Grassroots Revolution: the Relentless Rise of Compliant Crowdfunding

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(All Cap) Top of the class: Easy entry to Philippines US market 1100 New funding Takaful: OAC Stock Exchange welcomes 1075 1.08% platform oﬀ ers a new moves ahead Shariah 1050 1,044.72 teaches model...... 11 with plans to compliant 1025 1,033.50 student loans a launch Shariah NYSE-listed 1000 W T F S S M T lesson...... 8 compliant sub- ETF...... 18

Powered by: IdealRatings® index...... 15 COVER STORY 8th October 2014 (Volume 11 Issue 40) Grassroots revolution: The relentless rise of compliant crowdfunding

Crowdfunding is the latest catchphrase diff erent lines. The most common so far fundamental reliance on risk sharing. in capital formation, and these days have been reward or donation-based “Crowdfund investing is both timely and it seems as if everyone is jumping on campaigns, popularized by success authentic,” confi rmed Aamir A Rehman, the bandwagon. With a profi t-sharing stories such as US platform Kickstarter, managing director at UAE private equity model in close alignment to Shariah the world’s largest funding platform fi rm Fajr Capital Advisors. “Timely principles and a structure enabling for creative projects, which in the space because it helps address the need for unparalleled access to funding of just fi ve years has att racted over fi ve entrepreneurial fi nance in key Muslim for entry-level players, LAUREN million contributors and raised almost markets. Authentic because it encourages MCAUGHTRY looks at the astonishing US$1 billion for over 55,000 projects. risk-sharing, channels savings to real growth trajectory of the sector — and Lending platforms, such as UK-based economic activity, and enhances fi nancial asks whether this latest fashion could Funding Circle or ethical platform participation-core principles at the heart truly translate into the Next Big Thing Abundance Generation, in comparison of Islamic fi nance.” A recent report co- for Islamic fi nance… off er debentures in return for investment, authored by Aamir notes that: “Islamic which are repaid over a period of time. commercial law strongly favors equity A Cinderella story over debt fi nancing, which suggests The growth in popularity of the But one of the most exciting that crowdfund investing platforms are crowdfunding model has been nothing opportunities around, especially for especially well suited to Muslim-majority short of extraordinary. Between 2010- Islamic investors, is the rise of the countries. In our view, crowdfund 13 the amount of capital raised by equity-based funding model, in which investing and Islamic fi nancial services crowdfunding sites grew at an average participants receive a security in the are inherently compatible and mutually annual rate of 179%, with US$5 billion venture in return for their contribution. reinforcing.” raised in 2013 alone. Over US$10 billion While one of the most complex structures has been raised worldwide through in terms of regulation and The model not only encourages crowdfunding platforms in the last participation risk, the increased access to fi nancing, fi ve years, with the number of players economic possibilities for but has a knock-on eff ect for currently topping 500 — following a 91% capital generation could the wider economy which is increase in platforms in 2012. The US is be some of the most of particular importance to now home to over 350 sites, along with exciting that the market the Islamic industry, which almost 100 in the UK, over 50 in France has ever seen. emphasizes positive social and a growing number of launches across benefi ts and involvement the developing world. Perfect ϐit in the real economy. “The The equity-based model is opportunity to allow private Although based on similar principles of an almost perfect alignment investment in an effi cient profi t-sharing, crowdfunding campaigns with Shariah compliant and eff ective online can be structured along a variety of methods of fi nance, due to its continued on page 3

