The Gulf Says Hello to Halal Hospitality

The World’s Leading Islamic Finance News Provider 21st May 2014

(All Cap) 1100 Demand for dry: The Gulf says

1075 hello to Halal hospitality 0.99%

1050 1,045.89 Bricks and mortar are a standard favorite The Walk at Jumeirah Beach Residence, and 1,035.58 for Islamic investors; but the hotel has also bought land on Palm Jumeirah for business has always been a tricky beast a 160-room hotel to open in 2016. 1025 due to its exposure to impermissible revenue from Haram activities such Strong demand 1000 as alcohol sales. A slew of recent new W T F S S M T Hotel demand in Dubai is booming, and ‘Shariah compliant’ hotel launches fi rms are falling over themselves to leverage Powered by: IdealRatings® has highlighted an exciting trend in this growth. DAMAC recently saw fi rst the hospitality sector: but where is the Volume 11 Issue 20 quarter profi ts bounce by almost 80%, and demand really coming from - and just how recently re-weighted its US$1.9 billion IFN Rapids ...... 2 Islamic are they? This week we take you development portfolio to include a greater Islamic Finance news ...... 7 on a comprehensive journey into the heart proportion of hotel and serviced hotel Column ...... 18 of Halal hospitality. Shariah Pronouncement ...... 19 apartment projects - which now represent IFN Reports: 40% of its total pipeline. The developer is South Africa: Our Sukuk race winner?; Looking Last week UAE developer DAMAC capitalizing on this trend through Islamic beyond the chaos: Can Turkish real estate Properties announced the launch of channels, including the issuance in April recover?; Iran off ers tentative opportunities Constella, a serviced apartment block of US$650 million in Sukuk which saw for Islamic investors; Dubai Investments sees claiming to be the fi rst offi cially Shariah an exceptional reception from investors, opportunities in Asia and Africa; SME fi nancing compliant serviced residences in Dubai, — slowly but surely; Islamic securitization in resulting in an increase from the targeted the GCC set to pick up pace; New markets for managed under Shariah principles and with US$500 million and more than four times AmMetLife Takaful? ...... 20 certifi cation from Dar al Sharia. According over-subscribed. Special Reports: to Ziad El Chaar, the managing director of Brokerage fi rm rating in the capital market of the DAMAC Properties: "Constella presents a According to Deloitt e’s most recent Middle Islamic Republic of Iran ...... 27 unique opportunity to invest in the Dubai East Hotel Market Insight report, the Will Shariah compliant wills create a dual legal real estate market in line with the principles system in the UK? ...... 29 demand for hotel accommodation in Dubai and beliefs of many of our customers, Case Study: has grown signifi cantly in the last seven Investment Corporation of Dubai Sukuk debut particularly those from Saudi Arabia and years. Across the upmarket sectors, demand 2014...... 30 here in the UAE." measured in rooms sold rose by almost 79% between 2006-13. Dubai is currently Country Focus: Australia And New Just this week Maisarah, the Islamic Zealand home to over 650 hotels, including 65% banking arm of Bank Dhofar, also signed a (334) of the UAE’s total hotels, according IFN Analysis: Islamic fi nance down under: OMR17 million (US$43 million) agreement Opportunities in Australia and New Zealand .. 25 to data from STR Global, with a further 57 Feature: Shariah based retirement planning with Tameer Investment to fi nance the new hotels in the construction pipeline, — expanding the range ...... 35 new Wave Plaza Hotel in Oman. And this refl ecting a substantial improvement not just a fl ash in the pan, but looks in market confi dence. Recent Sector Focus: Equity Capital Market to be part of a wider Gulf trend. In announcements from the Dubai IFN Analysis: The fl ip side: Islamic fi nance September last year R Hotels Group, a equity capital markets ...... 26 Tourism and Commerce Marketing UAE-based operator which currently Department on its goals to Takaful Features: Index-based livestock runs three Shariah compliant Ramada dramatically increase the number insurance: Protecting living assets from hotels across the emirates, announced of hotels has further fuelled the severe drought ...... 36 a AED1.5 billion (US$408.3 million) market, while a range IFN Country Correspondents: expansion in Dubai to exploit of incentives was also Australia ...... 31 the rapid growth of tourism. recently announced to IFN Country Correspondents: The group recently opened Private Equity And Venture Capital ...... 32 Book Excerpt: Introduction to The Islamic a new 175-room Ramada in continued on page 3 Finance Handbook: A practitioner’s guide to the global markets ...... 33 Deal Tracker ...... 37 REDmoney Indexes ...... 38 Eurekahedge data ...... 40 Performance League Tables ...... 42 Events Diary...... 46 Company Index ...... 47 Subscription Form ...... 47 www.islamicfi nancenews.com IFN RAPIDS

Banque Saudi Fransi to meet compliant fund option this Moody’s affi rms Qatar DEALS investors with regards to month Islamic Insurance Company SAR2 billion Sukuk (US533.16 rating of ‘Baa2’ Central Bank of Bahrain Union National Bank reports million) at the end of May, monthly Sukuk issue a 16.11% return for its Shariah RAM assigns stable sovereign according to news report oversubscribed by 378% compliant Al Samaha Fund ratings to Kuwait Putrajaya Holdings’ Sukuk Saudi Telecom due to issue Investment fi rms including MARC affi rms Westports Murabahah and Musharakah SAR500 million (US$133.29 Shariah compliant Tadhamon Malaysia Sukuk at ‘AA+IS’ due and payable next week million) Sukuk program at the Capital form Bahrain’s fi rst Cagamas MBS secures end of May asset managers association ‘AAAID’ rating for RM2.05 Investment Corporation of NEWS billion (US$634.09 million) Dubai raises Sukuk value Cabinet fi nally approves TAKAFUL Sukuk Musharakah based to US$700 million following introduction of Islamic on low defaults and healthy Family Takaful highlighted as strong demand banking in Uganda repayments a critical target for Malaysia’s IDB eyes May 2015 Tajikistan to pass Islamic Economic Transformation RAM reaffi rms Thailand’s benchmark-sized Sukuk banking law by the end of Program global and ASEAN scale issuance in line with plans to June ratings based on sound MetLife International come to market every year fi nancial stability and strong Financial Investment Bank Holdings plans to expand external position amid Turkish real estate investment implements iMAL Islamic into Muslim markets political turmoil trust to enter Sukuk market core banking system outside of Malaysia using with US$100 million off ering Takaful expertise gained via Cagamas MBS’ RM2.11 Securities and Exchange next month partnership with AMMB billion (US$656.18 million) Commission of Pakistan Holdings Sukuk Musharakah receives South Africa expected to proposes tax exemption for ‘AAAIS’ rating by MARC launch maiden sovereign companies issuing Sukuk in Capital Market Authority Sukuk worth US$500 million the 2014-15 budget fi nes Ahli Takaful for failing MARC withdraws ‘AA-ID’ st on the 1 June to announce appointment of rating on Maju Expressway’s Dubai Islamic Bank Pakistan board member to the public RM550 million (US$171.04 IILM to issue US$490 million launches consumer durable nd million) Islamic facility at short-term Sukuk on the 22 fi nance product enabling Securities and Exchange issuer’s request May 2014 customers to purchase Commission of Pakistan Sovereign US$140 million electronic and household issues requirements for Sukuk issuance confi rmed items Takaful windows MOVES for September, according to Bank Islam Malaysia aims to Qatar Rail project to aid in Bahrain Bourse names Tunisia’s fi nance minister increase branch network to the Takaful industry’s human Shaikh Khalifa Ebrahim Al Bank Negara Malaysia 150 by 2015 capital development Khalifa as new CEO releases May issuance plan Basel III-compliant Sukuk, a Oman Arab Bank appoints RHB Islamic Bank’s RM500 catalyst for the global Sukuk RATINGS Abdul Qader Al Bulushi to market lead Islamic banking operations million (US$154.66 million) Fitch upgrades rating for Sukuk Murabahah receives Affi n Research maintains Qatar International Islamic Arab Banking Corporation overwhelming demand at a buy call on Shariah compliant Bank to ‘A’ announces the appointment bid-to-cover ratio of 7.5 times Alam Maritim shares of new group chief fi nancial Potential revision in adjusted offi cer Al Baraka Banking Group Hong Kong could be Islamic valuation of properties drives engages South African and fi nancial market leader down outlook on Menara Gulf Bond and Sukuk Pakistani authorities to for renminibi, according ABS’ Sukuk tranches to Association names discuss Sukuk issuance plans to Bank Negara Malaysia negative Mohammed Albensaleh as representative chairman of newly launched Dar Al Arkan Real Estate Pakistan Credit Rating Saudi Arabian chapter Development Company Agency aff ords Dawood initiates launch of Sukuk ASSET Family Takaful ‘A-’ rating Barwa Real Estate names program by meeting based on strong capacity to Ahmad Abdulla Ali Al- international investors today MANAGEMENT meet contractual obligations Abdulla as acting group CEO Kwantas SPV fully sett les UBL Fund Managers Pak-Qatar Family Takaful National Bank of Oman RM155 million (US$48.2 introduces new Islamic fund maintains grip on ‘A’ rating receives regulatory approval million) nominal value Sukuk with an upgraded positive to appoint Ahmed Al Government-initiated Ijarah outlook Musalmi as new CEO KiwiSaver to launch Shariah

Disclaimer: Islamic Finance news 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.

Demand for dry: The Gulf says hello to Halal hospitality Continued from page 1 stimulate development of new hotels in Tourism and Commerce Marketing, The Islamic appeal the midmarket range. confi rmed that: “For Dubai to become Although DAMAC claims that Constella the number one family destination in the will be the fi rst 100% certifi ed Halal PwC’s fi rst Middle East hotels forecast, world, it has to appeal to all demographics serviced residences in the country, ‘Gateway for Growth’, suggests the - and the Islamic strategy for Dubai Dubai is already home to a wide range improving economic and travel backdrop encompasses hospitality as well.” of Shariah compliant hotels including has helped reinvigorate trade across the Tamani Hotel Dubai Marina, the the Gulf region, especially in Dubai, According to Enver Cebi, the general Al Jawhara chain, the iconic thousand Abu Dhabi, Doha, Jeddah, Muscat and manager of Crescent Hotels, a world room Gloria Hotel and the Radisson Riyadh. The six cities represent over leader in Halal holidays, Muslim tourists Blu Residence Dubai Marina. In fact, 124,000 hotel rooms and have seen spent an estimated US$141 billion in it is notable that while DAMAC has supply soar in recent years. In Qatar, 2012, with 94% accounted for by non- made much of its claim, serviced 21 hotels are planned for construction Hajj/Umrah expenditure. This accounts apartments in Dubai are all prohibited by 2017 to meet FIFA World Cup for around 12% of global tourism, from selling alcohol anyway, unless they requirements, while in Dubai, the with the total global Muslim tourist are connected to a hotel through shared government has estimated a further market currently twice that of China areas. 160,000 rooms needed by the World Expo and expected to increase by around 5% in 2020. per year (compared to 3.8% for overall But increasing numbers of new players international tourism). Saudi Arabia are jumping on the hotel bandwagon, Halal tourism on the rise represents the biggest-spending tourist with international brands also seeking The emirate is set to achieve its highest nation in the OIC, followed by Iran and to leverage the market. Accor, Europe’s GDP growth since 2007 this year, and the UAE. In total, the GCC as a whole market leader and the world’s leading in 2013 this contributed to an 11% represents almost 40% of total global hotel chain with over 3,500 hotels in 92 increase in tourism (with 5.5 million Muslim outbound travel expenditure, countries, this year announced the launch visitors in the fi rst six months) which despite accounting for only 3% of the of a new upscale Islamic brand called it hopes to increase to 20 million a year total global Muslim population. Majlis Mercure, designed specifi cally by 2020. According to Viren Lodhia, the to appeal to Middle East investors. hospitality and leisure lead partner at A 2012 report by DinarStandard and The group signed on the fi rst hotel in PwC Middle East: “Travel to the Middle Singapore-based Halal travel research Madinah in January, and has plans for 20 East is expected to grow strongly over fi rm Crescentrating identifi ed it as: “The more across the MENA region. the next 10 years, with the region’s largest untapped niche market of the strategic location and investment in tourism industry.” By 2020 the sector Shariah compliant hotels were a airports and infrastructure establishing it is expected to increase by over 50% growing trend in the region before the as an important global hub.” and account for around 13.5% of the fi nancial crisis, with the emergence global market, according to Fazal of Islamic fi nance and the booming A vital part of this growth is coming from Bahardeen, CEO of Crescentrating. property sector driving interest – the Muslim market, and the importance of “As a travel sector it is one of the and although many players fell catering to this demographic is starting to fastest-growing in the world – we by the wayside, several have be recognized by players across the board. expect it to reach almost managed to hold on and Yousuf Ahmad Lootah, the executive US$200 billion by 2020,” he are now taking steps back director of tourism, development and confi rmed to Islamic Finance into the market. Hospitality news. investments at Dubai’s Department of continued on page 4

Influence abroad The Islamic infl uence is spreading. features such as a Halal menu, and Movenpick – suggesting that Not all hotels may be funded through Ramadan-friendly suites, Arabic TV the wave of Islamic adaptation could purely Shariah compliant means, but channels, prayer mats and prayer spread rapidly further through the more and more operators are jumping schedules to cater to wealthy Islamic international hospitality arena. on the Muslim bandwagon as they guests especially from the GCC, which att empt to appeal to an increasingly now counts as one of its top three According to Fazal Bahardeen, CEO powerful demographic. The trend markets. of Crescentrating, this trend is already is also supported by the growth in being seen across a number of regions. Islamic property investment, which is The hotel is owned by Katara “Hotel facilities in non-Muslim applying its own religious beliefs to Hospitality, a subsidiary of Qatar’s countries are defi nitely starting to international portfolios. sovereign wealth fund, which also develop – we are seeing this in countries has affi liations with some of the like Japan, Taiwan and Australia, One of the most iconic hotels in Paris, world’s biggest leading hotel brands where hotels are seriously looking at for example, Le Royal Monceau, including the Ritz-Carlton, Sheraton, the potential of the Muslim market and recently introduced a range of Islamic Interncontinental, Raffl es, Marriott upgrading their services to match this.”

Demand for dry: The Gulf says hello to Halal hospitality Continued from page 3

Management Holdings (HMH) is one Islamic banks and investors to seek new explained Guy Wilkinson, the managing such fi rm, founded in 2003 in Dubai, and locations to invest their capital, and with partner of Viability Management claiming to be the fi rst hotel operator in the boom in tourism and the enduring Consultants, a specialist hospitality and the Middle East to off er an alcohol-free att raction of real estate for Shariah real estate consultancy in Dubai. “It is environment. It runs 20 hotels across compliant investors, hotels are proving now one of the main two options that fi ve diff erent brands in the Middle East, an optimum choice. you have to decide at the beginning of including the Coral brand; and recently the project - whether you will go western announced fi ve new hotels due to open “Defi nitely demand is growing globally,” or Islamic with the fi nance.” later this year, boosting its existing confi rmed William Perry, the head of portfolio by 25%, with plans to double its hotel asset management for Shariah A fine line properties by 2020. compliant South African conglomerate However, the defi nition of Shariah Cii Holdings, to Islamic Finance news. compliance can be a tricky line to Emerging opportunities “Presently lenders, on a global basis, are walk. While many chains off er ‘dry’ And it is not just Dubai that off ers not really putt ing money into hotels - or alcohol-free options, there is no opportunities for growth. “Destinations banks tend to consider them a high risk certifi cation process for an overall hotel, such as Dubai or Oman represent a investment in today’s market. So there which has resulted in a wide variance product diversifi cation that is supporting is not a lot of cash fl oating around from in the application of Shariah principles. a market opportunity to meet an lenders into the hotel asset classes. That Although some off erings (such as increasing demand from Muslim opens up the opportunity for equity the Al Jawhara, Saudi’s Bellevue and travelers,” Ramsay Rankoussi, the investors to come in - so demand for Damac’s new Constella project) promote associate director of development and funding is very high.” themselves through the strictness of their asset management for the Middle East compliance, many others prefer to off er a and Africa at international hotel chain rather less rigid interpretation. Millenium & Copthorne, said in a recent There is not media statement. “The GCC market Abu Dhabi-based Rotana Hotels, for represents the largest feeder segment for a lot of cash example, off ers an alcohol-free brand the sector.” called Rayhaan which it does not defi ne floating around as Shariah compliant brand but instead While Dubai has growing demand due from lenders into claims to: "Respect the beliefs and culture to the high number of Muslim tourists, of our guests, while fostering the image other countries may have diff erent the hotel asset of a new Arabia." drivers. In ‘wet’ Gulf countries such as Dubai or Turkey, the diff erence between classes. That opens Shaza Hotels is another example. The a ‘wet’ and ‘dry’ hotel may be less luxury operator, which was named important. In dry countries such as Qatar up the opportunity the World’s Leading Emerging Luxury or Saudi Arabia, however, growth is Hotel Brand at the World Travel Awards driven by investors seeking to conform to for equity investors in 2013, is an independent dry hotel their own religious principles. operator affi liated with luxury European to come in - so hospitality fi rm Kempinski Hotels and According to Hala Matar Choufany, the supported by Guidance Hotel Investment regional managing director of consulting demand for funding Company, established in 2006 to invest in fi rm HVS Dubai, eight out of every 10 the rapidly growing Middle East leisure new hotel projects in Doha are now dry. is very high and hospitality sector and partially- “An increasing number of new hotel owned by Qatar’s Barwa Real Estate. On developments, particularly in Doha, are the 10th May 2014 the Shaza group signed dry, and there seems to be an increasing a second deal with Bahrain’s Tameer requirement from Qatari owners for a “The decision of Islamic fi nancing or Investment for a new hotel in Muscat, dry operation. This is largely att ributable Shariah compliance for hotel projects is following an operating agreement for to Shariah fi nancing sources, or purely derived from (several) variables, the most a resort in Salalah due to open in 2016. religious beliefs,” she explained to critical being the investor’s profi le,” said The group has a portfolio of around nine Islamic Finance news. “ Rankoussi. “Shariah compliance does not hotels across the MENA region with a represent a business model but rather an further four opening in Saudi Arabia, alignment of investment principles and Jordan and Qatar; and is planning Investor-driven trend religious beliefs.” This impetus from investors is to open further venues in Sarajevo, Marrakech, Cairo and Bahrain as well signifi cant, and is providing the However, since the recession sector with a strong supply-side as possibly London, Geneva and Dubai, started to recede Islamic fi nance with hopes for 25-30 hotels by 2016. push at the same time as demand is involvement is apparently on the driving it from beneath. The up. “What has happened since the slowdown in liquidity and The chain was originally launched to recession is that Islamic fi nance provide hotels that were alcohol-free and the squeeze in commercial has become mainstream,” real estate fi nancing has led continued on page 4

Demand for dry: The Gulf says hello to Halal hospitality Continued from page 4

"displayed the values and cultures of the Shariah compliant hotel, the Muscat we will make it them dry, or we will not Middle East and North Africa." Yet Shaza Grand Millenium. M&C already has two open another hotel that isn’t dry.” does not label itself a Shariah compliant Shariah compliant hotels in Dubai, with brand - primarily because there is no several more in the pipeline. Avoiding exclusion clear defi nition of exactly what the term But with the expansion of the industry means. "I've not yet been able to fi nd and backed by the entry of international one defi nition of Shariah compliant There is a players, it is becoming increasingly hotels and the defi nitions you do fi nd important for hotel operators to appeal seem to have a long list of compliance premium you to customers across the board. With requirements," said Simon Coombs, the the growing numbers of international president and CEO of Shaza Hotels. do pay for a hotel tourists in the region, hotels that exclude non-Muslims cater to a Crescentrating in fact stays away from that has a bar, and necessarily limited market, meaning that the term altogether. “We avoid referring compromise must be found in order to to hotels as Shariah compliant, as the an international balance the att raction. term is too diffi cult to defi ne,” explained Fazal. “Instead we work on a ratings chain will typically “Talking to some of the investment basis, which judges how good they are groups in the Middle East that we have in terms of catering to Muslim travellers. not want to manage relationships with, they are looking for What we try to do is get as many hotels more diversity with their investments,” as possible to start looking at this a dry hotel in a wet explained Perry. “So if you look at this as sector – and we have seen a lot of hotels an asset class, the hotel owners are now improving their services – even just by market, on principal, saying OK, how do we work with Islamic off ering a prayer mat or putt ing up a because you do investors but yet still serve the non- prayer timetable.” Muslim customers? How can we create reduce your products that serve the needs of both International appeal the Islamic investor and the non-Muslim This push is bringing the Islamic customer base consumer?" opportunity to a wider market, and many of the new entrants to the game This does not necessarily mean are affi liating themselves with major Many smaller dry hotel chains are also compromising on Shariah principles, but international brands, demonstrating now entering the market. Viability can involve targeting specifi c segments the increasing cross-border appeal of Management Consultants, for example, such as families. For example HMH the Islamic sector. R Hotels manages is currently working with a group of claims that across its portfolio of 20 its Ramada properties on behalf of the Pakistani Muslims from Manchester in alcohol-free hotels in the Middle East, US-based Wyndham Group, and is the UK who are seeking to export their between 50-60% of customers are non- currently looking at properties in chain of dry mid-range aparthotels to Muslims as the hotels appeal primarily central London to capture Gulf Dubai. “Dry hotels are mainstream in to those looking for family-friendly tourists to the UK. In September the Gulf now, 'wet' countries in which accommodation. 2013 Shaza Muscat Company alcohol is permitt ed in principle," signed a US$72.8 million deal confi rmed Wilkinson. "And there Neither does being a dry hotel with UK-based hotel giant are more and more coming up. necessarily limit appeal. “Many of our Millenium & Copthorne Even hotel owners that have clients are Muslim family offi ces who (M&C) to manage and traditionally had hotels with operate Oman’s fi rst fi ve star bars are now saying either continued on page 4

Innovative opportunities The Islamic tourism market is not Abdul Fatah Marafi e, the chairman investors looking for new opportunities just stopping at hotels, but moving and managing directorof Al-Tĳ aria, to expand their global reach.” into alternative new asset classes as confi rmed that: "Timeshare is a US$14 well. International hotel and real billion global business, of which the The new venture has confi rmed estate developer IFA Hotels & Resorts Middle East is the smallest contributor that it intends to appeal to the (IFA HR) recently joined forces with at roughly US$36 million. unique requirements of its home Kuwait-based Al-Tĳ aria to launch their market, including making Shariah inaugural vacation club business. The "When compared to another emerging compliant fi nancing easily available US$50million joint venture aims to market – Africa – which represents to its members. It expects to launch dominate markets in MENA, South East approximately US$616 million, the room operations in 2016 once its fl agship Asia, Europe and North America, and for growth is staggering. That makes Kingdom of Sheba property opens in target clients especially from Dubai. it an extremely appealing concept to Dubai’s Palm Jumeirah.

