Vol. 5, Issue 22 6th June 2008 The World’s Global Islamic Finance News Provider

In this issue QATAR Islamic Capital Markets Briefs ...... 1 Doha plans global acquisitions Islamic Ratings Briefs ...... 9 Doha Bank is planning to spend US$300 until the economic conditions stabilize and million on acquisitions this year focusing consumers regain their confi dence. Despite IFN Report ...... 10 mainly on Islamic banking, said its CEO, the current fi nancial crisis, the bank will Raghavan Seetharaman. It is looking at the start operations in Kuwait and South Korea Islamic Banking in US market, more specifi cally Houston and next month. Brunei Darussalam ...... 11 Washington, as well as countries in Asia. It is Venture Capital’s Islamic Principles .....13 particularly eyeing the GCC countries to add Currently, Doha Bank has representative of- to its branches in Doha and , he noted. fi ces in Singapore, Tokyo, Shanghai, Bucha- Shariah and Legal Aspects in rest and New York, besides a brokerage fi rm Islamic Venture Capital ...... 15 On the bank’s plan to issue Sukuk worth in India. Doha Islamic Bank is the Shariah Leads Robust Islamic US$1 billion, Seetharaman said it is on hold compliant banking arm of Doha Bank. Venture Capital Industry ...... 16

Challenges of Islamic Private INDONESIA Equity in the Western World ...... 17

More Islamic banks coming up Meet the Head ...... 19 The Islamic units of fi ve banks are being up- growth level is still below the central bank’s Azrulnizam Abd Aziz, Standard Chartered Saadiq graded into fully Shariah compliant commer- expectation. Termsheet ...... 20 cial banks as early as next year, according to Prasarana Negara US$616.4 million Sukuk Siti Chalimah Fadjrijah, deputy governor of Assets of Islamic banks have grown at 37%, Ijarah Bank Indonesia. She named BRI Syariah, BNI faster than conventional banks but still quite Takaful Report ...... 21 Syariah and Bukopin Syariah as among them. far from achieving the targeted 5% of total Takaful Poised to Take Off in the EU commercial banking assets in the country, she Siti Chalimah described the development added. Moves ...... 23 as a positive improvement for the Islamic Deal Tracker ...... 24 banking industry in the country, although the (Also see IFN Report on page 10) Islamic Funds Tables ...... 25 AFRICA S&P Shariah Indexes ...... 26 Africa-focused equity fund launched Dow Jones Islamic Indexes ...... 27 Stanlib has launched a Shariah compliant region’s exchanges can benefi t from the fund equity fund which aims to invest in Islamic as well, as long as the majority of their turnover Malaysian Sukuk Update ...... 28 equities in the African region outside South and profi ts are from Africa. It is aiming at 15% Islamic League Tables ...... 29 Africa. The open-ended fund, registered in to 20% returns, without a performance fee Ireland, is currently on a road show in the charge. According to Ashraf Mohammad, Events Diary...... 32 Gulf region. The bank targets to raise US$250 portfolio manager of the fund, Africa has a million. large pool of Shariah compliant assets. Subscriptions Form ...... 33 Country Index ...... 33 The fund can be invested in 16 African equity Stanlib is the asset management arm of markets. Companies not listed on any of the Standard Bank of South Africa. Company Index ...... 33 NEWS BRIEFS www.islamicfi nancenews.com

KUWAIT/SYRIA SWITZERLAND/UAE President calls for JV with KIA UAE bank in Basel II accord with IRIS The president of Syria has proposed a joint-venture with Kuwait UAE’s Invest Bank has inked an agreement with IRIS to use its three Investment Authority (KIA), said a report. Bashar Al-Assad said the JV year Basel II consultancy support to implement the international capital could involve the governments of the two countries as well as private framework. This is considered to be a strategic move for the bank as it investors. is now ahead of most banks in the region in terms of risk management practices and compliance to the UAE Central Bank. The possibility of a free-trade arrangement between the two is also being studied, he added. According to the report, Bashar spoke after meeting Sami Rashed Farhat, general manager of Invest Bank, said the relation- KIA’s managing director, Bader Al-Saad, during a visit to Kuwait. ship between the two not only helps in complying with the Basel II re- quirements but also helps improve the risk standards at the bank. Gulf Arab investors are looking for business opportunities internationally including in Syria, whose economy is opening up to more foreign private investments. BAHRAIN GBCorp forms investment subsidiary BAHRAIN/INDONESIA Global Banking Corporation (GBCorp) and Taylor-DeJongh, an infrastructure advisory company, are launching Global Energy Financial ABG opens Indonesian offi ce Services (GEFSCO), which will participate solely in Shariah compliant Albaraka Banking Group (ABG) has opened an offi ce in Indonesia, said energy investments globally. The company will be wholly-owned by its chairman, Sheikh Saleh Kamel, on Thursday. In a statement, the GBCorp. bank also revealed its plan to expand to Malaysia, which is one of the biggest Islamic banking hubs in the world besides the Gulf. Plans to There will be no constraints on the size of future deals, said Ahmed Al branch out to China and India are also being studied. Khan, GBCorp’s head of investment banking, but the company will focus more on the capital-challenged companies. He added that GEFSCO will Noting that Indonesia has a large Muslim population, Sheikh Saleh said look into investing into the renewable energy sector where its interest its commercial and economic links with the Arab and Islamic world are is in oil and gas. growing. Mark Hanson, CEO of GBCorp, said Gefsco is looking into opening LIBYA/QATAR branches, in London and Asia. Masraf Al Rayan plans Libyan expansion Masraf Al Rayan is applying for permission to open a representative offi ce in Libya from the Qatar Central Bank, the bank revealed on Thurs- day. It is looking into offering commercial and investment banking serv- ices in the North African country. 25 – 28 August 2008 Sandton Convention Centre It was previously reported that Qatar National Bank had opened an of- Johannesburg fi ce in Libya in April, while last month Abu Dhabi-based First Gulf Bank South Africa said an affi liate has received approval to operate in that country. The rise and rise of Islamic finance Libya has the largest oil reserves in Africa, and plans to modernize its banking system. • Gain vital insights on best practices in successful Islamic banking from key players from the United Arab MALAYSIA , Pakistan, Malaysia and Indonesia • Strategise on Islamic investment opportunities New Islamic debit card launched sweeping the African market EONCAP Islamic Bank launched its Shariah compliant debit card on • Debate on Islamic REITs and the potential of Islamic Thursday. The bank’s CEO and executive director, Fozia Amanulla, said hedge funds in Africa it plans to issue up to 70,000 of the cards within a year. The card, she said, will be attractive to both Muslims and non-Muslims and will give • Update yourself on Sukuk, Takafol, Islamic users better control of their fi nances. investment, private banking and Islamic funds Seats are limited. Secure yours by registering early. The card can also be used for e-banking, Fozia added. Because of its Contact Evashnee Pillay on +27 (0)11 516 4016 or Islamic nature, the card cannot be used to purchase alcohol or for gam- email [email protected] bling purposes. Terrapinn1925/Islamic Finance News www.terrapinn.com/2008/islamic EONCAP Islamic is a subsidiary of EON Bank.

© Page 2 6th June 2008 NEWS BRIEFS www.islamicfi nancenews.com

SAUDI ARABIA MALTA Health insurance scheme Authorities to review regulations Saudi Arabia plans to have a compulsory health insurance scheme for Changes to Malta’s regulations are being studied to enable Takaful foreign workers in the kingdom. An annual payment of US$133.50 will providers and other Shariah compliant fi nancial companies to operate be imposed on workers such as housemaids or drivers in the country. in the country, said the Malta Financial Services Authority (MFSA).

The insurance also covers the workers’ families in Saudi Arabia. Benefi ts A public consultation document on introducing Islamic fi nance in the include medical treatment. country was published by MFSA recently which analyzes the comparison between Shariah compliant funding structures and fi nancing vehicles MALAYSIA and Malta’s. More branches for Bank Islam According to MFSA, similar documents specifi cally on Sukuk and Bank Islam plans to add 25 more branches in the next three years to its Takaful are being planned for the end of this year and early next year, existing 90 branches nationwide, said managing director Zukri Samat. respectively. On the bank’s plan for a merger with a local bank, he said it is still look- ing for ‘the right partner’. MALAYSIA/UK

Zukri spoke after signing a will writing agreement with Amanah Raya on INCEIF, ICMA Centre sign agreement Wednesday under which Bank Islam will distribute and sell the services The International Centre for Education in Islamic Finance (INCEIF) and which will be written and executed by Amanah Raya. the ICMA Centre have signed an agreement to offer a Masters of Sci- ence in Investment Banking and Islamic Finance program at the ICMA This is expected to attract 1.5 million customers and generate as much Centre in the University of Reading. It was signed by Agil Natt, CEO of as RM1.5 million (US$460,400) in revenues. INCEIF, and Gordon Marshall, vice chancellor of the university.

SWITZERLAND/UAE The degree, according to the center, will be the fi rst in the UK to use materials taught by Islamic fi nance specialists in the fi eld, and aims to ADIH launches new funds cater to the increasing interest in Islamic fi nance products and serv- Abu Dhabi Investment House (ADIH) has launched two new funds - one ices. Students are required to spend three months in to for Islamic equity - in cooperation with its Geneva offi ce. understudy Islamic fi nance professionals.

ADIH Islamic Helvetic Fund - Global Islamic Equity will invest in Shariah compliant companies worldwide, and targets a return of 10% per year, with a volatility rate of 5%. It has a minimum subscription amount of US$100,000, and the initial offering period will end on the 31st July this year.

The other is ADIH Helvetic Fund-Optimised Structured product, which has the same minimum subscription amount and initial offering period as the Islamic fund.

Both funds will be administered by Pictet, one of Switzerland’s largest private banks.

SAUDI ARABIA Offshore expertise Al Rajhi to lend US$14 billion with a local presence. Al Rajhi Bank plans to loan US$14 billion for various projects in the Gulf countries, said Hidayathullah Baig, its head of project fi nance. It is backing four possible bids for power and water projects in the Gulf, at a The world's leading offshore law firm and the first to establish an office in the Middle East. Maples offers clients around the Middle cost of between US$2 billion and US$4 billion, he added. East an unparalleled range of Cayman Islands and British Virgin Islands legal services, including advising on offshore Islamic Hidayathullah said that up to US$10 billion may be loaned to a Saudi finance structures such as sukuk transactions, investment funds, rail project which will be developed by seven fi rms from Saudi Arabia as trusts and securitisations.

well as Asciano of Australia. Contact Tahir Jawed at +971 4 360 4070 or e-mail: [email protected] Al Rajhi is also in discussion with Saudi Aramco on fi nancing its refi nery www.maplesandcalder.com projects which may amount to US$10 billion. Another similar project is also in planning with Total, noted Hidayathullah.

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MALAYSIA Gross distribution for stakeholders MAAKL Mutual announced a 6.74% yield for the MAAKL Al-Umran fund for the fi nancial year ended the 31st May 2008. According to its CEO, Wong Boon Choy, the gross distri- presents bution per unit for the fund is RM0.02 (US$0.006).

The MAAKL Al-Umran fund is a Shariah compliant fund that seeks a balance between equities and bonds to maximize income, he added. The distribution is for unit holders CALENDAR 2008 who maintained their stake in the fund at the end of the fi nancial year period. Essentials of Islamic Finance & the Islamic Finance Industry UAE 16 – 18 June, JAKARTA RAK’s Sukuk oversubscribed The AED1 billion (US$272 million) Sukuk issuance by the Investment and Development Key Legal, Documentary & Structuring Offi ce for the government of Ras Al Khaimah (RAK) has been successfully closed by Issues for Islamic Financial Products Standard Chartered Bank. At the time of the pricing, the Islamic bonds were 1.5 times oversubscribed, with a total book size of over AED1.5 billion (US$408 million). 1 – 3 July, KUALA LUMPUR

The issuance is the fi rst tranche of the government’s US$2 billion Sukuk program. This will be a benchmark size for future dirham-denominated Sukuk issuance, and has Islamic Financial Instruments been given an ‘A’ rating by Standard & Poor’s and Fitch Ratings. & Structured Products 7 – 10 July, ZURICH KUWAIT KFH opening 175 branches by December Accounting & Financial Reporting for Islamic Banking & Finance Kuwait Finance House (KFH) plans to open 175 new branches worldwide by the end of 14 – 16 July, KUALA LUMPUR this year, said its CEO, Mohammed Sulaiman Al-Omar. The expansion plan is expected to cover the Kuwaiti, Malaysian, Bahraini and Turkish markets. It is part of the bank’s efforts to diversify its investments in different sectors and regions. Takaful: Islamic Insurance 6 – 8 August, KUALA LUMPUR KFH, the fi rst Shariah compliant bank in Kuwait, has seen rapid expansion in the Middle East and Asian regions. It is also targeting new markets in Europe, Central Asia and the GCC. Structured Islamic Finance & Investment Products MALAYSIA/SAUDI ARABIA 14 – 15 August, KUALA LUMPUR Enhancement for IDB The Islamic Development Bank (IDB) needs to be repositioned and exploit the current Islamic Investment Funds: Mutual Funds, subprime crisis to further develop Islamic fi nance and capital markets, said Ahmad Hedge Funds & REITs rd Husni Mohamad Hanadzlah, Malaysia’s deputy fi nance minister. He told IDB’s 33 10 - 12 November, KUALA LUMPUR board of governors meeting that the bank should take advantage of the fact that inves- tors are shying away from complicated products and preferring the more transparent and secured ones available under Shariah compliant fi nance. The Islamic Capital Markets & Investment Banking School Ahmad Husni said IDB should also consider attracting petrodollars to fi nance develop- 13 – 16 October, HONG KONG ment within the Organization of Islamic Conference (OIC) countries. He also touched on the worldwide hike in food prices and shortages, saying the poorer countries may be vulnerable to its effects. Takaful Products, Markets & Operations 16 - 18 December, KUALA LUMPUR He invited the International Islamic Trade Finance Corporation (ITFC), which was formed to enhance IDB’s trade fi nance portfolio, to establish an offi ce in Malaysia and join the country in developing halal products internationally. www.IslamicFinanceTraining.com

In a related report, Saudi Arabia’s minister of fi nance, Shaikh Ahmed Mohammed Al FOR MORE INFORMATION, contact: Khalifa, told the meeting that an Islamic fi nancial and banking studies center will be Andrew Tebbutt Tel: 603 2162 7802; set up in the kingdom. He said the center will be an essential addition to the industry Email: [email protected] in the region.

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MALAYSIA Online Takaful scheme Tune Money, an online fi nancial services provider, has unveiled its new Islamic motor protection plan that enables motorists to buy or renew their vehicle insurance online. The new Shariah compliant scheme is underwritten by CIMB Aviva Takaful.

According to its CEO, , the products are simple and easy to understand. As motor insurance is a tariffed product, other benefi ts are added to Tune Money’s motor Takaful to make it more attractive. These include a 24-hour road assistance service by CIMB Aviva Takaful and earning Tune Points for holders of Tune Money prepaid Visa card, which translate into cash. Another plus point is that the product is unbundled, allowing for more transparency for customers in choosing the coverage that is suitable for them, said Zafrul.

The company also plans to launch its hospitalization and surgical protection plan within the next few months. UAE/SYRIA Aman Syria gets green light Dubai Islamic Insurance and Reinsurance Company (Aman) has been given the green light to operate in Syria by the Syrian Insurance Supervi- sion Authority. The Aman Syria for Takaful Insurance is part of Aman’s expansion strategy in the region and takes it a step closer to penetrate other markets in the future, said Hussain Al Meeza, Aman’s CEO and managing director. SAUDI ARABIA Banking ‘Sultan’ of the region Saudi Arabia has one of the most lucrative and effi cient banking in- dustries in the region, according to a report by EFG-Hermes, a leading investment bank in the MENA region. The report, entitled ‘Best of Both Worlds’, described two contributing factors as low penetration and high profi tability.

