to a statement, its Islamic banking division posted a net Emirates Islamic Meethaq Islamic Banking, recorded a profi t of OMR370,000 (US$961,538) for UAE: Emirates Islamic has posted a 7.5% year-on-year growth in net profi t to the reported period. The bank’s total growth in net profi t by 76% year-on- OMR175.45 million (US$454.18 million) assets rose 6.36% to OMR2.21 billion year to AED641 million (US$174.49 for the period ending the 31st December (US$5.74 billion). million) for the 12-month period of 2015. 2015. According to a statement, total net income (net of customers’ share of profi t) The bank’s Islamic banking customer FIB-Egypt for the reported period rose to AED2.43 deposits amounted to OMR625 million EGYPT: Faisal Islamic Bank-Egypt billion (US$661.47 million), up 25% from (US$1.62 billion) over the period registered a 20.8% year-on-year growth the previous year’s AED1.95 billion compared to OMR283 million (US$732.59 in net profi t to EGP752.59 million (US$530.81 million).

is signalling prudence in a tougher CMS proposes Sukuk program environment by reminding banks at the RATINGS MALAYSIA: Cahya Mata Sarawak (CMS) beginning of the year to obtain clearance Omantel Sukuk rated has proposed a RM1 billion (US$226.73 prior to announcing dividend payments, million) Sukuk Ijarah program OMAN: Oman Telecommunications according to Fitch in a statement. Company (Omantel)’s proposed OMR50 (2016/2036) which has been assigned a million (US$129.44 million)-equivalent Dividend payouts from banks have preliminary rating of ‘AA3/Stable’ by Sukuk facility – to be issued by First been high historically, averaging about RAM. According to a statement, the Issue – has been assigned a provisional 50% on the back of high profi tability. rating is supported by CMS’s strong rating of ‘(P)A3’ at par with the issuer Fitch, however, reckons that banks’ business profi le as the sole cement ratings of Omantel by Moody’s, performance indicators are unlikely manufacturer in Sarawak. The rating according to a statement. to improve in 2016 as loan growth agency also reaffi rmed CMS’s corporate moderates, loan quality starts to credit ratings at ‘AA3/Stable/P1’. JEV’s Sukuk rating reafϐirmed deteriorate and liquidity remains tight. MALAYSIA: RAM announced in a The rating agency is of the opinion that Horizon Hills’s IMTN program statement that it has reaffi rmed the ‘AA3/ the regulator and the banks will have to afϐirmed Stable’ rating of Jimah Energy Ventures’s fi nd the right balance between reducing dividend payments to safeguard capital MALAYSIA: The ‘AAAID(bg)’ rating on RM4.85 billion (US$1.11 billion) senior Horizon Hills Development (Horizon Islamic medium-term note facility ratios, and at the same time allowing reasonable dividend payouts to maintain Hills)’s Islamic bank-guaranteed (2005/2025). The rating takes into account medium-term note (IMTN) program of the power company’s stable business investor interest. up RM200 million (US$45.35 million) has profi le and strong cash fl ow-generation been affi rmed by MARC with a stable ability. MARC afϐirms TTM SPV’s outlook. According to a statement, the Sukuk rating rating refl ects the credit quality of the RAM reafϐirms SPV’s Sukuk MALAYSIA: The ‘AAAIS’ rating on unconditional and irrevocable guarantee rating TTM Sukuk (TTM SPV)’s RM600 million provided by Public Bank on which MALAYSIA: The ‘A1/Stable’ rating on (US$135.9 million) Sukuk Murabahah MARC has a public information rating of Special Power Vehicle (SPV)’s RM800 program has been affi rmed by MARC ‘AAA/Stable’. million (US$182.32 million) Class A with a stable outlook, confi rmed the Islamic medium-term note facility rating agency in a statement. TTM No rating action on TNB (2005/2022) has been reaffi rmed by RAM. SPV is a funding vehicle for Trans Northern Energy’s Sukuk According to a statement, the rating Thai-Malaysia for Phase II of the Trans MALAYSIA: According to a statement, refl ects the continued receipt of sturdy Thailand-Malaysia (TTM) project payments from Jimah Energy Ventures’s (TTM Phase II), which is an equal joint MARC is of the view that no rating RM895 million (US$203.98 million) venture company of Petroliam Nasional action is warranted on TNB Northern junior debt. The rating agency also noted (PETRONAS) and PTT Public Company. Energy’s RM1.63 billion (US$369.57 that the rating of SPV’s Sukuk has been million) Sukuk at this juncture following notched down from that of JEV’s due to The rating refl ects the stable and the postponement of the commercial the former’s lower priority in terms of predictable cash fl ows generated under operation date of its power plant in both cash fl ow waterfall and security. long-term service agreements with Seberang Perai Tengah, Pulau Pinang creditworthy project sponsors and given that the structural enhancement Banks reminded to pay off takers, PETRONAS and PTT, and the on the Sukuk provides suffi cient importance of the TTM Phase II project recourse for delays. Any shortfall in TNB dividend prudently in supplying natural gas to Thailand and Northern Energy’s fi nance obligations GLOBAL: The Central Bank of the UAE Malaysia. on the Sukuk would also be adequately REDmoney Ideal Ratings Indexes

The REDmoney Global Shariah Index Series powered by IdealRatings consists of a rich subset of global listed equities that adhere to clearly deﬁ ned and transparent Shariah guidelines deﬁ ned by Shariyah Review Bureau.

The REDmoney Shariah Indexes provides Islamic investors with an accurate and Shariah- specifi c equity performance benchmark with optimized compliance credibility due to the intensive research conducted to ensure that index constituents do not confl ict with the defi ned Shariah requirements.

addressed by the unconditional and irrevocable rolling guarantee provided by TNB in favor of Sukukholders. The Sukuk facility is to fund the construction of the power plant and carries a rating of ‘AAAIS’ with a stable outlook from MARC.