Demand for dry: The Gulf says hello to Halal hospitality Continued from page 5 have a religious conviction against hotel was running in the lower twenty and the concept has been so successful alcohol so they will go for a dry option. percentages [of occupancy]” explained that with Cii Holdings currently looking And so the dry hotels in Dubai are faring Perry. So instead, the group put out a at new properties to add to its portfolio, very favorably in comparison to the tender for an international operator – and international operators are now showing wet ones, considering their perceived although several players responded, it signifi cant interest in the model. “These disadvantage,” said Wilkinson. “The dry struggled to fi nd one that was willing guys that originally turned us down now aspect is really not a stigma, and most to take on the commercial risk of a want to partner with us in other deals,” such concepts are not overtly Islamic Shariah compliant operation. Eventually confi rmed Perry. “But we have fi rmly either so non-Muslims are not put off . an agreement was reached with Hilton committ ed to Hilton because of their It is a recognized option to be dry but International, which resulted in the original willingness to think outside the otherwise to operate like a western launch of the Hilton Cape Town City box.” hotel.” Center. However, the hotel has a unique twist. Although fully Shariah compliant Investment gold A question of cost by ownership, it off ers a discreet bar on With the rise in Shariah compliant hotels However, one stumbling block for an upper fl oor that off ers non-Muslim looking to be unstoppable, everyone is investors is the question of cost. “Dry guests the opportunity to purchase keen to get a slice of the action. However, hotels are general cheaper than wet … alcohol. the increase in interest from the Islamic ones, although their cost bases may be fi nancial markets is undoubtedly a the same,” explained Wilkinson. “There If you were crucial trend. “We do a fi nancial model is a premium you do pay for a hotel that for our feasibility studies, and it is now has a bar, and an international chain non-Muslim, so common to be asked to look at Islamic will typically not want to manage a structures that we are able to just fl ick dry hotel in a wet market, on principal, you would not know a switch and choose whether to go the because you do reduce your customer Islamic or conventional fi nancing route,” base altogether – it's not just a question that the hotel was said Wilkinson. “It is at least 50/50. of lower beverage sales. Whenever an About half the feasibility studies we do investor says to us that they want to do Shariah compliant. involve Islamic fi nance, if not more.” a dry hotel, we say - well are you sure, because you won’t make as much money, There is a lot more The rise of Shariah compliant hotels may to put it bluntly.” be a complex road, but one thing remains creativity coming certain. As an upcoming asset class and But more and more Gulf investors are avenue for Islamic investment, this is one apparently saying just that, making it into the equation holiday that the industry cannot aff ord to imperative that the hotel industry fi nds miss. — LM new ways to address the issue. "Dry now than there was operators are having to think about ways of diff erentiating the off er and making it five or six att ractive so that there are other features to appeal to customers, to make up for years ago the lack of alcohol,” said Wilkinson. “So Have you joined it's certainly not a commercial imperative that is causing people to go for Islamic fi nance – but it is a really important "If you were non-Muslim, you would factor for the majority of investors over not know that the hotel was Shariah here.” compliant," asserted Perry. “But we comply with rigid Islamic standards – we are fully Halal certifi ed, and there Creativity for compromise is no pork served in any outlets on the And as it becomes more important, new property. The bar was sectional-titled and creative methods of compromise and physically sold to another entity, are springing up. In South Africa owned by Hilton International, so we for example, Cii Holdings recently are not engaged in the promotion or transferred its fl agship Cape Town hotel activity of selling alcohol and nor do to new management. our investors benefi t from any of the revenue. I think there is a lot more Originally operated by a Middle creativity coming into equation now Eastern operator as 100% compliant than perhaps was there fi ve or six both on the services and on years ago.” the ownership side, the hotel our facebook page? struggled to make a profi t. The hotel expects to hit 80% “The problem was that the occupancy at the end of 2014, model just didn’t work – the

confi rmed via IdealRatings that it will Cabinet finally approves DEALS issue a US$100 million Sukuk on the 1st June 2014. The fi ve-year Islamic debt will introduction of Islamic Demand for CBB Sukuk mature on the 1st June 2019. banking in Uganda BAHRAIN: The recent monthly issue UGANDA: Aft er years of ongoing of Sukuk Al Ijarah by the Central Bank South Africa to finally issue discussions at parliamentary level, of Bahrain was oversubscribed by 387% SOUTH AFRICA: South Africa is Uganda’s cabinet of ministers has fi nally according to the bank, with subscriptions approved the introduction of Islamic worth BHD75.6 million (US$199.35 expected to launch its maiden US$500 st fi nance in the republic. The government million) received for the BHD20 million million Sukuk on the 1 June, according to a statement available on IdealRatings is also expected to soon approve three (US$52.74 million). The Sukuk have a laws within the Financial Institution th website. The Islamic debt will be based tenor of 182 days and mature on the 13 Amendment Act. November 2014. on an Ijarah structure. Maria Kiwanuka, the Ugandan fi nance Saudi Telecom Sukuk in May IILM to issue Sukuk minister, has urged all parties who are in SAUDI ARABIA: Saudi Telecom will MALAYSIA: The International Islamic favor of introducing Islamic banking in issue a SAR500 million (US$133.29 Liquidity Management Corporation the country to persuade their respective million) Sukuk on the 30th May (IILM) has announced the auction of its members of parliament (MP) to pass 2014, according to a statement by US$490 million short-term Sukuk on the the Islamic Banking Bill 2014 into law. nd IdealRatings. 22 May 2014. The auction sett lement “What I can say is the cabinet has agreed date has been set as the 29th May. The to allow this kind of banking. It was three-month issuance matures on the 28th forwarded to the parliament committ ee ICD ups Sukuk size August 2014. responsible and if the MPs pass the bill UAE: Investment Corporation of Dubai into law then we shall roll out,” she said. (ICD) has issued a US$700 million, No further delays for Tunisia’s six-year Sukuk at a profi t rate of In furtherance to the introduction of 160bps over midswaps. Dubai Islamic Sukuk Islamic banking, the Ministry of Finance Bank, Citi, Emirates NBD Capital, TUNISIA: Tunisia will issue its delayed also noted the lack of trained and skilled HSBC and Standard Chartered Bank sovereign Sukuk in September, according professionals as a challenge that could were the mandated bookrunners for to Hakim Ben Hammouda, Tunisia’s impede the implementation of Shariah the transaction, which was initially fi nance minister. The minister confi rmed compliant banking in the republic. expected to be just US$500 million. ICD the timeline for the US$140 million Industry players have expressed their concurrently issued a 10-year US$300 Sukuk on the sidelines of a fi nance caution in this regard due to the fi rm million conventional bond at 210bps ministry event on the 15th May, with no foothold of conventional banking as well over midswaps. A total of approximately explanation given for the reduction in as the weaker economic power held by US$2.5 billion in investor orders were size of the planned issuance; to US$140 Ugandan Muslims. placed for the combined off ering. million from US$500 million. Nonetheless the prospects remain IDB issue in May 2015 BNM Sukuk planned for May promising, with a 12% Muslim population or approximately three SAUDI ARABIA: The IDB has plans MALAYSIA: Bank Negara Malaysia million people. The government is to sell a benchmark-sized Sukuk next (BNM) has released a Sukuk Issuance working together with the Islamic May, according to president Ahmad plan for the second half of May, with Chamber of Commerce, Industry and Mohamed Ali, who said that the bank fi ve issuances planned for the 20th, 22nd, Agriculture to introduce Islamic fi nance intends to enter the market on an annual 27th and 29th May. Issuances may be in the country. Should the legislation basis. Ahmad also said that its insurance issued through a fi xed or fl oating rate, allowing Islamic banking be passed, arm, the Islamic Corporation for the on a bullet or callable basis, with a range Uganda will join African counterparts Insurance of Investment and Export between RM200 million (US$62 million) such as Nigeria and Kenya in off ering Credit, is considering whether or not to RM3 billion (US$929.88 million). Shariah compliant fi nancial products in to extend a Sukuk insurance product Tender and issuance dates are subject to the region. Uganda will also be aff orded to enhance the credit rating of Tunisia’s change. opportunities in the areas of mining, proposed Sukuk, planned for this year. oil and gas, agro-industries, export and Nonetheless, Ahmad assured that the Overwhelming response for import trade, science and technology as IDB will defi nitely consider participating well as agriculture. in Tunisia’s Islamic issuance as a RHB Islamic Sukuk matt er of policy, to support its member MALAYSIA: RHB Islamic Bank countries. has concluded the sale of its Sukuk Murabahah worth RM500 million Are you reading us Kiler GYO to issue (US$154.66 million) in nominal value, which received a bid-to-cover ratio of 7.5 on your TURKEY: Turkish real estate investment times the issuance size. Payable semi- trust Kiler GYO, which announced annually in arrears, the subordinated iPad / in February that it was in discussion Sukuk were issued for a tenor of 10 with Saudi Arabian and Qatari banks non-callable fi ve years at a fi xed 4.95% iPhone? regarding the sale of Sukuk, has continued

© 7 21st May 2014 NEWS continued... million) and stock code DL060265, Tajikistan to pass Islamic profi t rate. The facility was assigned worth RM612,000 (US$190,323) on the 20th May. banking law by the end of a fi nal rating of ‘AA3/Stable’ by RAM June Rating Services and would qualify as Tier 2 capital. Sukuk for Banque Saudi TAJIKISTAN: Speaking to Islamic Fransi Finance news, the National Bank of Al Baraka considers Sukuk Tajikistan (NBT) has confi rmed that SAUDI ARABIA: Banque Saudi Fransi the country’s lower chamber of the GLOBAL: Bahrain-based Al Baraka plans to sell Sukuk worth SAR2 billion parliament (Majlisi Namoyandagon) Banking Group has engaged authorities (US$533.16 million) as soon as the end approved the draft law of the Republic in South Africa and Pakistan on its plans of June to boost capital, according to of Tajikistan entitled ‘On Islamic Banking to issue Sukuk through its respective unnamed sources in a report by Reuters. Activity’ on the 14th May 2014. units in said countries, according According to a statement on IdealRatings to CEO Adnan Ahmed Yousif. The however, the bank is expected to issue The central bank confi rmed that the th issuances are likely to replicate the on the 15 June. Saudi Fransi Capital, the law will be tabled and subsequently be US$200 million Sukuk issued by Al bank’s investment banking arm has been approved by the Higher Chamber of the Baraka Turk last year, designed to boost chosen to arrange the transaction, with Parliament (Majlisi Milli) in June. Tier 2 capital. an announcement that the bank plans to meet with Saudi fi xed income investors The upcoming legislation will provide a Dar Al Arkan holds Sukuk to market the off ering expected before foundation to facilitate Islamic banking the end of May. investors meeting activities in the country. Following the passing of the law, relevant authorities SAUDI ARABIA: Dar Al Arkan Putrajaya Holdings’ facilities will be able to develop regulations and Real Estate Development Company a legal framework for the sett ing up th due held meetings on the 20 May with of standalone Islamic banks as well as international investors, kickstarting the MALAYSIA: The redemption proceeds Shariah compliant windows. launch of its Sukuk program, which is for Putrajaya Holdings’ RM1.5 billion subject to market conditions. (US$466.48 million) Murabahah notes The draft law was presented by issuance facility shall be due and Abdujabbor Shirinov, the chairman of th Kwantas settles transaction payable on the 30 May. NBT, during a meeting of the Majlisi MALAYSIA: Kwantas SPV has fully Namoyandagon. According to a local Separately, the periodic distribution on daily, Abdujabbor said that the 2009 sett led its RM155 million (US$48.2 the fi rm’s Sukuk Musharakah Islamic million) nominal value Sukuk Ijarah global fi nancial and economic crisis medium-term notes of the same value will prompted numerous international following the redemption on stock code be due and payable on the 26th May. DL060185, worth RM20 million (US$6.23 fi nancial institutions to shift towards the principles of Islamic fi nance. He also pointed out that Islamic fi nance DEAL TRACKER Full Deal Tracker on page 37 principles have demonstrated resilience to successfully overcome the crisis. As ISSUER ISSUING SIZE (US$) DATE a result, this has led to the introduction CURRENCY ANNOUNCED of Islamic fi nance principles in countries such as the US, some countries of the EU, Dar Al Arkan Real Estate TBA TBA 20th May 2014 China, Russia, Azerbaĳ an, Kyrgyzstan Development Company and Kazakhstan.

th Al Baraka Banking Group US$ 200 million 20 May 2014 Tajikistan’s Islamic banking law has been

th on the cards since 2012 (see IFN Vol. 9 Bank Negara Malaysia RM various 16 May 2014 Issue 49). With a 98% Muslim population, the republic has shown signiﬁ cant Government of Tunisia US$ 140 million 7th February 2014 interest in Islamic banking, particularly ILLM US$ 490 million 16th May 2014 in the area of Shariah compliant microﬁ nance (see IFN Vol. 11 Issue 15).

corporate to raise fund from the capital Basel III-compliant Sukuk, a AFRICA market through issuance of Sukuk. catalyst for the global Sukuk Islamic system for FIBA DIBPL introduces new market SUDAN: Financial Investment Bank product GLOBAL: Over the past 16 months, (FIBA) has announced the successful since the implementation of Basel III implementation of the iMAL Islamic core PAKISTAN: Dubai Islamic Bank Pakistan in January 2013, a total of eight Basel banking system from Path Solutions. (DIBPL) has launched a consumer III-compliant Sukuk issuances have been durable fi nance product through which made. Auctioned by seven diff erent customers will be able to purchase issuing banks across Malaysia, Saudi ASIA generators from Yamaha at a six to Arabia and the UAE, the deals raised 36-month installment plan. The product approximately US$4.93 billion. Tax exemptions for Sukuk will later be expanded to include other electronic and household items including According to KFH Research, the gradual proposed solar panels, laptops, home furniture and implementation of Basel III accords has PAKISTAN: The Securities and Exchange mobile phones. led Islamic banks to turn towards Basel Commission of Pakistan (SECP)’s III-compliant Sukuk instruments to budget proposal for the upcoming year Growth plans for Bank Islam addresses the development of the Islamic satisfy the revised capital standards. The capital market and has put forward an MALAYSIA: Bank Islam Malaysia has research arm of Kuwait Finance House exemption from withholding tax on announced plans to open seven new expects more Islamic banks to come investment on Sukuk in the upcoming branches in 2014 and nine more next to the market with Basel III-compliant 2014-15 budget. The SECP has also year, with the aim of expansion to a issuances. proposed a tax exemption for companies network of 150 branches across Malaysia issuing Sukuk and Islamic fi nancial by 2015. The bank now operates 134 The fi rst Sukuk instrument structured instruments, with the view that the branches nationwide. to comply with Basel III standards proposed exemption will encourage the were issued by Abu Dhabi Islamic continued Bank (ADIB) in November 2012. The US$1 billion Sukuk was compliant to Basel III’s additional Tier 1 capital requirements and generated an overwhelming response from the investors. The deal was more than three times oversubscribed on the initial benchmark size at an orderbook of US$15.5 billion, with an expected profi t rate of 6.37% — the lowest ever coupon for an instrument of this type.

ADIB’s Sukuk success spurred others to follow suit. Financial institutions which have issued Basel III-compliant Sukuk include: Dubai Islamic Bank, Saudi Hollandi Bank, Saudi British Bank, National Commercial Bank, AmIslamic Bank, Maybank Islamic and most recently, RHB Islamic. Additionally, Public Islamic Bank has also jumped onto the bandwagon announcing its upcoming Basel III-compliant Tier 2 Sukuk issuances this year.

Based on KFH Research’s ﬁ ndings, out of the US$4.93 billion outstanding Basel III Sukuk, 59% was issued in accordance to Basel III’s Tier 2 capital requirements, while the other 41% was raised complying with the additional Tier 1 capital requirements. Various structures were utilized by issuers, the most preferred being the Mudarabah structure (67%), followed by hybrid structures (22%) and the Murabahah structure (11%).

© 9 21st May 2014 NEWS continued... created worldwide by 2020 as a result of UBL Fund Managers the upward growth trend of the Shariah introduces new Islamic fund Bank Islam Malaysia currently has a compliant fi nancial sector, according PAKISTAN: Following a consolidation below average fi nancing-to-deposit ratio to Bahrain Institute of Banking and exercise combining all its investment of 65% and aims to increase this to 75% Finance. solutions under one banner, the Al- by 2015, as well as growing its fee-based Ameen Funds, UBL Fund Managers has income and substantially increasing the Islamic microfinance industry successfully rolled out the Al-Ameen net profi t att ributable to the shareholders progressing well Islamic Principal Preservation Fund — III of the company within the 2014 fi nancial GLOBAL: The client base for Islamic (AIPPF-III). The new fund is an open- year. microfi nance services has exceeded ended ‘funds-of-funds’ scheme that 2 million with Sudan holding over carries a maximum term of two years The bank has also allocated over RM5 700,000 of the clients and at least 400,000 and preserves the principal investment at million (US$1.57 million) for its corporate domiciled in Pakistan, according to maturity. social responsibility (CSR) programs this Muhammad Zubair Mughal, CEO of year, which includes the rehabilitation Al Huda Center of Islamic Banking and Commenting on the launch of the fund, and construction of houses in the state of Economics. Other signifi cant markets Mir Muhammad Ali, CEO of UBL Fund Johor for needy families, projected to cost include Bangladesh, Indonesia and Managers, said: “AIPPF-III is an ideal over RM4 million (US$1.28 million). Yemen; while demand is satisfactory in fund for investors, who want to benefi t Morocco, Nigeria, Senegal and Tunisia. from exposure to equities without the AM likely to remain Shariah risk of losing their principal investment.” compliant Speculation over RHB Bank The fund seeks to provide a competitive MALAYSIA: Affi n Research has share return and will be dynamically invested maintained its buy call on Shariah GLOBAL: Taiwanese fi nancial group in Shariah compliant equity and income compliant Alam Maritim (AM), with a Mega Financial Holding Co is in talks or money market mutual funds, using target price of RM2.10 (US$0.65) from to buy shares in Malaysia’s RHB Bank, the Constant Proportion Portfolio RM1.83 (US$0.56). AM is predicted with local reports speculating that Insurance (CPPI) methodology which to remain Shariah compliant in the the party interested in selling is Abu provides an opportunity for appreciation upcoming May 2014 review. Dhabi-based Aabar Investments. Aabar of investment through exposure to equity Investments owns a 22% stake in RHB markets whilst aiming to preserve the Opportunities for Hong Kong Capital, which owns RHB Bank as well principal value. HONG KONG: Hong Kong has strong as shares in Oman-based Alizz Islamic potential to be the market leader for Bank. Mega Financial Holding Co is Investments will be made primarily in renminbi to be channelled through the reportedly interested in gaining exposure the Al-Ameen Shariah Stock Fund for Islamic fi nancial market, according to Islamic banking and therefore would equity exposure and in the Al-Ameen to Muhammad Ibrahim, the deputy benefi t from a share swap with Aabar Islamic Sovereign Fund or the Al- governor of Bank Negara Malaysia. Hong Investments, giving the Abu Dhabi Ameen Islamic Cash Fund (AICF) for Kong’s participation in the market will company exposure to the Taiwanese exposure to income and money markets. enhance product innovation, effi ciency market in turn. Mega Financial Holding Additionally, the fund may also invest in and global connectivity in the Islamic Co however has said in a statement to the other high quality Investment schemes fi nancial industry and aid in educating Taiwanese stock exchange that it has no off ered by other asset management and promoting the industry to others current plans to purchase stock in RHB companies. that have yet to be exposed to Islamic Capital. fi nance. According to the fund fact sheet, the IDB continues support benchmark for the AIPPF-III will be weighted average daily return of the GLOBAL: The IDB has approved a KMI-30 Index and the three-month GLOBAL total of US$670.9 million in funding for deposit rate of ‘A’ and above-rated development projects across member Subsidies to be addressed Islamic banks or Islamic windows of and non-member countries including: scheduled commercial banks, based GLOBAL: The call for a phase-out of US$312.8 million for electricity projects on the fund’s actual proportion in the subsidies by Arab countries pursuing in Egypt and Senegal; US$110 million equity and income or money market democracy by Christine Lagarde, the for major road development in Uganda; component. The scheme aff ords a IMF managing director, has been met US$48 million for pearl preservation and secure investment with a low to with a subdued response from the economic revival initiatives in Bahrain; medium-risk profi le, for medium-term relevant regional fi nance ministers, US$44 million for an underwater investor needs. despite agreement that subsidy reform communications cable in Bangladesh; is needed. and US$12.4 million to fi nance fi sh farms in Mozambique. Development projects in Opportunity for training Africa will also receive fi nancial support from the IDB while non-member Bosnia- development Herzegovina, Cambodia, India and GLOBAL: Approximately 250,000 to Thailand will receive donations from the 1 million Islamic fi nance jobs will be Islamic bank.

Revival in market activity Alvi, its CEO. The move comes as a Global Islamic banking assets response to feedback from IIFM members GLOBAL: Dollar Sukuk rates are falling including the IDB and Saudi Arabian projected to surpass US$3.4 due to the demand from Islamic banks and Malaysian monetary authorities. trillion by 2018 globally, with the average yield dropping The templates will aid in reducing by 55bps to 2.87% in April according to GLOBAL: Att ributed to the growing delays caused by disagreements between data from Deutsche Bank — the lowest economic activity in core Islamic fi nance Shariah scholars and may also help with rate in 10 months. Both issuers and markets, EY expects global Islamic the international shortage of Islamic investors are keen to see more Sukuk banking assets to exceed US$3.4 trillion scholars. in the market and a revival of Asian by the year 2018. Sukuk would aid Islamic debt investors stifl ed by the uncertainty regarding the Growth for new Islamic According to analysts at EY’s Global US Federal Reserve’s stimulus tapering finance markets Islamic Banking Center, combined profi ts of Islamic banks in Qatar, program, according to industry players. GLOBAL: Regional economies are Indonesia, Saudi Arabia, Malaysia, the The US regulator has announced a showing positive signs in Islamic fi nance, UAE and Turkey hit the US$10 billion US$10 billion reduction in its monthly be it bank credit, capital markets or IPOs, mark for the fi rst time at the end of 2013. bond purchases at every meeting since according to Dr Jarmo Kotilaine, the chief Should the current growth rate remain, December, making it easier for investors economist of the Economic Development the Islamic banking profi t pool across and issuers to predict the pace of further Board. The prospects for the industry these markets is set to exceed US$25 tapering, and raising confi dence for new are strong, given the underlying growth billion by 2018. Sukuk issuances. fundamentals that these markets possess; young, fast-expanding populations and Banks and utilities selected increasing demand for fi nancial services. Commenting on the profi t statistics, for upgrade Dr Kotilaine predicts that Bahrain will Ashar Nazim, the global Islamic fi nance see non-oil growth exceeding 4% in 2014, leader at EY, pointed out: “While the GLOBAL: MSCI has released the list of providing new growth opportunities for profi t numbers for Islamic banks are companies to be added to its emerging the Islamic fi nancial industry as investors impressive, they are still, on average, markets index when the UAE and Qatar look for new ways to fund projects. 15-19 percentage points lower than are upgraded at the end of May. The traditional banks in these markets. UAE companies to be included are: Regionalization and operational Abu Dhabi Commercial Bank, Aldar DIB expands into Indonesia transformation, which are currently properties, Arabtec, DP World, Dubai GLOBAL: Dubai Islamic Bank will underway in several leading Islamic Financial Market, Dubai Islamic Bank, acquire a 25% stake in Indonesia’s banks, will help to close this gap.” Emaar Properties, First Gulf Bank and Bank Panin Syariah, with a view to the National Bank of Abu Dhabi. The subsequently increase its shareholding “With increasing trade and capital fl ows companies picked in Qatar are Al Rayan to 40%, according to a Dubai bourse between Turkey, Middle East and Asia Bank, Barwa Real Estate, Commercial fi ling. The bank will jointly manage and Pacifi c, there is growing appetite to Bank of Qatar, Doha Bank, Ooredoo, operate the Indonesian Islamic bank learn about Islamic fi nancial solutions Qatar Electricity and Water, Qatar along with parent Bank Pan Indonesia, from clients and investors in these Industries, Qatar Islamic Bank, Qatar the controlling shareholder. No purchase markets. Similarly, linking with world National Bank and Vodafone Qatar. price was revealed, which will be subject growth engines like China and India to regulatory approval. is becoming more important to help Dubai’s main stock measure has build business bridges between these risen 126%, Abu Dhabi’s 40% since Scale needs to be built high potential markets,” added Gordon the announcement last June that the Bennie, EY’s MENA head of fi nancial countries would be upgraded. GLOBAL: The sustainability of the Islamic investment market’s strong services. growth momentum achieved over the Lulu eyes Southeast Asian past several years depends greatly on Out of the 38 million customers banking market creating conditions enabling industry with Islamic retail banks globally, only GLOBAL: UAE-based supermarket players to build scale and support eff orts a small number have fully transitioned chain Lulu Group has announced that to further geographic reach, so as to from a traditional to an Islamic banking it plans to invest US$200 million in fi ve att ract international Islamic investment relationship. Based on EY’s estimates, Halal-only hypermarkets in Malaysia, fl ows as well as fresh capital issuers, said the average number of Islamic banking the fi rst of which is due to open in 2015. Abdul Rahman Mohammed Al Baker, the products per customer is just over The stores will be the company’s fi rst in executive director of fi nancial institutions two, whereas leading traditional banks Southeast Asia, ahead of expansion in the supervision of Central Bank of Bahrain, have an average of fi ve products per region. at a recent Islamic fi nance-related customer. The market share of Islamic conference. banks could potentially increase by 40% Sukuk templates underway through building consumer confi dence Framework in review through services provided by banks as GLOBAL: The International Islamic well as tapping into the SME sector by GLOBAL: IFSB and the Islamic Research Financial Market (IIFM) is working assisting their cross-border business and Training Institute (IRTI) have issued on generic templates for structuring growth. of Sukuk, starting with the Ijarah a report detailing the mid-term review of structure, according to Ijlal Ahmed continued