It also included a detailed analysis of the top 11 banks in Saudi Arabia, including the Shariah compliant fi nance institution Al Rajhi Bank, which received a “buy” recommendation for the long and short terms.

Samba Financial Group, Riyad Bank, Arab National Bank and Banque Saudi Farsi were also given similar recommendations. Other issues dis- cussed in the report are the macroeconomic backdrop, sector and prof- itability outlooks and valuation of the industry in Saudi Arabia. UAE New subsidiary for Tamweel Tamweel has announced the formation of a subsidiary, Tamweel Properties & Investments, a real estate investment and brokerage services company. The new unit has a paid-up capital of AED400 million (US$109 million) and more than AED4 billion (US$1.1 billion) in assets.

Tamweel is UAE’s largest Shariah compliant provider of real estate finance.

© Page 5 6th June 2008 NEWS BRIEFS www.islamicfi nancenews.com

SAUDI ARABIA UK Falcom launches Islamic fund Another step closer to issuing Sukuk Falcom Financial Services has launched an Islamic investment fund The UK government prefers the ‘bill-like’ Sukuk as its fi rst sovereign that will be used to invest in Shariah compliant assets and investment Islamic bond issuance, according to Economic Secretary and City Min- products. The Falcon Multi-Assets Fund has a minimum investment of ister Kitty Ussher. She said after an Islamic Finance Experts Group SAR2,000 (US$533) for individual investors, while corporations can meeting that the Sukuk can be fully integrated with the conventional invest a minimum of SAR50,000 (US$13,332). Treasury bill program.

BAHRAIN Ussher said the Treasury plans to publish a paper by the end of this year on the country’s Islamic fi nance strategy. She expects the paper SICO most active on the BSE to provide the government and major players in the industry with de- The Securities and Investment Company (SICO) is the most active bro- tailed assessments of issues that need to be addressed for the sector’s ker on the Bahrain Stock Exchange (BSE). Its market share by value of growth in the UK. all trades on the exchange was BHD191 million (US$507 million) in 2007, or 48.7% of the total turnover value, with the overall transaction HONG KONG standing at BHD392 million (US$1.04 billion). First Sukuk worth US$1 billion? SICO is an investment bank incorporated in 1995, offering services Hong Kong Airport Authority is set to sell Hong Kong’s fi rst Islamic bond which include asset management, brokerage and corporate fi nance. It sometime in the third quarter of this year, revealed its CEO, Stanley Hui. is the fi rst closed company to be listed on the BSE. Final arrangements are underway. It is also waiting for some tax issues to be resolved, he added. Hui, however, neither denied nor confi rmed QATAR a report that the airport operator is raising up to US$1 billion from the Sukuk. According to the report, HSBC and Citigroup may be involved in Profi t of US$67 million the issuance. QInvest announced US$67 million in profi t for the fi nancial year end- ed the 31st March 2008, with total assets and total equity reported The special administrative region of China is looking into developing at US$257 million and US$587.3 million, respectively. Total revenues the city as a hub for Islamic fi nance, said Hui. Last month, it was were at US$102.6 million, with its annual return on capital at 14.6%. reported that the airport operator, Hong Kong Mortgage Corporation and MTR Corporation may be the fi rst companies to issue Sukuk in The Shariah compliant investment bank focuses on real estate and Hong Kong. infrastructure development, private equity, venture capital, asset man- agement and advisory services, and was licensed in April last year. UAE NORTH AFRICA/UAE Aldar Sukuk worth US$500 million The Sukuk issuance by Aldar Properties has been priced at 175 basis ADIB buys Egypt bank points above the three-month Emirates Interbank Offered Rate (EIBOR). Abu Dhabi Islamic Bank (ADIB) recently acquired Egypt’s National Bank The size of the sale is likely to be announced later this week, although of Development, according to its managing director, Khamis Buharoon. it is expected to be benchmark-sized which typically means at least He added that the move is part of ADIB’s strategy to become a world- US$500 million. renowned Islamic fi nancial institution. MALAYSIA ADIB has also applied for a license to start operations in Algeria, which is part of the bank’s expansion plans. The managing director made the KFHM concludes deal announcement during the bank’s annual reception. Kuwait Finance House Malaysia (KFHM) has closed a deal for fi nancing a biogas green power project with the Bell Group of Companies, the fi rst SAUDI ARABIA local renewable energy project developer, to capture waste by-products and convert them into green energy that will be linked to the national IDB: Saudi banks not affected by crisis electricity grid. KFHM will provide the group with Shariah compliant According to a report by the Islamic Development Bank (IDB), the recent fi nancial solutions for the project. US subprime crisis did not affect most of the banks in the country due to the low exposure of its fi nancial and banking sectors to the global SAUDI ARABIA/US capital market. Marsh heading to Saudi The 2007-08 annual report said the falls in the global equity markets New York-based insurance broker and strategic risk investor, Marsh, has since early this year has created uncertainties and this may lead to received the green light to operate in Saudi Arabia. According to the fi rm, a further slowdown in economic growth. IDB also said the biggest Marsh Saudi Arabia Insurance and Reinsurance Brokers will provide challenge faced by its members is alleviating infl ationary pressures due insurance and reinsurance services, while Marsh Insurance Consulting to the uncertainties and the increases in energy and food prices. Saudi Arabia will offer consultancy and risk advisory services.

© Page 6 6th June 2008 NEWS BRIEFS www.islamicfi nancenews.com

QATAR KUWAIT/UAE Bonds at US$3 billion Ekttitab lists on DFM HSBC targets to arrange up to US$3 billion worth of bonds next year, Ekttitab Holding Company was listed on the Dubai Financial Market said its director of investment banking in Qatar, Kapil Chadda. He added (DFM) on the 29th May following approval by DFM and the Emirates that the sales could be in both conventional and Shariah compliant Securities and Commodities Authority (ESCA). Ekttitab issued 47 million bonds. shares priced at a par value of KWD1 (US$4).

Following the recent global credit crunch, Chadda said, some of the The company’s shares are also being listed on the Kuwait Stock bonds may be issued towards the end of the year when the companies Exchange, and the dual listing will hopefully give UAE investors more in Qatar feel confi dent of the market stability. exposure to the shares and the ability to participate in its trading, said Aku Darwish Al Shimali, chairman and managing director of Ekttitab. UAE DFM vice chairman Rashid Al Shamsi said the listing signifi es stronger ties between the two stock exchanges, as well as between the UAE’s DEWA Sukuk raises US$749 million and Kuwait’s economies. Dubai Electricity & Water Authority (DEWA) has sold AED2.7 billion (US$749 million) of Sukuk in its fi rst dirham-denominated issuance. PHILIPPINES The fl oating rate Sukuk Ijarah has a fi ve-year sale period. DBP takes up stake in Al Amanah It was previously reported that Barclays Capital, Citigroup, Dubai Islamic The Development Bank of the Philippines (DBP) recently acquired 70% Bank and Emirates NBD participated in the transaction. The issuance of Al Amanah Investment Bank for PHP35 million (US$803,000). In was denominated in UAE currency to meet the demand for local cur- the sale, 300,000 shares were bought from the government while the rency debt. Privatization Management Offi ce sold 50,000 shares to DBP.

DBP has also outlined its plans to rehabilitate the Shariah compliant INDIA bank, with a number of foreign and local banks already expressing GIC to launch Islamic reinsurance interest in participating in the effort. It is investing around PHP1.3 General Insurance Corporation (GIC) is launching a new reTakaful billion (US$30 million) in Al Amanah and using the bank as its Islamic program within this fi nancial year, said its chairman and managing banking arm. director, Yogesh Lohiya. He added that GIC is still studying the matter and will set up the product at its head offi ce in Mumbai before an DBP has received the green light from the country’s central bank, international launch later. The focus will be on the markets in Malaysia, Bangkong Sentral Pilipinas, to venture into Islamic banking. Bangladesh, Indonesia, Saudi Arabia and other West Asian countries, said Lohiya.

GIC is the only reinsurer in India. It has branch offi ces in London and Dubai as well as a representative offi ce in Moscow. Advising on the laws of BERMUDA CAYMAN BVI BAHRAIN Since 1928, Conyers Dill & Pearman has consistently provided responsive, timely and thorough offshore law advice. The Dubai office provides advice on corporate and Second company for Nexus commercial law, with particular emphasis on private equity funds, mutual funds, capital markets, project financing, Nexus has opened a second branch in the country to better serve its securitisations and commercial and private aircraft financing clients, especially the expatriates, said its general manager in Bahrain, and registration. Nigel Watson. The fi nancial adviser and insurance solutions provider also has offi ces in Dubai as well as Abu Dhabi, and plans to expand to Qatar later this year. Saudi Arabia is also a likely target, but the tough Conyers Dill & Pearman regulations may require Nexus to work with a partner, Watson noted. The Offshore Law Firm

Level 2, Gate Village 4 Besides increasing the number of advisers by 20%, the second branch Dubai International Financial Centre PO Box 506528 has made what Watson called a signifi cant amount of investment in Dubai, U.A.E. recruiting local talents, and it provides one of the best training programs Tel: +9714 428 2900 Fax: +9714 428 2999 for fi nancial services professionals in Bahrain. Email: [email protected]

He also mentioned that Nexus and the Chartered Insurance Institute of the UK are working together to improve the standard of insurance www.conyersdillandpearman.com professionals in the Middle East, and encourages its employees to improve themselves, such as by getting additional qualifi cations or Anguilla & Bermuda & British Virgin Islands & Cayman Islands & Dubai & Hong Kong & London & Moscow & Singapore certifi cations. Advising on the laws of Bermuda, British Virgin Islands and Cayman Islands.

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KUWAIT/SAUDI ARABIA INDIA/UAE GIH invests in Mazaya Saudi EIB gets US$33 million for fund Global Investment House (GIH) has formed Al-Thouraia Project The Danat India RIA Fund by Emirates Islamic Bank (EIB) has received Management Company, a special purpose vehicle (SPV) with an initial overwhelming response, obtaining AED120 million (US$33 million), capital of KWD180 million (US$678 million), which will invest all its inclusive of the AED60 million (US$16.3 million) that the bank has funds in Mazaya Saudi for commercial investment. GIH will be managing injected in the fund. Following the closing of the fund, EIB will buy a the launch and private placement of the Kuwait dinar offering of Al- 77.78% stake in Danat RIA Company, which will buy 500 acres of land Thouraia to its investors. for an affordable housing area in India.

The Shariah compliant Mazaya Saudi plans to become the number The positive response has prompted EIB to plan for a second fund which one Saudi real estate company, and will use its funds for expansion will also focus on the development of the Indian real estate sector. throughout the kingdom, said Khaled Esbaitah, vice chairman and CEO of Mazaya Holding, the company managing Mazaya Saudi. The real BAHRAIN estate company will have SAR2.5 billion (US$667 million) in total paid- up capital. Khaleeji plans US$2 billion company Khaleeji Commercial Bank plans to form a building materials company, Mazaya Saudi will provide comprehensive real estate services for all Binaa, with an expected value of more than US$2 billion, according types of projects, and manage the projects from architectural design to managing director and CEO Ebrahim H Ebrahim. Binaa will focus to execution. on the construction of wholesale and retail markets in the Gulf and MENA regions. It also intends to build a world-renowned brand that will PAKISTAN reposition the building materials industry in these regions, he added.

Faysal to start Islamic division The Gulf Organization for Industrial Consulting is the market adviser for Faysal Bank is to start its Shariah compliance unit next week in line with Binaa, and they are working on developing Binaa’s market assessment the increasing demand for Islamic products in the country, said its CEO, and entry strategy. China National Building Materials is the technical Naved A Khan. He said seven branches will be opened this year with 10 and trading partner for the new company. added annually over the next three years. Binaa has also formed strategic partnerships with Gulf Finance House, The Islamic arm will be using cards and insurance products developed Abu Dhabi Investment House, Emirates Islamic Bank and Dubai by Bahrain-based Shamil Bank, which owns 68% shares in Faysal. Investment Company.

The bank also plans to broaden its network in the country, and is looking into increasing the number of branches to 150 by the end of 2009, with Only a 23 new branches coming up this year in addition to the existing 107 few places branches, he added. remaining!

13 June 2008, Middle East Association, London MALAYSIA “What has religion got to do with banking? More Islamic stocks for investors The rapid rise of Islamic Finance” The UK is the largest centre of Islamic However, issues such as a lack of trust In conjunction with Dow Jones, The Securities Commission (SC) has reported an increase in Shariah Finance in the Western World and has in the nature of these products, a lack Middle East Association and the Wall been described as Europe’s capital of standardisation, a dearth of Islamic Street Journal Europe, Financial News’ compliant stocks listed on Malaysia’s stock exchange. A total of of Islamic Finance. There is a huge banking practitioners (human capital) Islamic Finance Lunch Briefing demand by foreign investors, including and issues regarding transparency conference will provide a platform for 23 stocks were included, such as top mobile phone company TM Gulf investors, sovereign wealth funds, have stifled the growth of Islamic key players to discuss the pertinent Muslim and non-Muslim retail investors, Finance in the UK. topics, learn about new developments International and energy company Dayang Enterprise. SC also noted for Sharia based UK banking products. and network in a relaxed atmosphere. that 12 stocks have been dropped. Top level speakers include: Be there for EXPERT ADVICE on:

Mr. Michael Thomas, • How to implement Islamic Finance The market regulator said the listing, which took effect on the 30th May, Director General, Middle East Association • The size of the industry • What the best routes into Islamic Finance are • How competitive Islamic Finance is accounts for 85% of the securities listed on Bursa Malaysia. Mr. Brian Kettell, Course Director, Islamic • How to secure the big deals Banking & Finance Training Courses. (Former Adviser to the Bahrain Monetary Agency, now the Central Bank of Bahrain) Delegates places are BAHRAIN/UK Mr.Waheed Qaiser, Managing Director, Qatar Consulting Co. and Amanah Banking limited and are allocated on a first Consultants (Former Head, Islamic come first served basis. Investors need to act fast Investment Unit, United Bank of Kuwait) To register or for more information contact Lead Media Partner: Gulf Finance House (GFH) has advised its investors to move into the UK Anna Konieczny on +44 (0) 20 7426 3345 or commercial property market as the recent decrease in prices there has email akonieczny @efinancialnews.com For sponsorship information contact made it more attractive. According to a report by the Islamic investment Ifeoma Bosah on +44 (0) 20 7426 3346 or email ibosah@efinancialnews.com bank, the correction in the sector is providing long-term investors an opportunity to purchase properties, but they should act quickly as the www.efinancialnewsevents.com/islamicfinance08/ market may not stay this way for long.