Oman’s ratings outlook revised OMAN: RAM has revised the outlook on Oman’s global (‘gA1(pi)/gP1(pi)’), Asean (‘seaAAA(pi)/seaP1(pi)’) and national-scale ratings (‘AAA(pi)/P1(pi)’) to negative from stable while reaffi rming the said ratings, according to a statement. The revision is premised on the rating agency’s view that Oman is likely to incur large fi scal defi cits due to weak revenue generation from prolonged low global energy prices and elevated fi scal expenditure that is deemed structurally sticky.

RAM rates EKVE’s proposed Sukuk Asia Forum MALAYSIA: EKVE’s proposed 6th & 7th April 2016 guaranteed Sukuk Murabahah facility Shangri-La, Jakarta of up to RM1 billion (US$226.73 million) has been assigned a preliminary rating of ‘AAA(bg)/Stable’ by RAM, according Known throughout the industry as the premier Islamic finance event in the region the forumconsistently brings to a statement. The rating reﬂ ects the together the most influential market players and provides a platform to discuss the very latest issues affecting irrevocable and unconditional guarantees Islamic finance in the region. As major Asian economies begin to seriously assess the prospects of Islamic capital from ‘AAA’-rated Maybank Islamic raising the IFN Asia Forum will continue to deliver on its promise: to provide delegates with prospects, and Bank Pembangunan Malaysia, opportunities and current trends in mature and new each committ ing up to RM500 million (US$113.36 million) in nominal value, Islamic finance markets in Asia. The event will draw participation from speakers and delegates from Malaysia, Indonesia, Hong Kong, Japan Pakistan, Brunei, the Philippines, the Maldives and Sri Lanka amongst others. which enhance the proposed Sukuk’s ratings beyond the company’s stand- alone credit strength. REGISTER FREE NOW at www.REDmoneyevents.com

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equity and real estate funds, according to the CEO of National Takaful Company MOVES a press release. (Watania), confi rmed a bourse fi ling. BNI INDONESIA: Bank Negara Indonesia CIMB Bank Cobalt Underwriting (BNI), which operates BNI Syariah, has MALAYSIA: CIMB Group confi rmed in UK: Former Lloyd’s chairman Max appointed the former deputy governor of a statement that it has appointed group Taylor has joined the board of Cobalt Bank Indonesia Haryadi A Sarwono as CEO Tengku Zafrul Aziz to the role Underwriting as its chairman while Sean its new chief commissioner, according to of CEO of CIMB Bank eff ective the 20th Dalton of Armour Group Holdings joined The Jakarta Globe. BNI has also appointed January 2016. Zafrul will step down from as a non-executive director. The Shariah Bistok Simbolon as a commissioner and his position as CEO of CIMB Investment insurer and reinsurer confi rmed in a Panji Irawan as a director. Bank with eff ect from the same date. statement that John Turner, the chairman Kong Sooi Lin, the deputy CEO of CIMB of Aon Risk Solutions (UK & Americas) DLA Piper Investment Bank, has been elected as the and former Brit Insurance Group CFO person-in-charge in the interim. Andrew Baddeley also joined the board GLOBAL: DLA Piper has appointed Ben in non-executive capacities. Gillespie as the head of corporate for the Middle East, according to a press release. Makkah & Madinah Holdings UK: Ahmad Iqbal Bangee has resigned Axis REIT Gillespie, previously a partner at as the fi nancial director of Makkah & MALAYSIA: George Stewart Labrooy Addleshaw Goddard, joins the fi rm’s Madinah Holdings with immediate eff ect. has resigned as a non-independent Dubai offi ce as a partner eff ective from the director of Shariah compliant Axis Real 1st January 2016. According to a bourse fi ling, the Shariah Estate Investment Trust (Axis REIT). compliant real estate investment According to a bourse fi ling, Labrooy’s Al Rajhi Bank company intends to replace Ahmad in resignation is due to his new business due course and the present fi nancial commitments. Separately, it is also MALAYSIA: Mahfi zan Muhammad manager will oversee his role in the confi rmed that principal offi cer Ng Choy has been appointed as the new director meantime. Tip has been promoted to fi nancial of treasury of Al Rajhi Bank Malaysia, controller of the company. according to a press release. Meezan Bank ZICOlaw Elian PAKISTAN: Meezan Bank has renewed the contract of its president and CEO MALAYSIA: Senior partner Hanim GLOBAL: Elian, which provides fi nancial Irfan Siddiqui for another three years. Hamzah has been promoted to regional services including Islamic fi nance According to a bourse statement, Irfan’s managing partner of ZICOlaw network, services, has made two appointments reappointment, which took eff ect on the eff ective the 1st January 2016, according to to its recently launched commercial 17th November 2015, was approved by the a statement. Hanim has been a resident team: Lisa Mclauchlan as the business central bank on the 6th January 2016. partner and a senior foreign counsel in development and marketing director and Indonesia at Roosdiono & Partners – a Mari Hietala-David to oversee marketing Watania member law fi rm of ZICOlaw – since and business development for private 2005. UAE: Gutam Data has been appointed as STRUCTURING ISLAMIC TRADE FINANCE SOLUTIONS 15th – 17th March 2016, RIYADH

Highlights: • Review the main principles of Islamic finance applied to trade transactions • Analyze traditional collections and documentary credits in order to contrast them to Shariah principles • Examine the documentary credit cycle and how Shariah compliant approaches may be structured applying LC Murabahah, LC Istisnah and documentary collections • Provide clear examples of Islamic finance structures applied to pre-export finance, export finance, manufacturing and shipping guarantees • To illustrate the Shariah principles governing guarantees, bonds, and counter guarantees www.REDmoneytraining.com • Foreign exchange issues, risk and accounting issues will be incorporated [email protected]