continued... where a single price is set for all trades Al Masar, aims to strengthen the bank’s the 10-Year Framework and Strategies for using a matching algorithm to obtain the pipeline of Emirati staff through skill the Islamic Financial Services Industry, closing price. development and establishing eff ective launched in 2007 by IFSB, IRTI and the succession planning within the bank. IDB. The review report was launched Islamic funding for tallest at the 11th IFSB Summit, held recently, tower Bank Sohar to boost capital and is available from the IFSB and IRTI SAUDI ARABIA: Saudi-based Jeddah OMAN: Bank Sohar, which operates websites. Economic Co is in talks with Saudi Shariah compliant window Sohar banks to raise funds of SAR14 billion Islamic, has announced plans to issue (US$3.73 billion) for the fi rst phase of its a OMR70 million (US$181.34 million) EUROPE Kingdom City project, with Sukuk being mandatory convertible bond to boost its considered as a fi nancing option. The capital reserves, as the bank remains in London’s potential in Islamic project includes the Kingdom Tower, merger talks with Bank Dhofar. finance projected to be the tallest tower in the The issue will be completed as a private UK: London will become a place world, with a planned height of over one kilometer. placement and will help to improve renowned for understanding Islamic the bank’s Tier 1 capital which was fi nance and creating new products and reported as 9.85% at the end of the fi rst accessibility, according to Debashis Dey, IDB funding for Iran quarter according to the bank’s fi nancial a partner at Cliff ord Chance, following IRAN: The IDB and the World Bank statement, compared to the average Tier an Islamic fi nance seminar in London have provided fi nancing towards water 1 capital ratio in the Omani banking organized by QInvest in partnership and wastewater projects in Iran. IDB system of 11.97% as at the end of 2013, with the London Stock Exchange. Alex funding is being put towards wastewater according to Thomson Reuters data. Armstrong, the head of structured treatment plants in 93 villages across the fi nance at QInvest, believes that the UK country according to Hamidreza Janbaz, ACWA moves forward on IPO has the potential to provide assets to fi ll Iran’s deputy energy minister. The total the demand from Islamic investors. project is valued at US$2.2 billion. SAUDI ARABIA: Saudi power provider, ACWA Power, which launched its fi rst Shariah compliant revolving corporate GFH dispels rumors facility worth up to SAR1.77 billion MIDDLE EAST BAHRAIN: In response to the sharp (US$471.87 million) in December, has New system for BisB decline in its share price, Gulf Finance appointed Banque Saudi Fransi as House (GFH) has announced that arranger for its IPO on the Saudi stock BAHRAIN: Bahrain Islamic Bank the drop appears to be driven by exchange. The company hopes to have (BisB) has selected to implement the speculative trading activities based on the IPO completed by the end of this year EFS Collection and Recovery System unsubstantiated rumors in relation to the or the beginning of 2015. by EXUS to increase effi ciency in its Islamic bank’s fi nancial standing, which early and late-stage collections whilst the bank assures, is in good shape. insuring compliance with Shariah banking BDB plans to grow financing practices and local banking regulations. GFH recently fi led an appeal against BAHRAIN: Bahrain Development a decision by the Capital Markets Bank, which entered an agreement Emirates Islamic expands Authority of Kuwait to monitor its with Tamkeen to increase their Shariah Kuwait-listed shares for six months. compliant Enterprise Finance Scheme UAE: Emirates Islamic has inaugurated in January, plans to boost its fi nancing a new branch in Al Barsha Mall, Dubai, The decision was made following an investigation into the company’s unusual volume to over BHD60 million bringing the total number of branches in (US$158.33 million) this year. the UAE to 52, with 30 in Dubai. trading activity on its shares last year ahead of a regulatory disclosure (See IFN Vol.11 Issue 19). The bank is also looking at launching new New format for DFM trading facilities as well as two more branches session this year, according to CEO Nedhal Al Ooredoo signs Islamic deals Aujan, with more focus on supporting the UAE: Dubai Financial Market (DFM) QATAR: Telecommunication fi rm industrial, educational, medical care and has announced a pre-closing period to th Ooredoo has procured three one-year food production sectors. its trading sessions from the 14 May Murabahah fi nancing facilities from three to aid in the prediction of closing prices Islamic banks: Barwa Bank, Masraf Al RAK Sukuk resilient and to eliminate large last-minute swings Rayan and Qatar Islamic Bank. Worth ahead of the upgrade to MSCI emerging US$166 million each, the funds will be UAE: Experts have opined that a possible market status at the end of the month. used for general corporate purposes. downgrade in Ras Al Khaimah (RAK)’s The new rule, which will apply both to credit rating will not aff ect the emirate’s equity and debt securities, will mean US$500 million Sukuk due October that orders submitt ed within the last 10 FGB plans for the future 2018, as RAK has strong backing from minutes of trading, 1350 to 1400 local UAE: FGB, which operates Siraj Islamic Abu Dhabi. S&P on 9th May revised the time (0950-1000 GMT), will accumulate Bank, has launched a fast-track career borrower’s outlook to negative and has for completion at closing. This will be development program for the bank’s said that there is a one-in-three chance it followed by an auction by the exchange UAE national employees. The program, will lower its credit rating.

Growth period ahead for managing director of GFH Capital, been lowered to 110% instead of 115%. has said that the education sector is an Operating income of companies also Qatari banks att ractive investment and the bank will need to stand at 75% of total revenues. QATAR: Qatar banks are positioned for continue to invest in opportunities will This is hoped to broaden shareholder a profi table period ahead as the country’s similar growth potential. base, create an eff ective trading need for infrastructure project fi nancing environment and enable companies to grows following a substantial slowdown New MSCI Index addition raise capital for expansion. last year, according to a recent report by Samba Financial Group. UAE: UAE investment bank SHUAA Capital, parent company to Shariah Alizz eyes personal financing compliant Gulf Investments, has OMAN: Alizz Islamic Bank has Shariah compliant deposit announced that it has been added to the submitt ed requests to the Central Bank of protection MSCI Emerging Markets Small Cap Index Oman seeking approval to participate in QATAR: Qatar’s three regulatory which includes small cap representation personal fi nance, said Saif Al Yarubi, the bodies have announced the intention to across 21 countries worldwide. bank’s acting CEO. While it is considered establish a deposit insurance framework, a lucrative portfolio due to relatively including a Shariah compliant variant Share increase for Dana Gas high margins, Alizz Islamic Bank will face some challenges with regards to the with any expenses and investments made UAE: Dana Gas has announced that by the scheme complying with Shariah debatable Shariah aspects of personal approval has been granted for an fi nancing, according to Saif. principles, as part of the strategic plan increase in capital share of AED50.44 to modernize the country’s fi nancial million (US$15.63 million) from the sector by 2016. The scheme will be set up conversion of voluntary conversion New property for Emirates under Qatar Central Bank law, creating a notices received between the 1st and the REIT safety net to promote fi nancial stability. th 15 April, amounting to US$10.3 million UAE: Shariah compliant Emirates A risk-based premium mechanism will of convertible Sukuk. be considered for introduction at a later REIT has acquired community mall, Le date. Grande for a cash payment of AED118.2 EI shows support for local million (US$32.17 million). Le Grande The fi nancial strategic plan also calls for businesses forms part of the 45-fl oor, mixed-use Trident Grand Residence Tower in the strengthening of regulation of Islamic UAE: SMEs account for 92% of all fi rms fi nance institutions, with initiatives Dubai Marina. Emirates REIT plans to in the UAE, 86% of the workforce and increase the rental yield of the property including enhancing licensing criteria for contribute around 60% to the UAE GDP Islamic banks, tightening of standards by increasing occupancy, reconfi guring according to Mohammed Al Shaer, areas to increase leasable space and for corporate governance and Shariah Emirates Islamic (EI)’s district manager boards, as well as reporting on capital generating car parking income. The of branches in Sharjah and Northern purchase increases the valuation of the adequacy, solvency and liquidity and Emirates, at a recent meeting for UAE a framework for liquidation of Islamic trust’s portfolio to over AED1.3 billion national SME owners, held by the bank. (US$353.84 million). fi nance institutions. The meeting was held to showcase the EI’s SME-focused off erings and the Saudi companies to consider initiative to support SMEs. Taameer signs deal with IPOs in 2014 Maisarah SAUDI ARABIA: Increased government Governor requests new KFH OMAN: Bank Dhofar’s Maisarah Islamic spending on infrastructure projects will branch will provide OMR17 million (US$43.05 million) to Taameer Investment to fi nance act as a catalyst for long-term growth KUWAIT: Fahad Al Amir, the newly in non-oil sectors such as transport, ‘The Wave Plaza’ hotel project, as agreed appointed governor of Kuwaiti city by both parties via a formal agreement. hospitality and real estate, according to Jahra, has called for further expansion of Arjuna Mahendran, the chief investment Kuwait Finance House in the governorate offi cer at Emirates NBD Wealth through the opening of a branch in the Mulkia chooses SRB Management. Mahendran believes that Naeem area. SAUDI ARABIA: Mulkia Investment has the diversifi cation of the capital markets engaged Bahrain-based Shariyah Review over the last year will lead to several Kuwait eases listing rules Bureau (SRB) to manage and supervise IPOs from high growth companies in the its Shariah compliant investments and non-oil sector in 2014. KUWAIT: In a bid to boost the market to support the fi rm’s Islamic funds as well as arrest suspicious dealings, transformation strategy. GFH Capital invests in Kuwait’s Capital Markets Authority has issued new regulations as part of a series education of rulings this year, eff ectively easing the SIB signs MoU with University UAE: GFH Capital, subsidiary of Shariah process for joint-stock companies to list of Sharjah compliant Gulf Finance House, has on the stock exchange. UAE: Sharjah Islamic Bank (SIB) has announced the signing of the acquisition entered an MoU with University of a Dubai-based US curriculum private Under the new regulations: instead of at of Sharjah enabling students of the school valued at US$34 million. The 7.5%, companies intending to list only university to make tuition fee payments school off ers a K-12 education to nearly need an annual profi t of 5% of their at any SIB branch, ATM or through the 1,300 students. Hisham Al Rayes, the capital while shareholders’ equity have bank’s online banking infrastructure.

CBB to implement changes asset manager, Fidelity Worldwide, with period of the previous year, turning the the inclusion of the UAE and Qatar in the tables on analysts’ predictions that the BAHRAIN: The Central Bank of Bahrain MSCI Emerging Markets index seen as an bank’s profi t would fall by 3.9%. The (CBB) is in the process of fi nalizing indication of their intrinsic strength. Local profi t increase has been att ributed to a rules for the supervision of Shariah investors are however seeking investment 65% reduction in impairment charges, compliance advisory fi rms to aid small in areas such as US equities, equity which fell to AED44 million (US$11.98 Islamic fi nance institutions and fund income and multi-asset portfolios. million) in the fi rst quarter of 2014. managers to outsource the Shariah compliant review process, according to Abdul Rahman Mohammed Al Baker, the Credit bureau ready to launch Dar Al Takaful executive director of fi nancial institutions UAE: Cabinet Resolution No. 16 of UAE: Dar Al Takaful reported total profi t supervision at the CBB. The rules are part 2014 has been approved by Shaikh of AED2.06 million (US$560,750) for the of a larger revision of Bahrain’s Islamic Mohammad Rashid Al Maktoum, three months ended the 31st March 2014, fi nance standards by the central bank, UAE vice-president, allowing the an improvement from the AED982,825 which is also preparing to issue a new establishment of Al Etihad Credit Bureau (US$267,534) loss recorded in the same regulatory framework for Takaful and and its offi cial launch. Once active, the period last year. Total assets were up to studying changes to the rules for Shariah bureau will hold credit information on AED198.64 million (US$54.07 million), compliant fi nancing arrangements which everyone with a UAE ID card and part of from AED191.04 million (US$52 million) can be off ered to accredited investors. the active credit population. The cabinet at the end of 2013. resolution allows authorized entities ADIB Securities joins NASDAQ to obtain a credit information report DAMAC Real Estate including any information regarding Dubai default payments or refusal to pay and UAE: DAMAC Real Estate announced UAE: The brokerage arm of Abu Dhabi any judicial decisions issued. Individuals a 79% jump in net profi t for the fi rst Islamic Bank, ADIB Securities, has will not be able to obtain their personal quarter of the year, at US$210 million, been accepted as an equity member of credit information using the service, compared to US$117 million for the NASDAQ Dubai, allowing the fi rm to although they will be able to amend same period last year, with booked sales extend the reach of its Shariah compliant inaccurate data provided in reports when for the fi rst quarter totalling US$864 trading platform. their credit information is sought. million. DAMAC, which issued a US$650 million Sukuk in April, has no plans to issue again according to Adil Taqi, the Emirates Islamic launches Amlak Finance back in company’s chief fi nancial offi cer. RemitProtect business UAE: Emirates Islamic has partnered UAE: Islamic mortgage provider Amlak Al Baraka Bank Tunis with Takaful Emarat to off er Indian and Finance, which suspended mortgage TUNISIA: Al Baraka Bank Tunis, a Pakistani expatriates in the UAE free fi nancing in 2008, has reportedly begun subsidiary banking unit of Shariah accidental Life Takaful cover for 30 days accepting new loan applications since compliant Al Baraka Banking Group, when remitt ing money, in respective last week. Sultan Saeed Al Mansouri, announced full-year net income of local currency, back to their respective UAE’s minister of economy, last month US$6.5 million for 2013, a 25% increase home countries. Known as RemitProtect, announced that shares of Amlak will on results for 2012. Total assets increased transactions carried out at the bank’s resume trading on the Dubai Financial by 23% to US$760 million as at the end of branch will be exempted from transfer Market in the second half of the year. 2013 and the bank’s total fi nancing and fees. investments portfolio grew by 13% to US$675 million as at the 31st December GFH plans capital reduction RESULTS 2013. BAHRAIN: Shariah compliant Gulf Finance House (GFH) aims to conclude BLME Gulf Finance House a capital reduction exercise by the end of UK: Bank of London and The Middle BAHRAIN: Gulf Finance House (GFH) the second quarter, reducing the nominal East (BLME) announced results for the announced a net profi t of US$1.1 million value of its shares by 13.8% to US$0.265 fi rst quarter, with total operating profi t for the fi rst quarter of 2014, a drop from per share from US$0.3075, subject to before tax of GBP2.9 million (US$4.88 the US$1.5 million recorded for the regulatory approval. The exercise will million) and net fee income of GBP1.45 same period in 2013. Total income for reduce the bank’s paid-up capital to million (US$2.44 million). Total operating the period was up at US$29.7 million US$837 million from US$972 million, income was GBP16.9 million (US$28.47 compared to US$11.1 million for the with no cash transfer or change to the million) and total assets were reported at previous year, due to the US$22.5 million bank’s net equity, but will help to remove GBP 1.2 billion (US$2.02 billion). from consolidation of the results of accumulated losses from GFH’s balance Cemena Holding, which became a GFH sheet, under accountancy rules. Union National Bank subsidiary during the quarter. UAE: Union National Bank, which off ers Strong markets Islamic products, announced a fi rst Ithmaar Bank UAE: The UAE and Qatar will stand quarter net profi t of AED512.1 million BAHRAIN: Ithmaar Bank, which off ers out in terms of economic growth and (US$139.38 million), a 3.5% increase Shariah compliant banking, announced market performance among the other compared to the AED494.9 million emerging markets, according to global (US$134.70 million) reported for the same continued

© 14 21st May 2014 NEWS continued... compared to US$6.9 million for the same Methaq Takaful period last year. The bank’s total assets net profi t of US$2.11 million for the UAE: Methaq Takaful Insurance increased to US$2.6 billion, including fi rst quarter of the year, almost a 50% Company issued results for the fi rst consolidation of its stake in FIMBank- increase in the US$1.43 reported for the quarter of the year, reporting a loss Malta and total equity reached US$548.5 same period in 2013. Total income for of AED4.76 million (US$1.29 million) million, an increase from US$459.6 million the fi rst three months of the year was compared to profi t of AED3.06 million last year, with a capital adequacy of 14%, up by almost 5% to US$111.15 million (US$832,857) for the same period in 2013. well above the Central Bank of Bahrain compared to US$105.92 million for Total Takaful income for the quarter was required minimum of 12.5%. the fi rst quarter of 2013. Liquid assets AED61.73 million (US$16.8 million) with represent 16% of the bank’s balance sheet net Takaful loss recorded as AED15.83 and the total due to banks, fi nancial Al Salam Bank-Bahrain million (US$4.31 million). and other institutions has decreased BAHRAIN: Al Salam Bank-Bahrain by almost 18% to US$1.15 billion from reported a net profi t BHD4.09 million Affin Holdings US$1.41 billion. (US$10.79 million) for the fi rst three MALAYSIA: Despite an improvement in months ended the 31st March 2014, income for its Islamic banking operations against BHD3.05 million (US$8.05 Kuwait International Bank from a year ago, Affi n Holdings recorded million) in the same period last year. KUWAIT: Shariah compliant Kuwait a 5.37% drop in net profi t to RM142.73 Total assets for the fi rst quarter stood at International Bank announced fi rst million (US$44.39 million) in the fi rst BHD1.89 million (US$4.99 million), up quarter net profi t of KWD5 million quarter. This fall is att ributed to higher from BHD1.09 million (US$2.88 million) (US$17.75 million) up from KWD4.24 overhead expenses and share of losses reported at the end of 2013. million (US$15.04 million) for the same in jointly controlled entities. For the period of the previous year. The bank three months ended the 31st March 2014, reported total assets of KWD1.5 billion VCBank Affi n Bank recorded lower pre-tax profi t (US$5.32 billion) and total shareholder BAHRAIN: Shariah compliant Venture at RM175.3 million (US$54.52 million) equity of KWD223.2 million (US$792.16 Capital Bank (VCBank) realized lower against RM185.1 million (US$57.56 million) for the fi rst quarter. net profi t for the nine months ended million) in the same period last year; the 31st March 2014 at US$5.3 million, while Affi n Islamic Bank saw its profi t TAQA as compared to US$7.2 million in the before tax fall slightly to RM21 million corresponding period last year. Total (US$6.53 million) from RM22.5 million UAE: Abu Dhabi National Energy revenues dropped to US$14.5 million (US$7 million) last year, mainly due to Company (TAQA), whose RM3.5 billion against US$20 million earlier. In the third higher overhead expenses. (US$1.12 billion) Sukuk Murabahah was quarter, the bank reported a net profi t of reaffi rmed by RAM Ratings in March, US$1 million aft er a US$20,000 fair value recorded a 158% leap in fi rst quarter loss as compared to a US$1.7 million net profi t to AED274 million (US$74.57 profi t in prior quarter. million) from AED106 million (US$28.85 ASSET million) for the same period in 2013. The rise was att ributed in part to the Dana Gas MANAGEMENT restoration of North Sea oil production at UAE: Dana Gas reported a net profi t Shariah compliant KiwiSaver Cormorant Alpha and higher natural gas of AED164 million (US$44.63 million) prices in North America. for the fi rst quarter of the year, a 32% fund decrease from the AED241 million NEW ZEALAND: A Shariah compliant Abu Dhabi National Takaful (US$65.59 million) recorded for the fund under the ambit of government same period in 2013. The dip has been initiative KiwiSaver will be launched UAE: Abu Dhabi National Takaful att ributed to the absence of a one-off gain this month. To be known as Amanah announced net profi t of AED10.3 of AED143 million (US$38.92 million) New Zealand, the fund invests in up million (US$2.8 million) for the fi rst made in the sale of an asset in the fi rst to 50 listed US companies producing quarter of the year, compared to AED9.9 three months of last year. Whilst the in-demand goods and services alongside million (US$2.69 million) reported for company has received US$3 million from some US cash holdings. While only a the fi rst three months of 2013. Takaful the Egyptian government in outstanding single investment fund will be available underwriting profi t for the fi rst quarter payments, it has not received any at launch, Amanah will look to off er experienced a slight dip in year-on-year payment from the Kurdistan Regional diff erent Shariah compliant KiwiSaver profi t, reaching AED8.6 million (US$2.34 Government, which has a trade options. million) for the fi rst quarter of 2014 receivable balance of US$515 million, compared to AED8.8 million (US$2.4 since December 2013. million) in 2013. Fund sees performance rise of EFG-Hermes 17.4% United Gulf Bank UAE: Union National Bank has EGYPT: Investment bank EFG-Hermes announced a 17.4% rise in the fi rst BAHRAIN: United Gulf Bank, which announced a fi rst quarter net profi t quarter performance of its Shariah off ers Shariah compliant products and is of EGP119 million (US$16.48 million), compliant Al Samaha Fund, reporting the merchant banking subsidiary of the an increase of almost three times the a return of 16.11% for the fund, which KIPCO Group, announced a surge in net company’s net profi t for the same period invests in Shariah compliant large caps profi t for the fi rst three months of 2014, in 2013. The bank also reported a 14% across the Middle East region. with an increase of 69% to US$11.6 million increase in group operating revenues.