© Page 8 6th June 2008 RATINGS NEWS www.islamicfi nancenews.com

UAE GULF Capital Intelligence upgrades UAB Moody’s fi rst rating on GGICO United Arab Bank’s (UAB) long-term and short-term foreign credit ratings Moody’s Investors Service has affi rmed Gulf General Investment have been upgraded by Capital Intelligence from ‘BBB’ and ‘A3’, to Company’s (GGICO) long-term local and foreign currency issuer ratings ‘BBB+’ and ‘A2’ respectively with a stable outlook on both. Its support at ‘Baa2’ with a stable outlook. rating was also increased to ‘3’ from ‘4’, while the fi nancial strength rating is maintained at ‘BBB’. The ratings indicate the fi rm’s fi nancial policy, diverse businesses and practical risk management policy, said the rating agency’s senior vice These ratings are refl ective of the support from the Commercial Bank president in Dubai, Philipp Lotter. of Qatar (CBQ), its new strategic shareholder (39.9%), as well as its healthy credit quality and capacity for prompt repayment. But its small GGICO is listed on the Dubai Financial Market and this is the fi rst time size and narrow operation range may affect future ratings, says Capital that Moody’s has assigned ratings on the company. Intelligence. US MALAYSIA S&P downgrades three banks Maybank’s Islamic bonds rated Standard & Poor’s (S&P) Rating Service has lowered its ratings on three RAM Ratings has assigned an ‘AA1’ rating for Maybank’s RM1.5 bil- investment banks ─ Merrill Lynch, Lehman Brothers and Morgan Stanley. lion (US$461 million) Islamic subordinated bonds as well as RM1 bil- lion (US$307 million) Islamic subordinated bonds, which will mature Merrill and Lehman were both previously rated ‘A+’ but went one notch in 2018 and 2015 respectively. The ratings, it said, refl ect the bank’s down to ‘A’. Morgan Stanley’s ‘AA-’ rating was reduced to ‘A+’. The out- strong domestic franchise and its healthy credit position. looks on the ratings are negative, refl ective of the possible continued weakness in the investment banking sector, said the rating agency. Maybank is the largest fi nancial group and one of the biggest compa- nies by market capitalization in Malaysia. Its Shariah compliant sub- The collapse of the mortgage market has caused a lending crisis for sidiary, Maybank Islamic, began operation in January this year. more than a year, and investment banks and lenders have been strug- gling since then. BAHRAIN UAE Sovereign ratings move up Capital Intelligence has raised Bahrain’s long-term foreign currency rat- Fitch rates ADIB ing to ‘A’ from ‘A-’, while its short-term foreign currency rating went up a Fitch Ratings has affi rmed the long-term and short-term issuer default notch as well, from ‘A2’ to ‘A1’. The ratings are refl ective of its fi nances ratings (IDRs) of Abu Dhabi Islamic Bank (ADIB) at ‘A+’ and ‘F1’ and likelihood for continued economic growth, supported by high oil respectively. Meanwhile, the bank’s individual rating was assigned a prices and healthy liquidity. ‘C’, support a ‘1’ and support rating fl oor an ‘A+’.

However, the rating agency noted that the ratings are constrained by The IDRs are testament to the support ADIB would get from its the country’s reliance on oil as a source of income, increasing consum- shareholders and the authorities should it need any, while the individual er and asset price infl ations as well as high credit growth in the private rating refl ects the bank’s profi tability, healthy asset ratios as well as sector. high liquidity and capitalization.

THIS TIME LAST YEAR

• The Securities Commission of Malaysia called for Islamic • Gulf Finance House and Abu Dhabi Investment House venture capital to boost Malaysia’s stand in the emerging launched two Shariah compliant crude oil investment markets. funds worth US$150 million.

• Canadian fund managers iTrust Partners launched the • Adeem Investment Company raised US$210 million in world’s fi rst Islamic fund for Canadian assets. Sukuk, convertible into units of a fund investing in hotels and resorts. • Allco Finance of Australia formed a structured fi nance partnership for large assets including airplanes and ships, • Bahrain Islamic Bank signed a BHD6.13 million (US$16.25 with CIMB Group to provide onshore fi nancing options for million) Ijarah Iqtinah agreement with the Falcon Cement Malaysian companies. Company.

© Page 9 6th June 2008 IFN REPORT www.islamicfi nancenews.com

INDONESIA Bank acquisitions in Indonesia seen to spawn several Islamic banks Indonesia has been trying to make its mark in the Islamic fi nance indus- focus, perhaps small and medium enterprises or the corporate sector. try despite being home to 10% of the world’s Muslim population. Even She added that BNI, which has submitted an application for a license to with its claim of having the most number of Islamic fi nancial institutions convert into Islamic banking, is focusing on the corporate sector due to in the world, the country is still seen as lagging behind neighboring its joint venture with Middle East investors. countries like Malaysia, which is aiming to be the global Islamic Finance hub, and Singapore hot on its heels. It was reported that BNI and a unit of Saudi Arabia’s Islamic Develop- ment Bank set up an independent Shariah bank in Indonesia by early An analyst recently commented that the concentration of Islamic bank- 2009. BNI’s existing Shariah division will be spun off to form the unit ing has been extremely low in Indonesia unlike Malaysia, where the that will be majority controlled by unit, Islamic Corporation for the De- regulatory body has done a lot to encourage Islamic banking. She felt velopment of the Private Sector. the recent regulatory changes in Indonesia will help boost the Islamic Finance industry but it remains to be seen how soon this will happen. The assets of the present Islamic banks in Indonesia in the fi rst quarter of 2008 are said to have failed to reach their cumulative target of 5% of the conventional banks’ assets. Siti said Indonesia currently faces the twin challenges of lack of human resources and capital. “Most conven- tional banks now service SMEs but for the corporates there is a joint fi nancing. And therein lies the problem of fi nding corporates that are Shariah compliant,” she added. “We hope that these new laws will facilitate us (the central bank) and other relevant authorities in bringing Islamic Finance, especially the Islamic capital market and the banking A recent report of several conventional banks converting into Shariah (Islamic) Banks indicated that Indonesia hopes to improve its situation industry, up to speed so as to and secure a larger share of the US$700 billion global Islamic Finance attract investments from the market. Middle East” A Bank Indonesia offi cial was also quoted as saying that the current strength in numbers - three full fl edged Islamic banks, the Islamic divi- She said the Indonesian parliament had passed the Sukuk Act and she sions of 25 conventional banks and about 110 rural Islamic banks – anticipates the Shariah Banking Act to be approved this month. “We lent credence to the fact that, in terms of market size, Indonesia shows hope that these new laws will facilitate us (the central bank) and other promise and is too big to be ignored. relevant authorities in bringing Islamic Finance, especially the Islamic capital market and the banking industry, up to speed so as to attract When contacted by Islamic Finance news, Bank Indonesia’s deputy gov- investments from the Middle East,” she added. ernor Siti Chalimah Fadjrijah said the central bank expects at fi ve con- ventional commercial banks to upgrade their Shariah divisions into full She said even though the central bank had always encouraged the de- fl edge Islamic banks by the fi rst quarter of 2009. velopment of Islamic banking, including supporting the conventional banks’ increased provision of Shariah services and opening of addition- She said Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI) al branches, rapid growth could not be expected immediately. and Bukopin will grow their Shariah units into Islamic bank subsidiaries while Bank Panin will acquire and convert Bank Harfa Irna Gustia into an However, the deputy governor is confi dent of Indonesia’s future in this Islamic bank, likewise Bank Victoria International with Bank Swaguna. industry but stressed that it has to increase and improve its human re- “These two conventional commercial banks with Shariah divisions will sources. “The Center of Central Bank Education and Studies is conduct- soon have an Islamic bank subsidiary each once the acquisitions are ing banking development programs to boost human resource capacity completed. The potential of our Islamic bank market is very high but it in the banking sector, particularly Islamic banking,” she said, adding has yet to be fully developed,” she said. that the central bank is also working with several universities in Indone- sia, Malaysia and other countries. Siti also said once an Islamic bank subsidiary is established, its man- agement should then develop products and services in line with on their by Raphael Wong

© Page 10 6th June 2008 COUNTRY REPORT www.islamicfi nancenews.com

Islamic Banking in Brunei Darussalam By Dr Abul Hassan

Brunei Darussalam is one of the richest Muslim countries in the world. Islamic banking Its fi nancial system basically can be divided into two categories, Within the Islamic fi nancial services industry, the progress of Islamic banks and non-banking fi nancial institutions. As there is no central banking has been remarkable. Until 2005, Brunei only had three bank in Brunei, the Finance Ministry’s fi nancial institutions division Islamic banks: Tabung Amanah Islam Brunei (TAIB), Islamic Bank (FID) issues licenses, administers the laws for fi nancial businesses Brunei (IBB) and Islamic Development Bank (IDB). In 2006, IBB and and supervises the activities of the fi nancial services sector. It also IDB merged into Bank Islam Brunei Darussalam (BIBD). ensures that all players in the country abide by the Banking/Financial Acts/Orders (Rules). There are also eight conventional commercial banks in Brunei: HSBC, Citibank, Standard Chartered Bank, Maya Bank, RHB Bank, United Overseas Bank, Baiduri Bank and Development Bank of Brunei. Except for the last two, all conventional commercial banks are foreign banks.

Assets of Islamic banks in comparison to conventional banks The total assets of banks in Brunei comprise cash in hand and liquid assets, balances due from the head offi ce, branches of the bank and the bank itself, secured and unsecured loans and advances to customers, investments, bank’s premises and properties and offshore deposits. The performance data for 11 years from 1995 shows that the total assets of banks operating in Brunei have fl uctuated within a narrow band. From slightly more than BND9 billion (US$6.6 billion) Figure 1: Financial Services Sector in Brunei Darussalam in 1995, the total assets dropped slightly, to as low as BND8 billion (US$6 billion) in 1999, before rebounding to BND11 billion (US$8.1 The banking industry in Brunei has been growing rapidly in the last billion) in 2000. 12 years. Besides the local banks, there are a number of fi nancial institutions of international standing and reputation. The relaxation Since 2001, the total assets of the banks in Brunei have shown a of exchange controls and a progressive regulatory system have also signifi cant increase and continue to grow year by year. By June 2006, played a remarkable role in the development of an effi cient banking the total amount of bank assets had reached almost BND20 billion system in Brunei. Furthermore, the banking and fi nancial regulations (US$15 billion) as shown in Table 1 below. are being reviewed to be at par with international standards by making amendments to Chapter 95 of the Banking Act. From the breakdown of total assets shown in Table 1, conventional banks (mainly foreign banks and one local bank) have accumulated In the absence of a central bank, the Brunei Currency Board (BCB), more assets in Brunei compared to local banks, for example, Islamic established in 1967, manages and issues currency notes and coins banks. This was because the conventional banks outnumbered the in Brunei. It buys, sells, discounts and rediscounts Treasury Bills and local banks. Besides, the foreign banks had been established in the short-term government securities denominated in Brunei dollar (BND). country for a long time. Most of them have secured the accounts of It also manages the advent of new Islamic fi nancial instruments, the prominent clients, including companies’ accounts and high net worth selling and buying of securities as well as other fi nancial products and individuals. services that are now provided in the Brunei market. For instance, the fi rst government Sukuk Ijarah was issued in Brunei in January 2006. The trend, however, gradually changed when Islamic (local) banks began to operate in the 1990s. The total assets of local banks have The development of a capital market in Brunei is still very much at gradually increased, from less than BND2 billion (US$1.5 billion) in the infancy stage. At present, only two securities companies provide 1995 to almost BND10 billion (US$7.3 billion) in 2006. Loans, both brokerage services. continued... Table 1: Percentage of Distribution of Total Assets Islamic banks Conventional banks 1995 2006 1995 2006 Amount in BND % Amount in BND % Amount in BND % Amount in BND % (million) (million) (million) (million) Loan 781 71 3,860 41.7 1,780 22.4 1,656 16.9 Current assets 211 19 2,529 27.3 2,875 36.1 1,130 11.9 Investment 40 3.7 1,167 12.6 36 0.5 83 0.8 Offshore deposits 62 5.7 1,710 18.5 3,270 41.1 6,910 70.7 Total assets 1,094 100 9,266 100 7,961 100 9,779 100 (Source: Financial Institutions Division, Ministry of Finance, 2006)

© Page 11 6th June 2008 COUNTRY REPORT www.islamicfi nancenews.com

Islamic Banking in Brunei Darussalam (continued) secured and unsecured, are the largest component of the assets for One of the key goals of the Brunei government has been to develop Islamic banks. In 1995, this accounted for about 71% of the total fi nancial services, especially Islamic and commercial banking. With assets, followed by current assets, cash in hand, including all the liquid the enactment of the International Limited Partnerships Order 2000, assets and dues from banks, which accounted for about 24% of the International Banking Order 2000, Money Laundering Order 2000, total assets. Another component of Islamic banks’ assets is offshore Anti-Terrorism (Financial and Other Measures) Order 2002 and deposits which accounted for about 6%, and there were about 4% Banking Order 2006, much progress has been made in developing investments at that time (see Table 1). supervisory and prudential regulations.

As the amount increased to almost BND10 billion by 2006, the assets The purpose of enacting these legislations was to bring local laws of Islamic banks changed slightly in their composition, whereby the in conformity with international obligations to have transparency loans component was reduced to about 41%. As a result, the amount in foreign investment policies and to encourage investments in all of current assets, which accounted for about 20% in 1995, increased sectors. The newly adopted laws clearly indicate the scope of foreign to about 42% in 2006. The investments component of the assets also equity holdings and the sectors in which investments are encouraged, increased signifi cantly, from only 6% in 1995 to about 13% in 2006. thereby providing wider investment opportunities in Brunei. Furthermore, the offshore deposits also increased to about 18% by 2006 (see Table 1). The Brunei government is also trying to establish an international offshore Islamic fi nancial center. The proposed Islamic offshore On the other hand, the assets of conventional banks have been fairly fi nancial market can act as a catalyst to attract foreign investments consistent for the past 10 years. They consisted of about BND8 billion and create a wider scope for the government’s economic diversifi cation (US$6 billion) in 1995 and fl uctuated within a small band between efforts. This is one of the areas in which Brunei can offer products 1995 and 2006. By the end of 2006, the assets had grown by more and services different from those offered by other aspiring regional than BND2 billion, or about 25%. fi nancial market centers. But Brunei needs to move fast and capitalize on its strengths. Among the major components of the conventional (foreign) banks’ assets are the offshore deposits, which accounted for about 42% of total assets in 1995. It represented the amount of money earned in Brunei and deposited in other countries for an earnings spread. The result is also indicated in Table 1, that the investment by conventional Dr Abul Hassan is a coordinator with the Islamic Economics Unit at (mostly foreign banks) in the Brunei market is a very small amount and The Islamic Foundation, UK. almost negligible compared to the total assets. C EVENTS ICG

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© Page 12 6th June 2008 SECTOR REPORT www.islamicfi nancenews.com

Venture Capital’s Islamic Principles By Dr Oussama Tabbara

Shariah is Islam’s legal system. It differs from the legal traditions Venture capital (VC) is the equity fi nancing of unquoted companies of the Western world in that Shariah represents a comprehensive ranging from small early stage to large management buyouts. VC system for all aspects of life. Its principles strike a balance between has a particular emphasis on entrepreneurial undertakings and less the interests of the individual and society. Universally, in any society, mature businesses. It has four categories: seed, start-up, expansion investment is the foundation of economic activity. and replacement capital.