Expected date Company's name Size Structure Announcement Date TBA Khazanah Nasional TBA Sukuk 15th January 2015 TBA IDB TBA Sukuk 15th January 2015 TBA EKVE RM1 billion Sukuk Murabahah 13th January 2015 TBA Oman Telecommunications TBA Sukuk 12th January 2016 TBA Emirates of Sharjah TBA Sukuk 11th January 2016 TBA Tenaga Nasional US$3 billion Sukuk 8th January 2016 TBA Toprak Mahsulleri Oﬁ si up to TRY600 million Sukuk 7th January 2015 TBA Government of Jordan JOD150 million Sukuk 7th January 2015 TBA Government of Pakistan PKR300 billion Sukuk Ijarah 10th December 2015 First quarter of 2016 Government of Egypt TBA Sukuk 7th December 2015 TBA Barwa Bank US$2 billion Sukuk 27th November 2015 TBA Sime Darby up to RM3 billion Sukuk 27th November 2015 TBA Samalaju Industrial Port up to RM950 million Sukuk Murabahah 27th November 2015 TBA Government of Kuwait TBA Sukuk 30th November 2015 TBA WAPDA PKR144 billion Sukuk 26th November 2015 TBA WAPDA PKR100 billion Sukuk 26th November 2015 TBA Government of Ivory Coast XOF150 billion Sukuk 23rd November 2015 TBA Kuveyt Turk US$400 million Sukuk 13th November 2015 TBA Widad Capital RM120 million Sukuk Murabahah 13th November 2015 TBA Hascol Petroleum PKR2 billion Sukuk 9th November 2015 TBA Emirates Airline US$500 million-US$1 Sukuk 9th November 2015 billion TBA CIMB Islamic RM5 billion Sukuk 6th November 2015 2016 Government of Indonesia IDR150 trillion Sukuk 9th October 2015 TBA MMC Corporation RM1.5 billion Sukuk Murabahah 13th October 2015 TBA Country Garden Real Estate RM1.5 billion Sukuk Murabahah 6th October 2015 First quarter of 2016 National Home Mortgage Finance PHP2 billion Sukuk 29th September 2015 Corp TBA HNA Group US$150 million Sukuk 11th September 2015 TBA Saudi Electricity Company US$1.5 billion Sukuk 1st September 2015 TBA Turkiye Finans TRY1.5 billion Sukuk 1st September 2015 2016 Government of Indonesia IDR12.2 trillion Sukuk 1st September 2015 By 2017 KT Bank EUR100 million Sukuk 11th June 2015 TBA TIME dotCom UP to RM1 billion Sukuk 19th August 2015 2016 Government of South Africa TBA Sukuk 13th February 2015 TBA Government of Niger XOF150 billion Sukuk 26th February 2015 TBA Government of Tunisia US$500 million Sukuk 13th January 2015 2016 Al Baraka Bank (Egypt) US$100 million Sukuk 12th August 2015 2016 Jordan Islamic Bank US$100 million Sukuk 12th August 2015 2016 Al Baraka Bank (South Africa) US$50 million Sukuk 12th August 2015 TBA Government of UAE TBA Green energy Sukuk 12th March 2015 TBA Turkiye Finans US$400 million Sukuk 20th July 2015 TBA Eskom TBA Sukuk 25th June 2015 TBA Republic of Turkey TBA Sukuk 25th June 2015 TBA 1Malaysia Development RM5 billion Sukuk 18th June 2015 TBA Toyota Capital Malaysia TBA Sukuk 17th June 2015 TBA Sindh Province US$200 million Sukuk 15th June 2015 TBA Grand Sepadu RM210 million Sukuk Murabahah 5th June 2015 TBA Abu Dhabi Islamic Bank US$3 billion Sukuk 29th May 2015

REDmoney Asia ex. Japan 6 Months REDmoney Europe 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap 2500 1200

2090 1100

1680 1000

1270 900

860 800

450 700 Aug Sep Oct Nov Dec Jan Aug Sep Oct Nov Dec Jan

REDmoney GCC 6 Months REDmoney Global 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap 1300 2200

1140 1896

980 1592

820 1288

660 984

500 680 Aug Sep Oct Nov Dec Jan Aug Sep Oct Nov Dec Jan

REDmoney MENA 6 Months REDmoney US 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap 1150 2250

1000 1960

850 1670

700 1380

550 1090

400 800 Aug Sep Oct Nov Dec Jan Aug Sep Oct Nov Dec Jan

SAMI Halal Food Participation (All Cap) 6 months

2250

2110

1970

1830

1690

1550 Aug-2015 Sept-2015 Oct-2015 Nov-2015 Dec-2015 Jan-2015

REDmoney Global Shariah Index Series (All Cap) 6 Months REDmoney Global Shariah Index Series (Large Cap) 6 Months

REDmoney Asia ex. Japan REDmoney Global REDmoney Asia ex. Japan REDmoney Global REDmoney Europe REDmoney MENA REDmoney Europe REDmoney MENA REDmoney GCC REDmoney US REDmoney GCC REDmoney US 1400 1300

1230 1130

1060 960

890 790

720 620

550 450 Aug Sep Oct Nov Dec Jan Aug Sep Oct Nov Dec Jan

REDmoney Global Shariah Index Series (Medium Cap) 6 Months REDmoney Global Shariah Index Series (Small Cap) 6 Months

REDmoney Asia ex. Japan REDmoney Global REDmoney Asia ex. Japan REDmoney Global REDmoney Europe REDmoney MENA REDmoney Europe REDmoney MENA REDmoney GCC REDmoney US REDmoney GCC REDmoney US 2250 2450

1900 2060

1550 1670

1200 1280

850 890

500 500 Aug Sep Oct Nov Dec Jan Aug Sep Oct Nov Dec Jan

REDmoney Global Shariah

Equities are considered eligible for inclusion Utilities Basis Materials Telecomunication Services 2% 15% into the REDmoney Global Shariah Index 2% Series only if they pass a series of market Consumer Goods Services 15% related guidelines related to minimum market Technology capitalization and liquidity as well as country 14% restrictions. Energy 8% Once the index eligible universe is determined Non-Cyclical the underlying constituents are screened Consumer Goods Services 7% Financials using a set of business and ﬁ nancial Shariah 4% guidelines. Industrials Healthcare 22% 11%

The REDmoney Shariah Indexes provides Islamic investors with an accurate and Shariah-specifi c equity performance benchmark with optimized compliance credibility due to the intensive research conducted to ensure that index constituents do not confl ict with the defi ned Shariah requirements.