New platform for Bahrain’s changes to the Takaful industry to att ain in a separate bank account for a higher penetration rate and improve Takaful business in a scheduled bank. asset managers upon the current low levels of personal Insurers also need to submit company BAHRAIN: Islamic investment company fi nancial literacy among Malaysians. documentation including minutes of Tadhamon Capital has become one the board of directors meeting where of the founding members of the fi rst Expansion plans for MetLife approval for the decision for Takaful is Bahrain Asset Managers Association. The given, along with their application to association, which also counts Alpine MALAYSIA: MetLife International operate a Takaful window. Wealth Management, J Equity Partners, Holdings will leverage the knowledge PineBridge Investments Middle East and skills it gains regarding Takaful In addition to the PKR50 million, for and The Family Offi ce Company as products from its strategic partnership Family Takaful, a statement of the with AMMB Holdings and put them in members, aims to work as a research- statutory funds to be established by the place in other Muslim markets, including oriented think-tank for the industry and operator and participant Takaful Fund Bangladesh, Indonesia and the Middle provide representation for investment policies need to be submitt ed, as well as East, according to Dr Nirmala Menon, fi rms. Membership is open to all three a CV of the proposed Shariah advisor. A MetLife Asia’s head of designated categories of licenced investment 10-year business plan is also required for markets and health. fi rms, both Shariah compliant and Family Takaful, with a three-year plan conventional. required for non-Life Takaful operators. CMA fines Ahli Takaful SAUDI ARABIA: As a result of failing Giant leap for Qatar’s Takaful to duly announce the board’s decision on industry TAKAFUL appointing Faisal Omar Al Saqqaf as a Takaful is NKEA target for board member to the public, Ahli Takaful QATAR: The granting of the single project tunnelling and rail construction 2014 has been fi ned SAR30,000 (US$7,997.61) by the Capital Market Authority for insurance policy to a consortium of six MALAYSIA: A framework for the violating the Listing Regulations. Qatari insurers including Al Khaleej provision of basic Family Takaful and Takaful Group, Doha Insurance life insurance products through direct Ruling for Pakistani Takaful Company and Qatar Islamic Insurance channels has been set as one of the critical Company by Qatar Rail, has provided targets for Malaysia’s fi nancial services operators the insurance industry in Qatar with the National Key Economic Area (NKEA) PAKISTAN: The Securities and Exchange opportunity to develop a pool of talent in 2014, as part of the government’s Commission of Pakistan (SECP) has in the industry, as well as a chance for Economic Transformation Program. introduced a mandatory ruling that established industry players to gain Bank Negara Malaysia will implement conventional insurers interested in experience and expertise in large scale feedback received on the concept paper establishing a Takaful window, must projects, according to Bassam Hussein, issued in 2013, with the aim of making deposit PKR50 million (US$501,932) CEO of Doha Insurance Company.

surpluses, low level of public debt as well RATINGS as its over-dependence on the oil-related MOVES sector. International Islamic Bahrain Bourse upgraded Rating affirmed for Westports BAHRAIN: Shaikh Khalifa Ebrahim QATAR: Fitch has upgraded the long- Sukuk program Al Khalifa has been named as the new term default issuer rating for Qatar CEO of Bahrain Bourse according to International Islamic Bank (International MALAYSIA: MARC has affi rmed its local reports, with Afnan Al Zayani Islamic) to ‘A’ from ‘A-’. The ratings rating for Westports Malaysia’s Sukuk introduced as head of the executive Musharakah program of up to RM2 upgrade, driven by a revision of the committ ee and Ayman Almoayed as her billion (US$618.62 million) as ‘AA+IS’. The bank’s support rating fl oors, has a stable deputy. Mohammed Ahmed Hassan has rating is issued with a stable outlook. outlook. also been announced as the new head of the audit, risk and corporate governance Outlook downgrade for Cagamas MBS Sukuk rated committ ee, with Nabeel Khalid Kanoo Menara ABS MALAYSIA: Cagamas MBS’ RM2.05 as his deputy. billion (US$634.09 million) asset-backed MALAYSIA: As a result of potential Sukuk Musharakah issuance has Shaikh Khalifa was formerly the deputy revision in adjusted valuation of its been affi rmed at ‘AAAID’ by MARC. CEO and chief operating offi cer of the properties, the outlook on Menara ABS’ The facility is Cagamas MBS’ second bourse. Sukuk tranches A2, A3 and A4 have been issuance. downgraded to negative from stable, by Al Yusr Islamic Banking RAM, which concurrently reaffi rmed Also, Cagamas MBS’s RM2.11 billion the stable outlook on tranches A1 and B. (US$656.18 million) Sukuk Musharakah OMAN: Abdul Qader Al Bulushi has The rating agency maintained the ratings (CMBS 2007-1-i) has been affi rmed at been appointed as general manager of tranches A1, A2, A3, A4 and tranche ‘AAAIS’ with a stable outlook by MARC. of Oman Arab Bank’s Al Yusr Islamic B at ‘AAA’, ‘AA2’, ‘A1’, ‘A2’ and ‘AAA’, The rating exercise aff ects RM1.53 billion Banking. respectively. Menara ABS is a trust- (US$475.81 million) of outstanding Sukuk owned SPV incorporated for the sale- and refl ects CMBS 2007-1-i’s 133.8% Arab Banking Corporation and-leaseback transaction of Menara TM, credit enhancement level on an account BAHRAIN: Arab Banking Corporation Menara Celcom, TM Taman Desa and balance of RM312.5 million (US$97.18 TM Cyberjaya. (ABC), which operates ABC Islamic million) and outstanding principal Bank, has appointed Brendon Hopkins of non-defaulted home fi nancings of as group chief fi nancial offi cer, as of the PACRA maintains rating RM1.73 billion (US$538 million). 1st June 2014. PAKISTAN: Dawood Family Takaful’s insurer fi nancial strength rating has been Thailand stable Hopkins, who joins ABC from Standard reaffi rmed at ‘A-’ by Pakistan Credit Rating THAILAND: Thailand’s well-diversifi ed Chartered Bank, will oversee the group’s Agency (PACRA), refl ecting the operator’s economy, stable track record of monetary global fi nance, strategy and taxation strong capacity to meet policyholder and and fi nancial stability as well as relatively activities. contractual obligations. sound external position are reasons cited by RAM in its reaffi rmation of GBSA Pak-Qatar Family Takaful the kingdom’s global and ASEAN scale SAUDI ARABIA: The Gulf Bond and ratings at ‘gA3(pi)’ and ‘seaAA1(pi)’ affirmed Sukuk Association has appointed respectively. The ratings carry a stable Mohammed Albensaleh, the associate PAKISTAN: Pak-Qatar Family Takaful’s outlook. However, the rating agency director of HSBC’s debt capital markets, insurer fi nancial strength rating has been added that while Thailand’s economy is as chairman of the association’s recently- affi rmed at ‘A’ by JCR-VIS Credit Rating resilient backed by solid macroeconomic launched Saudi chapter. Company. The outlook on the ratings has fundamentals, the kingdom still faces been upgraded to positive from stable. relative challenges in terms of modest but increasing government debt obligations Barwa Real Estate Stable outlook for QIIC and political instability. QATAR: Following the resignation of QATAR: Moody’s has affi rmed the former CEO Abdulla Al Subaie, Ahmad ‘Baa2’ insurance fi nancial strength rating MARC withdraws rating Abdulla Ali Al-Abdulla has been for Qatar Islamic Insurance Company MALAYSIA: The ‘AA-ID/stable’ rating appointed by Shariah compliant Barwa (QIIC), with a stable outlook. on Maju Expressway’s RM550 million Real Estate as acting group CEO. (US$171.04 million) Islamic medium- RAM issues Kuwait sovereign term note (IMTN) program has been National Bank of Oman rating withdrawn by MARC, at the issuer’s OMAN: National Bank of Oman, which request. The Sukukholders gave consent KUWAIT: RAM has assigned ‘gAA3(pi)/ operates Muzn Islamic Banking, has for the withdrawal on the 7th May via a Stable’ and ‘seaAAA(pi)/Stable’ global received approval from the Central Bank resolution, following the purchase of the and ASEAN scale sovereign ratings to of Oman to appoint Ahmed Al Musalmi outstanding IMTN by parent company Kuwait. The ratings take into account as the new CEO. Bright Focus on the 24th January. the country’s fi scal and current account

Daud speaks

By Daud Vicary Abdullah about Islam and Islamic sensationalize on the basis of fi nance were addressed and poorly researched facts, April has once again been a very busy corrected. and negatively infl uence month, with substantial travel in the US countless thousands this time. One thing about irresponsibly. The more misperceptions – these people we can educate to As I have mentioned on many occasions are not exclusive to the think, research and decide before, while there is an element of the Muslim audience at all. for themselves the bett er! day job in every trip, there is also great As I travel and interact opportunity to engage and refl ect. Being I fi nd that there are just Sadly, in recent weeks in a diff erent environment: with diff erent as many displays of and months we have people, who have diff erent experiences “you don’t know what witnessed too many and points of view, is very oft en both a you don’t know” from displays where blatant rewarding and stimulating experience. people of all faiths, misuse of the facts have including Muslims. been used to manipulate During this latest trip, I was able audiences and, indeed, whole to speak at a number of events and Which leads me on nicely populations, in the name of conferences on topics that ranged from to a concluding point. Put gaining and retaining power fi nancial inclusion to risk-sharing and bluntly: “Education is the and infl uence over others who from Muslim philanthropy to sovereign most powerful weapon that we do not have a voice. wealth funds. There was, therefore, possess” (apologies if I have plenty of scope to get some fundamental misquoted Nelson Mandela on Islamic fi nance is for all and profound messages across. I was this one!). I am afraid that humanity and for its also fortunate to secure a one-hour slot all too oft en remarks are bett erment. We are all part on VoiceAmerica Radio, to help explain made and conclusions of the solution, so let us all the value proposition of Islamic fi nance drawn without there continue to strive to get it done. and the disruptive innovation that it is being a full investigation and causing. Judging by listener feedback, appreciation of the facts. People There is much to do and not a many of the common misperceptions draw the wrong conclusions; moment to lose.

LATEST DEVELOPMENTS IN SUKUK STRUCTURING 17 th June 2014, KUALA LUMPUR Key Highlights: • Real-life case studies on Sukuk issuances and transactions • Latest concepts and structural development in the Sukuk market • Expert panel of speakers represented by Issuers, advisors or arrangers • Recent deals, latest trends and best practices

www.islamicfinancetraining.com [email protected]

SHARIAH PRONOUNCEMENT

Query:

Company A has approached an Islamic bank seeking ﬁ nance to import steel and other building materials from various suppliers. It has been noticed that the company A is holding 25% of the shares of company B. Company A is engaged in the business of building materials, while company B is www.daralsharia.com involved in foodstuﬀ import and supply including alcohol.

Can the Islamic bank extend ﬁ nancing for company A in order to import steel and building materials, despite its ownership in company B which deals in goods including alcohol?

Shariah guidance is sought in this situation.

Pronouncement:

Trade import is generally ﬁ nanced through a Murabahah structure: whereby the Islamic bank, based on a facility request and promise to purchase from the customer, purchases the goods from the supplier and subsequently sells the same to the customer with a sale price which comprises of procurement cost plus pre-agreed proﬁ t.

It is not allowed for an Islamic bank to purchase or sell goods which are prohibited in Shariah, such as alcohol.

It is also not allowed for an Islamic bank to sell to any party the goods which apparently will be used in producing Shariah prohibited goods or in facilitating Shariah repugnant activity in whatsoever form.

However, it is allowed for an Islamic bank to sell Shariah compliant goods to a party who whether directly or indirectly is involved in Shariah repugnant business, as long as the goods being sold to such party have no connection to that Shariah repugnant activity.

In the aforementioned situation, it is allowed for the Islamic bank to sell steel and building materials to company A, which basically deals with building materials import and supply, despite its partnership in a company which partially deals with alcohol.

This is in addition to the fact that the responsibility of dealing with prohibited activities lies on the one who deals with it.

Dr Hussain Hamed Hassan Chairman of the DIB Shariah Board, Managing director, Dar Al Sharia Legal & Financial Consultancy, Dubai, UAE

This Fatwa is brought to you exclusively by IFN in collaboration with Dar Al Sharia Legal & Financial Consultancy-Dubai. The Fatwa appearing in this space was obtained by Dar Al Sharia for issues faced by their clients and the documents stated in the Fatwa were developed at Dar Al Sharia. This Fatwa was compiled by Dr Muhiuddin Ghazi

South Africa: Our Sukuk race winner?

Lo and behold! Finally, aft er several Figure 1: IFN sovereign Sukuk race poll results months of dreary stillness on the fi eld, the arena is once again set to roar with excitement as Islamic Finance news UK 26.7% (IFN) brings you exciting news that could revolutionize the great Sukuk race. Market rumors suggest that one of South Africa 46.7% our leading contenders, South Africa, may issue a sovereign Sukuk as early as June — way ahead of its December Luxembourg 13.3% target. If this move materializes, the rainbow nation could in one sweeping move both subdue its adversaries, and Hong Kong 13.3% silence its detractors. 0% 10% 20% 30% 40% 50% 60% Last week, IdealRatings listed the South African government Sukuk issuance to Results taken on the 20th May 2014 be forthcoming on the 1st June. While the government has not offi cially confi rmed the date of off ering; the petrodollars into the country, especially displaced from the top spot and booted announcement by respected provider since investors are moving away from down to joint third as the UK overtakes IdealRatings is a strong suggestion the US and looking more into the African with 26.7% of the votes. Hong Kong that the country is nearing fi nalization. region.” shares the bott om spot with Luxembourg This places the African republic well at 13.3% each. ahead of the game, beating last week’s And while the wider media has not yet IFN Sukuk race poll victor Hong Kong, caught onto this piece of revelation, With less than two weeks left on the which is expected to come to market in our readers have fl ocked to the polls to clock before the estimated issuance from September. show their confi dence in South Africa. South Africa, a media frenzy could be Unsurprisingly, South Africa now leads about to kick off as we await with bated “South Africa’s sovereign Sukuk will the IFN sovereign Sukuk race poll at breath what pundits have long heralded defi nitely be a massive boost for the 46.7%. as a watershed moment for the Islamic economy in terms of capital injection,” fi nance industry. — VT confi rmed one South African investment However, in a new twist to the tale, professional to IFN. “This will att ract former pack leader Hong Kong has been

Looking beyond the chaos: Can Turkish real estate recover?

The Turkish real estate sector has Figure 1: Real estate investment trust price index performance been squeezed this year on the back of political pressures and consequent 45,000 1,800 investor caution. Declining domestic 40,000 1,600 growth has seen demand fall as 35,000 1,400 investors depart for more stable regions. 1,200 30,000 However, industry experts remain 1,000 conﬁ dent that despite the short-term 25,000 800 concerns, the sector will continue to 15,000 oﬀ er opportunities to both local and 600 international investors over mid to 10,000 L ǻeĞ axiǼ 400 long-term. With a new range of foreign 5,000 USǞ ǻright axiǼ 200 resident rules set to boost demand, can 0 0 the Islamic capital markets help Turkey’s 2007 2008 2009 2010 2011 2012 2013 property sector get back on track? Source: Borsa Istanbul

Driving demand Earlier this year the president of the IDB, In the most recent Emerging Trends in The REIT stuff Ahmad Mohamed Ali Al Madani, urged Real Estate Europe 2013 survey from The REIT sector is one of the driving Turkey to mobilize Sukuk to encourage PwC and the Urban Land Insitute, forces of Turkish property investment, Turkey was ranked the fourth most and its rapid growth demonstrates the investment into Turkey from Arab att ractive real estate investment market underlying potential in the market. countries. New development projects in Europe last year — down from Thirty REITs are currently trading on the have also encouraged Sukuk access. One number one in 2011 and 2012. And Borsa Istanbul, with two more awaiting of Turkey’s largest developers, Ağaoğlu although demand remains relatively approval. Borsa Istanbul’s REITs index Group, launched a US$2 billion Sukuk steady, the Deloitt e Turkish Real Estate was up 22% by May this year, double program with Aktif Bank, a private Market 2014 suggests that the squeeze in the 11% gain in the benchmark Borsa participation bank, to fi nance the Istanbul Istanbul 100 index. Despite the recent the Turkish property sector has resulted International Financial Center; with the in a demand for predominantly high troubles, this still represents a far bett er performance in the sector than last year, fi rst tranche of TRY100 million (US$47.63 quality properties, resulting in worrying million) issued last May. cap rate compression. when the index fell 26%. And overall, the trend over the previous years remains Ağaoğlu Group CEO Hasan Rahvalı, However, the ongoing privatization of positive. The index rose by 89% (in state-owned companies has once again Turkish lira) and by 52% (in US dollars) commented that: “These new boosted demand, with public-private between 2009 and 2013 (see Figure 1). instruments… which might appeal to partnership on the cards for a wide the Gulf region in particular, serve as variety of infrastructure projects, which Islamic opportunity an incentive to channel the capital that could widen investor interest. Although REITs are still only a small has been accumulated, or even anchored part of the wider Turkish REIT industry, in the region to Turkey. Our issuance Regulatory boost their infl uence is not only growing [was] an important step in drawing The government has also announced but their actions are supporting the international investors to Turkey.” a range of new incentives for foreign development of the wider Islamic capital ownership in a bid to boost foreign market as fi rms look towards the liquid A bleak outlook direct investment in the failing sector. Islamic capital markets for support However, Islamic property fi rms Last month the long-awaited Law on in an increasingly diffi cult fi nancing themselves are not having such a good Foreigners and International Protection, environment. Last week, Turkish REIT year. Last week Korfez Gayrimenkul originally announced in April 2013, Kiler GYO confi rmed the launch of a fi ve- Yatirim Ortakligi, the property unit of fi nally came into eff ect. year US$100 million Sukuk to be issued Islamic lender Kuveyt Turk, saw 95% of st The new law makes sweeping changes on the 1 June, led by banks from Qatar shares in its maiden IPO going to a sister to a wide range of issues including the and Saudi Arabia, in order to support company (also owned by Kuveyt Turk) requirements for residing and working in existing loans and expand investment. due to lack of investor interest. “Demand Turkey, and changes in business visitor was low,” said deputy CEO Ahmet Alga. rules, among others. Signifi cant among Although this is the most recent in a “Even huge property developers are these is creation of a new category of relatively limited pipeline of Islamic trading at big discounts in Istanbul.” resident permit for those opening a transactions in the Turkish real estate business or buying real estate in Turkey; market (notable other deals include the Korfez reported a loss of TRY443,265 as well as the increase of residence Qatar Islamic Bank-led US$50 million (US$211,165) for the fi rst quarter of permits from three months to one Murabahah fi nancing facility for Turkish 2014, compared to a TYR1.18 million year and their automatic renewal for REIT İş Gayrimenkul Yatırım Ortaklığıin (US$562,135) loss in the same period last foreigners who own property in Turkey. 2012) it is hoped that the most recent deal These new changes are set to drive year. Although this represents a relative further demand for both housing and will encourage other fi rms in the market improvement, it suggests that the Turkish offi ce space in the country and should to access the Islamic markets for their sector still has some way to go — and its provide a much-needed lift for the real funding needs. recent troubles are unlikely to assist in estate sector. improving investor sentiment. — LM

Iran offers tentative opportunities for Islamic investors

Last month Behrouz Alishiri, the The Geneva Interim Agreement signed in two countries. Between 2005-09 trade Iranian deputy economy minister, November last year between Iran and six between Iran and the UAE tripled to a announced that the value of foreign global powers including the US, Russia, reported US$12 billion. Yet by 2012 this investment in Iran surged by 100% in China, the UK, France and Germany had declined by over 70% to around the last Iranian year (ended the 20th consolidated a gradual progression US$3.4 billion, and fell further last year March), demonstrating the exceptional towards a more open relationship to an estimated US$2.9 billion. It is interest foreign investors are showing with the West. Since then the Iranian hoped that the reduced sanctions will see in the country as international relations Investment Organization has launched trade rebound this year, which should begin to relax and sanctions are lift ed. a program to encourage further foreign boost investment fl ows to Iran’s Islamic investment this year: including inviting economy. “The value of foreign investment in Iran the World Bank to Iran and holding a last year reached US$16 billion, which joint economic commission with China. Iran’s industry minister Mohammadreza shows more than 100% of growth as Nematzadeh has pledged to att ract at compared with the year before that, Due to the suspension of activities least US$8 billion in annual investment, which was US$7.5 billion,” Behrouz of western fi rms, Iran has developed with incentives including tax exemptions confi rmed. stronger trade ties with China, India and of up to 100% for foreign investors. Turkey; with China intending to invest Iran is thought to need a minimum of At the 14th OIC Trade Fair in Tehran in $20 billion in 2014. However, several US$300 billion in annual domestic and December last year, Iran’s industries, mines leading Islamic nations have had limited foreign investment to meet its economic and trade minister, Mohammad Reza trade with the Islamic republic, due in requirements. Nematzadeh, called on OIC countries part to tensions between Islamic schools to widen their cooperation with Iran in of thought. Saudi Arabia, the other major However, as the fourth round of various fi elds, including through joint Islamic power in the MENA region, has the ongoing Geneva talks ended in investment projects and health tourism. long had a fraught relationship with Iran arguments last Friday, new political And UAE-based hotel chain Rotana, which and trade between the two nations barely roadblocks have emerged which suggest operates the Shariah compliant Rayhaan topped US$250 million last year. that a peaceful end to the sanctions hotel brand, recently announced that it and untrammelled access to the Iranian would be the fi rst international chain to The UAE is a more enthusiastic Islamic markets could still be a long way re-enter Iran since 1979; with hotel projects supporter, and there are hopes that off . — LM in Tehran and Mashhad expected to be the partially lift ed sanctions could completed by 2015. renew the strong trade ties between the

Dubai Investments sees opportunities in Asia and Africa

The robust potential of the emerging Investments International was the fi rst its foreign ownership limit from 20% to markets and economies have stimulated step in our strategy to expand our global 35% on the back of the MSCI’s emerging considerable excitement among footprint in key markets. Our plans market status upgrade of Qatar and the investors. Over the next decade, analysts are in place and we are in advanced UAE. have predicted that the African region negotiations with leading strategic could experience growth rates exceeding players on investment opportunities DI is currently in advanced stages of 5%, while the Asian region is expected across diversifi ed sectors in the existing negotiation with prospective business to move at an even faster pace. Bearing and new geographical locations across partners in Libya and Erbil in Kurdistan, testament to the bright prospects of the globe to consolidate our position as Iraq to build an industrial, commercial these emerging economies, Dubai an important international player. We are and residential business park similar to Investments (DI), a government-backed now in the process of sett ing up agencies DIP and to replicate its business model in investment fi rm, is keen to tap into and representative offi ces across strategic the respective countries. DI International these opportunities available through markets.” is also working with relevant government its subsidiary, DI International. authorities to att ract investments from Perhaps to cater to its signifi cant international companies to set up Established in 2013, DI International expansion plans, DI in February this year industrial units within these business is part of DI’s strategy to strengthen listed a US$300 million Sukuk issuance parks. its international operations while through its real estate subsidiary, Dubai reinforcing its position as a global Investments Park Development Co DI International is currently also targeting conglomerate. It is mandated to build (DIP); the operator of Dubai Investment investments, joint ventures and strategic an international portfolio of diverse Park – the largest integrated business partnerships across Africa and Asia, as business assets across a wide spectrum of and residential community in the well as eyeing commercial projects in a industries. Middle East. The fi ve-year Sukuk was number of Middle Eastern countries, some exceptionally well-received, being of which are emerging economies with According to Khalid Kalban, the 13 times oversubscribed with orders a strong presence in Shariah compliant managing director and CEO of Dubai reaching US$4 billion. Following the fi nancial activities. — NA Investments: “The sett ing up of Dubai Sukuk success, DI subsequently raised

SME financing — slowly but surely

Islamic capital market instruments, institutions in several markets, which giving fi nancial institutions greater and Sukuk in particular, have seem committ ed to supporting the SME leeway to provide fi nance for SMEs. developed into the poster child of sector. Over in Bangladesh, the central bank Islamic fi nance. But while Sukuk has announced initiatives to introduce surges forward in popularity across a Shariah-based refi nancing scheme for borders and sectors, access to the bulk SMEs as well as other growth sectors. of the Islamic capital markets remain SME financing out of reach to those who do not have remains The Middle East, home to some of the the means and capabilities to tap world’s most active Islamic fi nance the sector. This includes most of the dismally markets, has also seen some interesting wider retail sector, and particularly developments: starting off with the SMEs. Overall, SME fi nancing remains disproportionate issuance of the long-awaited law dismally disproportionate to the scale regulating the relationship between of the sector’s economic contribution. to the scale of the SMEs and government institutions. However, this trend could shift in Dubai-based Mashreq, which operates coming years as banks, including sector’s economic an Islamic unit, also recently launched Islamic banks, ramp up their eff orts to a StartUp Academy aimed at growing reach out to this lucrative sector of the contribution. SME business owners’ knowledge in economy. business while providing them an However, this trend avenue to connect with market veterans Industry fi gures reveal a worryingly and experts. universal patt ern of SME fi nancing across could shift in coming most regions. For example, in Pakistan, Standard Chartered Saadiq and it is reported that SMEs constitute 90% years as banks, Bahraini government-owned enterprise of all private enterprises and contribute development fi rm Tamkeen have also 30% of the national GDP — but only 4% including Islamic expanded their existing Enterprise of SMEs receive fi nancing from banks. Finance Scheme with a Shariah compliant Over in the Middle East, World Bank banks, ramp up fi nancing facility for trade and working data from 2011 shows that the average capital needs of SMEs. Qatar Exchange share of SME loans granted by banks in their efforts to reach and Enterprise Qatar (EQ) joined forces the MENA region stood at just 7.6%, with earlier this year to launch a subsidy SME fi nancing in the GCC accounting out to this lucrative program assisting potential SMEs who for 2% and non-GCC MENA countries at satisfy the SME criteria set by EQ and 13%. sector of the listing requirements on the QE Venture Market. Most recently, Emirates Islamic Various factors have been highlighted economy reached out to SME owners in the UAE as justifi cation for the low rate of bank by hosting a meeting to showcase its SME funding: including the lack of In Asia, the Malaysia-based Credit SME-focused products. transparency and credit history of these Guarantee Corporation (CGC) has enterprises, which can deter banks from partnered with OCBC’s Shariah So it seems that both industry players lending. The lack of centralized SME compliant arm, OCBC Al-Amin, in a and regulators are keen to boost SME fi nancing infrastructure and low banking fi ve-year deal to launch a new product fi nancing, a key sector that forms a penetration in some countries can also be targeted at local SMEs. Known as fundamental block of the larger economy. problematic. However, in recent months Wholesale Guarantee, the new product If we play our cards right, the Islamic Islamic Finance news has observed a allows fi nancial institutions to share fi nance industry stands to benefi t from positive trend across Islamic fi nancial the risk for existing funding with CGC, this wave of new development. — VT

Are there more than one of you in your company involved in Islamic Finance? Join our company-wide subscription today

www.IslamicFinanceNews.com

Islamic securitization in the GCC set to pick up pace

Over the past decade, the GCC region of the challenges in Islamic securitization can then see how there will be an interest has witnessed relatively gradual progress is “the desire for simplicity in the in Islamic securitization as an option, in Shariah compliant securitization. structure”. The complexity surrounding provided that it meets the commercial According to statistics provided by KFH Islamic securitizations is something which requirements of the parties and that the Research, there have been seven Islamic may have a bearing on investor appetite. structure works for both bank ability and securitization transactions from four legal perspectives,” explained Qasim. diff erent countries from the year 2003-13, accounting for US$2.5 billion. These On the back Thus far, securitizations in the region transactions are dominated by the UAE, have largely originated from the real Qatar and Saudi Arabia with Kuwait of a predicted estate market. Four out of the seven being the newest market participant in transactions were concluded in the the year 2013. increase of Sukuk region by Saudi Arabia, Qatar and the UAE; all amounting to about US$1.3 The UAE structured the most issuances and billion. Other securitization transactions securitization deals at over US$1 billion; involve fi nancial institutions, sovereigns this is followed by Qatar at approximately significant economic and the retail sector. Amongst the seven US$800 million, Saudi Arabia at about transactions, the two most preferred type US$400 million and Kuwait at less than developments in of collateral were lease receivables (43%) US$200 million. According to a report and residential mortgages (29%). Trade by Rasameel Structured Finance, this the GCC, a surge in receivables and property lease receivables is due to the maturing investor base are also utilized as underlying collateral demanding for new asset classes for Islamic securitization assets for the securitization deals. portfolio diversifi cation, as well as human capital talent within the market to become transactions in the On the back of a predicted increase pioneers of newly structured instruments. region is of Sukuk issuances and signifi cant economic developments in the GCC, Speaking to Islamic Finance news, Dubai expected a surge in Islamic securitization based Qasim Aslam, partner and head transactions in the region is expected. of Islamic fi nance in the Middle East at Massive development projects have Dentons, opined that there is increasing “There is a great appetite from investors already been assigned and are currently demand for Islamic securitization; for Islamic capital market products, and underway. Established companies are however issues such as the economic we see this regularly in the demand for urged to set a precedent in transacting downturn and market perception still Sukuk. There is naturally a great deal of innovative deals as which should then remain problematic for this particular investor interest in developments that are pave a positive path for other fi rms to market segment. He pointed out that one taking place in the capital markets and one follow suit. — NA

New markets for AmMetLife Takaful?