Islamic fi nance (IF) constitutes three basic concepts: asset-based Venture capital funding prerequisites fi nance, partnership, and shared risk and reward. Profi ts form the The typical approach to access VC: basis of the IF system. It allows both the risk capital provider and the • Business plan should be short and to the point, preferably party that uses the capital to make profi ts, but the manner in which a one-page summary. Also, a proprietary model will help the this is done is subject to conditions. For example, certain actions are venture company secure a sustainable advantage. prohibited because they are harmful to participants in the business or • Funding is frequently through a very active merchant bank/ the economic activity. Profi ts must be shared by the provider and user VC/private equity funding network. Further, a single investor, of capital; both need to assume risk and share the rewards. Hence, in preferably one who is a seasoned entrepreneur, could fi nancial transactions, the interpretation of the Shariah applies to the contribute money as well as contacts and ideas. products, processes and the systems. • VC fi rms: There is an incredibly vibrant entrepreneurial atmosphere where people with ideas can get money. Competition is fi ercer than ever among VC fi rms. Their principal “Financing in conformity with activities are fundraising, investing and exiting. • The challenges facing those seeking VC are many; each must Shariah does not permit money be overcome. There are entrepreneurs and people who know how to grow a company. Usually they are not the same people. to be the object of trade, It is a meritocracy. If you do excellent work, you get results. • Expectations: Generally, the expectation is that it will take because every transaction must fi ve to seven years before there is any distribution of profi t. involve a tangible and usable This has since changed dramatically. Some VC funds are so fl ushed with funds that they look like investment banks. All asset to the community” the emphasis now tends to be on fi nancial performance in a very short time, distinct from a viable product with sustainable Compliance has to be with respect to the framework, operations growth potential. and methods being undertaken in the particular Islamic fi nancial • The mistakes: Some venture companies are prone to make investment product. Thus, in the routine handling of Islamic investment fundamental mistakes of judgment such as: products, there would generally be attributes of structure, process o Under-capitalization — not understanding how much and the required documentation to show compliance with the Shariah money the venture company needs. This is the biggest principles. The evidence documentation concerns the processes mistake. and relationships that originate from the underlying structure of the o Not having the right management team. fi nancial product, such as the fl ow of assets and services, the roles o Sustainable growth is a pillar of success. If you don’t and relationships of the participants in the transaction (principal/ continue to grow, you are left behind and will fall by the agent, buyer/seller) etc. wayside.

Financing in conformity with Shariah does not permit money to be the Regulatory controls object of trade, because every transaction must involve a tangible Islamic or traditional banks that provide Shariah compliant fi nancial and usable asset to the community. Essentially, instead of a return on products have to establish Shariah advisory councils to meet two capital being determined ex-ante (before the event) through a nominal objectives — advising the clients of the banks; and assuring them interest rate (riba), which is prohibited under the Shariah principles, that the institutions comply with the stipulations of Shariah. These the return should naturally occur ex-post (after the event) on the basis councils comprise religious scholars who are experts in Shariah as of the favorable outcome of the economic activity for which the funds well as the fi nancial markets. The application of Shariah principles is were invested. always evolving. Interpretations of rules can be different from time to time and in different parts of the world. This leads us to the aspects To increase one’s income, the only permissible manner is through of quality and transparency in fi nancial reporting in the IF industry — a undertaking increased trade, manufacture or provision of services. key challenge for this fast-growing sector. Thus, as funds are transferred from the provider to the user, it must result in an increase in trade, manufacture, service provision The International Financial Reporting Standards (IFRS) form the and, eventually, meaningful employment. The increased economic principal regulatory framework. The Accounting and Auditing activity, therefore, will provide the momentum for the development Organization for Islamic Financial Institutions (AAOIFI) has issued of infrastructure and the basic services to society such as security, accounting, auditing and governance standards for Shariah compliant Islamic fi nancial reporting. education and health. continued...

© Page 13 6th June 2008 SECTOR REPORT www.islamicfi nancenews.com

Venture Capital’s Islamic Principles (continued)

In the application of Shariah-based principles for VC investments, Timing to determine profi t the most common VC investment is structured on the principle of a. A limited term Mudarabah where profi ts are accounted for Mudarabah which gives rise to special types of relationships with when the venture is liquidated and the capital is returned to particular terms, conditions and restrictions. Basically, Mudarabah the providers of funds. is a partnership in profi t between capital and work. The Mudarabah b. A continuous Mudarabah where profi ts are accounted for on a contract is consistent with a VC transaction whereby a fi nancier periodical basis during the Mudarabah tenure, but without its provides capital to an entrepreneur for a percentage of future profi ts. liquidation and without returning the capital to the providers The entrepreneur provides only his expertise and labor for the venture of the funds. All counterparties (the providers of funds and the project while the fi nancier agrees to bear the full loss if the venture working partners) must consent to this. fails. Ownership of Mudarabah funds a. Non-commingled Mudarabah — Investment only by the “Mudarabah differs from what providers of funds, hence, they own the invested funds. b. Commingled Mudarabah — Investment is by the providers of is known as speculation which funds as well as by the Mudarib while the work is carried out only by the Mudarib, permissible only with the consent of both includes an element of gambling parties. Limitations to working partner’s actions in transactions relating to buying a. Unrestricted Mudarabah — The Mudarib is authorized by the fund providers to invest the funds in the manner the Mudarib and selling” deems appropriate. b. Restricted Mudarabah — The Mudarib is restricted by the fund This partnership arrangement could be structured for the transactions providers according to their contract. between investment account holders (the silent counterparty) as Profi ts and losses providers of funds and the Islamic bank as the working partner — a a. The profi t share of each party must be stated in the Mudarabah Mudarib — which only invests skill and labor. The Islamic bank and its contract as a common percentage rate rather than a fi xed investment account holders agree on how the profi ts are to be shared. amount. The losses are also to be borne by the provider of funds, except where b. The periodic distribution of profi ts is permissible only with the such losses are caused due to the misconduct, negligence or violation consent of both the fund providers and the Mudarib. by the Islamic bank (the working partner), based on the conditions c. Allocation of profi t or loss could be on the basis of funds agreed upon and as determined by the Shariah Supervisory Board of contributed by each party in the joint investment or according the Islamic bank. to the percentage agreed upon by the counterparties to the There can also be a Mudarabah contract between the Islamic bank Mudarabah contract. The share of the Islamic bank as a as the provider of funds, on behalf of itself or on behalf of the silent Mudarib is deducted from the share of profi ts of investment counterparty, with business owners as well as craftsmen, including account holders. The Mudarib shall not bear any part of the farmers, traders, etc (the party investing skills and labor). losses incurred in Mudarabah but only bear losses that were due to his misconduct, negligence or violation of the terms of The working partner (the VC company) will manage the Mudarabah the Mudarabah. partnership for all matters that concern the normal course of business. d. A loss shall not be considered a decrease of the Mudarabah So, besides his labor, the working partner will suffer no loss excluding capital unless it is not set off against profi ts generated from of course responsibility for fraud, wilful negligence, misconduct, other transactions of the venture. wrongdoings or serious breach of his mandate. Usually the working partner is rewarded an agreed upon percentage of the profi t. Where Mudarabah differs from what is known as speculation which includes advances against profi ts are allowed, these will be subject to ultimate an element of gambling in transactions relating to buying and selling. payback should the venture project fail. The risk to the provider of funds (the silent counterparty) is limited to the capital funds invested. IF is only a part of a larger concept of Islamic economics that seeks to conform all of one’s economic activity to the tenets of Islamic teachings. AAOIFI’s Financial Accounting Standard (FAS) No 6 — Equity of It augurs well that with the continual demand for more oil and the Investment Account Holders and Their Equivalent — sets the accounting resulting depletion of the oil reserves, the petrodollar revenues of the rules for the Islamic banks and fi nancial institutions in disclosing the oil producing Islamic nations would be invested almost exclusively transactions regarding equity of investment account holders as well through the Islamic fi nancial system worldwide. as for funds received by the Islamic banks for investment, in their capacity as working partners (Mudarib). Dr Oussama Tabbara is a co-founder, vice president, and member of the Gulf Venture Capital Association The types of Mudarabah and the relationships between the investment (GVCA). GVCA covers all major aspects of the venture account holders and the working partner (Mudarib) are: capital/private equity industry, investment models, Number of counterparties management of fund raising and structures, a. Single Mudarabah — a single provider of funds and a single technology evaluation and valuation, contracts Mudarib. This type is not usually used by Islamic banks. and control rights, information/studies, early-stage funding and b. Compound Mudarabah — many providers of funds and a single corporate venture capital. Mudarib. This type is most commonly used by Islamic banks.

© Page 14 6th June 2008 SECTOR REPORT www.islamicfi nancenews.com

Shariah and Legal Aspects in Islamic Venture Capital By Mohd Herwan Sukri Mohammad Hussin

Securities Commission (SC) chairman Zarinah Anwar, in her welcome • conventional insurance; remarks at the International Center for Education in Islamic Finance • entertainment activities that are non-permissible according to (INCEIF) Inaugural Intellectual Discourse Series II held in May 2007, Shariah; propounded the idea of having Islamic venture capital. • manufacture or sale of tobacco-based products or related products; • stockbroking or share trading in non-Shariah compliant In her speech, she said, “The question, therefore, is how can Malaysia securities; and distinguish itself in the emerging market venture capital pool? Our • hotels and resorts. belief is that Islamic venture capital provides that distinguishing factor.” The popular instrument used in a venture capital is preference share. The question is whether there is such a concept of preference share To explore further this idea, the Islamic Banking and Finance Institute in Islam. Malaysia (IBFIM) and the Malaysian Venture Capital and Private Equity Association (MVCA) took the initiative to jointly organize the Islamic The SC’s Shariah Advisory Council ruled that non-cumulative Venture Capital & Private Equity Conference 2008 on the 7th and 8th preference shares are permissible based on Tanazul, where the right May 2008 at Shangri-La Hotel, Kuala Lumpur. to profi t of the ordinary shareholder is given willingly to a preference shareholder. Tanazul is agreed upon at an annual general meeting of At the conference, SC managing director Dr Nik Ramlah Nik Mahmood a company which decides to issue preference shares in an effort to pointed out that it was timely for Malaysia, as an Islamic fi nance hub, raise new capital. to encourage the growth of Islamic venture capital. She further said that the effort would help bring in more foreign funds looking to invest If it is agreed at the meeting to issue preference shares, this means in Shariah compliant fi rms, especially from the Middle East. that ordinary shareholders have agreed to give priority to preference shareholders in dividing the profi ts, in accordance with Tanazul. In the Shariah aspects context of preference share, Tanazul means surrendering the rights According to Nik Ramlah, Islamic venture capital is no different from in a share of the profi t based on partnership, by giving priority to conventional venture capital, except that the former is structured and preference shareholders. managed according to Shariah principles (see Market Report on page 16). Shariah principles and concepts mainly applied to Islamic venture capital are Musharakah, Mudarabah and Wakalah. Legal aspects With the issuance of the Guidelines and Best Practices in May 2008, Islamic venture capital will be governed by both this as well as the Musharakah is a partnership between two or more parties to fi nance existing Guidelines for the Registration of Venture Capital Corporations a business venture whereby all parties contribute capital either in and Venture Capital Management Corporations. the form of cash or kind. If the venture is profi table, the profi t will be distributed based on a pre-agreed ratio. In the event of a loss, the loss The Guidelines and Best Practices can be divided into two parts. shall be shared on the basis of capital contribution. The fi rst part specifi es the core requirements for establishing an Islamic venture capital corporation (VCC) or an Islamic venture capital Mudarabah is a contract between two parties to fi nance a business management corporation (VCMC) while the second part sets out the venture. The parties are a Rab al maal (investor), who solely provides best practices which are intended to assist such VCCs and VCMCs in the capital, and a Mudarib (entrepreneur), who solely manages the carrying out Islamic venture capital business activities. project. If the venture is profi table, the profi t will be distributed based on a pre-agreed ratio. In the event of a business loss, it should be borne Among the core requirements is the need for the appointment of an solely by the capital provider, to the extent of the capital contribution. independent Shariah adviser to provide expertise and guidance on compliance with the Shariah principles in all matters of the Islamic Wakalah is a contract which gives the power and rights to another VCC or VCMC. party or parties to act on one’s behalf, based on the agreed terms and conditions. Under the Best Practices, an Islamic VCC or VCMC is highly encouraged to adopt the best practices as listed. The Best Practices relate to the With regard to the activities of the venture (investee) companies, responsibilities of a Shariah adviser, written disclosure and declaration the Guidelines for the Registration of Venture Capital Corporations by the Shariah adviser, compliance offi cer, portfolio management and and Venture Capital Management Corporations issued by the SC maintenance of accounts. (Guidelines and Best Practices) prescribe that their activities must be Shariah compliant. Among the non-permitted activities listed in the Mohd Herwan Sukri Mohammad Guidelines and Best Practices are: Hussin is an executive with the Shariah, Risk & Compliance • fi nancial services based on riba; section of the operational • gambling/gaming; management department at • manufacture or sale of non-halal products or related AmIslamic Bank. products;

© Page 15 6th June 2008 MARKET REPORT www.islamicfi nancenews.com

Malaysia Leads Robust Islamic Venture Capital Industry By Dr Nik Ramlah Nik Mahmood

Venture capital brings profound impact to the economy. It bridges country aims to be the center for Islamic fi nance and capital market the fi nancing gap where direct bank lending or fi nancing through the as well as a center for Islamic fi nance education, training, consultancy debt or equity market is diffi cult to obtain. and research.

It has been widely acknowledged that Malaysia has made signifi cant The unique nature of the venture capital model, which is based on active strides in the Islamic capital market. Today, it has a full complement management, leads to improved corporate governance and an overall of products, infrastructure, intermediaries and investors which have alignment of stakeholder interests with that of the management. This contributed to the development and deepening of the entire capital then creates signifi cant value above and beyond the use of fi nancial market. engineering. New companies and industries spawned by venture capitalists — for example, Apple Computer, Federal Express, Google With the rapid expansion and innovation of Islamic capital market and IBM — have irreversibly changed the way we live and work today. products such as Sukuk, Islamic unit trust funds, Islamic real estate investment trusts, Islamic exchange-traded funds and Shariah Venture capital companies compliant listed securities, it is now timely for Malaysia to encourage The fi rst venture capital company in Malaysia was established in and facilitate the growth of Islamic venture capital as another available 1984, when the Singapore-based South East Asia Venture Investment asset class in Malaysia‘s broad range of Islamic products. (SEAVI) set up Malaysian Ventures with a fund size of approximately RM13.8 million (US$4.24 million). The second venture capital fund, The development of Islamic venture capital will offer the opportunity Southern Bank Venture Capital Corporation, was only set up in 1989, for Islamic investors to diversify their portfolios. Also, the fact that a good fi ve years later. venture capital does not have perfect correlation with other asset classes such as listed securities, gives investors more opportunities to After the slow initial years, there is now a reasonably healthy growth enhance their portfolio returns. in the industry. As at the end of 2007, there were 98 venture capital companies and venture capital management companies registered with the Securities Commission (SC), with total committed funds under Islamic venture capital This prompts the question, what is meant by Islamic venture capital? management of RM3.3 billion (US$1 billion). Islamic venture capital is similar to a traditional venture capital except that it is structured and managed in accordance with Shariah The Malaysian government’s roles in the venture capital industry can principles. be seen on various fronts and in different stages. In addition to grants available under various ministries, the government has also allocated Venture capital exemplifi es the Islamic fi nance model because at the RM1.6 billion (US$500 million) for venture capital under the Ninth core of it, investments are made in businesses that offer Shariah Malaysia Plan (2006-10), a hefty two-fold increase from the previous compliant products and services and because the investment model plan. is based on long-term active partnership and risk sharing consistent with the Shariah principles of Mudarabah, Musharakah and Wakalah. There was also the establishment of the Malaysian Venture Capital Development Council (MVCDC) in January 2005 chaired by the Both Islamic fi nance and venture capital are high on the agenda of the chairman of the SC. The MVCDC is tasked to facilitate the development Malaysian government and Islamic venture capital is an area where of the venture capital industry by coordinating Government initiatives Malaysia can easily distinguish itself from other venture capital markets and incentives towards charting the industry’s strategic direction. in the emerging economies. Internationalization of the venture capital It also acts as a platform for policymakers and industry players to industry can be undertaken by leveraging on Malaysia’s strengths in discuss matters relating to the development of the industry and to Islamic fi nance and the capital market. channel views and strategies to the government.