IdealRatings™ is the leading provider of Shariah investment decision support tools to investors globally, including asset managers, brokers, index providers, and banks to empower them to develop, manage and monitor Shariah investment products and Shariah compliant funds. IdealRatings is headquartered in San Francisco, California. For more information about IdealRatings visit: www.idealratings.com

For further information regarding REDmoney Indexes contact: REDmoney Global Shariah Index Series Andrew Morgan Managing Director, REDmoney Group

RED Email: [email protected] Tel +603 2162 7800

Eurekahedge North America Islamic Fund Index 200 190 180 170 160 150 140 130 120 110

Index Values 100 90 80 70 60 50 Dec-99 Dec-03 Dec-07 Dec-11 Dec-15 Apr-01 Apr-05 Apr-09 Apr-13 Aug-02 Aug-06 Aug-10 Aug-14

Top 10 Monthly Returns for Developed Market Islamic Funds Fund Fund Manager Performance Measure Fund Domicile 1 AmOasis Global Islamic Equity AmInvestment Management 0.49 Malaysia 2 Al Rajhi Global Equity UBS 0.48 Saudi Arabia 3 Mashreq Al-Islami Income - Class B Mashreq Capital (DIFC) 0.11 UAE 4 Watani KD Money Market National Bank of Kuwait 0.05 Cayman Islands 5 Watani USD Money Market National Bank of Kuwait 0.01 Cayman Islands 6 Al Rajhi Commodity Mudarabah - USD Al Rajhi Bank 0.00 Saudi Arabia 7 Deutsche Noor Precious Metals Securities - Class A DWS Noor Islamic Funds -0.03 Ireland 8 QInvest JOHCM Sharia'a J O Hambro Capital Management -0.05 Cayman Islands 9 BLME Umbrella Sicav - SIF - USD Income - Class B Bank of London and The Middle East -0.08 Luxembourg 10 BLME Sharia'a Umbrella SICAV-SIF Global Sukuk - Bank of London and The Middle East -0.10 Luxembourg Class A USD Eurekahedge Islamic Fund Index 0.09

Taking into account funds that have at least 12 months of returns as at the 18th January 2016

Top 10 Monthly Returns for Emerging Markets Islamic Funds Fund Fund Manager Performance Measure Fund Domicile 1 CIMB Islamic Small Cap CIMB-Principal Asset Management 6.03 Malaysia 2 Al Baraka Hermes Fund Management 4.99 Egypt 3 Faisal Islamic Bank of Egypt Mutual Hermes Fund Management 4.72 Egypt 4 Meezan Tahaﬀ uz Pension - Equity Sub Al Meezan Investment Management 4.71 Pakistan 5 BIMB i-Growth BIMB UNIT Trust Management (BUTM) 4.35 Malaysia 6 Atlas Pension Islamic - Equity Sub Atlas Asset Management 4.02 Pakistan 7 Atlas Islamic Stock Atlas Asset Management 3.93 Pakistan 8 Meezan Islamic Al Meezan Investment Management 3.83 Pakistan 9 Dana Ekuiti Dinamik Manulife Insurance (Malaysia) 3.81 Malaysia 10 Mandiri Investa Atraktif - Syariah (Mitra Syariah) Mandiri Manajemen Investasi 3.78 Indonesia Eurekahedge Islamic Fund Index 4.42

Based on 57.52% of funds which have reported December 2015 returns as at the 18th January 2016

Comprehensive data from Eurekahedge will now feature the overall top 10 global and regional funds based on a specifi c duration (yield to date, annualized returns, monthly returns), Sharpe ratio as well as delve into specifi c asset classes in the global arena – equity, fi xed income, money market, commodity, global investing (which would focus on funds investing with global mandate instead of a specifi c country or geographical region), fund of funds, real estate as well as the Sortino ratio. Each table covering the duration, region, asset class and ratio will be featured on a fi ve-week rotational basis.

Eurekahedge Islamic Fund Balanced Index over the last 5 years Eurekahedge Islamic Fund Balanced Index over the last 1 year

210 110

190 105

170 100

Percentage 150 Percentage 95 130

90 110

90 85 Jul-15 Jul-15 Jan-15 Oct-15 Sep-15 Dec-14 Dec-15 Dec-99 Dec-03 Dec-07 Dec-11 Dec-15 Apr-15 Apr-01 Apr-05 Apr-09 Apr-13 Aug-15 Aug-02 Aug-06 Aug-10 Aug-14 Mar-15 Nov-15 May-15 May-15

Top 10 Islamic Fixed Income Fund by 3 Months Returns Fund Fund Manager Performance Measure Fund Domicile 1 MAA Takaful Shariah Flexi MAA Takaful 5.26 Malaysia

2 CIMB Islamic Enhanced Sukuk CIMB-Principal Asset Management 2.60 Malaysia

3 MAA Takaful Shariah Income MAA Takaful 2.11 Malaysia

4 Meezan Islamic Income Al Meezan Investment Management 1.96 Pakistan

5 Libra AsnitaBond Libra Invest 1.65 Malaysia

6 Meezan Tahaﬀ uz Pension - Debt Sub Al Meezan Investment Management 1.34 Pakistan

7 AmBon Islam AmInvestment Management 1.28 Malaysia

8 Atlas Pension Islamic - Debt Sub Atlas Asset Management 1.25 Pakistan

9 CIMB Islamic Sukuk CIMB-Principal Asset Management 1.22 Malaysia

10 AlAhli Diversiﬁ ed US Dollar Trade The National Commercial Bank 0.18 Saudi Arabia

Eurekahedge Islamic Fund Index 0.48

Based on 59.26% of funds which have reported December 2015 returns as at the 18th January 2016