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Volume 11 Issue 40 transactions in capital DEALS markets TAKAFUL IFN Rapids ...... 2 Pakistan government plans Maybank Islamic CEO Syarikat Takaful Malaysia IFN Reports: to auction US$1 billion hopes government will provides bursary to assist • Top of the class: New funding platform Sukuk this month include tax incentives for actuarial science graduates in obtaining a professional teaches student loans a lesson • Bridging the Puncak Niaga carries out Waqf and Zakat in Budget qualifi cation gap: Finding middle ground for Islamic and conversion of RM3.5 million 2015 conventional fi nance • Easy entry to Takaful: (US$1.06 million) Sukuk Investigation into US$1 Al Alamiya for Ijarah to company shares Cooperative Insurance OAC off ers a new model • Company Focus: Dar billion Kabul Bank theft Company engages IOI Properties Group reopened by Afghanistan’s Al Sharia – A pioneer, a leader • IFN Dealogic Shariyah Review Bureau issues Sukuk Murabahah new president roundup • Sovereign Sukuk: Asian wave in the for Shariah audit and under RM1.5 billion horizon • IFN Global Trendswatch • IFN Weekly Islamic Bank of Britain to advisory services (US$457.32 million) Sukuk become Al Rayan Bank by Poll: Will the recent spate of sovereign issuances program the end of the year in non-Muslim majority countries spur corporate Government of Indonesia EFG Hermes acquires 49% RATINGS Islamic issuances? • Philippines Stock Exchange auctions Sukuk, sets stake in French wind farm Moody’s upgrades rating moves ahead with plans to launch Shariah indicative target at US$1.5 as fi rst purchase outside trillion (US$123 million) on Jebel Ali Free Zone compliant sub-index • Africa: A destination for MENA FZE’s US$650 Sukuk to long-term growth investments • Luxembourg Mergers and acquisition ‘Ba1’ prices long-awaited Sukuk • Country fi rst for NEWS deals in the Middle East Indonesia’s global rating Al Baraka Bank Pakistan • US market welcomes Islamic fi nancing for US$2.6 and Africa down 31% reaffi rmed at ‘gBBB2(pi)’ by Shariah compliant NYSE-listed ETF ...... 8 billion Moroccan power The IDB to complement RAM project provided by IDB World Bank’s US$474 MARC assigns Putrajaya million water supply IFN Analysis: Islamic fi nance in Libya: Taking a Amãna Bank instigates Holdings’ Islamic debt development scheme to step back? ...... 19 ‘Senior Citizens Saving programs ratings of Month’ for October, off ering Lebanon with US$128 ‘AAAIS’ and ‘AAAID’ Real estate remains a fundamental accessory additional benefi ts to elders million in Shariah in the Islamic finance landscape ...... 20 compliant fi nancing RAM maintains rating No announcements on Case Study: watch on Malaysia Islamic megabank to be Further Sukuk anticipated Building Society and its Maiden sovereign Sukuk: Emirate of Sharjah ....21 expected before the 8th in the coming year from RM495 million (US$914.65 Shariah Pronouncement ...... 22 October, according to CIMB non-Islamic issuers, million) Sukuk according to Azzad Asset IFN Country Correspondents: acting CEO Management RAM reaffi rms ratings for Bangladesh; Brunei; UAE ...... 23 RAM predicts infl ation Bank Rakyat and its Islamic National Bank of Kuwait IFN Sector Correspondents: of 3.8-4% for Malaysia in funding programs 2015 on the back of GST offl oads 30% stake in Regulatory Issues; Takaful & Re-Takaful....25 implementation International Bank of Abu Dhabi receives ‘AA/A- Special Reports: Qatar as it sees no chance to 1+’ sovereign credit rating The Philippines: A latent opportunity ...... 27 Islamic Dakwah secure majority stake from S&P Foundation Malaysia to Country Feature: Saudi Arabia: An economy on increase Islamic fi nancial Moody’s Investor Services Highway concessionaire the up ...... 28 literacy programs in 2015 launches new rating Kesas proposes RM735 Sector Feature: Structured Islamic fi nance and product focusing on private million (US$224.09 million) Islamic banking industry placement markets of EMEA Sukuk the issue of ownership ...... 30 voices hope for incentives Book Excerpt: The Eurekahedge Report: Key for development of Investcorp to complete US$1.43 billion sale of trends in Islamic hedge funds ...... 31 investment accounts in MOVES upcoming budget Berlin Packaging this week Path Solutions’ iMAL Mohamed Abdulaziz Islamic Finance news ...... 33 Malaysian banking sector Kalmoor resigns as CEO of remains ‘underweight’, software passes AAOIFI Deal Tracker ...... 37 Bank Sohar according to CIMB compliance assessment REDmoney Indexes ...... 38 Research Kuwait records bumper Cheick-Oumar Sylla joins Eurekahedge data ...... 40 year with KWD12.9 billion ContourGlobal as CEO for Danajamin Nasional signs Africa Performance League Tables ...... 42 strategic collaboration (US$44.66 billion) budget Events Diary...... 46 agreement with Credit surplus but IMF warns this Global Investment House Company Index ...... 47 Guarantee and Investment could reverse if oil prices fall executive management team rescinds resignations Subscription Form ...... 47 Facility to undertake