As the ink dries on the strategic and the remaining shares owned by Speaking to Islamic Finance news, a partnership witnessed by President MetLife. Takaful industry expert confi rmed that Barack Obama on his recent visit despite regulatory issues, the outlook to Malaysia, MetLife International In a recent interview, Dr Nirmala amongst the industry in Bangladesh is Holdings is already projecting the Menon, the head of designated positive, with the prevalent belief being progress of its new entity, AmMetLife markets and health at MetLife Asia, that the industry will develop as public Takaful, outside of Malaysia — with confi rmed that the company was awareness regarding Takaful grows. the company seeking to leverage looking to leverage the potential of additional Muslim markets such as Takaful products: “We can export In October 2013, the Insurance Bangladesh and Indonesia in its fi rst those capabilities to our operations Development and Regulatory Authority foray into the Takaful sector. in some other Muslim countries such (IDRA) of Bangladesh circulated as Bangladesh, the Middle East and draft Takaful Rules for stakeholder The signing of a strategic partnership Indonesia.” feedback and in Indonesia, regulators with Malaysia’s AMMB Holdings and look to implement Takaful legislation a cash consideration of RM812 million The move could prove to be a profi table mandating the creation of standalone (US$249 million) has gained New York one for MetLife. In Bangladesh, MetLife Takaful entities from existing windows. Stock Exchange-listed MetLife a ‘50% currently operates as conventional MetLife does not yet have a presence plus one’ share in AmLife Insurance MetLife Alico, holding over 25% of in Indonesia, but in an email to IFN, (AmMetLife), with the remaining the market share. While the insurance the company stated that it is actively shares held by AmBank Group; and market is small with only eight Takaful looking across the Southeast Asia region the reverse in AmFamily Takaful providers out of a total 62 insurance for value creating opportunities to (AmMetLifeTakaful) with AmBank companies, the Takaful market held a expand operations in the high growth/ Group owning a ‘50% plus one’ share 26% market share in 2012. high margin region. — RS

Islamic finance down under: Opportunities in Australia and New Zealand

Muslims now constitute about 2.2% of Australia’s 23.48 million population and 1% of New Zealand’s population of 4.43 million, according to Pew Research. The majority of Shariah compliant ﬁ nancial activity in both countries is so far in the form of pension investments — unsurprising given Australia’s position as the world’s fourth largest pension fund market. REBECCA SIMMONDS explores the wider opportunities for Islamic ﬁ nance in Australia and New Zealand.

Legal and regulatory of New Zealand (FIANZ) Halal MCCA, and endorsed by the Islamic In 2013 Bernie Ripoll, the parliamentary certifi cation aiding in the development of Council of Victoria, the governing body secretary to the treasurer, stated that the the country’s Halal sector which has been for the state’s Muslim community. Australian government regarded the in place since 1979. Nearly 20% of New introduction of Islamic fi nance products Zealand’s total exports of red meat and A retirement project for Muslim pensions into the domestic market as a way to open edible co-products in 2013 were Halal- has also been established by for not-for- the country’s fi nancial services sector and certifi ed and exported to 66 countries — profi t company Madina Village Services economy to new opportunities for growth. with US$392 million worth of exports sent (MVCS — see IFN correspondent Currently Australia’s fi nancial regulations to Muslim countries. p.31), started in 2011, with the aim of do not prohibit the management of Shariah developing a multicultural village-style compliant funds and some states, such The Australian Center for Islamic Finance retirement precinct specializing in care as Victoria, have already implemented also off ers online training courses as for Muslim seniors but open to elderly of changes to stamp duty to reduce the well as raising awareness of Islamic all cultural and religious backgrounds, impediment of double taxation. fi nance in Australia. In March 2014, the and funded Islamically by local and center established a three person Shariah international investors. The 2010 Johnson Report, which advisory board to help local businesses recommended policy options to conduct Shariah compliant transactions, In New Zealand, the most recent Islamic bett er position Australia as a fi nancial including the development of Sukuk. fi nance product to be introduced is center, made two recommendations the Amanah KiwiSaver: a Shariah relating to Islamic fi nance: namely to Banking and fi nance compliant investment option under the conduct a comprehensive review of the Islamic fi nance has been present in country’s voluntary savings scheme. country’s tax laws to ensure there is no Australia in the form of home fi nancing Due to be launched in May, the scheme impediment to the provision of Islamic schemes since 1989 and has developed, operates under the regulations of both the KiwiSaver scheme and Shariah fi nance, banking and insurance products; with the introduction of investment compliance, and invests in 50 New and to ensure that Islamic fi nancial managers including Crescent Wealth, York Exchange-listed international products have parity of tax treatment First Guardian Capital, the Muslim corporations. AmanahNZ , the company with conventional products based on Community Cooperative of Australia managing the scheme, has stated that the their economic substance. The report (MCCA) launching Shariah compliant plan is to build a US$50-100 million book also recommended the removal of any funds and banks including the National then expand the investment range — regulatory barriers to the development of Australia Bank providing investment particularly into buying debt free land. Islamic fi nancial products in Australia. options for Islamic investors. Challenges and opportunities Australia’s treasurer, Joe Hockey, In May 2013, Crescent Wealth launched The challenges that Islamic fi nance announced the terms of reference for the Australia’s fi rst dedicated Shariah faces in Australia and New Zealand country’s fi nancial system inquiry on compliant superannuation fund, which are primarily regulatory. Although the th the 20 December 2013. While Islamic by the end of the year had over 1,000 legislation currently in place does not fi nance wasn’t explicitly referenced in the investors, with over AU$30 million prohibit Shariah compliant fi nance, terms of the inquiry, the fi nal results of (US$26.33 million) in funds under a level playing fi eld in terms of tax which are expected to be published in a management. In the third quarter of 2013, is necessary for further growth and report in November 2014, it is expected Crescent Wealth’s Australia Equity Fund development of the industry beyond to consider topics, like tax, would impact was named the best Islamic equities fund investment funds. An interest in the execution of Islamic fi nance in by Bloomberg, with a return of 23%. Islamic fi nance education and training Australia. According to industry professionals, is already present and this is an area Islamic investment funds in Australia that has potential for development; as In New Zealand, the law again does not could grow to US$22 billion in funds is the growth in the number of Islamic prohibit the practice of Islamic fi nance, under management by 2020. fi nance providers in both countries. The but does come up against the issue of tax expansion of the Halal industry in New regulations. So far this year, in February, First Zealand could be used as a platform for Guardian Capital has launched an the introduction of Islamic fi nancing Shariah compliant industry Islamic pension fund, the country’s methods and also as a means for greater New Zealand has an active Halal industry, second, in collaboration with the regulator and government engagement with the Federation of Islamic Association Australian Center for Islamic Finance, with the private sector.

The flip side: Islamic finance equity capital markets

Despite the industry focus on the debt capital market, the equity capital market forms a major chunk of the Islamic fi nance iceberg: with a number of traditional and new asset classes such as Islamic REITS, IPOs and structured products emerging to off er opportunities for investment. REBECCA SIMMONDS takes a closer look at the last six months’ activity in the Islamic fi nance equity capital market.

Legislative developments 2013, Bursa Malaysia, recorded RM8.2 In contrast, the GCC market is picking In November 2013, the International billion (US$2.46 billion) raised in funds up. Trading in Dubai-based Emirates Organization of Securities Commissions through IPOs and expects to see a higher REIT, following oversubscription by (IOSCO), the Islamic Financial Services volume reached by the end of 2014. institutional investors across the UAE, Board (IFSB) and Securities Commission the GCC and the UK, began on the 8th Malaysia (SCM) published a report According to EY, 23 IPOs in the GCC last April. The trust fl oated a US$175 million highlighting the necessity of international year raised US$3 billion, an increase of IPO on NASDAQ Dubai, becoming the regulatory standards for Islamic capital 64% from the previous year, and industry fi rst listing by a REIT on an exchange in market products and outlining possible experts have predicted a surge in IPOS the GCC. methods of implementation. from Saudi Arabia and the UAE for this year. New and innovative structures are also Given the growing role of Islamic equity being tried out. In 2013 KLCC Property funds in the market, the regulatory One of the fi rst IPOs of the year was Holdings (KLCCP) restructured into bodies have called for the disclosure of supported by Qatar Islamic Bank, a stapled structure known as ‘KLCCP all data relevant to investors considering Qatar International Islamic Bank Stapled Group’ and joining the existing a deal including screening methods, and Al Khalĳ i Commercial Bank, ordinary shares of KLCCP with units data sourcing and benchmarks. Most off ering a 100% fi nancing scheme for in KLCC Real Estate Investment Trust recently, Qatar announced the pending the Mesaieed Petrochemical Holding (KLCC REIT) to forming the resultant introduction of a fi nancial strategic plan, Company. The company fl oated the KLCCP Stapled Securities. In May, including the establishment of a Shariah fi rst Qatari IPO since 2010 and as such KLCCP Stapled Securities became compliant deposit insurance framework. was oversubscribed, raising a total of Malaysia’s fi rst listed Shariah compliant Pakistan is also in the midst of reframing QAR3.2 billion (US$878.08 million) stapled REIT. The company, which holds its Islamic fi nance legislation. from approximately 26% of its shares. a market capitalization of RM12 billion According to PwC, the success of the (US$3.89 billion), holds the Petronas Shariah screening listing is expected to encourage further Twin Towers, Petronas Tower 3 and the Shariah compliance screening plays a IPOs in the GCC, with the value of the ExxonMobil Tower as its main portfolio primary role in the Islamic equity capital two IPOs listed in the region for the fi rst constituents. market, with business and fi nancial quarter of the year registering at 183% screening employed by Shariah screening higher in comparison to the fi rst quarter Outlook companies to ensure the suitability of 2013. As the Islamic fi nance industry grows, so of potential acquisitions. As such, the do the opportunities in the Islamic equity Philippine Stock Exchange in April Even the exchanges themselves are capital markets. In Hong Kong there has announced that it was partnering with embracing the idea, with Kuwait Stock been interest from corporate investors in IdealRatings to screen companies listed Exchange established as a company the real estate market and infrastructure on the exchange for Shariah compliance by the Capital Market Authority in funds and in a continuance of the IPO based on AAOIFI standards as it April with a capital of KWD60 million trend, potential issuers this year include contemplates the launch of a Shariah (US$213.2 million), prior to fl oating its MyETF MSCI Malaysia Islamic Dividend, index as a means to grow the Islamic own shares, although a timeline has yet 1Malaysia Development and Malakoff fi nance quotient in the country’s capital to be set for the IPO. Saudi Arabia’s stock Corp in Malaysia. In the GCC, Doha markets. exchange, Tadawul, has also voiced plans Global Investments, Barwa Bank and to go public with an IPO. QInvest have all also announced plans In April, the Muscat Securities Market to list but so far have issued no news of (MSM) also began trading of its revised REITs further developments. MSM Shariah Compatible Index with a REITs in Asia have seen a tough fi rst new sample index made up of 30 listed quarter. In February, Al-Hadharah companies, compatible with AAOIFI Boustead REIT, the fi rst plantation-based standards. Islamic real estate investment trust in Malaysia, confi rmed its delisting from IPOs the Kuala Lumpur Stock Exchange Midway through the second quarter of (Bursa Malaysia); while Singapore’s fi rst the year, a number of Shariah compliant and largest Islamic REIT, Sabana, has companies have already utilized initial seen its total income fall and occupancy public off erings (IPOs) to raise equity. In levels decline.

Brokerage firm rating in the capital market of the Islamic Republic of Iran

Over 100 brokerage ﬁ rms currently conduct business in the Iranian capital market across two categories — securities brokers and commodity brokers. MAJID PIREH explores the impact of new regulations on rating these brokers and how these ratings are assigned.

The Iranian capital market is composed Table 1: The criteria for rating brokerage fi rms on Tehran Stock Exchange of four major exchanges that include the Tehran Stock Exchange (TSE), No. Description of criteria Maximum score Required earned minimum score Farabourse Company, Commodity Exchange and Energy Exchange. All A-Ordinary criteria these exchanges operate under the 1 Administration offi ces of brokerage fi rm 15 4 supervision of the Iranian Securities 2 Paid-up capital 10 3 and Exchange Organization (SEO). The SEO implements the general policies 3 Active admission offi ce 30 7 that the High Council announces. 4 Board members and the managing director 8 3 5 The staff holding certifi cates 15 4 While securities brokers off er their clients 6 Other staff members 15 4 some services in TSE and/or Farabourse Company, commodity brokers look aft er 7 Brokerage system capabilities 20 10 trading in commodities exchanges such 8 Accounting system capabilities 15 8 as the Iran Mercantile Exchange (IME) 9 Internet website capability 10 4 and/or Iran Energy Exchange (EX). 10 Block and non-block trades and futures 15 2 contracts The rating 11 Number of clients/customs 20 3 12 Acceptance and execution of clients’ 10 2 process in e-applications general has been a 13 Scores given by the TSE 15 5 14 Scores given by the association of stock 15 5 great motivation for exchange brokers Total ordinary scores 213 64 Iranian brokerage B-Promotional and disciplinary criteria firms to strengthen 15 Portfolio management 10 - 16 Mutual funds 15 - and develop the level 17 Listing advice and off ering advisor 10 - of services 18 Bulk trades 8 - 19 Certifi cates issued by the SEO 15 - they offer 20 Market-making activities 15 - 21 Call center 10 - In order to evaluate current activities and 22 Att raction of foreign customers 10 - services these brokerage fi rms off er their th 23 Qualifi ed opinion, modifi ed opinion and -- clients, on the 25 December 2010, the disclaimer by the auditor and legal inspector SEO’s board of directors approved the ‘Regulations Governing Rating of Tehran 24 Violations committ ed by brokerage fi rms - - Stock Exchange Brokers’. According Total promotional and disciplinary scores 93 - to the regulations, the Department Total scores 306 64 for Supervision of the SEO Brokers will assess the performance of active minimum (as indicated in the last column As per the total scores of the brokerage brokerage fi rms on the Tehran Stock of Table 1) under Article 2, the matt er fi rm earned under the criteria described Exchange once a year as per the criteria shall be reported to the investigation in Table 1, the criteria for assigning the indicated in Table 1. authority whereby this authority shall, brokerage fi rm rating are described in the within 20 business days, have the power following table. Based on Article 3 of the above- to suspend the license for all or parts of mentioned regulation, if on the basis the brokerage activities and set a time- of the existing rules the scores of the limit for the brokerage fi rm to achieve the brokerage fi rms are lower than the given minimum scores. continued...

Continued

Table 2: Assigning the rates of brokerage ﬁ rms Rate Rating method Minimum ordinary Total minimum scores scores A Earning the minimum (80%) of ordinary scores and the minimum (65%) of total scores 170 199 B Earning the minimum (65%) of ordinary scores and the minimum (55%) of total scores 138 168 C Earning the minimum (50%) of ordinary scores and the minimum (40%) of total scores 107 122 D Earning the minimum (35%) of ordinary scores and the minimum (30%) of total scores 75 92 E The brokers that have not earned the scores of higher categories - -

The brokerage fi rm ratings shall be assessing the performance of brokerage assigned rate that the brokerage fi rm has assigned and made public under this fi rms in the capital market. The rating gained. article by the Department for Supervision process in general has been a great of SEO Brokers. motivation for Iranian brokerage fi rms Majid Pireh is the Islamic fi nance senior to strengthen and develop the level expert at Securities and Exchange Based on the above tables, it has been of services they off er to their clients, Organization of Iran. He can be contacted at over three years since the SEO started as investors will be more aware of the [email protected].

Will Shariah compliant wills create a dual legal system in the UK?

On the 13th March this year, the UK Law Society published a practice note explaining Shariah succession rules to solicitors who have Muslim clients that require Shariah compliant wills. The publication of the note has led to a media frenzy directed at Islamic law, with some journalists portraying the new Law Society publication as a threat to the English legal system as a whole, and warning that this could represent beginning of the creation of a dual legal system in the UK. HAMID HARASANI asks whether that fear is justiﬁ ed — are Shariah compliant wills really such a threat?

The plain answer is no. For one, as can clients may prefer a Shariah compliant note. However, in the absence of a will, be gleaned from the second section of will, notwithstanding the freedom of Muslims cannot ask for the application the practice note, it is largely aimed disposition provided by English law. of Shariah succession law by the mere at solicitors who have non-domiciled Provided the will is signed in accordance virtue of being Muslims. In a case where English clients who wish to divest with the requirements set out in the Wills the deceased leaves no will, provisions their property according to the Shariah. Act 1837, there is nothing to prevent an of English intestacy law regulate the Section 2.3 of the practice note states: English domiciled person choosing to distributions of the deceased’s estate, “Since the laws of the testator’s domicile dispose of their assets in accordance with regardless of his or her religion or race. will apply to the deceased’s English Shariah succession rules (subject to any This is the default position in English moveable assets, a client domiciled potential claim under the Inheritance law. in a jurisdiction where Shariah rules (Provision for Family and Dependants) apply may wish to have the English law Act 1975, which only applies where the Testamentary freedom allows anyone will limited to the immoveable assets deceased died domiciled in England and to opt out of this default position to any situated in England and Wales”. Wales). You will have to obtain probate other position. So, subjects of English on the Shariah compliant will, in the law are equal under intestacies laws, More importantly, the Law Society is normal way”. while equally having the right to opt out. not a law-making body. All it can do is Shariah succession law is just one option produce guidelines on how to operate one can opt into and it is an option any within existing law. As it stands, the The Law subject of English law can choose, not English long-standing legal principle only Muslims. This is why the recent of testamentary freedom facilitates the Society is not a Law Society’s practice note does not recent Law Society guidelines. Although undermine the English legal system and slightly curbed by recent case law, law-making body. All certainly does not create a dual legal testamentary freedom simply means that, system. upon death, one has the right to leave his it can do is produce or her property to whomever he or she Hamid Harasani is a special consultant wishes. guidelines on how for Taylor Wessing and a PhD researcher in comparative property law at King’s So, while Shariah succession law to operate within College London. He can be contacted at gives a deceased’s daughter half what [email protected]. a son receives, under the doctrine existing of testamentary freedom, generally law speaking, one can leave everything to Have you joined the his or her son and nothing to his or her daughter. Indeed, one can ignore his or Muslims themselves have been draft ing leading Islamic finance her children altogether, leaving his or her Shariah compliant wills in the UK for Linked-In Group yet? estate to a total stranger. some time. This is not done under the pretence of applying Shariah law in the The point is that, under English law, a UK; this, in actual fact, is part of English person has complete freedom to divest law. All the Law Society has done was his or her property aft er death as he or to create a standard practice note, which she pleases. The Law Society has worked can be followed by solicitors dealing from within this parameter. Indeed, this with Shariah succession provisions so was echoed in Section 2.5 of the practice that they may have a common standard note. practice. This makes their jobs a lot easier and ultimately saves costs for their Come and join “Some clients are domiciled for clients. thousands of other succession purposes in England and Wales, but still wish to pass their Legally speaking, Muslims can apply like-minded industry assets in accordance with Shariah Shariah succession provisions using a practitioners now. rules for religious reasons. Such will, with or without this recent practice

Investment Corporation of Dubai Sukuk debut 2014

The Investment Corporation of Dubai Citi, Emirates NBD Capital, HSBC and (ICD), the sovereign wealth arm of the Standard Chartered Bank were the government of Dubai, has successfully bookrunners for the conventional bond, auctioned its US$1 billion dual bond and Dubai Islamic Bank joined them for Investment Corporation of Dubai issuance comprising of a US$700 the Sukuk issuance. Sukuk Issuance million Sukuk and a US$300 million conventional bond. The emirate is US$700 million (Sukuk) The profi t rate for the six-year Sukuk is 160bps over mid-swaps, while the spread looking to take on the 10-year conventional bond is advantage of lower 210bps over mid-swaps, according to a document from one of the lead arrangers. yields and increased th The Sukuk were priced at the mid-point 14 May 2014 of the revised 155-165bps initial price appetite for its paper range. ICD fi rst revealed its intentions for a debut Sukuk issuance in February 2013. as it benefits from The sovereign fund upsized the Sukuk a strong rebound Issuer ICD Sukuk Company issuance from the US$500 million it previously announced; while the after the global Originator ICD Sukuk Company conventional bond was reduced to US$300 million from the earmarked financial crisis Issuance Price US$700 million amount of US$500 million. The issuances follow US$750 million raised by the Ownership Corporate Dubai government late last month to ICD’s investment portfolio is comprised help fi nance its fi scal debt, infrastructure of wholly and partly-owned government Program Type Non-Series projects and to refi nance more businesses. Its mandate is to generate obligations. (see IFN Vol.11 Iss. 19) a superior return on investment, in Tenor Six years a way that will benefi t the regional Investor orders received reached fi nancial community. As the principal Cash Asset Ratio 100% approximately US$2.5 billion for the investment arm of Dubai, ICD has a combined off ering. According to the stake in numerous corporations ranging Asser Transfer Benefi cial title transfer prospectus, proceeds from the deal will from various sectors: including fi nance be utilized for general business purposes. and investment, transportation, energy, Currency US dollar The emirate is looking to take advantage industrial, real estate and retail. The of lower yields and increased appetite companies which make up its portfolio Domicile UAE for its paper as it benefi ts from a strong include Emirates NBD, Emirates Airlines, rebound aft er the global fi nancial crisis, Emaar Properties and Emirates National Source: IdealRatings according to a local daily. Oil Company. — NA