Top 10 Islamic Fund of Funds by 3 Months Returns Fund Fund Manager Performance Measure Fund Domicile 1 Al Yusr Mizan Multi Asset Fund Saudi Hollandi Bank -0.10 Saudi Arabia

2 Al Yusr Aman Multi Asset Fund Saudi Hollandi Bank -0.17 Saudi Arabia

3 Al Rajhi Multi Asset Balanced Fund Al Rajhi Bank -0.73 Saudi Arabia

4 Al Yusr Tamoh Multi Asset Fund Saudi Hollandi Bank -1.24 Saudi Arabia

5 Al Rajhi Multi Asset Growth Fund Al Rajhi Bank -4.11 Saudi Arabia

Eurekahedge Islamic Fund Index (1.27)

Based on 57.52% of funds which have reported December 2015 returns as at the 18th January 2016

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Most Recent Global Sukuk Priced Issuer Nationality Instrument Market US$ (mln) Managers 21st Dec 2015 Cagamas Malaysia Sukuk Domestic market 101 Maybank public issue 15th Dec 2015 Samalaju Malaysia Sukuk Domestic market 161 CIMB Group Industrial Port public issue 14th Dec 2015 Perodua Global Malaysia Sukuk Domestic market 162 Maybank Manufacturing public issue 3rd Dec 2015 Prasarana Malaysia Sukuk Domestic market 459 RHB Capital, Maybank, Kenanga Investment Malaysia public issue Bank, CIMB Group, AmInvestment Bank 26th Nov 2015 Rantau Abang Malaysia Sukuk Domestic market 238 RHB Capital Capital public issue 24th Nov 2015 Albaraka Turk Turkey Sukuk Euro market 250 Standard Chartered Bank, Nomura, Dubai Katilim Bankasi public issue Islamic Bank, Emirates NBD, QInvest, Barwa Bank, Noor Bank 23rd Nov 2015 Jimah East Power Malaysia Sukuk Domestic market 2,100 HSBC, Maybank, CIMB Group public issue 13th Nov 2015 Cagamas Malaysia Sukuk Domestic market 114 CIMB Group public issue 12th Nov 2015 Axiata SPV2 Malaysia Sukuk Euro market 500 Deutsche Bank, CIMB Group public issue 3rd Nov 2015 MMC Malaysia Sukuk Domestic market 279 RHB Capital Corporation public issue 2nd Nov 2015 DanaInfra Malaysia Sukuk Domestic market 727 HSBC, RHB Capital, Maybank, CIMB Group, Nasional public issue AmInvestment Bank 27th Oct 2015 Majid Al Futt aim UAE Sukuk Euro market 500 Standard Chartered Bank, HSBC, National Properties public issue Bank of Abu Dhabi, Dubai Islamic Bank, Abu Dhabi Islamic Bank 26th Oct 2015 Sultanate of Oman Sukuk Euro market 649 Bank Muscat Oman public issue 20th Oct 2015 Qatar Islamic Qatar Sukuk Euro market 750 Standard Chartered Bank, HSBC, Citigroup, Bank public issue QInvest, Barwa Bank, Noor Bank 19th Oct 2015 Arab Petroleum Saudi Sukuk Euro market 500 Saudi National Commercial Bank, Standard Investments Arabia public issue Chartered Bank, Goldman Sachs, First Gulf Bank, Emirates NBD, Noor Bank 13th Oct 2015 Malaysia Malaysia Sukuk Domestic market 217 RHB Capital Building Society public issue 13th Oct 2015 Jana Kapital Malaysia Sukuk Domestic market 217 RHB Capital public issue 8th Oct 2015 Rantau Abang Malaysia Sukuk Domestic market 358 CIMB Group, AmInvestment Bank Capital public issue 5th Oct 2015 IDB Trust Saudi Sukuk Euro market 336 Natixis Services Arabia public issue 18th Sep 2015 International UK Sukuk Euro market 200 Standard Chartered Bank, National Bank Finance Facility public issue of Abu Dhabi, Maybank, Emirates NBD, for Immunisation National Commercial Bank Jamaica

Global Sukuk Volume by Month Global Sukuk Volume by Quarter

US$bn US$m US$bn Value (US$bn) Avg Size (US$m) US$m 12 1500 18 600 Value (US$bn) 16 10 1250 14 500 Avg Size (US$m) 8 1000 12 400 10 300 6 750 8 4 500 6 200 4 100 2 250 2 0 0 0 0 11253 4 5 6 7 8 9 101112 2 3 4 6 7 8 9 101112 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2Q 3Q 4Q 1Q2Q 3Q 4Q 1Q 2Q 3Q 4Q 2014 2015 2011 2012 2013 2014 2015