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Grassroots revolution: The relentless rise of compliant crowdfunding Continued from page 1 marketplace could dramatically impact “There are banks and fi nancial job creation,” explained Jason Best, institutions funding micro-projects and Crowdfunding in ϐigures co-founder and principal at US-based other large projects with more than a Crowdfund Capital Advisors (CCA). million dollars... but the projects that US$10 billion raised through “You can have all these incubators and need between US$50,000-300,000 do crowdfunding platforms over the last talent development plans and start-up not fi nd it,” said Shehab Marzban, co- fi ve years: from US$500 million in loans — but at the end of these, you founder of Shekra, a new crowdfunding 2009 to US$5 billion in 2013. need to provide these companies with fi rm launched in Egypt last year that access to capital.” Before crowdfunding, claims to be the fi rst Shariah compliant US$96 billion potential funding this meant access to angel investors or equity-based platform. “We are trying deployed from over 344 million venture capital players: and in many to bridge this gap by targeting this households (with income over Muslim markets, these sectors are not yet segment.” US$10,000pa) in the developing world well established — thus the opportunity by 2025. to give people a chance to raise early This access to an alternative source of capital from their communities is vital to funding has the potential to create an encourage a culture of entrepreneurship entirely new fi nancial market outside of 500+ crowdfunding platforms and private sector involvement. “I the traditional framework, which some worldwide: including over 350 in the am hopeful that we can have more believe could revolutionize the way we US, 90+ in the UK, 50+ in France and conversations with more regulators do fi nance. Kavilash Chawla, CEO of 20+ in MENA. more quickly to begin moving down this Nur Global Strategies, explained to IFN path,” commented Best. that: “In the markets where retail Islamic 91% increase in the number of banking is thriving, crowdfunding crowdfunding platforms in 2012 platforms that empower individuals alone. The to transact with one another directly, outside of the formal banking system, 179% average annual growth rate of opportunity could be a very big threat, especially capital raised through crowdfunding in markets where the ‘Islamic value sites worldwide between 2010-13. for equity-based proposition’ of the Islamic banks is being questioned.” In fact, he continued: “The 524% compound annual growth rate crowd funding to opportunity for equity-based crowd (CAGR) for reward-based platforms funding to replace certain forms of bank between 2009-12, along with 114% replace certain fi nance, especially for the SME sector, is CAGR for equity-based platforms and forms of bank almost limitless.” 78% for lending-based platforms. Not everyone agrees, however. “This is ϔinance, especially a method to provide shared risk, shared Shariah focused crowdfunding platform reward fi nancing and that can align very at scale, and there is an enormous space for the SME sector, well with Islamic investors. But it won’t for that,” thinks Thomas Woolf, the eliminate the role of banks,” thinks Best. MENA mission chief of charity funding is almost “As the opportunity gets larger, it might platform JustGiving. “If someone were instead take the place of something that able to do that the potential could be limitless actually is not happening today at all — huge — no one has fi lled that gap in the funding many people who are not able to market yet.” access traditional forms of fi nance — or Bridging the gap who have been rejected from banks.” He believes that one of the factors Not only are the basic principles a inhibiting rapid growth is a lack of close match, but crowdfund faith in e-commerce, despite the strong investing also has the Barriers to growth appetite for digital products in Muslim potential to fi ll a key gap So far, Shariah compliant markets. “In the UK and US, there is a in the spectrum of Islamic involvement in the sector natural convergence between retail and fi nancial services available has got off to a relatively online commerce. However, the majority to SMEs. “While the slow start, and a number of the Muslim population is unbanked, Islamic fi nancial services of factors have inhibited so there will probably be a fi ve to 10 year industry has successfully its growth. However, lag in crowdfunding penetration. But the designed interest-free with the astonishing pace latent potential is much higher, given the alternatives to debt-based of growth these are being average donation volume and speed with SME fi nancing (typically surmounted fast and which it is growing.” based on Islamic trade Islamic interest in the instruments), Islamic area is growing. Other issues include a lack of energy equity fi nancing for this “No one has and technology infrastructure impeding segment has been more yet developed elusive,” said Aamir. a purely continued on page 4