In its ongoing efforts to create a conducive and attractive environment Guidelines and best practices for the venture capital industry to fl ourish, the government introduced It has been widely acknowledged that issuance of Shariah specifi c rules various tax incentives in addition to liberalizing equity ownership and guidelines is a signifi cant enabler for the growth of the Islamic for venture capital corporations and venture capital management capital market in Malaysia as it leads to compliance with Shariah corporations. The government has also established its own venture principles. Guidelines also provide market participants with clarity and capital companies such as Malaysia Venture Capital Management certainty as to what is or is not acceptable. With standardization, the (MAVCAP), Malaysian Technology Development Corporation (MTDC) cost of structuring products and services will be more competitive. and Kumpulan Modal Perdana (KMP) to further develop certain strategic sectors of the economy. Dr Nik Ramlah Nik Mahmood is the managing director of the Securities Leveraging on Malaysia’s strengths Commission of Malaysia. This is an excerpt from a keynote address at the Islamic Malaysia is the only country in the Asian region that can claim to Venture Capital & Private Equity Conference have a robust and comprehensive Islamic fi nancial system. Under the 2008 on the 7th May in Kuala Lumpur. Malaysia International Islamic Financial Center (MIFC) initiative, the

© Page 16 6th June 2008 INTERVIEW www.islamicfi nancenews.com

Challenges of Islamic Private Equity in the Western World By Raphael Wong

Private equity has been untapped in the Gulf region despite its There may be alternative structures, for example Mudarabah. However, abundance of capital, with the GCC countries regarded as having the using the Musharakah structure will best fi t the requirements set by smallest share of the private equity markets in the world. But with the local law, the desired tax transparency as well as the requirements set vast excess liquidity over the recent years, many investors are now out by Shariah law. looking at the global market for suitable investment opportunities. According to the Gulf Venture Capital Association, funds managed With the stringent rules prohibiting investments in haram industries/ by private equity fi rms in 2006 equaled approximately US$18 billion economic activities or speculative elements, how willing are private and were estimated to exceed US$25 billion by the end of 2007. equity sponsors in Western countries to comply with the Shariah principles? What challenges do they face? Private equity and venture capital are in principle very technology This was boosted by investment and advisory fi rm Corecap recently oriented. Hence, most of the private equity funds due to their launching its fi rst US$150 million Corecap Islamic Private Equity Fund investment focus are not in confl ict with the investment guidelines I (CIPEF I), to fund Shariah compliant private equity investments in set out by the Shariah and can welcome Islamic investors without the Middle East and North Africa (MENA) region. CIPEF I is said to be materially changing their investment strategy. Western investors and one of its kind as the fi rst private equity fund that offers a Shariah Islamic investors should not be investors in a single fund but in an compliant mezzanine structure worldwide. instrument such as a master-feeder structure. In this case, the feeder vehicle provided for Islamic investors may decide whether to take part Private equity has been soaring in Western countries, especially in the in a proposed investment or not. US where private equity outperformed the US stock market over both the short and long terms. In the US alone, the pool of private equity A challenge for Western sponsors, however, is the requirement of funds surpassed US$800 billion in 2005 from US$5 billion in 1980. establishing a Shariah board at the level of the fund. Usually, each However, Islamic private equity remains virtually unknown. investment as well as divestment of it would be subject to the approval of such board. This requires intense communication between the Islamic Finance news spoke to Thomas sponsor and the board well ahead of the acquisition. As we have seen Gierath (pic), a national partner at in the past, sponsors are very willing to accept such restrictions of international law fi rm Dechert LLP, on the their investment discretion because in Western structures, too, usually Islamic private equity sector in the West. He an investment committee consisting of members who are not part of feels that private equity is, and will remain, the management, is a common practice. one of the most interesting asset classes for Islamic investors due to its natural fi t How will assets under these funds be managed with the stringent with the Shariah principles of risk sharing Shariah principles with regard to haram industries/economies, riba and the current available return rates. etc? Structuring a Shariah compliant fund usually requires the management He predicts an increase in the number of to comply with the principles set out by the Shariah. Normally, the fund regional as well as Western funds dedicated documentation such as the LPA (limited partnership agreement) and to private equity investors as the industry in the PPM (private placement memorandum) will consist of rules for the Western countries would especially want to take advantage of the such compliance which restrict the management with regard to the immense liquidity available to Islamic investors. However, he advises use of the funds provided by the investors. It is common to include industry players in the Western countries to adhere more closely to investment guidelines based on Shariah law, for instance, regarding these investors’ special requirements. investment in only halal industries. As stated above, when forming a Shariah board, the board will be provided with approval rights to the How do you structure the private equity funds? Musharakah seems intended investments of the fund and will supervise the fund in relation to be the most common Shariah principle to govern the structure of to its ongoing compliance with its investment guidelines. private equity investment although there are other structures that can be considered. The investment guidelines will also set out the prohibition of riba for The funds we structured are those which have their domicile in a the fund and its investments. This usually results in the prohibition of member state of the European and in offshore destinations investing in certain target companies which do not comply with the such as the Cayman Islands. Thus, the relevant structure is provided prohibition of riba (for example, those whose debt fi nance is above 33% by the relevant local law. In principle and pursuant to tax transparency or whose interest payments exceed 5%). The individual investment requirements, a limited partnership structure will usually be used, guidelines and its stringencies regarding compliance with Shariah law whereby the sponsor of the fund provides the general partner and will usually be determined by the Shariah board of the fund. manages the fund’s assets. The investors, such as the Middle East investors, are limited partners providing cash to the fund. What about the concerns over the option of leveraging that exists in conventional private equity funds, as leveraging in principle does not This structure is comparable to the Shariah-based Musharakah conform to Shariah laws although some liberal Shariah committees structure and is based on the principle of sharing risk. Hence, this may allow a leverage ratio of up to 33% of the value of the private structure appeals to Islamic investors. As in the Musharakah structure, equity fund? there is one party, the sponsor of the fund, providing the management and one fi nancier, that is, the investor, providing cash to the fund. continued...

© Page 17 6th June 2008 INTERVIEW www.islamicfi nancenews.com

Challenges of Islamic Private Equity in the Western World (continued)

In principle, Shariah compliant funds are restricted with regard to fi rms to understand the principles of the Shariah and its outcome for leveraging their investments in comparison to Western private equity the management of the fund as well as its assets, Western sponsors funds. Depending on the legal view of the relevant Shariah board, are well prepared to provide private equity for Islamic investors. Dechert leveraging may be totally prohibited or allowed to a certain extent. For LLP, for example, has a broad range of Islamic fi nance knowledge instance, the board may allow the fund to use leverage within a certain and advises Western sponsors in relation to the implementation and frame (for example, 33% of the balance sheet of the target). management of a Shariah compliant private equity fund.

However, Shariah compliant funds must also compete with Western Is there a need for governments, especially in countries which are funds as to their rate of returns, in addition to the Islamic investors’ practising Islamic fi nance, to do more to encourage the growth of expectation of investing their money in products that would provide Shariah compliant private equity? market returns. This requires the fund to leverage its investments to In principle, Islamic private equity in Europe and the US currently a certain extent. To ensure leverage is Shariah compliant, one can does not have the volume compared to Western private equity. use those Shariah structures typically used for acquisition fi nance (for Although Islamic fi nance and Islamic private equity are increasing by example, Ijarah or Murabahah structures). These structures are always approximately 15% per year, funds provided for Islamic investors are subject to the approval of the Shariah board and additionally, they much smaller than Western funds. To support this industry, the Western would have to be reviewed from the local law perspective regarding governments will have to learn more and provide a better environment feasibility and avoidance of detrimental tax consequences for the fund for Shariah compliant investments. Some countries (for example, the or the target. UK), are well ahead of the others by resolving some detrimental tax consequences for Shariah compliant transactions. This is especially so What infl uence does domiciliation have on private equity funds? in providing transaction structures that are Shariah compliant, feasible Will these be offi cially registered in jurisdictions with favorable tax and enforceable under local law as well as adequate tax treatment of regimes? Shariah compliant transactions. These are the main objectives of the Investors of private equity funds, particularly Islamic investors, intend industry when talking to governmental representatives. to achieve tax transparency on the fund level. Hence, many of the funds are domiciled in offshore destinations providing no or low tax regimes The issuance of Shariah compliant products by governments (for for the fund and its investors. To benefi t from such treatment, the fund example, the intended sovereign Sukuk to be issued by the UK has to comply with the requirements of the relevant local tax laws of government) may help to gain more acceptance of Islamic fi nance in the funds’ domicile, consisting of a proper formation (for example, with the Western world, which in turn, will also be benefi cial for the Islamic registration subject to local law) of the fund in the relevant domicile. private equity sector.

Further, when structuring the fund, one should obtain the relevant www.islamicrealestateworld.com local tax laws of the target companies. In most cases, there will be 20TH - 21ST OCTOBER 2008 no double taxation treaty between the domicile of the target company RIYADH, KINGDOM OF SAUDI ARABIA and of the fund, or the fund could not rely on such. So, investors may Under the High Patronage of the Chairman of the Council of be taxed in the domicile of the target company, such as for capital Saudi Chambers, H.H. Abdulrahman R. AL-Rashed gains. To avoid detrimental taxation, one may make use of alternative acquisition structures with an acquisition vehicle domiciled in a Offi cial Host: Council of Saudi Chambers of Commerce country providing favorable taxation in an exit scenario. In such a case, & Industry (CSCCI) certain substance requirements for the acquisition vehicle will have to be obtained.

In case the fund is a corporate vehicle (for example, a Ltd or LLC), substance requirements will apply on the fund level requiring the fund “The most exclusive summit only for the VIPs and VVIPs” to rent space in its domicile and to hire staff working for it in these Confi rmed & Invited Speakers An exclusive format premises. H.E. Amr Al-Dabbagh, Ijlal Alvi, Governor, CEO, Islamic fi nance meets real estate SAGIA International Islamic Financial The most exclusive Islamic real estate investment summit ever being hosted in the Market Kingdom of Saudi Arabia Upto 250 hosted International leading high-end profi les and C-level executives Are there enough private equity professionals who are conversant from top Islamic investment companies, high net worth individuals, fi nancial H.E. Nasser Al Shaikh, Abdul Majeed Al Fahim, institutions and Developers Chairman, Amlak Finance Chairman, More than 800 invited investors from Saudi Arabia Chairman, Deyaar Pearl Dubai High-level networking sessions, deal-making opportunities and joint ventures with with all issues related to the private equity industry per se and Shariah Vice Chairman, National Bonds some of the leading players in the industry Cutting-edge conference agenda compliance? Awards for Excellence in Real Estate Dr. Sulaiman Al Fahim, Samir Yaqoob Al-Nafi si, Chairman & CEO, Vice Chairman, As private equity provided for Islamic investors is a young industry Hydra Properties Kuwait Finance House in Europe, the knowledge of European private equity professionals Hot Topics to be addressed Insight on the Islamic Real Estate investments in the global market Wealth Management in Islamic Investment Ayman Sejiny, Abdulaziz Al-Abdulkader, Islamic Hedging regarding Shariah compliance is not comparable to the knowledge of Board Member & MD, Chairman, Osool Capital Unicorn Investment Bank Vice Chairman, Islamic REITS Advisor to the Chairman, Gulf International Bank Sharia’h Structuring of Funds professionals from the Middle East. Although there are sponsors only Dar Al-Arkan Bahrain Growing Popularity of Sukuk in real estate fi nancing providing Shariah compliant products and also funds (for example, HSBC Amanah), most of the Western sponsors still have to learn more naseba Event Partners Association Partner about Islamic fi nance and are faced with challenges when intending to raise funds in the Middle East.

For further information, please contact: Teena Tolani, Event Producer. But knowledge regarding Shariah compliance is ever increasing in the Tel: +971 4 367 1376 - Fax: +971 4 367 2764 - [email protected] www.naseba.com Disclaimer: This document is a promotional event release and is not contractual. international law fi rms. When working together with experts of such

© Page 18 6th June 2008 MEET THE HEAD www.islamicfi nancenews.com

Islamic Finance news talks to leading players in the industry

Name: Azrulnizam Abd Aziz us the unique opportunity to understand, structure and deliver Islamic solutions to suit our customers. As a foreign bank, we were fi rst movers Position: Director – Head of of Islamic banking in Malaysia, opening an Islamic banking window in Islamic banking 1993.

Company: Standard Chartered Secondly, we are in the forefront of product innovation and the fi rst in the Saadiq introduction of several markets — ringgit capital raising exercise between Standard Chartered Bank Malaysia and KWSP (Employees Provident Based: Kuala Lumpur Fund), Islamic Murabahah program, Wiqa forward rate agreement with Age: 38 Bank Islam, Islamic profi t rate swap with Bank Muamalat and Islamic cross currency derivative with Bank Muamalat. Nationality: Malaysian Third is our brand name Saadiq, which means ‘Truthful’, which has helped us in building credibility among customers and raising our Could you provide a brief journey of how you arrived profi le in the rapidly expanding Islamic banking market. where you are today? What are the factors contributing to the success of My Islamic banking journey started in Citibank where I was actively your company? involved in setting up its Islamic banking business in 2001. Prior to that, I had stints with Shell Malaysia and Development and Commercial Our extensive footprint in Asia, Africa and the Middle East combined (D&C) Bank. I hold a Bachelor of Business Administration from Wichita with our local knowledge and international capabilities are key State University, Kansas, and an MBA majoring in International distinctive factors supporting the successful growth of our Islamic Business from University of Hartford, Connecticut, USA. banking business. Additionally, we have been given strong support and guidance from our group, our Shariah scholars and the regulators What does your role involve? in the development of our business. I joined Standard Chartered Bank Malaysia in 2005 to lead and develop What are the obstacles faced in running your the Islamic banking business. My key roles involve strategic planning business today? and implementation of the plans to ensure continuous growth and development of the Islamic banking business. Islamic banking solutions require further explanations and familiarity especially when it comes to more complex structures, for example the What is your greatest achievement to date? Islamic treasury products and structured investment products. We believe that awareness and continuous learning are crucial for the Standard Chartered Bank Malaysia’s Islamic banking business continued growth of the Islamic banking business. performance in the last three years recorded many achievements and launched many innovative products in the market. As part of the Where do you see the Islamic fi nance industry in, say, Standard Chartered Group’s overall Islamic fi nance initiative, we were the next fi ve years? awarded The Most Improved International Islamic Bank in 2007. We have also launched the new identity of our global Islamic banking In my opinion, Islamic fi nance is evolving and transforming and Malaysia business — Standard Chartered Saadiq. is in the forefront of developing the industry. Rapid development is being driven by greater demand not only from Muslims but also from non-Muslims, who prefer the transparency and accountability Which of your products/services deliver the best of Islamic fi nance; globalization; and the government’s interest to results? create a resilient and dynamic fi nancial system. In the next fi ve years, We cater for the mass market. We have been positioning ourselves the industry will be in the advanced growth stage. Malaysia has the as a product innovator and integrated services provider. To date, we advantage to lead in building an Islamic services sector that can co- have a full range of Islamic products covering the retail and corporate exist and compete with that of conventional. To have this advantage, business as well as treasury requirements. we need to see changes in human capital, R&D and a standardization body. In the retail space, both personal and business fi nancing are gaining momentum and our Islamic mortgages are showing stable Name one thing you would like to see change in the performance. In the corporate space, we have seen good trajectory world of Islamic fi nance? in our Islamic trade and supply chain fi nancing program. We are also building our pipeline to the Islamic capital market. Better legal framework to support the development of Islamic fi nance.