To receive the latest developments on the global Islamic capital markets

Read exclusive research reports from industry practitioners every week

Get to know the leaders in your industry

Keep abreast of latest deal flows and funds performances

Exclusive online access to www.islamicfinancenews.com

Read exclusive articles and case studies in our annual guides and supplements sent to you in hard copy

Tel: +603 2162 7800 extext 24 Contact Musfaizal for a FREE Trial subscription Email: [email protected]

Investment in social responsibility to IFN Country Correspondents AUSTRALIA: Gerhard Bakker director, Madina Village Community Services counter Shariah compliant needs BAHRAIN: Dr Hatim El-Tahir director of Islamic Finance Knowledge Center, Deloitt e & Touche AUSTRALIA BANGLADESH: Md Shamsuzzaman second type is the Caravansarai (traders’ executive vice president, Islami Bank Bangladesh motel), which supported commercial BELGIUM: Prof Laurent Marliere By Gerhard Bakker CEO, ISFIN activities. BERMUDA: Belaid A Jheengoor director of asset management, PwC Revelations that elderly Muslims in BRUNEI: James Chiew Siew Hua Funding for the facility will be senior partner, Abrahams Davidson & Co Australia are facing the autumn of based on two income streams: not- CANADA: Jeff rey S Graham their lives without proper care and partner, Borden Ladner Gervais for-profi t funding (such as grants, EGYPT: Dr Walid Hegazy isolation has raised the need for care managing partner, Hegazy & Associates general donations and endowments), home facilities that specifi cally meet FRANCE: Kader Merbouh and income generated by activities co head of the executive master of the Islamic fi nance, Paris- Islamic requirements. In 2011, Madina Dauphine University through a separate for-profi t company, HONG KONG & CHINA: Anthony Chan Village Community Services (MVCS), founder, New Line Capital Investment Limited namely Madina Village. This strategy INDIA: H Jayesh Perth-based not-for-profi t organization, is in line with a general trend in the founder partner, Juris Corp initiated a project to meet this INDONESIA: Farouk A Alwyni Australian charity sector to run projects CEO of Alwyni International Capital and the chairman requirement. of Centre for Islamic Studies in Finance Economics and on a commercial basis with profi ts Development IRAN: Majid Pireh supporting charitable activities. Islamic fi nance expert, Securities & Exchange Organization It aims to relieve the needs of the of Iran elderly by providing care homes and IRAQ: Khaled Saqqaf MVCS is collaborating with BDO, an partner and head of Jordan & Iraq offi ces, Al Tamimi & Co other support services, specializing JAPAN: Serdar A Basara Australian accounting and advisory president, Japan Islamic Finance in the needs of Muslims but available fi rm, to set up its funding strategy. BDO JORDAN: Khaled Saqqaf to people of all cultural and religious partner, Al Tamimi & Co has a prior relationship with MVCS KOREA: Yong-Jae Chang backgrounds. partner, Lee & Ko as well a specialized aged care team KUWAIT: Alex Saleh and access to a global network with an partner, Al Tamimi & Co In line with its hopes of becoming the LEBANON: Johnny El Hachem understanding of the Islamic system partner – corporate, Bin Shabib & Associates offi cial Western Australian endorser of a LUXEMBOURG: Said Qaceme of banking through its presence in new Shariah compliant superannuation senior manager of Advisory & Consulting, Deloitt e Tax & Malaysia and the Middle East. Consulting fund, managed by First Guardian MALDIVES: Aishath Muneeza deputy minister, Ministry of Islamic Aff airs, Maldives Capital, MVCS also recently published MALTA: Reuben Butt igieg Earlier this year in March, an MoU president, Malta Institute of Management the fi rst edition of the ‘Western was also signed between MVCS and MAURITIUS: Sameer K Tegally Australian Health Care Providers associate, Conyers Dill & Pearman two other Perth-based not-for-profi t MOROCCO: Ahmed Tahiri Jouti Handbook on Muslim Patients’, to raise senior consultant, Al Maali Islamic Finance Training and organizations. Consultancy awareness among healthcare workers NEW ZEALAND: Dr Mustafa Farouk and the wider community about Shariah counsel member for Islamic fi nancial institutions, The 1. Foundation Housing: A housing Federation of Islamic Associations of New Zealand (FIANZ) compliant needs. NIGERIA: Auwalu Ado company providing aff ordable Shariah auditor, Jaiz Bank housing for low to moderate income OMAN: Riza Ismail The care homes facility project will senior associate, Trowers & Hamlins households in Western Australia, PAKISTAN: Muhammad Shoaib Ibrahim include approximately 100 apartments managing director & CEO, First Habib Modaraba registered by the state government PHILIPPINES: Rafael A Morales (at two diff erent pricing levels) as as a ‘Growth Provider’ and thus managing partner, SyCip Salazar Hernandez & Gatmaitan well as a high care unit, crisis housing QATAR:Amjad Hussain eligible for capital funding. partner, K&L Gates units, community services areas RUSSIA: Roustam Vakhitov including nursing offi ces and prayer managing partner, International Tax Associates 2. Stirling Ethnic Aged Homes SAUDI ARABIA: Nabil Issa rooms, commercial offi ce space and partner, King & Spalding Association (MYVISTA): An SENEGAL: Abdoulaye Mbow Halal retail space. The project claims Islamic fi nance advisor, Africa Islamic Finance Corporation approved provider of aged care fi nancial support from local, regional SOUTH AFRICA: Amman Muhammad services and retirement living CEO, First National Bank-Islamic Finance and overseas investors, and is one of the SINGAPORE: Yeo Wico accommodation which specializes partner, Allen & Gledhill fi rst major Islamic fi nancing projects in in providing services and SRI LANKA: Roshan Madewala Western Australia to go beyond the level director/CEO, Research Intelligence Unit accommodation to elderly persons SWITZERLAND: Khadra Abdullahi of individual retail Islamic home loans. associate, Investment banking, Faisal Private Bank from culturally and linguistically SYRIA: Gabriel Oussi, diverse backgrounds. general manager, Oussi Law Firm The project reportedly draws inspiration TANZANIA: Khalfan Abdullahi head of product development and Shariah compliance, Amana from two historical types of building. Bank The MoU paves the way for developing THAILAND: Shah Fahad The fi rst is the Bimaristan (hospital), vice-president and head of strategic marketing and product the project’s long-term goals; as well which served all citizens without regard development, Islamic Bank of Thailand as identifying potential land options TURKEY: Ali Ceylan to their religion, gender or social status. partner, Baspinar & Partners and formulating capital funding and UK: Roshan Madewala Male and female nurses and other CEO and director, Research Intelligence Unit operational strategies. UAE: Rima Mrad ancillary staff looked aft er patients of partner, Bin Shabib & Associates the same gender, and physicians from US: Joshua Brockwell Gerhard Bakker is the director of Madina investment communications director, Azzad Asset Management various faiths worked together to ensure Village Community Services. He can be YEMEN: Moneer Saif the best treatment for the patients. These head of Islamic banking, CAC Bank contacted at [email protected]. IFN Correspondents are experts in their respective fi elds hospitals also received funding from the and are selected by Islamic Finance news to contribute designated short country reports. For more information state, donors and philanthropists. The about becoming an IFN Correspondent please contact [email protected]

Club deals ebb while growth equity flows IFN Sector Correspondents ASSET MANAGEMENT Sean Daykin, head of investment funds, Emirates NBD PRIVATE EQUITY AND PE deal activity was down 6% in the US, Asset Management VENTURE CAPITAL technology-related transactions grew CROSS-BORDER FINANCING: by 14% as PE funds(and their portfolio Fara Mohammad, senior lawyer and consultant in Islamic By Arshad A Ahmed fi nance companies) closed on more than 500 DEBT CAPITAL MARKETS: technology deals. Muhammad Shoaib Ibrahim, managing director & CEO, In the last couple of years, global First Habib Modaraba private equity has benefi ted from DERIVATIVES Suhaimi Zainul - Abidin, treasurer for Gulf-Asia Shariah growing diversifi cation among PE Compliant Investment Association and advisor to 5Pillars fi rms’ approaches to investing, one LPs and PE LAW (EUROPE): cause being a shift by PE fi rms away Ayhan Baltaci, att orney at law, Bereket & Baltaci Law Firm from large club deals. When multiple firms continue LAW (MIDDLE EAST) Bishr Shiblaq, head of Dubai offi ce, Arendt & PE fi rms aggregate to cover the entire Medernach equity check for a large bid, that is to retool in their LEASING: known as a club deal. Professor Dr Shahinaz Rashad, executive director, Financial Services Institute, Egyptian Financial search for risk- Supervisory Authority. The recent decline in club deals can MERGERS & ACQUISITIONS also be traced to Limited Partners(LPs)’ adjusted profitable Jamal Hĳ res, CEO, Cappinova Investment Bank increasing demand for co-investment MICROFINANCE (ASIA): Dr Mahmood Ahmed, executive vice president and rights. LPs would rather directly co- investments. Some director training, Islami Bank Training and Research invest with specifi c funds because fi rstly, Academy it means some of the LPs’ capital is held PE firms are turning MICROFINANCE (AFRICA): Mansour Ndiaye, director of microfi nance, Assistance and back and, consequently, untainted by Consulting for Development management fees. Secondly,when two or more toward large PRIVATE BANKING & WEALTH MANAGEMENT more PE funds co-invest with each other, Khadra Abdullahi, associate, investment banking, Faisal Private Bank they concentrate risk undesirably for growth rounds, their LPs who might be invested in both PRIVATE EQUITY & VENTURE CAPITAL: particularly in Arshad Ahmed, partner, Elixir Capital funds. Club deals defeat LPs’ premise PROJECT & INFRASTRUCTURE FINANCE of risk distribution. I was involved Anthony Coleby, head of corporate commercial in the 2006 take-private of Freescale technology department, Said Al Shahry Law Offi ce (SASLO) Semiconductor, in which at least 24 REAL ESTATE (EUROPE) Philip Churchill, founder partner, 90 North Real Estate diff erent LPs were invested in at least Interestingly, most of this growth was Partners three of the participating funds (Carlyle due in part to technology-enabled REAL ESTATE (MIDDLE EAST): IV, Blackstone V and TPG V) and at least business models not traditionally tracked Yahya Abdulla, head of capital markets — Middle East, Cushman & Wakefi eld 72 diff erent LPs were invested in at least as “IT investments” in industry reports. REGULATORY ISSUES (ASIA) two of the funds. This trend also bodes well for Muslim Intan Syah Ichsan , chief operating offi cer, Samuel Aset belts in Asia and Africa where the Manajemen LPs and PE fi rms continue to retool in insertion of appropriate — sometimes REGULATORY ISSUES (MIDDLE EAST): Mohammad Abdullah Malik Dewaya, head of Shariah their search for risk-adjusted profi table known as intermediate — technology compliance and audit, Maisarah Islamic Banking Services investments. Some PE fi rms are turning into tried and tested business models RETAIL BANKING: more toward large growth rounds, will lead to new effi ciency gains and Ris Rizqullah, lecturer, Trisakti University particularly in technology (as seen by opportunities for scaling where none RISK MANAGEMENT: TPG’srecent investments in Uber and Hylmun Izhar, economist, Islamic Research and Training existed before. Institute, Islamic Development Bank Country Airbnb), a space where the fundamental SECURITIES & SECURITIZATION: business characteristics tend not to Arshad Ahmed is a partner at Elixir Capital. Nidhi Bothra, executive vice president, Vinod Kothari befi t most PE investors. Yet PE fi rms’ He can be contacted at arshad.ahmed@ Consultants att raction to technology hasbeen growing elixircap.com. STOCK BROKING & TRADING: fast: in 2013, while the volume of overall Athif Shukri, research analyst, Adl Capital STRUCTURED FINANCE: John Dewar, partner and head of Islamic fi nance, Milbank, Tweed, Hadley & McCloy SUKUK Anthony Coleby, head of corporate commercial department, Said Al Shahry Law Offi ce (SASLO) TAKAFUL & RE-TAKAFUL: Dr Sutan Emir Hidayat, assistant professor and academic advisor for Islamic fi nance, University College of Bahrain

CIMB has 564 subscribers to Islamic Finance TRADE FINANCE Anthony Coleby, head of corporate commercial news, and pays less than US$22.16 per department, Said Al Shahry Law Offi ce (SASLO) subscription. TREASURY PRODUCTS: Nafi th ALHersh Nazzal, certifi ed fi nancial & investment IFN is for everyone, not just the CEOs advisor IFN Correspondents are experts in their respective fi elds Contact us now and see how we can help your entire team and are selected by Islamic Finance news to contribute designated short sector reports. For more information Call: +603 2162 7800 or Email: [email protected]@redmonneygroupp..ccoom about becoming an IFN Correspondent, please contact [email protected]

Introduction to The Islamic Finance Handbook: A practitioner’s guide to the global markets

The subprime crisis that peaked in 2008 Islamic bank subsidiaries as well as The Middle East and North has pushed the world economy into the establishment of new domestic and the deepest recession since the end of international Islamic banks. Aside from Africa World War II. As doubts mount over the experiencing a rapid development of Islamic fi nance in the Middle East and proper functioning of the conventional the Islamic banking industry, Malaysia North Africa (MENA) has become an banking and fi nance industry during introduced the Islamic money market in important ingredient in these countries’ the crisis, growing att ention is being 1994 to provide an avenue for short-term development agendas. The signifi cant given to Islamic banking and fi nance. investment based on Shariah (Islamic pressence of Islamic fi nance can be law), and it has made its mark in the seen in various MENA countries. These Headed by Iran, Saudi Arabia, and development and issuance of Sukuk (an include the UAE, Iran, Saudi Arabia, Malaysia, Islamic fi nance has penetrated Islamic bond). Bahrain, Kuwait, Oman, and Egypt. In more than 65 countries around the globe. addition, Islamic fi nance has made its way in Jordan, Morocco, and Tunisia. By the end of 2013, Islamic fi nancial In 2012, the government consolidated assets were estimated to be around various acts into two separate acts, The fi rst Islamic bank was set up in the US$1.3-1.5 trillion. namely the Islamic Financial Services Act UAE when Dubai Islamic Bank came (IFSA) 2012 and the Financial Services into being in 1975. Apart from Dubai Although Islamic assets are roughly less (FSA) Act 2012. Both acts came into eff ect Islamic Bank, there are now four other than 1% of global fi nancial assets, their on the 30th June 2013. rapid growth, especially in Southeast fully dedicated Islamic banks in the UAE: Sharjah Islamic Bank, Emirates Islamic Asia and the Middle East, and their Neighboring Indonesia, which has the Bank, Abu Dhabi Islamic Bank, and superior performance during the crisis, largest Muslim population in the world, Dubai Bank. Conventional banks also have led many to believe that Islamic has recently recognized the need to fi nance is a viable alternative. off er Islamic products through either an harness the Islamic fi nance industry’s Islamic window or a subsidiary. Several potential. In 2012, Indonesia’s Islamic The rapid growth of the Islamic fi nance major Sukuk issuances originate from the banking assets were US$17 billion, an UAE fi nancial market as well. can be seen in various regions of the increase of more than 50% from the world. To provide perspective and an previous year. Propelled by government Iran is one of the few countries in the overview of the Islamic fi nance industry, support, Islamic fi nancial assets in key developments of the industry for world to have converted its entire Indonesia are expected to continue their fi nancial sector to an Islamic system that various regions are highlighted in this rapid growth. The republic is showing introduction. governs the Central Bank of Iran. Iran positive signs in Islamic retail banking, is the world’s largest market for Islamic Sukuk, project and infrastructure fi nance. Southeast Asia fi nancing, Takaful (insurance) and Southeast Asia can be considered one of Islamic microfi nance. However, the Islamic capital market the key centers of Islamic banking and has not yet developed in Iran as it has fi nance, with Malaysia being a leader. Currently, Indonesia houses fi ve Islamic in Malaysia and the Gulf Cooperation In Malaysia, the formal development banks as well as 24 banks that have Council (GCC), a consortium of six of Islamic fi nance began with the Islamic windows. With a population of Persian Gulf countries. Nevertheless, establishment of Tabung Haji (an 230 million, Indonesia has a huge market Islamic bonds have existed in Iran since interest-free savings-like or deposit- potential for Islamic fi nance. 1994 in the form of so-called participation taking institution for Muslims to perform bonds issued by municipalities or large Hajj [pilgrimage] in Mecca) in 1963. Being the international fi nancial hub of companies to fi nance projects. the region, Singapore is no exception to The fi rst Islamic bank in Malaysia, the development of Islamic fi nance. The Iran’s legal framework for Islamic Bank Islam Malaysia, began operations most prominent developments witnessed banking envisages four types of deposits: in July 1983 with the passage of the in recent years were the 2007 inception demand deposits, which are interest- Islamic Banking Act of 1983. In 1984, of the Islamic Bank of Asia, a full-fl edged free loans to the bank; savings accounts; the government has enacted the Takaful Islamic bank, and the issuance of more term deposits or investment accounts, in Act 1984 to pave the way for the than US$11 billion-worth of Sukuk in which the depositors share in the general establishment of the fi rst Takaful (Islamic January 2013. Islamic fi nance has also profi ts of the banks; and, since 2011, insurance) company, Syarikat Takaful gained prominence in Brunei with the special-purpose investment accounts, in Malaysia. presence of two Islamic banks and three which the investor or depositor restricts Takaful companies. In Thailand, Islamic the use of funds to designated projects Since then, the Islamic banking industry fi nance has developed to provide Islamic in which the bank is also an equity has seen the participation of conventional fi nancial services to the predominantly partner. Savings deposits receive some banks in providing Islamic banking Muslim population in the southern part remuneration in the form of bonuses in services, initially through Islamic of the country and the capital city of windows at banks and presently through Bangkok. continued...

Continued cash or in kind through random drawing. (GDP), and its banking system is one Dhabi Islamic Bank of Egypt. Despite The provisional remuneration of term of the largest in the region. Yet Egypt several more lenders with Islamic deposits is set by the Money and Credit has hardly been involved in the recent fi nance windows, the approximately Council (MCC) each year with a view to expansion of Islamic fi nance, the most US$17 billion of assets in Egypt’s Islamic ensuring reasonable funding costs. exciting development in Middle East banking industry are dwarfed by Egypt’s fi nancial markets for decades. In January conventional banks. Total assets of the Saudi Arabia’s Islamic banking is 2013, the Egyptian cabinet of ministers entire banking sector are about US$198 making good headway despite the approved a new draft Sukuk bill aft er billion, according to Egypt central bank fact that there are no separate Islamic Shariah scholars rejected a previous data in 2012. banking laws in the country. There are version. two major players in Islamic banking The Islamic Finance Handbook: A in Saudi Arabia: Al Rajhi Banking and Egypt now has 14 Islamic banking Practitioner’s Guide to the Global Markets Investment Corporation and Bank Al licenses but only three fully-fl edged by REDmoney; ISBN: 978-1-118-81441-3. Jazira. Conventional banks are also Islamic banks, including Faisal Islamic Copyright © 2014 by REDmoney. Reprinted serving the Islamic banking clientele by Bank of Egypt; Al Baraka Banking Group, with permission of Wiley.” establishing their own Islamic windows headquartered in Bahrain; and Abu or subsidiaries. The Saudi fi nancial sector comprises 14 commercial banks and fi ve credit unions and holds assets worth more than US$20 billion. Islamic banking operations capture 64% of the total An overview of the market share in Saudi Arabia. SAVE key financial markets 25%* In 1978, Bahrain Islamic Bank, the Quote IFH25 on fi rst Islamic bank for Bahrain, was in Islamic Finance www.wiley.com established. There are 351 fi nancial institutions in Bahrain, of which 33 The Islamic Finance Handbook is the definitive are Islamic and have a total capital report for the Islamic finance industry. Written by the of US$2.24 billion. Islamic banking industry’s leading practitioners, the book provides a country-by-country breakdown of the current state operations in Bahrain are undertaken by of the Islamic market, including league tables by full-fl edged commercial banks, off shore region and by country. Relevant case studies are used banking units, and investments banks. A throughout to illustrate the practical aspect of the signifi cant number of Islamic banks use information presented. Organized for easy navigation, Bahrain as a base from which to operate each chapter features sub-sections that allow instant in the Gulf states, the European Union, comparison between countries in a specific area of interest. and North America. t Current macroeconomic and microeconomic conditions Kuwait has been ranked third in the Regulatory and political situations holding of Islamic banking assets; it is t t Recent transactions, key participants, and the worth US$22.7 billion. The establishment investor climate of the Kuwait Finance House in 1977 laid t Real-world cases, as opposed to speculative scenariosrios down the foundation of Islamic banking in Kuwait. It has had great success About REDmoney over time and at present is successfully REDmoney is a publishing and events company focusing purely on the global Islamic finance competing with 12 conventional banks market. The company was started in mid-2004 in Kuala Lumpur, Malaysia, by Andrew Morgan and and three specialized government banks Andrew Tebbutt, and initially rolled out two products: Islamic finance training and Islamic finance in the Kuwaiti fi nancial market. news. Since then, a range of other products have been introduced including conferences, print media, and consulting. Meanwhile, in Oman, as the result of Buy your copy today! a decree passed by His Majesty Sultan Qaboos in 2011, two fully-fl edged Islamic www.wiley.com/buy/9781118814413 banks and a number of conventional banks have already received licenses to 978-1-118-81441-3 | Cloth | 592pages | April 2014 | US$150; €72.00; £60.00 start Islamic operations. The two Islamic banks, Bank Nizwa and Alizz Islamic *Offer ends Dec 31, 2014 and it applies only to the print book. This offer is not valid with other discounts and promotions. Bank, went public in 2012, and several conventional banks have announced sett ing up Islamic windows.

Download Wiley’s Islamic Finance catalog

Egypt currently accounts for about 9% of http://bit.ly/IFC2014 14-65608 the Arab world’s gross domestic product

Shariah based retirement planning — expanding the range

New Zealand has seen its array of Islamic oﬀ erings grow, but the sector remains a tiny part of the wider ﬁ nancial industry. Nevertheless as demand grows new products are coming to market, particularly in the fund management and retirement scheme sector. FARIS AZIMULLAH reports.