Grassroots revolution: The relentless rise of compliant crowdfunding Continued from page 3 the ability to deliver the platform in average £371 (US$600) each per year), arena, and which could hopefully a cost-effi cient and reliable way; as with a growing number of Muslims increase the interest level of other well the eternal problem of human making their donations online. And with Muslim majority nations in the channel capital in Islamic markets. “Building almost two thirds of the overall Muslim as a way to provide start-ups and SMEs a globally competitive crowdfunding population under 30, a new generation with access to capital. platform, whether on a commercial is driving progression, innovation and or philanthropic basis, requires a very entrepreneurship in Muslim markets — Islamic opportunity strong technology skill set, fi nancial creating the ideal sett ing to receive the However, interest is by no means services/Islamic fi nance skill set, and new concept. restricted to Malaysia, and growth is social sector/social impact skill set. spreading throughout the Muslim world. Gett ing access to that talent and bringing Indonesia is an already active market it together as part of a unifi ed team… is a Given the with sites including Bursalde, Pantugan very diffi cult thing to build,” highlighted and Wujudkan; while Egypt (through Kavilash. “You essentially need a team preference for Shekra.com) and Turkey (including that brings together Silicon Valley tech Biayda and FonlaBeni) are also gett ing talent, Islamic and western fi nancial later stage ϔinancing involved. services, and a social impact track record. And because building the tech by Islamic banks, The Middle East is of course a key side of the platform and the legal and market to access, and has already regulatory work involved is a signifi cant this should help seen activity pick up in recent years initial investment, you need to be able with successful sites such as Eureeca, to fundraise or be able to bank-role the drive more investing Goodgate and Afl amnah. “There are development of the platform on your nearly 20 crowdfunding platforms own. Being able to do all of that is very into earlier stage [currently] operating in the MENA uncommon.” region, and we expect to see the launch of companies, which Shariah compliant equity crowdfunding Chris Abdur-Rahman Blauveldt, founder platforms in the Gulf in 2015,” confi rmed of US-based Shariah-focused platform are signiϔicant Dr Richard Swart, partner with CCA and LaunchGood, emphasized to IFN that director of research at the UC Berkeley the limitations in terms of jurisdictional employers of young Program on Innovation in Entrepreneural sophistication are also a problem. “It’s and Social Finance, to IFN. “Countries painfully diffi cult to transfer money workers and large institutions in GCC need help between countries with lots of funds allocating resources to help SMEs. We lost on exchange rates and fees. Some expect to see co-investment models, countries don’t even allow locals to where governments and funds will invest donate online unless we had a bank Malaysian lead alongside retail investors — this is a account open in their country (Algeria signal of support, a way of decreasing is one example), and other countries are Malaysia has already seen a signifi cant take-up on the conventional side, with risk, and of allocating capital into the off -and-on government watch lists, like SME sector.” Pakistan and Somalia.” multiple platforms set up in the last few years: including a reality TV show-based model called Make the Pitch, along With formal participation by Picking up the pace with other players such as myStartr governments and trusted institutions, Nevertheless, with such enormous and pitchIN. Not all are successful experts hope to see increases in private potential it is inevitable that the sector is — some, such as the charity platform Islamic fi nance. “I expect the fi rst country starting to see signifi cant interest. SocialSharity — have already closed. to make major moves will be the UAE,” “These are still early days But in time-honored tradition, predicted