What are the strengths of your business? Standard Chartered Saadiq is a major The strengths of our business lie in three important factors; international bank with a prominent role in providing Islamic banking Firstly, our long and established presence in key Muslim markets products and services. across Asia, Africa and the Middle East for over 150 years provides

© Page 19 6th June 2008 TERMSHEET www.islamicfi nancenews.com

Prasarana Negara US$616.4 million Sukuk Ijarah

INSTRUMENT Sukuk Ijarah

ISSUER / OBLIGOR Syarikat Prasarana Negara

Syarikat Prasarana Negara (Prasarana) is a wholly-owned government company under Malaysia’s Ministry of PRINCIPAL ACTIVITIES Finance and was formed to own the assets of selected public transport companies

Izzuddin Dali (chairman), Shaipudin Shah Harun (executive director), Muhammad Safaruddin Muhammad Sidek, BOARD OF DIRECTORS Ibrahim Mahaluddin Puteh, Redza Rafi q Abdul Razak, Khadijah Idris and Ahmad Badri Mohd Zahir (alternate director)

ISSUE SIZE RM2 billion (US$616.4 million)

DATE OF ISSUE 30th May 2008

MATURITY Seven, 10 and 15 years

Semi annual. Profi t rates are at 4.05% per year for the seven-year series, 4.4% for 10 years and 4.65% for 15 PAYMENT SCHEDULE years

Rail, buses and other acceptable assets of the issuer to be identifi ed by the issuer and endorsed by the IDENTIFIED ASSETS Shariah adviser prior to the issuance of the Islamic securities

JOINT LEAD ARRANGERS / AmInvestment Bank and CIMB Investment Bank MANAGERS

LAW Laws of Malaysia

LEGAL COUNSEL Hisham Sobri & Kadir

GUARANTOR Federal Government of Malaysia

TRUSTEE AmanahRaya Trustees

SHARIAH ADVISOR CIMB Islamic Shariah Committee and Daud Mohd Bakar

METHOD OF ISSUE Book-building

PURPOSE OF ISSUE To fi nance Prasarana’s capital expenditure and any other funding requirements in a Shariah compliant manner

For more termsheets, visit www.islamicfinancenews.com

© Page 20 6th June 2008 TAKAFUL REPORT www.islamicfi nancenews.com

Takaful Poised to Take Off in the EU By Mohammad S Khan

Takaful (Islamic insurance) is now one of the fastest-growing areas of Takaful challenges in the EU insurance with growth rates in the Middle and Far East of 10% to 20% In the EU, there are passporting regulations that allow an insurer in per year, compared to an average 9% in emerging markets and 5% one EU state to sell insurance to customers in another EU state. In among more conventional insurance markets in OECD countries. theory, this should make selling Takaful to approximately 20 million Muslims in the UK easier than having to set up a separate Takaful The EU, with over 20 million Muslims, represents a signifi cant company in each of the EU states. However, there are obstacles. potential market for Takaful entities but the issue is how to access this potentially lucrative but very diverse market. Some companies have The fi rst obstacle is the lack of understanding among Muslims in the already spotted this opportunity. For example, Principle Insurance EU of Takaful itself. Research has shown that many Muslims do not Company has just been granted Financial Services Authority (FSA) know what the word “Takaful” means or indeed whether insurance authorization in the UK and will start writing motor and household can ever be Islamic. The key selling feature of Takaful is therefore insurance later this year. not understood and the challenge is to increase awareness of what it is. This would require educating Muslims on how Takaful is Shariah Key features of Takaful business compliant. When considering a Takaful business, it is often useful to think of it as a mutual insurance company within a shareholder wrapper. “Marketing will be easier in EU Takaful businesses consist of two separate — physically and on a theoretical accounting basis — entities: a policyholders fund (PF) and countries with large Muslim a shareholders fund (SF). populations that are generally The PF represents the mutual insurance part of the business. The policyholders pay their contributions (Islamic equivalent of insurance concentrated within specifi c premiums) into the PF in return for a Takaful contract. Should a specifi ed claim occur, the PF will pay this and any future claim. Any geographical areas” underwriting profi ts and investment income are shared among the policyholders. The second obstacle is how to market Takaful to the different ethnic mix of Muslims in each of the member states in the EU. The EU consists The SF pays all the non-insurance related expenses to run the Takaful of over 27 member states where each member state has a different business on behalf of the policyholders. For example, the SF will pay mix of culture backgrounds. for all the Takaful entity staff. In return, the policyholders (through the PF) pay explicit fees to the SF for operating the Takaful entity on For example, the Muslim populations in Denmark, Germany, the its behalf. Netherlands and Austria are descended primarily from Turkey while Muslims in France are mostly descended from Algeria, whereas the There are two explicit fees paid to the shareholders: largest Muslim populations in the UK originate from Pakistan and 1 A fee to operate the Takaful business on behalf of the Bangladesh. In order to market the Takaful business successfully policyholders. This fee is either a percentage of the total these differences in culture need to be considered. contributions (Wakalah fee on contributions) or a percentage of the underwriting profi t (Mudarabah proportion of the Marketing will be easier in EU countries with large Muslim populations underwriting profi t); and that are generally concentrated within specifi c geographical areas 2 A fee to manage the investments in the PF. This fee is either in the EU state. Countries which meet these criteria include the UK, a percentage of the total PF investible assets (Wakalah fee on France, Germany and Spain. investments) or a percentage of any investment income earned (Mudarabah proportion of the investment income). Takaful businesses have been most successful in countries with a signifi cant Muslim population. However, this is not the case in the EU, There are also other less common methods available for remunerating where Muslims do not make up a signifi cant proportion of any member the SF, which are not detailed in this article. state. Takaful businesses therefore need to appeal to both Muslims If the PF is in defi cit, the SF gives an interest-free loan (Qard Hassan) and non-Muslims in order to be economically viable. to the PF. This loan should be paid back to the SF once the PF is in surplus. Other than the fees paid to the SF, in theory this is the only If one considers the Takaful business from a non-Islamic perspective, transfer of money from the SF to the PF. In practice, some countries it is an insurance product that returns any underwriting surplus to its have allowed the SF to claim back some surplus arising from the PF as customers, invests its assets in ethical investments — for example, an incentive to maximize returns for the PF. not in companies that deal with tobacco, alcohol, gambling or the manufacture or sale of weapons — and costs the same as insurance In general, the PF and SF are both contained within the same company. products that do not do this. However, one can have a structure where the PF insurance entity is separated from the SF service company. continued...

© Page 21 6th June 2008 TAKAFUL REPORT www.islamicfi nancenews.com

Takaful Poised to Take Off in the EU (continued)

It’s a price-competitive ethical insurance product. Takaful contracts statement as appendices which may help in the transparency of their are also fully transparent contracts that fully state all fees. This accounts and would also enable them to be compared with other combination — ethical, transparent and price-competitive — could be a Takaful entities around the world which use the AAOIFI standards. powerful marketing tool to insurance customers in the EU. Investment compliance The need for Shariah compliance To be Shariah compliant, Takaful businesses should invest their assets A Shariah board determines whether the Takaful business is operating in products that are compliant with the Shariah laws. This may trigger in a Shariah compliant manner and whether its products are Shariah certain regulatory issues as some local regulators of the EU member compliant. The board usually consists of at least three religious states have certain restrictions on the proportion of the assets of an scholars with economics education who are generally employed by insurance company that can be invested in any particular fi nancial the Takaful business. There are currently not many scholars in the product in order to minimize any “concentration risk”. world who understand both the intricacies of Shariah law and the complexities of modern fi nance. Consequently, those who understand Many of the investments available in the market, such as government both are in huge demand. and company bonds, are not Shariah compliant. Even if there are suitable Shariah investments, there may not be enough of them to meet the regulators’ requirements due to the huge shortage in “Even if there are suitable Shariah compliant investments within the EU. EU governments are Shariah investments, there may aware of this issue and in the UK, the government recently completed consulting with the market on issuing Sukuk. not be enough of them to meet Shariah compliance also requires that the reTakaful (Islamic the regulators’ requirements...” reinsurance) program be placed with a reTakaful company. Currently, there is a lack of reTakaful capacity in the market, specifi cally a lack of Shariah compliance presents an interesting regulatory issue. A Takaful adequately rated reTakaful capacity. business has two regulators: • the local regulator such as the FSA in the UK, which ensures At the time of writing, there are only three reTakaful companies and that policyholders are adequately protected; and reTakaful windows that have a rating of A- or above, and there are • the Shariah board, which ensures that the Takaful business is fewer than 20 reTakaful entities in the world. Takaful companies may operating in an “Islamically appropriate” manner. be forced to use conventional reinsurance until suffi cient growth in capacity. As each company has its own Shariah board, this can result in inconsistencies in the interpretation between companies of what is The EU has skilled insurance technical resources but lacks insurance Shariah compliant. Malaysia has overcome this problem by setting up specialists who also understand Islamic fi nance, Takaful business and a National Shariah Advisory Council which makes rulings on particular the intricacies of how the Takaful business operates within the modern fi nancial issues. This ensures consistency in both the interpretation of fi nancial world. Shariah principles as well as of Shariah regulations. There are specialized training institutions such as the Institute of Additional regulatory and accounting challenges Islamic Banking and Insurance, Bahrain Institute of Banking and There are some specifi c accounting challenges that need to be met for Finance and the Islamic Banking and Finance Institute Malaysia but Takaful businesses. In particular, there needs to be consideration as on the job experience is still relatively scarce. to whether the company should present and assess its results with the PF and the SF separately or combined in addition to the local national The large Muslim population within the EU makes the Takaful business regulatory guidelines. an attractive opportunity. The current accounting and regulatory regimes in the region do not preclude Takaful businesses from being Consideration is needed as to which format will be more suitable when set up and marketed, and indeed, movement towards this is starting dealing with issues like transparency of information, which accounting to occur. principles should apply and how the results of one Takaful business can be best compared to another Takaful business or a conventional However, companies considering this option will need to consider how insurance business. to keep their companies Shariah compliant while also complying with local accounting and solvency regulations as well as ensuring that the Bahrain is an example of a possible compromise where all conventional advantages of their products can be marketed to, and understood by, insurers’ accounts use IFRS (the accounting standards that all both Muslims and non-Muslims. insurers use in the EU) but Takaful business accounts use the AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) Mohammad S Khan is standards. AAOIFI is similar to IFRS but was specifi cally developed for a director in Pricewater- Islamic companies. houseCoopers LLP. He is a qualifi ed actuary who has signifi cant experience in advising reTaka- A solution for Takaful businesses operating in the EU could be to ful and conventional (re)insurers in the UK, the Middle East, Europe display the accounts for the PF and SF as well as the Shariah board and around the world on all aspects of their business.

© Page 22 6th June 2008 MOVES www.islamicfi nancenews.com

tional, and later moved to the Banker’s Trust Company in Singapore as NIKKO CITIGROUP ─ Japan the managing director of structured lending, securities and derivatives. Sim S Lim has been appointed as the new CEO for Nikko Citigroup, Joining him is Simon Stockwell, who was previously the head of the effective on the 30th June. He is succeeding Hideo Abe who retires in European corporate advisory in Lehman Brothers. September and remains on the board of directors until then. The current co-CEO, Shinji Oyama, is the new vice chairman of client relationships. FSA has also appointed David Smith as a senior adviser. He was a sen- ior partner at KPMG Forensic Accounting in the UK. Lim is also Citigroup’s head of market and banking businesses in Hong Kong and Taiwan. He has been with the bank for 25 years, holding MERRILL LYNCH — Mena various positions in Kuala Lumpur, New York, Riyadh and Singapore as Fares D Noujaim, a former vice-chairman of Bear Stearns, has been well as a previous stint in Tokyo in 1987. named head of Merrill Lynch’s Middle East and North African opera- tions and the global head of its sovereign wealth funds. AMANAHRAYA INVESTMENT BANK ─ Malaysia Mohamed Azahari Kamil is the new managing director cum CEO of Noujaim, 45, will divide his time between New York and Dubai. AmanahRaya Investment Bank in Labuan. He has resigned from AmanahRaya-JMF Asset Management, where he held a similar post, TAMWEEL PROPERTIES & INVESTMENTS — UAE but remains the company’s non-executive director. Abdulla Nasser Abdulla has been appointed CEO of Tamweel Properties & Investments, a fully owned subsidiary of Tamweel focusing on real The bank is a wholly-owned subsidiary of Amanah Raya. It was estate investment and brokerage services. It was established with a established in December 2006, and is licensed by the Labuan Offshore paid-up capital of AED400 million (US$109 million) and assets under Financial Services Authority (LOFSA). management in excess of AED4 billion (US$1.09 billion).

Amanah Raya is a Malaysian government-owned trustee company Abdulla will continue as chief commercial offi cer of Tamweel. He joined which provides trust, legacy management and will services. Tamweel following more than a decade with Dubai-based Emirates Air- line, where he was vice president of commercial sales for the UAE. ALLIANZ MALAYSIA — Malaysia BLME — UK Allianz Malaysia has appointed Alexander Ankel as CEO of Allianz Life Insurance Malaysia and Ng Hang Ming as CEO of Allianz General Roscow Lucas has been appointed as head of syndication at Bank of Insurance Company (Malaysia) as well as Commerce Assurance. London and the Middle East (BLME). He has over 20 years experience in the syndicated loans market and will assist in addressing the Ankel was also appointed CEO of Allianz Malaysia, the holding company. growing requirements for larger and more complex Islamic funding. The former CEO of Japan’s Allianz Fire & Marine Insurance has over 17 years of international insurance experience. Lucas spent 11 years at Australia and New Zealand Banking Group (ANZ), where he was head of global syndication and involved in deals Ng joined the Allianz regional offi ce in Singapore in 1998 and was in the Middle and Far East, Southeast Asia and Latin America. He involved in the life and general insurance business. He has been with also contributed signifi cantly to maintaining ANZ’s position as the top Allianz Malaysia since 2003. arranger in India and Pakistan.

BANK BUMIPUTERA INDONESIA — Indonesia GEFSCO ─ Bahrain Bank Bumiputera Indonesia has appointed Mat Amir Jaffar as presi- Timothy Holder is the new CEO for Global Banking Corporation’s (GB- dent commissioner, replacing Hadenan A Jalil with effect from the 27th Corp) new subsidiary, Global Energy Financial Services (Gefsco). May 2008. The new company will participate in Shariah compliant energy invest- CREDIT SUISSE — Switzerland ments worldwide. Ashraf Issa has joined Credit Suisse as global market leader (GCC and IOI CORPORATION ─ Malaysia Saudi Arabia) for private banking the Middle East/ISC. Lee Yeow Seng has been appointed as the new executive director of He will be based in Geneva. IOI Corporation. He will be involved in the group’s corporate affairs and general management. FSA ─ UK LOVELLS ─ UK Two senior derivatives bankers, Jeremy Bennett and Simon Stockwell, have been hired as Financial Services Authority’s (FSA) part-time advis- London-based law fi rm Lovells has appointed Richard Olver as its CFO, ers. and is responsible for overseeing the fi rm’s fi nancial management. This is the fi rst time that Lovells has employed a CFO. He was previously in Bennett was Credit Suisse’s co-head of fi xed income and emerging Deloitte, where he advised listed companies mainly in the media and markets. He started his career in derivates exchanges in Tokai Interna- technology sectors.