As a resident Muslim in New Zealand savings schemes, each competing to sustainability, morality and anti-war your religious representation would capture this new market. As predicted sentiments there is also now a real be just 1% of the total population, by many pundits, unless the individual option for ethical investments and a real according to recent census data. Aside schemes could demonstrate a compelling alternative to the conventional property from the everyday diffi culties of return in their early lives, only niche game. seeking Shariah compliant products players would survive. and services (which is surprisingly easy Of course Amanah is not the only these days if you know where to look) Enter Amanah Kiwisaver, New Zealand’s religion-based niche KiwiSaver scheme. your choice of retirement plans would fi rst Shariah compliant retirement plan There is also a scheme for the Exclusive have been one of those ‘more diffi cult to due to open its doors in May 2014. As Brethren (BCF) and one for Christians comply’ matt ers. with other Shariah compliant fi nancial (Koinonia). Beyond these, other niche institutions the scheme is governed schemes have been established for Most Muslim Kiwis would be forced to according to specifi c criteria overseen by common interest groups such as use self-managed schemes as a proxy for a Shariah Advisory Board and invests employees of large organizations (eg. retirement plans — with most relying on in up to 50 carefully chosen US-listed FoodStuff s) and even one for those their private homes or real estate as their entities in its portfolio which may be who wish to be identifi ed as Maori major asset that would hopefully grow dynamic, depending on the deemed (IwiInvestor). in market value. Of course, entering the Shariah status of the investments. property market is near impossible for For a small market such as New those who do not carry suffi cient capital, In addition there are the usual Zealand one could argue that KiwiSaver and even harder if you wish to borrow prohibitions on certain investments customers are already spoilt for choice. under an Islamic scheme. Sadly, your best such as derivatives, currency hedging, Even more interesting is the news approach is to rely on fi nancial support gambling, pork, alcohol/tobacco, that Amanah is already talking about from family members. weapons any activity contrary to Sharia additional funds which will off er more law. The target investments are those Shariah compliant choices. For the average Kiwi, owning your own which are easily traded in good volumes home is still a dream and until recently, and those which are healthy in terms of What does this tell us? was seen as the mainstream way to debt levels and real growth. Surely this is not just about serving secure your fi nancial future. more choices to 1% of the market. This Additional measures have been planned is a response to customers being serious As we all know too well, retirement to ensure unexpected or unplanned about their beliefs and views, and being planning is a marathon game and some income from non-permissible activities more informed now than ever. Perhaps degree of locking is required for those which inadvertently fi nd its way into customers are simply now more ready to who wish to sincerely ‘stay in the game’. the scheme is detected, calculated and act on this sophistication when it comes The fund should only be broken during cleansed out of the system through to fi nancial decisions. a genuine fi nancial crisis. The temptation purifi cation payments (donations to do so is obviously higher when you nominated by the saver). While Ethics aside, all fi nancial services are your own fund manager. administrative costs will accrue for these providers can learn from this. Those additional management activities this is which diff erentiate themselves clearly That changed somewhat in 2007 when considered acceptable given the niche and convincingly will eventually win New Zealand’s KiwiSaver scheme was status of such products. customer loyalty and their business. launched as a voluntary savings scheme Those needs can be based on anything, to help Kiwis save for their retirement. Brian Henry, the managing director for even religion. With just 130,000 participants at launch Amanah, has pointed out that while it has grown steadily, with nearly half Shariah compliance is a specifi c objective Faris Azimullah is a partner of enterprise risk of the entire country’s population of 4.5 of the fund it also automatically appeals services at Deloitt e. He can be contacted at million now enrolled, despite being not to many non-Muslims such as Mormons, fazimullah@deloitt e.co.nz. yet compulsory. Unfortunately anyone orthodox Jews and Seventh Day looking for a Shariah compliant option Adventists. Now we can see that this is must still stick to the self-managed not just about a 1% niche but something option. much bigger.

A great thing is that the establishment To the average Kiwi who holds of KiwiSaver saw a peak of about 40 strong opinions on ethical matt ers,

Index-based livestock insurance: Protecting living assets from severe drought

Over the past several years, the International Livestock Research Institute (ILRI) headquartered in Nairobi, Kenya, in collaboration with a suite of partners, has pursued substantial research into a development program aimed at designing, developing and implementing index-based insurance products to protect livestock keepers in the arid and semi-arid lands (ASALs) of the Horn of Africa from drought-related asset losses. ANDREW MUDE discusses its implications.

ILRI’s Index-Based Livestock Insurance consequences of climate change plus valuable ‘living’ asset and increase its (IBLI) program has grown from human population increase unfold, links commercial value. The project turned strength to strength since its inception between drought risk, vulnerability and to the insurance industry for ideas as in 2010, winning several national and poverty become stronger. insurance is well known to be an eff ective international awards in recognition of its way to manage asset risk. innovativeness, its scientifi c rigor, and One problem inspired the IBLI research its problem-driven approach. The recent and development agenda: Could we fi nd IBLI is a promising innovation in IBLI pay-out ceremony that took place a sustainable way to reduce the drought- insurance design that allows the risk- on the 25th March in Wajir town, northern related vulnerability that pastoralist’s management benefi ts of insurance to Kenya, where insured pastoralists face and enhance their livestock-based be made available to poor and remote received indemnity payments livelihoods? Currently, pastoralists are clients. The IBLI product aims to provide compensating them for livestock losses among the greatest recipients of food compensation to insured pastoralists due to the recent drought, represents aid in the region, and other eff orts to in the event of livestock losses due to another of these milestones. provide them with support in times of severe forage scarcity. Like any insurance great drought stress include emergency product, index-based insurance aims to For the fi rst time in Africa, an insurance destocking of livestock, restocking compensate clients in the event of a loss. policy that combines a Shariah compliant aft er droughts to help build herds, and fi nancial instrument with innovative increasingly, cash aid. However, these Unlike traditional insurance, which use of satellite imagery is compensating responses, while off ering necessary makes pay-outs based on case-by-case Muslim pastoralists for drought-induced humanitarian assistance, are reactive in assessments of individual clients’ loss losses suff ered in Kenya’s northeastern nature. realizations, index-based insurance Wajir County, where livestock are valued pays policyholders based on an external at over US$500 million. The 30 women indicator that triggers payment to all and 71 men who insured their herds in insured clients within a geographically August 2013, when Takaful Insurance For the first defi ned space. IBLI uses satellite imagery of Africa (TIA) fi rst launched its IBLI — measuring the conditions of grazing product, branded Index-Based Livestock time in Africa, lands — that is fed into an algorithm Takaful, were the fi rst benefi ciaries of this that predicts livestock losses. Predictions innovative product. an insurance above a certain contractually agreed level of livestock losses then triggers payments The IBLI product was fi rst piloted in the policy that to active policyholders. neighboring Marsabit County in 2010 combines a Shariah and has since scaled up to include two The eight-nation Intergovernmental more counties in northern Kenya and compliant financial Authority on Development (IGAD) has also reached across the border into estimates that over 90% of the meat southern Ethiopia. TIA, recognizing instrument with consumed in East Africa comes from the value of the service IBLI provided pastoral herds. ILRI, in collaboration with and aware that the vast majority of satellite imagery is a wide array of partners supporting the pastoralists across the Horn of Africa are IBLI program, seeks to fi nd a sustainable Muslim, entered the market in 2013 and compensating way to help pastoralists to protect their is already planning its expansion across livestock and promote quick recovery Northern Kenya and the region. pastoralists from the considerable losses they incur due to severe droughts. TIA shares this In the ASALs of the Horn of Africa, goal; and seeks to show that pastoralists drought is the most pervasive hazard The IBLI project sought to fi nd a risk- can use a fair and ethical business model encountered by households. For management solution that would be to protect their valuable living assets and livelihoods like pastoralism that rely proactive and more focused on the enhance their productivity. solely or largely on livestock, the high provision of complementary services that livestock death rates from drought could enhance pastoralist livelihoods as Andrew Mude is the project leader of Index- have devastating impacts, rendering a whole. As livestock are the principal Based Livestock Insurance for International pastoralists among the most vulnerable asset owned by pastoralists, we started Livestock Research Institute. He can be of populations in the region. As the by seeking ways to help protect this contacted at [email protected].

DATE ISSUER SIZE ANNOUNCED Dar Al Arkan Real Estate Development TBA 20th May 2014 training Company Al Baraka Banking Group US$200 million 20th May 2014 MAY Bank Negara Malaysia various 16th May 2014 IFB: Impact of IFSA on Malaysian Government of Tunisia US$140 million 7th February 2014 Financial Institutions 28 May, KUALA LUMPUR ILLM US$490 million 16th May 2014 JUNE South African Government US$500 million 26th November 2013 IFT: Shariah Audit & Compliance for Saudi Telecom SAR$500 million 15th May 2014 Takaful Products Banque Saudi Fransi US$530 million 15th May 2014 12-13 June, KUALA LUMPUR Meethaq OMR300 million 5th May 2014 RMT: Funds Transfer Pricing Khazanah Nasional RM1 billion 2nd May 2014 15-17 June, Dubai Government of Pakistan TBA 2nd May 2014 IFT: Latest Issues in Shariah Screening Pelaburan Mara RM1 billion 30th April 2014 Methodology 16 June, KUALA LUMPUR Hua Yang RM250 million 30th April 2014 IFT: Latest Developments in Sukuk Bank Negara Malaysia RM200 million - RM3 billion 30th April 2014 Structuring Engro Corp PKR4 billion 24th April 2014 17 June, KUALA LUMPUR th Saudi Telecom TBA 24 April 2014 IFT: Islamic Finance Qualiﬁ cation Public Islamic Bank RM5 billion 24th April 2014 23-25 June, KUALA LUMPUR Dubai Islamic Bank TBA 18th April 2014 IFT: Structuring Islamic Legal Government of Pakistan PKR542 billion 16th April 2014 Documentation 23-25 June, ABU DHABI KLCC REIT RM3 billion 11th April 2014 IFT: Risk Management & Capital Adequacy Emaar Misr for Development TBA 10th April 2014 for Islamic Banks th Etiqa Takaful RM300 million 8 April 2014 26 June, KUALA LUMPUR th Electricity Supply Board - Ireland RM500 million 4 April 2014 AUGUST th Japan Bank TBA 4 April 2014 IFT: Advanced Sukuk & Islamic Treedom Group TBA 2nd April 2014 Securitization Maybank Islamic RM10 billion 27th March 2014 19-21 August, ISTANBUL Bumi Armada Capital RM1.5 billion 27th March 2014 IFT: Islamic Finance Qualiﬁ cation Saudi Investment Bank TBA 21st March 2014 24-26 August, DUBAI Gulf Finance House US$500 million 20th March 2014 IFT: Structuring Islamic Retail Banking Products th Bank Muscat - Saudi Arabia SAR1 billion 20 March 2014 25-27 August, MUSCAT Bank Muscat OMR500 million 20th March 2014 IFT: Shariah Audit for Islamic Banking Sabana Sukuk SG$85 million 12th March 2014 19-21 August, KUALA LUMPUR th Fawas Abdulaziz Alhokair Co TBA 11 March 2014 SEPTEMBER th FGB Sukuk Company II US$1.07 billion 7 March 2014 IFT: Structuring Islamic Trade Finance IDB TBA 7th March 2014 Solutions Government of Malaysia RM3 billion 26th February 2014 8-10 September, DUBAI DanaInfra Nasional RM200 million 24th February 2014 IFT: Internal Audit for Islamic Banking 22-24 September, KUALA LUMPUR 1Malaysia Development RM2.4 billion 19th February 2014 TSH Sukuk Ijarah RM20 million 18th February 2014 IFT: Islamic Treasury & Risk Management Products th Kiler GYO US$100 million 13 February 2014 22-24 September, KUALA LUMPUR th Government of Indonesia IDR1.57 trillion 6 February 2014 IFT: Islamic Fund & Asset Management Flydubai TBA 4th February 2014 25-26 September, KUALA LUMPUR BNM Sukuk RM1 billion 28th January 2014 OCTOBER Citra Marga Nusaphala Persada IDR1.75 trillion 23rd January 2014 IFT: Structuring Islamic Legal Albaraka Turk Katilim Bankasi US$300-400 million 10th January 2014 Documentation Ĳ M Corp RM3 billion 10th January 2014 14-16 October, KUALA LUMPUR Government of Saudi Arabia TBA 8th January 2014 Government of Luxembourg EUR200 million 7th January 2014 www.REDmoneyTraining.com

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 1250 1200

1130 1120

1010 1040

890 960

770 880

650 800 Dec Jan Feb Mar Apr May Dec Jan Feb Mar Apr May

REDmoney GCC 6 Months REDmoney Global 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap 1200 1450

1060 1296

920 1142

780 988

640 834

500 680 Dec Jan Feb Mar Apr May Dec Jan Feb Mar Apr May

REDmoney MENA 6 Months REDmoney US 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap 1050 2200

940 1920

830 1640

720 1360

610 1080

500 800 Dec Jan Feb Mar Apr May Dec Jan Feb Mar Apr May

SAMI Halal Food Participation (All Cap) 6 months

2050

1980

1910

1840

1770

1700 Dec-2013 Jan-2014 Feb-2014 Mac-2014 Apr-2014 May-2014

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 1350 1250

1190 1090

1030 930

870 770

710 610

550 450 Dec Jan Feb Mar Apr May Dec Jan Feb Mar Apr May

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 2200 2000

1860 1700

1520 1400

1180 1100

840 800

500 500 Dec Jan Feb Mar Apr May Dec Jan Feb Mar Apr May

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 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 in Jeddah, Saudi Arabia.

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 150

140

130

120

110

100

90 Index Values 80

50 Jul-09 Jul-03 Oct-04 Feb-13 Feb-07 Sep-10 Dec-11 Dec-05 Dec-99 Apr-14 Mar-01 May-08 May-02

Top 10 Monthly Returns for ALL Islamic Funds Fund Fund Manager Performance Measure Fund Domicile 1 Al-Beit Al-Mali Global Investment House 8.67 Qatar 2 Amanah GCC Equity SABB 3.44 Saudi Arabia 3 Jadwa GCC Equity Jadwa Investment 3.76 Saudi Arabia 4 Al Qasr GCC Real Estate & Construction Equity Trading Banque Saudi Fransi 3.57 Saudi Arabia 5 Jadwa Saudi Equity Jadwa Investment 1.48 Saudi Arabia 6 Jadwa Arab Markets Equity Jadwa Investment 3.08 Saudi Arabia 7 Al Danah GCC Equity Trading Banque Saudi Fransi 3.69 Saudi Arabia 8 AlAhli Saudi Mid Cap Equity NCB Capital Company 3.17 Saudi Arabia 9 Riyad Gulf Riyad Bank 5.33 Saudi Arabia 10 Al Rajhi GCC Equity Al Rajhi Bank 2.98 Saudi Arabia Eurekahedge Islamic Fund Index 0.73 Based on 52.09% of funds which have reported April 2014 returns as at the 19th May 2014 Top 10 Monthly Returns for Global Islamic Funds Fund Fund Manager Performance Measure Fund Domicile 1 AlAhli Global Real Estate The National Commercial Bank 2.11 Saudi Arabia 2 AlAhli Global Natural Resource NCB Capital Company 1.94 Saudi Arabia 3 Altaira Funds - Ethical Global High Dividend (I) Altaira Wealth Management 1.75 Luxembourg 4 Al Shamekh Islamic Portfolio Riyad Bank 1.59 Saudi Arabia 5 Al-Mubarak Global Equity Arab National Bank 1.51 Saudi Arabia 6 Al Shuja'a Islamic Portfolio Riyad Bank 1.04 Saudi Arabia 7 Emirates Islamic Global Balanced EIS Asset Management 0.80 Channel Islands 8 Al-Mubarak Balanced Arab National Bank 0.59 Saudi Arabia 9 Al Mokdam Islamic Portfolio Riyad Bank 0.53 Saudi Arabia 10 Jadwa Global Sukuk Jadwa Investment 0.46 Saudi Arabia Eurekahedge Islamic Fund Index 0.05 Based on 50.91% of funds which have reported April 2014 returns as at the 19th May 2014

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 Fixed Income Index over the last 5 years Eurekahedge Islamic Fund Fixed Income Index over the last 1 year 175 101 165 100.5 155 100 145 135 99.5 125 99 Percentage Percentage 115 98.5 105 98 95 Jul-09 Jul-03 8-Jan-14 Oct-04 Feb-07 Feb-13 Sep-10 25-Jul-13 Dec-99 Dec-05 Dec-11 5-Mar-14 Apr-14 Mar-01 May-02 May-08 19-Sep-13 29-Apr-14 13-Nov-13 31-May-13 Top 10 Islamic Fixed Income Funds by 3 Months Returns Fund Fund Manager Performance Measure Fund Domicile 1 MAA Takaful Shariah Flexi MAA Takaful Berhad 4.86 Malaysia 2 BNI-AM DanaPlus Syariah BNI Asset Management 3.48 Indonesia 3 BNI-AM Dana Syariah BNI Asset Management 2.52 Indonesia 4 Atlas Pension Islamic - Debt Sub Atlas Asset Management 2.34 Pakistan 5 Meezan Tahaﬀ uz Pension - Debt Sub Al Meezan Investment Management 2.03 Pakistan 6 Jadwa Global Sukuk Jadwa Investment 1.86 Saudi Arabia 7 Public Islamic Enhanced Bond Public Mutual 1.72 Malaysia 8 MAA Takaful Shariah Income MAA Takaful 1.65 Malaysia 9 Public Islamic Select Bond Public Mutual 0.74 Malaysia 10 Public Islamic Bond Public Mutual 0.64 Malaysia Eurekahedge Islamic Fund Index 0.73 Based on 63.64% of funds which have reported April 2014 returns as at the 19th May 2014 Top 10 Annualized Sortino Ratio for ALL Funds Fund Fund Manager Performance Measure Fund Domicile 1 Atlas Pension Islamic - Debt Sub Atlas Asset Management 15.13 Pakistan 2 Meezan Tahaﬀ uz Pension - Debt Sub Al Meezan Investment Management 15.02 Pakistan 3 Commodity Trading - SAR Riyad Bank 6.63 Saudi Arabia 4 AlAhli GCC Growth and Income NCB Capital Company 4.03 Saudi Arabia 5 Public Islamic Income Public Mutual 3.96 Malaysia 6 Public Islamic Bond Public Mutual 3.29 Malaysia 7 PB Islamic Bond Public Mutual 3.25 Malaysia 8 Altaira Funds - Ethical Global High Dividend (I) Altaira Wealth Management 3.18 Luxembourg 9 Public Islamic Select Enterprises Public Mutual 2.75 Malaysia 10 Public Islamic Select Bond Public Mutual 2.45 Malaysia Eurekahedge Islamic Fund Index 0.21 Based on 52.09% of funds which have reported April 2014 returns as at the 19th May 2014 Based on reporting funds with at least 12 months of returns till April 2014 as at the 30th April 2014

Contact Eurekahedge To list your fund or update your fund information: [email protected] For further details on Eurekahedge: [email protected] Tel: +65 6212 0900

Disclaimer Copyright Eurekahedge 2007, All Rights Reserved. You, the user, may freely use the data for internal purposes and may reproduce the index data provided that reference to Eurekahedge is provided in your dissemination and/or reproduction. The information is provided on an “as is” basis and you assume and will bear all risk or associated costs in its use, and neither Islamic Finance news, Eurekahedge nor its aﬃ liates provide any express or implied warranty or representations as to originality, accuracy, completeness, timeliness, non-infringement, merchantability and ﬁ tness for any purpose.

Most Recent Global Sukuk Priced Issuer Nationality Instrument Market US$ (mln) Managers 14th May 2014 ICD UAE Sukuk Euro market 700 Standard Chartered Bank, HSBC, Dubai public issue Islamic Bank, Citigroup, Emirates NBD 23rd Apr 2014 Midciti Sukuk Malaysia Sukuk Murabahah Domestic market 476 Maybank, CIMB Group, AmInvestment public issue Bank 22nd Apr 2014 Government of UAE Sukuk Ijarah Euro market 750 Standard Chartered Bank, HSBC, National Dubai public issue Bank of Abu Dhabi, Dubai Islamic Bank, Emirates NBD 15th Apr 2014 Turkiye Finans Turkey Sukuk Euro market 500 HSBC, Citigroup, Emirates NBD, QInvest Katilim Bankasi public issue 9th Apr 2014 DanaInfra Nasional Malaysia Sukuk Murabahah Domestic market 801 HSBC, RHB Capital, Maybank, CIMB Group, public issue AmInvestment Bank 2nd Apr 2014 Saudi Electricity Saudi Sukuk Euro market 2,500 JPMorgan, Deutsche Bank, HSBC Company Arabia public issue 2nd Apr 2014 DAMAC UAE Sukuk Euro market 650 Deutsche Bank, National Bank of Abu Dhabi, Real Estate public issue Barclays, Dubai Islamic Bank, Abu Dhabi Development Islamic Bank, Citigroup, Emirates NBD 1st Apr 2014 Ĳ M Corporation Malaysia Sukuk Domestic market 153 HSBC, RHB Capital, Maybank, CIMB Group, public issue Aﬃ n Investment Bank 27th Mar 2014 Maybank Islamic Malaysia Sukuk Domestic market 455 Maybank private placement 25th Mar 2014 National Higher Malaysia Sukuk Murabahah Domestic market 757 Maybank, CIMB Group Education Fund public issue 13th Mar 2014 Imtiaz Sukuk II Malaysia Sukuk Musharakah Domestic market 304 Maybank, CIMB Group public issue 12th Mar 2014 Rantau Abang Malaysia Sukuk Musharakah Domestic market 305 Standard Chartered Bank, HSBC, CIMB Capital public issue Group 11th Mar 2014 SME Bank Malaysia Sukuk Wakalah Domestic market 305 Kuwait Finance House, Maybank, public issue AmInvestment Bank 6th Mar 2014 Bumitama Agri Indonesia Sukuk Musharakah Domestic market 153 UOB, Maybank public issue 4th Mar 2014 Gamuda Malaysia Sukuk Murabahah Domestic market 122 HSBC, AmInvestment Bank public issue 3rd Mar 2014 Syarikat Prasarana Malaysia Sukuk Murabahah Domestic market 610 RHB Capital, Maybank, Kenanga Investment Negara public issue Bank, CIMB Group 27th Feb 2014 IDB Trust Services Saudi Sukuk Wakalah Euro market 1,500 Standard Chartered Bank, HSBC, National Arabia public issue Bank of Abu Dhabi, First Gulf Bank, RHB Capital, Natixis, CIMB Group, Commerzbank Group 20th Feb 2014 Bandar Malaysia Malaysia Sukuk Murabahah Domestic market 455 AmInvestment Bank public issue 17th Feb 2014 NCB Saudi Sukuk Domestic market 1,333 Saudi National Commercial Bank, JPMorgan, Arabia public issue HSBC, Gulf International Bank 13th Feb 2014 Dubai Investments UAE Sukuk Euro market 300 Dubai Islamic Bank, Citigroup, Emirates Park Development public issue NBD, Al Hilal Bank Company

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 18 700 Value (US$bn) 16 600 10 1250 14 Avg Size (US$m) 500 8 1000 12 10 400 6 750 8 300 4 500 6 200 4 2 250 2 100 0 0 0 0 123 4 5 6 78 9 10 11 12 1 2 3 4 5 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2Q 3Q 4Q 1Q 2Q 2013 2014 2009 2010 2011 2012 2013 2014