Top 30 Issuers of Global Sukuk 12 Months Issuer Nationality Instrument Market US$ Iss Managers (mln) (%) 1 Jimah East Power Malaysia Sukuk Domestic market 2,100 6.6 HSBC, Maybank, CIMB Group public issue 2 Perusahaan Penerbit Indonesia Sukuk Euro market 2,000 6.3 JPMorgan, HSBC, Dubai Islamic Bank, CIMB Group SBSN Indonesia III public issue 3 DanaInfra Nasional Malaysia Sukuk Domestic market 1,670 5.3 RHB Capital, Maybank, CIMB Group, Aﬃ n Investment Bank, public issue AmInvestment Bank, HSBC 4 Malaysia Sovereign Malaysia Sukuk Euro market 1,500 4.7 Standard Chartered Bank, HSBC, CIMB Group Sukuk public issue 5 IDB Trust Services Saudi Sukuk Euro market 1,336 4.2 Saudi National Commercial Bank, Standard Chartered Bank, Arabia public issue HSBC, National Bank of Abu Dhabi, RHB Capital, Dubai Islamic Bank, Gulf International Bank, Natixis, CIMB Group 6 Petronas Global Malaysia Sukuk Euro market 1,250 3.9 JPMorgan, Deutsche Bank, Morgan Stanley, HSBC, Maybank, Sukuk public issue Mitsubishi UFJ Financial Group, CIMB Group, Citigroup, Bank of America Merrill Lynch 7 National Shipping Saudi Sukuk Domestic market 1,040 3.3 JPMorgan, HSBC, Samba Capital Co of Saudi Arabia Arabia public issue 8 Hong Kong Sukuk Hong Sukuk Euro market 1,000 3.1 Standard Chartered Bank, HSBC, National Bank of Abu Dhabi, 2015 Kong public issue CIMB Group 8 Government of Ras UAE Sukuk Euro market 1,000 3.1 JPMorgan, National Bank of Abu Dhabi, Citigroup, Al Hilal Al Khaimah public issue Bank 10 Prasarana Malaysia Malaysia Sukuk Domestic market 999 3.1 RHB Capital, Kenanga Investment Bank, CIMB Group, Aﬃ n public issue Investment Bank, AmInvestment Bank, Maybank 11 Danga Capital Malaysia Sukuk Domestic market 992 3.1 RHB Capital, CIMB Group public issue 12 Emirates Airlines UAE Sukuk Euro market 913 2.9 Standard Chartered Bank, JPMorgan, HSBC, National Bank public issue of Abu Dhabi, Dubai Islamic Bank, Abu Dhabi Islamic Bank, Citigroup, Emirates NBD 13 Qatar Islamic Bank Qatar Sukuk Euro market 750 2.4 Standard Chartered Bank, HSBC, Citigroup, QInvest, Barwa public issue Bank, Noor Bank 13 Dubai Islamic Bank UAE Sukuk Euro market 750 2.4 Standard Chartered Bank, HSBC, National Bank of Abu Dhabi, public issue First Gulf Bank, Maybank, Dubai Islamic Bank 15 Sultanate of Oman Oman Sukuk Euro market 649 2.0 Bank Muscat public issue 16 Jana Kapital Malaysia Sukuk Domestic market 622 2.0 RHB Capital public issue 17 Rantau Abang Malaysia Sukuk Domestic market 595 1.9 CIMB Group, AmInvestment Bank, RHB Capital Capital public issue 18 Jambatan Kedua Malaysia Sukuk Domestic market 560 1.8 RHB Capital, Maybank, Kenanga Investment Bank, public issue AmInvestment Bank 19 Arab National Bank Saudi Sukuk Domestic market 533 1.7 JPMorgan, Deutsche Bank, HSBC, Arab National Bank Arabia public issue 20 Pengurusan Air SPV Malaysia Sukuk Domestic market 525 1.7 Maybank, Bank Islam Malaysia, CIMB Group public issue 21 Sharjah Islamic UAE Sukuk Euro market 500 1.6 Standard Chartered Bank, HSBC, Kuwait Finance House, Dubai Bank public issue Islamic Bank, Abu Dhabi Islamic Bank, Emirates NBD, Al Hilal Bank, Noor Bank 21 Noor Bank UAE Sukuk Euro market 500 1.6 Standard Chartered Bank, Dubai Islamic Bank, South Indian Bank, public issue Citigroup, Emirates NBD, Al Hilal Bank, QInvest, Barwa Bank 21 Axiata SPV2 Malaysia Sukuk Euro market 500 1.6 Deutsche Bank, CIMB Group public issue 21 Arab Petroleum Saudi Sukuk Euro market 500 1.6 Saudi National Commercial Bank, Standard Chartered Bank, Investments Arabia public issue Goldman Sachs, First Gulf Bank, Emirates NBD, Noor Bank 25 Majid Al Futt aim UAE Sukuk Euro market 499 1.6 Standard Chartered Bank, HSBC, National Bank of Abu Dhabi, Properties public issue Dubai Islamic Bank, Abu Dhabi Islamic Bank 26 Garuda Indonesia Indonesia Sukuk Euro market 496 1.6 Standard Chartered Bank, Deutsche Bank, ANZ, National Bank Global Sukuk public issue of Abu Dhabi, First Gulf Bank, Maybank, Dubai Islamic Bank, Sharjah Islamic Bank, Emirates NBD, Al Hilal Bank, Warba Bank, Noor Bank 27 Malaysia Building Malaysia Sukuk Domestic market 452 1.4 RHB Capital Society public issue 28 Almarai Saudi Sukuk Domestic market 427 1.3 HSBC, Samba Capital Arabia public issue 29 SABB Saudi Sukuk Domestic market 400 1.3 HSBC Arabia private placement 30 Sarawak Energy Malaysia Sukuk Domestic market 386 1.2 RHB Capital, Kenanga Investment Bank, AmInvestment Bank public issue Total 31,803 100

Top Managers of Sukuk 12 Months Sukuk Volume by Currency US$ (billion) 12 Months

Manager US$ (mln) Iss % Malaysian ringgit 14.2 1 CIMB Group 5,148 44 16.2 US dollar 14.0 2 RHB Capital 4,173 35 13.1 2.4 3 HSBC 4,154 22 13.1 Saudi riyal

4 Maybank 3,224 29 10.1 Other 0.6

5 Standard Chartered Bank 1,806 18 5.7 6 AmInvestment Bank 1,757 20 5.5 Sukuk Volume by Issuer Nation US$ (billion) 12 Months