© Page 23 6th June 2008 DEAL TRACKER www.islamicfi nancenews.com

Deal tracker Islamic Finance news Advisory Board: Keeping you abreast of the world’s upcoming Shariah compliant deals Mr Daud Abdullah (David Vicary) Another Islamic Finance news exclusive Chief Operating Offi cer Asian Finance Bank ISSUER SIZE (million) INSTRUMENT Dr Mohd Daud Bakar Dewa Minimum US$500 Sukuk Chief Executive Offi cer International Institute of Islamic Finance Philippines Up to US$1 billion Sukuk Prof Dr Mohd Masum Billah BTA Bank Up to US$150 Sukuk Group Executive Chairman Middle Eastern Business Bahrain Central Bank US$500 Sukuk World Group of Companies

Qatar Islamic Bank US$300 Sukuk Dr Humayon Dar Chief Executive Offi cer Barwa Real Estate US$800 Sukuk BMB Islamic Mr Badlisyah Abdul Ghani Doha Bank US$1 billion Sukuk Ijarah Chief Executive Offi cer CIMB Islamic RAK Properties US$2 billion Sukuk Ms Baljeet Kaur Grewal Tabreed Up to US$500 Sukuk Group Chief Economist Head, Global Research Dubai International KFH Research Limited US$200 Sukuk Financial Center Mr Sohail Jaffer Partner Amlak Finance US$260 Sukuk International Business Development FWU International Al-Rajhi Cement Investment US$595 Sukuk Dr Monzer Kahf Al-Zamin US$11.15 Mudarabah Consultant/Trainer/Lecturer Private Practice Muhibbah Engineering US$125.41 Mudarabah Mr Mohamed Ridza Abdullah Indonesia up to US$2 billion Ijarah Managing Partner Mohamed Ridza & Co Orient Technology Indonesia US$120 Islamic and conventional Prof Bala Shanmugam Perisai up to US$47.03 2 tranches in 6 series Director of Banking & Finance Monash University Malaysia Ranipur Sugar US$7.96 Diminishing Mushakarah Mr Muhammad Nejatullah Siddiqi Author, Scholar, Speaker, Trainer Pak Elektron US$1.9 billion Diminishing Musharakah Mr Rushdi Siddiqui Al Noor Sugar Mills US$7.99 Diminishing Musharakah Global Director Dow Jones Islamic Indexes FACB Industries US$25.11 Murabahah; CP/MTN Mr Dawood Taylor Head of Takaful Taawuni Division Glomac US$18.83 Murabahah MTN Bank Aljazira First Fidelity US$2.9 Diminishing Musharakah Mr Abdulkader Thomas President & CEO Ijarah alongside US$8.5 million SHAPE – Financial Corp Aneka Gas US$26.5 worth of conventional bonds Mr Paul Wouters US$93.5 million senior Partner Bener Prolintas US$187 Ijarah, US$93.5 million junior Musharakah Prof Rodney Wilson Director of Postgraduate Studies Monetary Authority of TBA Sukuk Durham University Singapore Mr Sohail Zubairi Vice President & Head Shariah For more details and the full list of deals visit Coordination www.islamicfi nancenews.com Dubai Islamic Bank

© Page 24 6th June 2008 FUNDS PAGE www.islamicfi nancenews.com

Eurekahedge Global Islamic Fund Index

120

110

100

90

80

70

60

4 4 5 5 5 5 6 6 6 6 7 7 7 7 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 p c r n p c r n p c r n p c e e a u e e a u e e a u e e S D M J S D M J S D M J S D

Monthly returns for Global funds (as of 4th June 2008) FUND MANAGEMENT COMPANY Performance Measure FUND DOMICILE

1 Gulf Industrial Companies Fund The Saudi Investment Bank 14.52 Saudi Arabia 2 Riyad Equity Fund 2 Riyad Bank 13.28 Saudi Arabia 3 DWS Noor Precious Metals Securities Fund - Class A DWS Noor Islamic Funds 11.30 Ireland

4 Islamic Certifi cate on the LLB Western Hilal TR Index ABN Amro Bank 11.25 Switzerland 5 Al Fajer Fund Wafra International Investment Company 11.00 Kuwait 6 Al Dar Securities Fund ADAM 10.95 Kuwait 7 Al Rajhi Local Shares Fund Al Rajhi Bank 10.93 Saudi Arabia 8 AlAhli Emerging Markets Trading Equity Fund The National Commercial Bank 10.80 Saudi Arabia 9 Al Rajhi Children Fund Al Rajhi Bank 10.46 Saudi Arabia 10 Al Naqaa Asia Growth Fund Banque Saudi Fransi 10.33 Saudi Arabia Eurekahedge Islamic Fund Index* 2.30

Monthly Returns for ALL funds (as of 4th June 2008) FUND MANAGEMENT COMPANY Performance Measure FUND DOMICILE 1 DWS Noor Precious Metals Securities Fund - Class A DWS Noor Islamic Funds 11.30 Ireland 2 Thahabi Ijara Fund I Wafra Investments Advisory Group 7.88 Kuwait 3 Islamic Ijara Fund III Wafra Capital Partners 7.13 Kuwait 4 AlAhli Islamic Global Equitybuilder Certifi cates The National Commercial Bank 6.66 Germany 5 Global Equity Trading Fund - Al-Manal Samba 6.58 Saudi Arabia 6 Noor Islamic Developed Markets Ex US Fund Noor Financial Investment Company 5.94 Kuwait

7 AlManarah High Growth Portfolio The National Commercial Bank 5.71 Saudi Arabia

8 Al-Crescent Fund Arab National Bank 5.48 Saudi Arabia 9 DWS Noor Global Select Equity Fund - Class A DWS Noor Islamic Funds 5.11 Ireland 10 Al Shamekh Islamic Portfolio Riyad Bank 4.86 Saudi Arabia Eurekahedge Global Islamic Func Index* 1.87

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.

© Page 25 6th June 2008 SHARIAH INDEXES www.islamicfi nancenews.com

S&P Shariah Indices Price Index Levels

2000 1900 S&P 500 Shariah S&P Europe 350 Shariah 1800 S&P Japan 500 Shariah 1700 1600 1500 1400 1300 1200 1100 1000 04/06/08 May-08 Apr-08 Mar-08 Feb-08 Jan-08 Dec-07

Index Code Index Name 04/06/08 May-08 Apr-08 Mar-08 Feb-08 Jan-08 Dec-07 SPSHX S&P 500 Shariah 1173.996 1191.671 1159.136 1101.027 1102.059 1113.559 1210.401 SPSHEU S&P Europe 350 Shariah 1528.836 1561.127 1527.614 1447.319 1469.692 1433.380 1605.956 SPSHJU S&P Japan 500 Shariah 1315.109 1298.106 1256.791 1183.592 1242.786 1245.302 1313.474

2000 S&P Pan Asia Shariah 1900 S&P GCC Composite 1800 S&P Pan Arab Shariah S&P BRIC Shariah 1700 1600 1500 1400 1300 1200 1100 1000 04/06/08 May-08 Apr-08 Mar-08 Feb-08 Jan-08 Dec-07

Index Code Index Name 04/06/08 May-08 Apr-08 Mar-08 Feb-08 Jan-07 Dec-07 SPSHAS S&P Pan Asia Shariah 1158.908 1181.396 1213.284 1128.294 1179.878 1125.301 1276.625 SPSHG S&P GCC Composite Shariah 1308.056 1275.791 1300.940 1217.617 1341.970 1261.967 1360.276 SPSHPA S&P Pan Arab Shariah 1356.382 1326.664 1346.319 1265.531 1365.488 1277.606 1354.519 SPSHBR S&P BRIC Shariah 1531.215 1618.083 1490.222 1339.677 1434.744 1329.801 1564.039

1200 S&P Global Property Shariah 1080 S&P Global Infrastructure Shariah 960 840 720 600 480 360 240 120 0 04/06/08 May-08 Apr-08 Mar-08 Feb-08 Jan-08 Dec-07

Index Code Index Name 04/06/08 May-08 Apr-08 Mar-08 Feb-08 Jan-07 Dec-07 SPSHGU S&P Global Property Shariah 834.503 846.205 897.914 832.467 870.938 858.447 939.792 SPSHIF S&P Global Infrastructure Shariah 112.266 113.133 111.336 108.755 112.966 110.419 125.143 The S&P Shariah Indices. Creating opportunity for Islamic investors.

To learn more, contact [email protected].

© Page 26 6th June 2008 MARKET INDEXES www.islamicfi nancenews.com

Data as of the 4th June 2008

PERFORMANCE OF DJ INDEXES

DJIM World DJIM Asia/Pacific DJIM Europe DJIM US

10

8

6

4

2

0

PRICE RETURN (%) -2

-4

-6 1 Week 2 Week 3 Week 1 Month 3 Month 6 Month 1 Year YTD INDEX PRICE RETURN (%) 1 Week 2 Week 3 Week 1 Month 3 Month 6 Month 1 Year YTD DJIM World -0.66 -1.75 -0.40 0.83 7.57 1.29 -1.34 2.23 DJIM Asia/Pacifi c 2.05 -1.35 0.86 0.79 8.85 3.44 -0.90 3.24 DJIM Europe -1.69 -3.89 -1.25 -0.45 5.11 0.01 -3.22 1.48 DJIM US -0.56 -0.19 -0.22 1.54 8.35 -0.72 -2.00 0.02

PERFORMANCE OF DJ TITANS INDEXES

DJIM Titans 100 DJIM Asia/Pacific Titans 25

15

10

5

0 PRICE RETURN (%)

-5 1 Week 2 Week 3 Week 1 Month 3 Month 6 Month 1 Year YTD

10 1 Week 2 Week 3 Week 1 Month 3 Month 6 Month 1 Year YTD INDEX PRICE RETURN (%) 1 Week 2 Week 3 Week 1 Month 3 Month 6 Month 1 Year YTD DJIM Titans 100 -0.97 -2.21 -1.02 -0.17 5.12 -3.47 -5.26 -0.04 DJIM Asia/Pacifi c Titans 25 2.91 -1.01 1.06 1.58 13.90 9.42 5.21 11.94

DESCRIPTIVE STATISTICS Market Capitalization (US$ billions) Component Weight (%) Component Float Index Full Mean Median Largest Smallest Largest Smallest number adjusted DJIM World 2620 20746.99 16807.88 6.42 1.38 461.51 0.01 2.75 0.00 DJIM Asia/Pacifi c 1118 4080.98 2726.91 2.44 0.56 143.36 0.01 5.26 0.00 DJIM Europe 390 5443.47 4064.35 10.42 2.70 214.21 0.18 5.27 0.00 DJIM US 728 9140.07 8614.08 11.83 3.06 461.51 0.14 5.36 0.00 DJIM Titans 100 100 8435.57 7538.47 75.38 48.30 413.68 11.91 5.49 0.16 DJIM Asia/Pacifi c Titans 25 25 1322.87 896.18 35.85 27.66 93.37 11.91 10.42 1.33 Mean, median, largest, smallest and component weights are based on fl oat adjusted market capitalization, not full market capitalization.

Learn more about the Dow Jones Islamic Market Indexes

Anthony Yeung [email protected] Regional Director Tel: +852 2831 2580

© Page 27 6th June 2008 MALAYSIAN SUKUK UPDATE www.islamicfi nancenews.com RINGGIT ISLAMIC DEBT MARKET: WEEKLY SNAPSHOT AS AT 4th JUNE 2008 MOST ACTIVE BONDS TRADED BETWEEN 29th MAY and 4th JUNE 2008 Total Volume Traded % w-o-w Price Last Week Closing Stock Name Last Traded Price Last Traded Yield Last 7 Change Price

BNMNI B4 (68D - 91D) 98.12 3.52 1150.0

BNMN-IDB 73/2007 91D 27.03.2008 97.52 3.46 520.0

BNMN-IDB 18/2008 182D 11.09.2008 97.24 3.44 300.0

BNMNI B7 (172D - 211D) 98.33 3.46 300.0

BNMNI B9 (262D - 311D) 99.21 3.49 234.5

CAGAMAS IMTN 3.830% 13.03.2009 99.21 4.50 190.0

PROFIT- BASED GII 3/2007 14.09.2012 98.43 3.44 150.0

BNMN-IDB 2/2008 90D 10.04.2008 99.17 3.50 150.0

PROFIT-BASED GII 1/2007 15.03.2010 98.11 5.05 145.0 -0.08 98.19

KHAZANAH 0% 08.12.2016 97.64 3.42 130.0

BNMN-IDB 16/2008 182D 04.09.2008 98.19 3.52 119.6

BNMN-IDB 34/2007 273D 20.03.2008 98.29 3.5 118.0

RANTAU IMTN 0% 14.08.2013-MTN 2 97.92 3.50 100.0

BNMN-IDB 17/2008 273D 11.12.2008 100.36 4.25 80.0 -0.13 100.49

WESTPORTS IMTN 0% 07.03.2013 (TRANCHE- 3) 99.42 4.15 75.0

Outstanding Bond by Issuer Class as at 4th June 2008 (RM’000) Bond Traded Amount by Issuer Class as at 4th June 2008 (RM’000)

Government ABS Corporate Government 30,000 (15%) 6,767 (3%) Corporate 113,280 (55%) 314 (7%) 734 (16%) ABS 1 (0%) Financial 4,056 (2%) Quasi-Govt 275 (6%)

Quasi-Govt 26,955 (13%) Corporate Guaranteed BNM BNM 2,949 (1%) 3,388 (72%) 22,500 (11%)

YTM Curves as at 4th June 2008 5 YR YTM Historical Chart (week closing, last 3 months)

Disclaimer: Information on this page is intended solely for the purpose of providing general information on the Ringgit Bond market and is not intended for trading purposes. None of the information constitutes a solicitation, offer, opinion, or recommendation by Bondweb Malaysia Sdn Bhd (“Bondweb”) to buy or sell any security, or to provide legal, tax, accounting, or investment advice or services regarding the profi tability or suitability of any security or investment. Investors are advised to consult their professional investment advisors before making any investment decision. Materials provided on this page are provided on an “as is” basis, and while care has been taken to ensure the accuracy and reliability of the information provided in this page, Bondweb provides no warranties or representations of any kind, either express or implied, including, but not limited to, warranties of title or implied warranties of fi tness for a particular purpose, accuracy, correctness, non-infringement, timeliness, completeness, or that the information is always up-to-date.