Top 30 Issuers of Global Sukuk 12 Months Issuer Nationality Instrument Market US$(mln) Iss(%) Managers 1 General Authority Saudi Sukuk Domestic market 4,056 10.0 Saudi National Commercial Bank, HSBC for Civil Aviation Arabia public issue 2 Saudi Electricity Saudi Sukuk Al- Domestic market 3,700 9.1 Banque Saudi Fransi, HSBC, JPMorgan, Deutsche Bank Company Arabia Istithmar public issue 3 IDB Trust Services Saudi Sukuk Euro market 2,500 6.1 Standard Chartered Bank, National Consumer Cooperative Arabia Wakalah public issue Bank, RBS, National Bank of Abu Dhabi, Natixis, CIMB Group, Credit Agricole, Barwa Bank, HSBC, First Gulf Bank, RHB Capital, Commerzbank Group 4 DanaInfra Nasional Malaysia Sukuk Domestic market 1,621 4.0 RHB Capital, Maybank, CIMB Group, Affi n Investment Murabahah public issue Bank, AmInvestment Bank, HSBC 5 Malakoff Malaysia Sukuk Domestic market 1,521 3.7 Maybank, CIMB Group public issue 6 Perusahaan Penerbit Indonesia Sukuk Euro market 1,500 3.7 Standard Chartered Bank, Deutsche Bank, Citigroup SBSN Indonesia III public issue 7 Cagamas Malaysia Sukuk Domestic market 1,396 3.4 RHB Capital, CIMB Group, Maybank, AmInvestment Bank Murabahah public issue 8 National Saudi Sukuk Domestic market 1,333 3.3 Saudi National Commercial Bank, JPMorgan, HSBC, Gulf Commercial Bank Arabia public issue International Bank 9 Republic of Turkey Turkey Sukuk Euro market 1,250 3.1 Standard Chartered Bank, HSBC, QInvest public issue 9 Ooredoo Qatar Sukuk Euro market 1,250 3.1 Deutsche Bank, HSBC, DBS, Qatar National Bank, QInvest public issue 11 Syarikat Prasarana Malaysia Sukuk Ijarah Domestic market 1,233 3.0 HSBC, RHB Capital, CIMB Group, AmInvestment Bank, Negara public issue Maybank, Kenanga Investment Bank, CIMB Group 12 TNB Western Malaysia Sukuk Domestic market 1,109 2.7 CIMB Group Energy Ijarah and public issue Wakalah 13 National Higher Malaysia Sukuk Domestic market 946 2.3 RHB Capital, AmInvestment Bank, Maybank, CIMB Group Education Fund Murabahah public issue 14 Sukuk Funding UAE Sukuk Euro market 750 1.8 Standard Chartered Bank, Goldman Sachs, National Bank (No 3) Musatahah public issue of Abu Dhabi, First Gulf Bank, Dubai Islamic Bank 14 Government of UAE Sukuk Ijarah Euro market 750 1.8 Standard Chartered Bank, HSBC, National Bank of Abu Dubai public issue Dhabi, Dubai Islamic Bank, Emirates NBD 16 Dar Al-Arkan Saudi Sukuk Euro market 746 1.8 Goldman Sachs, Deutsche Bank, Masraf Al Rayan, International Sukuk Arabia Wakalah public issue Emirates NBD, QInvest, Bank Alkhair, Bank of America Merrill Lynch 17 Konsortium Malaysia Sukuk Domestic market 718 1.8 CIMB Group Lebuhraya Utara- Musharakah public issue Timur (KL) 18 ICD UAE Sukuk Euro market 700 1.7 Standard Chartered Bank, HSBC, Dubai Islamic Bank, public issue Citigroup, Emirates NBD 19 Power & Water Saudi Sukuk Domestic market 667 1.6 HSBC Utility Co for Jubail Arabia private placement & Yabbu - Marafi q 20 DAMAC Real UAE Sukuk Euro market 650 1.6 Deutsche Bank, National Bank of Abu Dhabi, Barclays, Estate Development public issue Dubai Islamic Bank, Abu Dhabi Islamic Bank, Citigroup, Emirates NBD 21 Kapar Energy Malaysia Sukuk Ijarah Domestic market 581 1.4 AmInvestment Bank Ventures public issue 22 Turkiye Finans Turkey Sukuk Euro market 500 1.2 HSBC, Citigroup, Emirates NBD, QInvest Katilim Bankasi public issue 22 Government of Ras UAE Sukuk Euro market 500 1.2 Mashreqbank, Standard Chartered Bank, National Bank of Al Khaimah public issue Abu Dhabi, Citigroup, Al Hilal Bank 22 Al Hilal Bank UAE Sukuk Euro market 500 1.2 Standard Chartered Bank, HSBC, National Bank of Abu Dhabi, Mudarabah public issue Citigroup, Al Hilal Bank / Wakalah 25 Midciti Sukuk Malaysia Sukuk Domestic market 476 1.2 Maybank, CIMB Group, AmInvestment Bank Murabahah public issue 26 Pengurusan Air SPV Malaysia Sukuk Ijarah Domestic market 473 1.2 CIMB Group, RHB Capital, Bank Islam Malaysia, private placement AmInvestment Bank 27 Imtiaz Sukuk II Malaysia Sukuk Domestic market 460 1.1 Maybank, CIMB Group Musharakah public issue 28 Maybank Islamic Malaysia Sukuk Domestic market 455 1.1 Maybank private placement 29 Bandar Malaysia Malaysia Sukuk Domestic market 455 1.1 AmInvestment Bank Murabahah public issue 30 Almarai Saudi Sukuk Domestic market 453 1.1 Banque Saudi Fransi, Standard Chartered Bank, BNP Arabia private placement Paribas, HSBC 40,768 100

Top Managers of Sukuk 12 Months Sukuk Volume by Currency US$ (billion) 12 Months Manager US$ (mln) Iss % 17.5 1 HSBC 7,056 24 17.3 Malaysian ringgit 2 CIMB Group 6,309 44 15.5 US dollar 14.9

3 Maybank 4,157 32 10.2 Saudi riyal 8.1 4 AmInvestment Bank 2,917 21 7.2 Singapore dollar 0.2 5 RHB Capital 2,764 34 6.8

6 Saudi National Commercial Bank 2,361 2 5.8 Sukuk Volume by Issuer Nation US$ (billion) 12 Months 7 Standard Chartered Bank 2,320 15 5.7 Malaysia 17.2 8 Deutsche Bank 1,810 6 4.4 Saudi Arabia 13.9 9 Citigroup 1,171 8 2.9 UAE 4.4 10 JPMorgan 1,167 2 2.9 Indonesia 1.9 Turkey 1.8 11 National Bank of Abu Dhabi 924 8 2.3 Qatar 1.3 12 QInvest 866 4 2.1 Singapore 0.4 13 Emirates NBD 717 7 1.8

14 Banque Saudi Fransi 713 2 1.8 Global Sukuk Volume by Sector 12 Months 15 Dubai Islamic Bank 608 5 1.5

16 DBS 345 3 0.9 13% 27% Finance 17 First Gulf Bank 338 2 0.8 6% Government 18 Gulf International Bank 333 1 0.8 10% Utility & Energy Real Estate/Property 19 Natixis 313 2 0.8 Transportation Other 20 Aﬃ n Investment Bank 298 4 0.7 21% 23% 21 Goldman Sachs 284 3 0.7 22 Al Hilal Bank 275 3 0.7 23 Qatar National Bank 250 1 0.6 Global Sukuk Volume - US$ Analysis 24 BNP Paribas 188 2 0.5 US$bn US$m 25 Commerzbank Group 188 1 0.5 18 600 16 Non-US$ US$ 500 26 UOB 180 2 0.4 14 12 400 10 27 OCBC 160 5 0.4 300 8 28 Kenanga Investment Bank 153 1 0.4 6 200 4 100 29 Mashreqbank 150 2 0.4 2 0 0 30 Abu Dhabi Islamic Bank 143 2 0.4 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2Q 3Q 4Q 1Q 2Q 2009 2010 2011 2012 2013 2014 Total 40,768 110 100

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 Public Investment Fund 463 2 16.1 1 Allen & Overy 2,365 3 43.8 2 Samba Financial Group 434 2 15.1

3 Banque Saudi Fransi 283 1 9.8 2 Cliﬀ ord Chance 1,600 1 29.6 4 Alinma Bank 281 2 9.8 5 National Bank of Abu Dhabi 200 1 6.9 3 Baker Bott s 668 1 12.4 6 Al-Rajhi Banking & Investment 188 1 6.5 7 Mizuho Financial Group 166 2 5.8 3 Chadbourne & Parke 668 1 12.4 7 Standard Chartered 166 2 5.8 9 HSBC Holdings 100 1 3.5 5 Mohammed Al Zamil & Emad Al 97 1 1.8 Kharashi Law Firm 9 Mitsubishi UFJ Financial Group 100 1 3.5

Top Islamic Finance Related Loans Mandated Lead Arrangers Ranking 12 Months Top Islamic Finance Related Loans Deal List 12 Months Mandated Lead Arranger US$ (mln) No % Credit Date Borrower Nationality US$ (mln) 1 Standard Chartered Bank 494 5 8.5 10th Jun 2013 ICD UAE 1,675 2 Abu Dhabi Islamic Bank 466 5 8.0

3 Abu Dhabi Commercial Bank 410 4 7.1 7th May 2014 Emirates Steel Industries UAE 1,300 4 Emirates NBD 375 4 6.5 th 5 Dubai Islamic Bank 328 4 5.6 17 Jul 2013 Al Jubail Petrochemical Saudi Arabia 800 (Kemya) 6 Citigroup 297 3 5.1 18th Jun 2013 Turkiye Finans Katilim Turkey 502 7 HSBC 283 2 4.9 Bankasi th 8 Barwa Bank 209 3 3.6 18 Jul 2013 Albaraka Turk Katilim Turkey 427 Bankasi 9 Credit Agricole 174 2 3.0 23rd Dec 2013 Kuveyt Turk Katilim Turkey 388 10 Saudi National Commercial Bank 169 2 2.9 Bankasi 10 Samba Capital 169 2 2.9 24th Mar 2014 Ezdan Real Estate Qatar 350 12 First Gulf Bank 169 3 2.9 5th Jun 2013 Gulf Marine Services UAE 340 13 Arab Banking Corporation 169 4 2.9 14 Deutsche Bank 160 1 2.8 1st Jun 2013 Mobily Saudi Arabia 321 15 Noor Bank 149 3 2.6 26th Sep 2013 Qatar Electricity & Water Qatar 271 16 Qatar Islamic Bank 140 2 2.4 17 National Bank of Abu Dhabi 113 2 2.0 Top Islamic Finance Related Loans by Country 12 Months 18 Sberbank 111 2 1.9 19 Masraf Al Rayan 90 1 1.6 Nationality US$ (mln) No % 1 UAE 2,575 5 44.3 20 Banque Saudi Fransi 89 1 1.5 2 Turkey 1,317 3 22.7 21 Riyad Bank 80 1 1.4 3 Saudi Arabia 1,187 3 20.4 21 National Bank of Kuwait 80 1 1.4 4 Qatar 621 2 10.7 21 Arab Petroleum Investments 80 1 1.4 5 Malaysia 116 2 2.0 24 Union National Bank 72 2 1.2 25 Al Hilal Bank 64 2 1.1 Top Islamic Finance Related Loans by Sector 12 Months 26 Islamic Development Bank 61 1 1.1 27 Mashreqbank 58 1 1.0 Finance

27 Bank Islam Brunei Darussalam 58 1 1.0 Chemicals 27 Ahli United Bank 58 1 1.0 Transportation 30 RHB Capital 58 2 1.0 Real Estate/Property 30 CIMB Group 58 2 1.0 Telecommunications Top Islamic Finance Related Loans Mandated Lead Arrangers US$ bln0 126 3 4 5 12 Months

Bookrunner US$ (mln) No % Global Islamic Loans - Years to Maturity (YTD Comparison) 1 Emirates NBD 604 3 17.9 2013 2 Barwa Bank 435 2 12.9 2012 3 HSBC 419 1 12.4 2011 3 Citigroup 419 1 12.4 2010 3 Abu Dhabi Commercial Bank 419 1 12.4 2009 6 Noor Bank 336 3 10.0 2008 7 Standard Chartered Bank 186 2 5.5 2007 7 Arab Banking Corporation 186 2 5.5 0% 20% 40% 60% 80% 100% 0-3yrs 3-5yrs 5-7yrs 7-10yrs 10+yrs 9 Al Hilal Bank 100 1 3.0

Are your deals listed here? If you feel that the information within these tables is inaccurate, you may contact the following directly: Mandy Leung (Media Relations) Email: [email protected] Tel: +852 2804 1223

MAY 2014

26th — 27th IFN Asia Forum 2014 Kuala Lumpur, Malaysia REDmoney Events

JUNE 2014

5th — 6th Moscow Halal Business Forum Moscow, Russia Halal Holding

10th IFN Iran Forum Tehran, Iran REDmoney Events

26th IFN Europe Forum Luxembourg REDmoney Events

SEPTEMBER 2014

15th – 16th IFN Global Forum Dubai REDmoney Events

29th IFN Kuwait Forum Kuwait REDmoney Events

OCTOBER 2014

13th IFN Sri Lanka Forum Colombo REDmoney Events

NOVEMBER 2014

4th IFN Africa Forum Abuja REDmoney Events

6th IFN Turkey Forum Istanbul REDmoney Events

17th IFN Saudi Forum Riyadh REDmoney Events

DECEMBER 2014

1st IFN Egypt Forum Cairo, Egypt REDmoney Events

Senior Production Mohamad Rozman Besiri Admin & Support Nurazwa Rabuni Designer [email protected] Executive [email protected] Tel: +603 2162 7800 x 68 ______Managing Lauren Mcaughtry Editor [email protected] Financial Faizah Hassan Business Steve Stubbs Controller [email protected] Contributions Sasikala Thiagaraja Development [email protected] Editor [email protected] Manager Tel: +603 2162 7800 x 55 Deputy Publisher Geraldine Chan (Dubai oﬃ ce) News Editor Nabilah Annuar & Director [email protected] Head of Business Mohamed Maksoud [email protected] Development [email protected] Managing Director Andrew Tebbutt Senior Journalist Vineeta Tan EMEA Tel: +971 4 427 3624 andrew.tebbutt @REDmoneygroup.com & Copy Editor [email protected] Subscriptions Faizan Haider Managing Director Andrew Morgan Journalist Rebecca Simmonds Manager [email protected] & Publisher [email protected] [email protected] Tel: +603 2162 7800 x 24 Contributing Ellina Badri Published By: Editor [email protected] Subscriptions Gabriele Baraldo Manager [email protected] MALAYSIA UAE Suite 22-06, 22nd Floor PO Box 126732, 3rd Floor, Correspondents Kamal Bairamov, Shabbir Kazmi, Shirene Shan Tel: +603 2162 7800 x 38 Menara Tan & Tan X2 Tower, Jumeirah Lake 207, Jalan Tun Razak Tower (JLT), Jumeirah Bay, Production Hasnani Aspari Subscriptions Ifran Tarmizi 50400 Kuala Lumpur, Malaysia Dubai, UAE Manager [email protected] Manager [email protected] Tel: +603 2162 7800 Tel: +971 4 427 36 23 Tel: +603 2162 7800 x 63 Fax: +603 2162 7810 Fax: +971 4 431 4614 Production Norzabidi Abdullah Editor [email protected] Subscriptions Mithun N Gangolli (Dubai oﬃ ce) Graphic Eumir Shazwan Kamal Bahrin Accounts Manager [email protected] Designer [email protected] Tel: +971 4 427 3638

DISCLAIMER All rights reserved. No part of this publication may be reproduced, duplicated or copied by any means without the prior consent of the holder of the copyright, requests for which should be addressed to the publisher. While every care is taken in the preparation of this publication, no responsibility can be accepted for any errors, however caused.

Doha Bank 11 Maybank Islamic 9 1Malaysia Development 26 Doha Global Investments 26 Mega Financial Holding Co 10 Aabar Investments 10 Doha Insurance Company 16 Menara ABS 17 AAOIFI 26 DP World 11 Mesaieed Petrochemical Holding Company 26 Abu Dhabi Commercial Bank 11 Dubai Financial Market 11,12,14 Methaq Takaful Insurance Company 15 Abu Dhabi Islamic Bank 9,14 Dubai Investment Park 22 MetLife Asia 16,24 Abu Dhabi Islamic Bank of Egypt 34 Dubai Investments 22 MetLife International Holdings 16,24 Abu Dhabi National Energy Company 15 Dubai Investments Park Development Co 22 Abu Dhabi National Takaful Company 15 Dubai Islamic Bank 7,9,11,30,33 Millenium & Copthorne 4,5 ACWA Power 12 Dubai Islamic Bank Pakistan 9 Money and Credit Council 34 ADIB Securities 14 Economic Development Board 11 MSCI 13,22 Affi n Bank 15 EFG-Hermes 15 Mulkia Investment 13 Affi n Holdings 15 Elixir Capital 32 Muscat Securities Market 26 Affi n Islamic Bank 15 Emaar Properties 11 MyETF MSCI Malaysia Islamic Dividend 26 Affi n Research 10 Emirate NBD Wealth Management 13 NASDAQ Dubai 14 Ağaoğlu Group 21 Emirates Airlines 30 National Bank of Abu Dhabi 11 Aktif Bank 21 Emirates Islamic 12,13,14,33 National Bank of Tajikistan 8 Al Baraka Bank Tunis 7,14 Emirates National Oil Company 30 National Commercial Bank 9 Al Baraka Banking Group 7,14,34 Emirates NBD 30, OCBC 23 Al- Barakah Takaful Company 34 Emirates NBD Capital 7 OCBC Al-Amin 23 Al Khaleej Takaful Group 16 Emirates REIT 13,26 Oman Arab Bank 17 Al Khalĳ i Commercial Bank 26 Energy Exchange 27 Ooredoo 11 Al Rajhi Banking and Investment Corporation 34 Enterprise Qatar 23 Pakistan Credit Rating Agency 17 Al Rayan Bank 11 EY 11,26 Pak-Qatar Family Takaful 17 Al Salam Bank-Bahrain 15 Farabourse Company 27 PineBridge Investments Middle East 16 Al Yusr Islamic Banking 17 Federation of Islamic Association of New Zealand 25 Putrajaya Holdings 7 Alam Maritim 10 FGB 11,12 PwC 3,21,26 Aldar Properties 11 FIMBank-Malta 15 Qatar Central Bank 13 Al-Hadharah Boustead REIT 26 Financial Investment Bank 9 Alizz Islamic Bank 10,13,34 First Guardian Capital 25,31 Qatar Electricity and Water 11 Alpine Wealth Management 16 Fitch Ratings 17 Qatar Exchange 23 AmanahNZ 25 Gulf Bond and Sukuk Association 17 Qatar Industries 11 AmIslamic Bank 9 Gulf Finance House 12,13,14 Qatar International Islamic Bank 15,17,26 Amlak Finance 14 Hospitality Management Holdings 4,5 Qatar Islamic Bank 12,21,26 AMMB Holdings 16,24 HSBC 7,17 Qatar National Bank 11 Arabtec 11 HVS Dubai 4 Qatar Rail 16 Australian Center for Islamic Finance 25 ICD Sukuk Company 30 QInvest 12,26 Bahrain Asset Managers Association 16 IDB 7,10,11,12,21 R Hotels Group 1 Bahrain Bourse 17 IdealRatings 7,20 RAM Ratings 17 Bahrain Development Bank 12 IFA Hotels & Resorts 5 RHB Bank 7,10 Bahrain Institute of Banking and Finance 10 IFSB 11,12,26 RHB Capital 10 Bahrain Islamic Bank 12,34 IIFM 11 RHB Islamic Bank 7,9 Bank Al Jazira 34 IILM 7 Rotana Hotels 4 Bank Dhofar 1,12,13 IMF 10 S&P 12 Bank Islam Malaysia 7,9,10,33 Intergovernmental Authority on Development 36 Sabana REIT 26 Bank Negara Malaysia 10,16 International Livestock Research Institute 36 Samba Financial Group 13 Bank Nizwa 34 Investment Corporation of Dubai 7,30 Saudi British Bank 9 Bank of London and The Middle East 14 IOSCO 26 Saudi Hollandi Bank 9 Bank Pan Indonesia 11 Iran Energy Exchange 27 Bank Panin Syariah 11 Iran Mercantile Exchange 27 Saudi Telecom 7 Bank Sohar 12 Iranian Securities and Exchange Organization 27 Securities and Exchange Commission of Pakistan 9,16 Banque Saudi Fransi 7,12 IRTI 11,12 Securities Commission Malaysia 26 Barwa Bank 12,26 İş Gayrimenkul Yatırım Ortaklığı 21 Shariyah Review Bureau 13 Barwa Real Estate 4,11,17 Islamic Council of Victoria 25 Sharjah Islamic Bank 13,33 BDO 31 Istanbul International Financial Center 21 Shaza Hotels 4,5 Borsa Istanbul 21 Ithmaar Bank 14 Shaza Muscat Company 5 Bursa Malaysia 26 J Equity Partners 16 Siraj Islamic Bank 12 Cagamas MBS 17 JCR-VIS Credit Rating Company 17 Standard Chartered Bank 7,30 Capital Market Authority (Kuwait) 12,13 Jeddah Economic Co 12 Standard Chartered Saadiq 17,23 Cemena Holding 14 Katara Hospitality 4 STR Global 1 Central Bank of Bahrain 7,11,14,15 Kempinski Hotels 4 Syarikat Takaful Malaysia 33 Central Bank of Iran 33 KFH Research 9,24 Tadhamon Capital 16 Central Bank of Oman 13 Kiler GYO 7,21 Takaful Emarat 14 Cii Holdings 4,6 King’s College London 29 Takaful Insurance of Africa 36 Citi 7,30 KIPCO Group 15 Tameer Investment 1 Cliff ord Chance 12 KLCC Property Holdings 26 Tamkeen 23 Commercial Bank of Qatar 11 KLCC REIT 26 Taylor Wessing 29 Credit Guarantee Corporation 23 KLCCP Stapled Group 26 Tehran Stock Exchange 27 Crescent Hotels 3 KLCCP Stapled Securities 26 Crescent Rating 3 Korfez Gayrimenkul Yatirim Ortakligi 21 The Family Offi ce Company 16 Crescent Wealth 25 Kuveyt Turk 21 Ubl Fund Managers 10 DAMAC Properties 1,3 Kuwait Finance House 13 UK Law Society 29 DAMAC Real Estate 14 Kuwait Stock Exchange 26 Union National Bank 14,15 Dana Gas 13,15 Kwantas SPV 8 United Gulf Bank 15 Dar Al Arkan Real Estate Development Company 7 London Stock Exchange 12 Urban Land Institute 21 Dar Al Sharia Legal & Financial Consultancy 19 Madina Village Community Services 31 US Federal Reserve 11 Dar Al Shariah 1 Maisarah Islamic Banking 1,13 Venture Capital Bank 15 Dar Al Takaful 14 Maju Expressway 17 Viability Management Consultants 4,5 Dawood Family Takaful 17 Malakoff Corp 26 Vodafone Qatar 11 Deloitt e 1,35 MARC 17 Westports Malaysia 17 Deutsche Bank 11 Mashreq 23 World Bank 12 DinarStandard 3 Masraf Al Rayan 12 Wyndham Group 5

Each subscription will receive: ȊȱśŖȱȱȱ ȱȱnews available every Wednesday Yes! I would like to subscribe to: Ȋȱ¢ȱ ȱ Ȋȱ¡ȱȱȱȱȱ INDIVIDUAL SUBSCRIPTION COMPANY WIDE SUBSCRIPTION GROUP WIDE SUBSCRIPTION ȊȱUnlimited access to entire archived ŗȱȱȱǞşşśȱĴ ŗȱȱȱǞŚǰşşśȱĴ 1 Year: US$12,500 library ŘȱȱȱǞŗǰŝşŖȱĴ ŘȱȱȱǞŞǰŜśśȱĴ 2 Years: US$22,050 ȊȱAll additional supplements, guides and reports (Max: 10 Individual Subscriptions) YOUR DETAILS

Full Name: (First Name) (Surname) Company Name: Job Title:

Address:

Postal/Zip: Country:

Work Email: Telephone: Fax:

The information you provide will be safeguarded by REDmoney, whose subsidiaries may use it to keep you informed of relevant products & services. TO INITIATE YOUR SUBSCRIPTION, RETURN FAX TO +603 2162 7810

Payment can be made in US$ by: How to subscribe: [email protected] ȱȱȮȱ ȱȱ ǯę ǯȦǯ ¢ȱĜ ȱĜ Check Suite 22-06, 22nd Floor PO Box 126732, Telegraphic Transfer (T/T) Menara Tan & Tan 3/F, X2 Tower, Jumeirah 207, Jalan Tun Razak Lake Towers (JLT), Please send your T/T advice with your subscription form to us either by post or fax. 50400 Kuala Lumpur, Malaysia Jumeirah Bay, Dubai, UAE ȱęȱ ȱȱȱȱ¢ȱȱǯȱȱȱȱȱȱ ȱęȱȱ¢ȱȱȱȱȱǯ Tel: +603 2162 7800 Tel: +971 4427 3600 Fax: +603 2162 7810 Fax: +971 4431 4614 NE-IFN11/20