7 JPMorgan 1,483 6 4.7 Malaysia 17.3 8 Dubai Islamic Bank 1,177 10 3.7 Saudi Arabia 4.2 UAE 4.2 9 National Bank of Abu Dhabi 1,056 9 3.3 Indonesia 2.5 10 Citigroup 691 5 2.2 Hong Kong 1.0 11 Bank Muscat 649 1 2.0 Qatar 0.8 12 Deutsche Bank 564 4 1.8 Oman 0.6 13 Samba Capital 560 2 1.8 14 Kenanga Investment Bank 512 14 1.6 Global Sukuk Volume by Sector 12 Months 15 Natixis 447 2 1.4 16 Emirates NBD 440 7 1.4 16% Finance 17 Al Hilal Bank 416 4 1.3 5% 36% Government Transportation 18 Aﬃ n Investment Bank 358 4 1.1 11% Construction/Building 19 Noor Bank 348 5 1.1 Oil & Gas 12% Other 20 Abu Dhabi Islamic Bank 276 3 0.9 20% 21 First Gulf Bank 250 3 0.8 22 Hong Leong Financial Group 248 4 0.8 Global Sukuk Volume - US$ Analysis 23 QInvest 223 3 0.7 23 Barwa Bank 223 3 0.7 US$bn US$m 25 Saudi National Commercial Bank 194 2 0.6 18 600 16 Non-US$ US$ 500 26 Bank Islam Malaysia 157 3 0.5 14 12 400 10 27 Morgan Stanley 139 1 0.4 300 8 27 Mitsubishi UFJ Financial Group 139 1 0.4 6 200 4 100 27 Bank of America Merrill Lynch 139 1 0.4 2 0 0 30 Arab National Bank 133 1 0.4 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2Q 3Q 4Q 1Q2Q 3Q 4Q 1Q 2Q 3Q 4Q 2011 2012 2013 2014 2015 Total 31,803 121 100

Top Islamic Finance Related Project Finance Mandated Lead Top Islamic Finance Related Project Financing Legal Advisors Arrangers 12 Months Ranking 12 Months Mandated Lead Arranger US$ (million) No % Legal Advisor US$ (million) No % 1 Sumitomo Mitsui Financial Group 1,354 1 25.2 1 Salans FMC SNR Denton Group 3,334 2 34.9 2 HSBC 750 3 13.9 3 Riyad Bank 417 1 7.8 2 Milbank Tweed Hadley & McCloy 2,704 1 28.3 4 Mitsubishi UFJ Financial Group 354 1 6.6 4 Mizuho Financial Group 354 1 6.6 6 Banque Saudi Fransi 346 2 6.4 2 White & Case 2,704 1 28.3 7 Mashreqbank 224 2 4.2 7 Union National Bank 224 2 4.2 4 Allen & Overy 411 2 4.3 9 First Gulf Bank 210 1 3.9 10 BNP Paribas 104 1 1.9 10 Citigroup 104 1 1.9 5 Linklaters 311 1 3.3 10 Credit Agricole Corporate & 104 1 1.9 Investment Bank 6 Baker & McKenzie 100 1 1.0 10 Norinchukin Bank 104 1 1.9 10 Sumitomo Mitsui Trust Holdings 104 1 1.9

Top Islamic Finance Related Financing Mandated Lead Arrangers Ranking 12 Months Top Islamic Finance Related Financing Deal List 12 Months Mandated Lead Arranger US$ (mln) No % Credit Date Borrower Nationality US$ (mln) 1 First Gulf Bank 1,264 16 6.4 30th Mar 2015 Saudi Aramco Saudi Arabia 9,999 2 Banque Saudi Fransi 1,119 5 5.7 16th Mar 2015 Rabigh Reﬁ ning & Saudi Arabia 2,870 3 Saudi National Commercial Bank 971 6 4.9 Petrochemical 4 HSBC 963 9 4.9 24th Jun 2015 Jazan Gas Projects Saudi Arabia 1,790 5 Samba Capital 940 6 4.8 18th Jun 2015 Emirates National Oil UAE 1,500 6 Mashreqbank 791 11 4.0 10th Mar 2015 Port & Free Zone World UAE 1,100 7 Abu Dhabi Islamic Bank 744 10 3.8 17th Apr 2015 Turkiye Vakiﬂ ar Bankasi Turkey 1,021 8 Emirates NBD 702 10 3.6 28th Jul 2015 GEMS Education UAE 817 9 Noor Bank 567 8 2.9 24th Dec 2015 Sindh Engro Coal Mining Pakistan 800 10 Alinma Bank 490 2 2.5 Engro Powergen 11 Riyad Bank 485 2 2.5 16th Aug 2015 ACWA Power International Saudi Arabia 769 12 Dubai Islamic Bank 467 7 2.4 11th Dec 2015 Cititower Malaysia 751 13 Abu Dhabi Commercial Bank 464 5 2.3 14 Standard Chartered Bank 453 7 2.3 Top Islamic Finance Related Financing by Country 12 Months 15 Arab Banking Corporation 371 6 1.9 Nationality US$ (mln) No % 16 Maybank 370 2 1.9 1 UAE 6,898 20 34.9 17 Gulf International Bank 347 4 1.8 2 Saudi Arabia 5,769 5 29.2 18 Barwa Bank 340 5 1.7 3 Turkey 1,912 4 9.7 19 CIMB Group 338 1 1.7 4 Pakistan 1,633 4 8.3 20 Industrial & Commercial Bank of China 337 3 1.7 5 Qatar 1,200 3 6.1 21 Sumitomo Mitsui Financial Group 274 3 1.4 6 Malaysia 847 3 4.3 21 SG Corporate & Investment Banking 274 3 1.4 7 Egypt 382 2 1.9 23 China Development Bank 267 1 1.4 8 Kuwait 362 2 1.8 23 China Construction Bank 267 1 1.4 9 Cayman Islands 325 1 1.6 25 Kuwait Finance House 241 2 1.2 10 Jordan 275 1 1.4 26 Union National Bank 225 5 1.1 Top Islamic Finance Related Financing by Sector 12 Months 27 Qatar Islamic Bank 222 4 1.1

28 Mizuho 221 2 1.1 Oil & Gas 28 Mitsubishi UFJ Financial Group 221 2 1.1 Utility & Energy 30 Citigroup 215 4 1.1 Finance

Top Islamic Finance Related Financing Mandated Lead Arrangers Transportation 12 Months Bookrunner US$ (mln) No % Mining 1 Mashreqbank 1,566 7 15.7 US$ bln0 128 3 4 5 6 7