© Page 28 6th June 2008 LEAGUE TABLES www.islamicfi nancenews.com

TOP ISSUERS OF ISLAMIC BONDS JUNE 2007 – JUNE 2008

Issuer or Group Nationality Instrument Amt US$ m Iss. % Manager

CIMB, RHB Investment, Aseambankers 1 Binariang GSM Malaysia Sukuk Musharakah 4,509 9 12.9 Malaysia, ABN Amro Bank, AmInvestment, OCBC Bank (Malaysia)

2 Saudi Basic Industries Saudi Arabia Sukuk Istithmar 3,466 2 9.9 Calyon, HSBC Saudi Arabia

3 Malaysia Malaysia Sukuk 2,494 3 7.1 Malaysia Government bond

Barclays Capital, Deutsche Bank (London), 4 JAFZ Sukuk UAE Sukuk Musharakah 2,043 1 5.8 Dubai Islamic Bank, Lehman Brothers International (Europe) Barclays Capital, Citigroup Global Markets, 5 DP World Sukuk UAE Sukuk Mudarabah 1,496 1 4.3 Deutsche Bank, Lehman Brothers

6 Saudi Electricity UAE Sukuk 1,333 1 3.8 HSBC Saudi Arabia Deutsche Bank (London), Goldman Sachs 7 Dubai Sukuk Center UAE Sukuk Mudarabah 1,248 1 3.6 International Projek Lebuhraya Utara 8 Malaysia Sukuk Musharakah 1,163 11 3.3 CIMB Selatan

9 Dana Gas Sukuk UAE Sukuk Mudarabah 1,000 1 2.9 JPMorgan

ABS Islamic Bond, Arab National Bank, Dar Al-Arkan International Deutsche Bank, Dubai Islamic Bank, Gulf 10 Saudi Arabia Sukuk Ijarah 1,000 1 2.9 Sukuk International Bank (UK), Kuwait Finance House, Unicorn Investment Bank

Dubai Islamic Bank, NBD Investment Bank, 11 Nakheel Development 3 UAE Sukuk Ijarah 980 1 2.8 JPMorgan Deutsche Bank (Malaysia), JPMorgan, 12 Cherating Capital Malaysia Exchangeable Sukuk 850 1 2.4 CIMB

13 Hijrah Pertama Malaysia Sukuk Ijarah 847 2 2.4 Citibank, CIMB

14 Nakheel Development 2 UAE Sukuk Ijarah 750 2 2.1 JPMorgan

Barclays Capital, Citigroup, Dubai Islamic 15 DEWA Funding UAE Sukuk Ijarah 749 1 2.1 Bank, Emirates Bank International

16 Syarikat Prasarana Negara Malaysia Sukuk Ijarah 616 3 1.8 CIMB, AmInvestment

17 Khazanah Nasional Malaysia Exchangeable Sukuk 550 1 1.6 CIMB, Deutsche Bank, UBS

18 Cagamas Malaysia Sukuk Murabahah 547 5 1.6 HSBC, CIMB, Aseambankers

19 National Bank of Abu Dhabi UAE Exchangeable Sukuk 545 1 1.6 Morgan Stanley, Credit Suisse

BNP Paribas, Citigroup, National Bank of 20 NIG Sukuk Kuwait Sukuk Mudarabah 475 1 1.4 Kuwait, Standard Chartered, WestLB

Total 34,959 305 100.0

For all enquires regarding the above information, please contact: Catherine Chu Email: [email protected] Phone: +852 2804 1223; Fax: +852 2529 4377

© Page 29 6th June 2008 LEAGUE TABLES www.islamicfi nancenews.com

TOP ISSUERS OF ISLAMIC BONDS MARCH 2008 – JUNE 2008

Issuer or Group Nationality Instrument Amt US$ m Iss. % Manager

1 Saudi Basic Industries Saudi Arabia Sukuk Istithmar 1,333 1 15.8 Calyon, HSBC Saudi Arabia

Dubai Islamic Bank, NBD Investment 2 Nakheel Development 3 UAE Sukuk Ijarah 980 1 11.6 Bank, JPMorgan Barclays Capital, Citigroup Global 3 DEWA Funding UAE Sukuk Ijarah 749 1 8.9 Markets, Dubai Islamic Bank, Emirates Bank International

4 Malaysia Malaysia Islamic Sukuk 627 1 7.4 Malaysia Government bond

5 Syarikat Prasarana Negara Malaysia Sukuk Ijarah 616 3 7.3 CIMB, AmInvestment

6 Khazanah Nasional Malaysia Exchangeable Sukuk 550 1 6.5 CIMB, Deutsche Bank, UBS

Istisna & Ijarah 7 Tabreed 08 Financing UAE 463 1 5.5 Morgan Stanley exchangeable Sukuk National Central Cooling 8 UAE Convertible Sukuk 463 1 5.5 Morgan Stanley (Tabreed)

9 Lingkaran Trans Kota Holdings Malaysia Musharakah MTN 457 13 5.4 Aseambankers

10 Central Bank of Bahrain Bahrain Sukuk Ijarah 350 1 4.1 Calyon

11 RAK Capital UAE Sukuk Ijarah 272 1 3.2 Standard Chartered

Al Rajhi Banking & Investment, 12 Villamar Sukuk Bahrain Sukuk Musharakah 190 1 2.2 Merrill Lynch International

13 Almana Sukuk Qatar Sukuk Mudarabah 163 1 1.9 Gulf International Bank

14 Westports Malaysia Malaysia Musharakah MTN 140 3 1.7 OSK Investment Bank

Salam Bounian Development Qatar National Bank, Commercial 15 Qatar Sukuk Musharakah 138 1 1.6 Sukuk Bank of Qatar, Qatar Islamic Bank

Bank Islam Malaysia, Kuwait 16 Aras Sejagat Malaysia Ijarah Islamic bond 133 1 1.6 Finance House (Malaysia)

17 Bumiputra-Commerce Holdings Malaysia Sukuk Murabahah 110 1 1.3 CIMB

18 Cagamas Malaysia Sukuk Murabahah 96 2 1.1 HSBC, CIMB, Aseambankers

19 Projek Lebuhraya Utara Selatan Malaysia Musharakah MTN 96 1 1.1 CIMB

Musharakah & Murabahah 20 Gamuda Malaysia 92 1 1.1 CIMB MTN

Total 8,451 78 100.0

ARE YOUR DEALS LISTED HERE? If you feel that the information within these tables is inaccurate, you may contact the following directly:

Catherine Chu Email: [email protected] Telephone: +852 2804 1223

© Page 30 6th June 2008 LEAGUE TABLES www.islamicfi nancenews.com

ISLAMIC BONDS JUNE 2007 – JUNE 2008 ISLAMIC BONDS MARCH 2008 – JUNE 2008

Manager or Group Amt US$ m Iss. % Manager or Group Amt US$ m Iss. %

1 CIMB 4,222 52 12.1 1 Calyon 1,016 2 12.0

2 HSBC 3,887 20 11.1 2 Morgan Stanley 926 2 11.0

3 Malaysia Government bond 2,494 3 7.1 3 CIMB 821 8 9.7

4 JPMorgan 2,360 5 6.8 4 HSBC 669 2 7.9

5 Deutsche Bank 2,118 6 6.1 5 Malaysia Government bond 627 1 7.4

6 Citigroup 1,810 13 5.2 6 Aseambankers 568 17 6.7

7 AmInvestment 1,626 55 4.7 7 Dubai Islamic Bank 514 2 6.1

8 Aseambankers 1,499 40 4.3 8 Emirates NBD 514 2 6.1

9 Barclays Capital 1,372 4 3.9 9 AmInvestment 336 14 4.0

10 Morgan Stanley 1,308 7 3.7 10 JPMorgan 327 1 3.9

11 Dubai Islamic Bank 1,228 6 3.5 11 Standard Chartered 280 2 3.3

12 Riyad Bank 1,066 1 3.1 12 Barclays Capital 187 1 2.2

13 Calyon 1,016 2 2.9 13 Citigroup 187 1 2.2

14 Lehman Brothers 885 2 2.5 14 Deutsche Bank 183 1 2.2

15 Standard Chartered 875 31 2.5 15 UBS 183 1 2.2

16 RHB Capital 852 62 2.4 16 Gulf International Bank 163 1 1.9 17 OSK Asia Securities 140 3 1.7 17 Oversea-Chinese Banking 683 16 2.0 Malaysian Industrial 18 106 14 1.3 18 Goldman Sachs 624 1 1.8 Development Finance 19 Emirates NBD 622 3 1.8 19 Al Rajhi Banking & Investment 95 1 1.1

20 ABN Amro 620 8 1.8 20 Merrill Lynch 95 1 1.1 Total 34,959 305 100.0 Total 8,451 78 100.0

ISLAMIC BONDS BY COUNTRY JUNE 2007 – JUNE 2008 ISLAMIC BONDS BY COUNTRY MARCH 2008 – JUNE 2008

Amt US$ m Iss. % Amt US$ m Iss. %

Malaysia 15,637 44.7 252 Malaysia 3,216 38.1 63

UAE 10,853 31.0 18 UAE 2,927 34.6 5

Saudi Arabia 5,799 16.6 4 Saudi Arabia 1,333 15.8 1

Pakistan 702 2.0 19 Total 8,451 100.0 78

Bahrain 550 1.6 2 ISLAMIC BONDS BY CURRENCY MARCH 2008 – JUNE 2008 Kuwait 475 1.4 1 Amt US$ m Iss. % Total 34,959 100.0 305 Emirati Dirham 3,090 36.6 6 ISLAMIC BONDS BY CURRENCY JUNE 2007 – JUNE 2008 Malaysian ringgit 2,666 31.5 62 Amt US$ m Iss. % Saudi Arabian riyal 1,333 15.8 1

Malaysian ringgit 14,237 40.7 250 Total 8,451 100.0 78

US dollar 9,392 26.9 20 For all enquires regarding the above information, please contact: Emirati dirham 5,677 16.2 8 Catherine Chu Saudi Arabian riyal 4,799 13.7 3 Email: [email protected] Total 34,959 100.0 305 Phone: +852 2804 1223; Fax: +852 2529 4377

© Page 31 6th June 2008 EVENTS DIARY www.islamicfi nancenews.com

DATE EVENT VENUE ORGANIZER Islamic Finance news team

Published By: June 21/F, Menara KUB, 12, Jalan Yap Kwan Seng 50450 Kuala Lumpur, Malaysia th th 15 - 17 TradeTech Middle East 2008 Dubai WorldWide Business Tel: +603 2162 7800 Fax: +603 2162 7810 Research

th th 15 - 19 Sukuk World Middle East Dubai IIR Middle East EDITORIAL TEAM 18th - 19th Malaysian Islamic Capital Market Kuala Lumpur Bursa Malaysia Managing Editor Frances O’Sullivan [email protected] Conference 2008 Editor Arfa’eza A.Aziz 23rd - 26th 4th International Islamic Finance Forum 2008 Hong Kong Informa [email protected] Deputy Editor Raphael Wong 24th - 26th Islamic Finance & Investment World Europe 2008 UK Terrapinn [email protected] Senior Copy Koay Sook Kuan Editor Sookkuan.Koay@ REDmoneyGroup.com 25th - 26th Sukuk Summit London ICG Events Copy Editor Sasikala Thiagaraja [email protected] July Editorial Elmira Azlan Executive [email protected] st rd 1 - 3 Islamic Finance: The India Opportunity India IQPC Features Editor Shabnam Mokhtar [email protected] th 8 The World Islamic Banking Conference London MEGA Staff Writers Dalila Abu Bakar [email protected] 14th - 16th 2nd International Takaful Summit London IBFIM Nazneen Abdul Halim [email protected] 22nd Innovative Product Development UK IGG Events Correspondents Kamal Bairamov, Seelan Sakran Shirene Shan 23rd - 24th Islamic Real Estate Asia 2008 Kuala Lumpur IQPC Forum Manager Christina Morgan [email protected] August Production Hasnani Aspari Manager [email protected] 11th - 13th MIF 2008 Issuers & Investors Forum Kuala Lumpur Islamic Finance Production Muhammad Najib Abdul Rahim Events Executives [email protected] Nor Hidayah Mohamed th th 25 - 28 Islamic Finance & Investment World 2008 South Africa Terrapinn [email protected]

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© Page 32 6th June 2008 Company Index

Company Page Company Page Company Page Company Page ABG 2 CBK 9 GIC 7 Morgan Stanley 9 ADIB 6, 9 China National Building Materials 8 GIH 8 MTR Corporation 6 ADIH 3, 8 CIMB Aviva Takaful 5 Gulf Organization for Industrial Consulting 8 National Bank of Development 6 Al Amanah Investment Bank 7 Citigroup 6, 7 HKAA 6 Nexus 7 Al Rajhi Bank 3, 5 Credit Suisse 23 Hong Kong Mortgage Corporation 6 Nikko Citigroup 23 Aldar Properties 6 Danat RIA Company 8 HSBC 6, 7 OIC 4 Allianz Malaysia 23 Dayang Enterprise 8 ICMA Centre 3 Pictet 3 Al-Thouraia Project Management Company 8 DBP 7 IDB 4, 6 Qatar Central Bank 2 Aman 5 DEWA 7 INCEIF 3 QInvest 6 Aman Syria for Takaful Insurance 5 DFM 7, 9 Invest Bank 2 QNB 2 Amanah Raya 3 DIB 7 IOI Corporation 23 RAM Ratings 9 AmanahRaya Investment Bank 23 DIC 8 IRIS 2 Riyad Bank 5 Arab National Bank 5 Doha Bank 1 ITFC 4 S&P 4, 9 Asciano 3 Doha Islamic Bank 1 KFH 4 SAMBA 5 Bangkong Sentral Pilipinas 7 EFG-Hermes 5 KFHM 6 Saudi Aramco 3 Bank Bumiputera Indonesia 23 EIB 8 Khaleeji Commercial Bank 8 SC 8 Bank Indonesia 1 Ekktitab Holding Company 7 KSE 7 Shamil Bank 8 Bank Islam 3 Emirates NBD 7 Kuwait Investment Authority 2 SICO 6 Banque Saudi Farsi 5 EONCAP Islamic Bank 2 Lehman Brothers 9 StanChart 4 Barclays Capital 7 ESCA 7 Lovells 23 Standard Bank 1 Bell Group of Companies 6 Falcom Financial Services 6 MAAKL Mutual 4 Stanlib 1 Binaa 8 Faysal Bank 8 Malta Financial Services Authority 3 Syrian Insurance Supervisory Authority 5 BLME 23 FGB 2 Marsh 6 Tamweel 5, 23 BNI Syariah 1 Fitch 4, 9 Masraf Al Rayan 2 Taylor-DeJongh 2 BRI Syariah 1 FSA 23 Maybank 9 TM International 8 BSE 6 GBCorp 2 Mazaya Holding 8 Total 3 Bukopin Syariah 1 GEFSCO 2, 23 Mazaya Saudi 8 Tune Money 5 Bursa Malaysia 8 GFH 8 Merrill Lynch 9, 23 UAB 9 Capital Intelligence 9 GGICO 9 Moody’s 9 UAE Central Bank 2

Country Index

Country Title Page Country Title Page Country Title Page Africa Africa-focused equity fund launched 1 Gross distribution for stakeholders 4 Switzerland UAE bank in Basel II accord with IRIS 2 Bahrain ABG opens Indonesian offi ce 2 Enhancement for IDB 4 ADIH launches new fund 3 GBCorp forms investment subsidiary 2 Online Takaful scheme 5 Syria President calls for JV with KIA 2 SICO most active on the BSE 6 KFHM concludes deal 6 Aman Syria gets green light 5 Second company for Nexus 7 More Islamic stocks for investors 8 UAE UAE bank in Basel II accord with IRIS 2 Investors need to act fast 8 Maybank’s Islamic bonds rated 9 ADIH launches new fund 3 Khaleeji plans US$2 billion company 8 Malta Authorities to review regulations 3 RAK’s Sukuk oversubscribed 4 Sovereign ratings move up 9 North Africa ADIB buys Egypt bank 6 Aman Syria gets green light 5 Gulf Moody’s fi rst rating on GGICO 9 Pakistan Faysal to start Islamic division 8 New subsidiary for Tamweel 5 Hong Kong First Sukuk worth US$1 billion 6 Philippines DBP takes up stake in Al Amanah 7 ADIB buys Egypt bank 6 India GIC to launch Islamic reinsurance 7 Qatar Doha plans global acquisitions 1 Aldar Sukuk worth US$500 million 6 EIB gets US$33 million for fund 8 Masraf Al Rayan plans Libyan expansion 2 DEWA Sukuk raises US$749 million 7 Indonesia More Islamic banks coming up 1 Profi t of US$67 million 6 Ekktitab lists on DFM 7 ABG opens Indonesian offi ce 2 Bonds at US$3 billion 7 EIB gets US$33 million for fund 8 Kuwait President calls for JV with KIA 2 Saudi Arabia Health insurance scheme 3 Capital Intelligence upgrades UAB 9 KFH opening 175 branches by December 4 Al Rajhi to lend US$14 billion 3 Fitch rates ADIB 9 Ekktitab lists on DFM 7 Enhancement for IDB 4 UK INCEIF, ICMA Centre sign agreement 3 GIH invests in Mazaya Saudi 8 Boost for fi nancial sector 5 Another step closer to issuing Sukuk 6 Libya Masraf Al Rayan plans Libyan expansion 2 Falcom launches Islamic fund 6 US Marsh heading for Saudi 6 Malaysia New Islamic debit card launched 2 IDB: Saudi banks not affected by crisis 6 S&P downgrades three banks 9 More branches for Bank Islam 3 Marsh heading for Saudi 6 INCEIF, ICMA Centre sign agreement 3 GIH invests in Mazaya Saudi 8

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