Swart. “Given the preference for crowdfunding and the country is taking the lead for later stage fi nancing by Islamic banks, crowdfund investing in in terms of state involvement this should help drive more investing Muslim markets, but in order to promote the into earlier stage companies, which are the rate at which new sector through regulatory signifi cant employers of young workers. platforms are being encouragement. Last week, So there are geopolitical, economic launched suggests that the Securities Commission and Islamic factors that suggest that a fundamental shift is (SC) released its proposed countries should invest into their equity underway,” observe Best. regulatory framework on crowdfunding infrastructure.” equity crowdfund investing The Muslim community is following a public consultation Western promise one of the most generous in launched in August, which Neither is the growth in Shariah-focused the world — a 2013 JustGiving Best describes as: “The crowdfunding limited to the Muslim poll of 4,000 found that most exciting thing world. The US has seen an exceptional Muslims donated the happening” in the highest amount (on Islamic crowdfunding continued on page 5

Grassroots revolution: The relentless rise of compliant crowdfunding Continued from page 4 take up, with Fred Wilson, the founder compliant products. Due to its users of US venture capital fi rm Union Case Study 1: NARWI being able to pool 0% capital, there is an Square Ventures, pointing out that: “If incentive for MFI partners to be more Americans take 1% of the US$300 trillion Narwi.org is an initiative of Silatech, a innovative and diverse in their product they have in savings it would create Qatar-based social initiative focusing portfolio. For MFI partners to tap into a US$300 billion dollar market.” And on creating the next generation of this, essentially, free capital, they will the country is well on the way — in the jobs for Arab youth in the MENA have to develop either Islamic windows 12 months since equity crowdfunding region. Based on the Kiva model of or Shariah compliant products. This regulations were introduced, over crowdfunding microfi nance initiatives sort of incentivization has strong US$350 million has already been raised to spur micro-entrepreneurship, the potential to create growth in the Islamic for small business and start-ups. new platform is due to launch in Q1 2015. microfi nance sector both in MENA and abroad. This potential is not only being recognized but leveraged by US Muslim Mohammad Raafi Hossein, the project communities. Multiple new platforms leader for Narwi at Silatech, explained Narwi’s beta launch was titled Kiva have been launched across North to IFN that: “Narwi is diff erent because Arab Youth, available through a America, including LaunchGood and instead of having our users give loans, dedicated window on the Kiva.org UmmahHub; as well as in the UK, with our users create a micro-Waqf, aka website. “In two years, we’ve been HalalFunder and MuslimCrowdFunding. micro-endowment. In essence, our able to raise US$6 million from 122,000 “We’re defi nitely seeing an increase in users pool a small amount of capital users. Through this fi nancing, nearly interest from US Muslims,” confi rmed and disburse it (on a 0% interest basis, 3,900 businesses in the region were Blauveldt to IFN. “We’ve had a huge or Qard Hasan) to youth entrepreneurs fi nanced. This success motivated us to take-up in the last several months in of their choice (sourced by our MFI create our own dedicated portal for the the US. It was slow to start, but after six partners). When the repayment comes MENA region, Narwi,” said Raafi . months of operating people started to back, instead of being routed back to understand crowdfunding bett er and as our users’ wallets, they return to the Kiva Microfunds is a US-based non- a result there’s been a constant stream of user’s endowment/Waqf. Then the profi t organization founded in 2005 that projects in the last few months.” user has the ability to re-disburse these allows people to lend money via the funds to another entrepreneur. It’s a internet to low-income entrepreneurs Kavilash also pointed out the wider form of sustainable giving that allows a over 70 countries worldwide. Since its benefi ts to the Islamic fi nance industry. static pool of funds to create revolving launch Kiva has crowd-funded more “In the North American market, where impact.” than 1 million loans totaling over retail banking regulations are not US$500 million, with a 99% repayment aligned to the requirements of retail Narwi could