2 Noor Bank 1,013 5 10.1 Global Islamic Financing - Years to Maturity (YTD Comparison) 3 Saudi National Commercial Bank 666 1 6.7 2015 3 Riyad Bank 666 1 6.7 2014 3 Alinma Bank 666 1 6.7 2013 2012 6 Abu Dhabi Islamic Bank 521 4 5.2 2011 7 Emirates NBD 519 4 5.2 2010 2009 8 Dubai Islamic Bank 376 2 3.8 2008 9 Standard Chartered Bank 354 3 3.6 0% 20% 40% 60% 80% 100% 0-3yrs 3-5yrs 5-7yrs 7-10yrs 10+yrs 10 Maybank 338 1 3.4

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1MDB 15 CIMB Investment Bank 26 Morgan Mckinley 8 Abu Dhabi Islamic Bank 8, 13, 21 CIMB Islamic 5, 15 Morgan Stanley 20 Abu Dhabi Islamic Bank-Egypt 21 Cliﬀ ord Chance 12 Muscat Securities Market 10 Abu Dhabi Islamic Bank-UK 13 Cobalt Underwriting 13, 23, 26 NASDAQ Dubai 20 Addleshaw Goddard 26 Commerzbank 22 National Bank of Abu Dhabi 22 Adnan Sundra & Low 15 Companies Control Department 6 National Bank of Oman 10 ADNIF 8 Compareit4me 8 National Development Fund of Iran 22 Ahmad Zaki Resources 20 Danga Capital 20 National Electric Power Company 6 Al Baraka Turk 13 DLA Piper 26 National Financial Services Regulatory 19 Al Hilal Bank 22 DRB-HICOM 21 New York Exchange 7 Al Jannah Group 7 Dubai Islamic Bank 4, 8, 13 Norton Rose Fulbright 12 Al Rajhi Bank 5, 26 Dubai World 12 Omantel 10, 24 Al Rayan Bank 13, 14 Egyptian Electricity Transmission Company 21 Otoritas Jasa Keuangan 23 Al-Azhar University of Egypt 17 EIIB-Rasmala 13 Parsian Bank 22 Alinma Bank 23 EKVE 20, 25 PBDAC 21 Amman Chamber of Commerce 6 Elian 26 Pertamina Pension Fund 14 Amwal 23 Emirates Islamic 8, 23 PETRONAS 24 Angkasa 21 Emirates NBD 22 Pew Research Center 14 Aon Risk Solutions 26 Eni 4 Pointon York 14 Arcapita 9 Export Guarantee Fund of Iran 22 Prudential BSN Takaful 5 Armour Group Holdings 23, 26 EY 14 PTT Public Company 24 ASEAN Exchanges 7 Faisal Islamic Bank-Egypt 23 Putrajaya Holdings 20 Asian Infrastructure Investment Bank 21 Fitch 24 PwC 14 Australia Exchange 7 Gatehouse Bank 13 Qatar Islamic Bank 13 Axis REIT 26 Great Eastern Takaful 5 QIB-UK 13 Bahana TCW Investment Management 23 Horizon Hills Development 24 RAM 24, 25 Bank Banten 21 HSBC 10 Real Estate and Construction (Lockton) 13 Bank Dhofar 23 HSBC Amanah 15 S&P 1, 6 Bank Mellat 3, 22 IASB 22 S&P Dow Jones 22 Bank MNC International 21 Ibdar Bank 23 Saturna (Malaysia) 5 Bank Muamalat 21 ICD 6 SDF Partners 3 Bank Muscat 23 IDB 14, 20 Seacera Porcelain 21 Bank Negara Indonesia 20, 25 IdealRatings 7 SECP 14 Bank Negara Malaysia 21 IILM 20 Securities Commission Malaysia 20 Bank Panin Syariah 21 Industrial and Commercial Bank of China 11 Sedania As Salam Capital 21 Bank Pembangunan Malaysia 25 Investment House 23 Sharjah Islamic Bank 13 Bank Pundi 21 Iran Air 3 Singapore Exchange 7 Bank Sepah 22 Iranian Customs Organization 11 SME Bank Malaysia 21 Bank Simpanan Nasional 5 Irish Stock Exchange 13 Special Power Vehicle 24 Bank Sohar 23 Islamic Insurance Association of London 13 Standard Chartered Bank 10 Bank Windu Kencana 21 ITFC 6 Sun Life Malaysia Takaful 5 Barclays 20 Jakim 21 Sunway Treasury Sukuk 20 Barwa Real Estate Company 22 Jimah Energy Ventures 15, 24 Supreme Council for Iranian Free Zones 11 Baton Global 5 Jordan Enterprise Development Corporation 6 Tenaga Nasional 25 BAWAG 21 Khazanah Nasional 20, 21, 23 The Trump Organization 5 BBK 22 King & Spalding (Middle East) 1 Tilal Development 10 BBK Health Center 22 Libra Group 13 TNB Northern Energy 24 BLME 13, 23 London Stock Exchange 13 Tose-e Saderat (Exports Development) Bank 22 BNI Syariah 26 Majid Al Futaim 13 TPL Direct Insurance 23 Borden Ladner Gervais 19 Makkah & Madinah Holdings 26 UBS 20 Brit Insurance Group 26 Malaysia Building Society 21 UK Export Finance 22 Cahya Mata Sarawak 24 Malaysian Electronic Clearing Corporation 20 United Nations 14 Capita 23 MARC 15, 20, 24, 25 Universiti Tun Abdul Razak 22 Central Bank of Bahrain 20 Masraf Al Rayan 22 Watania 26 Central Bank of Iran 11, 22, 23 Maybank Investment Bank 15 Woori Bank 8, 22 Central Bank of the UAE 24 Maybank Islamic 25 XL Group 13 CIMB 20 Meezan Bank 23, 26 Zaid Ibrahim & Co 15 CIMB Bank 26 Mitsui & Co 15 Zaiwalla & Co 1 CIMB Group 26 Moody’s 10, 24 ZICOlaw 26

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