be potentially a powerful rate and a community of over 1 million level Islamic banking, a crowdfunding vehicle in moving the MENA global lenders. As of November 2013, platform such as a Shariah compliant microfi nance industry towards a more Kiva was reportedly raising around P2P lending platform can enable diverse portfolio of Islamic/Shariah US$1 million every three days. consumers to execute Islamic fi nance transactions directly with one another, company, as there is no Riba-based bank should appeal strongly to these thereby opening up the market to Islamic loan funding it,” pointed out Woolf. economies due to its potential to drive fi nance at the retail level.” In addition, growth by “leapfrogging” the traditional the use of crowdfunding rather than A world of opportunity capital market structures and fi nancial bank fi nancing by mainstream players Nevertheless, it is in emerging economies regulatory regimes of the developed opens up the possibility of increased that the trend really has the potential world. Islamic investor participation even in to make its mark. The World Bank conventional projects that in its 2013 report on ‘Crowdfunding “We really believe that there is an they may previously Potential for the Developing World’ opportunity here for developing have avoided. For noted that: “The crowdfunding economies to move faster and more example, entrepreneur market is in its infancy, especially eff ectively than developed economies in Stelios Haji-Ioannou in developing countries, but the this space, especially as so many people of EasyJet fame last potential market is signifi cant.” are unbanked or don’t have access to month partially There are an estimated 344 million conventional fi nancing,” emphasized Best. funded his new households in the developing EasyProperty project world (with annual income Innovation & hybridization with GBP1.4 million of over US$10,000 and at least And as the sector develops new (US$2.24 million) three months of savings), which opportunities and innovations emerge using the UK-based the World Bank predicts could which promote even greater access and CrowdCube platform. have the ability to deploy involvement across all sectors of the “Islamic investors up to US$96 billion a year economy. One of the most interesting can now take an by 2025 in crowdfunding of these is the possibility for large equity stake in the investments. The model continued on page 6

Grassroots revolution: The relentless rise of compliant crowdfunding Continued from page 5 corporations to utilize crowdfunding in various ways — whether to access Case Study 2: GROWMADA with social enterprises throughout the new talent, fi nd new ideas or fulfi l their entire product cycle towards building corporate social responsibility objectives Growmada.org is a crowdfunded sustainable livelihoods.” in a manner that is profi table for all market platform based in Qatar, parties. providing artisan goods from The platform essentially allows users to emerging markets. Founded in invest in productive social enterprises, helps them scale and, while nominal, Another new trend is the growing September 2012, it delivers an then share in their sales success. This involvement and cross-collaboration integrated crowdfunding+marketplace form of emotional engagement creates of multiple investor levels. “One of the solution to scale social enterprises a unique set of brand ambassadors things we are seeing on the conventional by providing them with access to capital, market intelligence, and global for these social enterprises that can side of fi nance is a hybridization of potentially help them market to the models,” commented Best. “We are consumers. Structured on a revenue- based model, the platform has a close mainstream markets, thus off ering seeing angels coming together with exponential returns compared to their crowd coming together with venture relationship with Islamic fi nance through its profi t-sharing principles. respective domestic markets, where capital, with private equity, in new disposable income rates aren’t as high. and diff erent ways. And so I think that “At its simplest, Growmada is there is great opportunity for there to be ‘Kickstarter + Ali Baba’ for social Growmada targets what is often called innovative new structures within Islamic crowdfunders and ethical consumers,” the ‘Missing Middle’ of enterprises in fi nance that could be created, that are explained chairman Kavilash the productive social enterprise space. aligned and that could be very benefi cial Chawla to IFN. “One of the truly These enterprises are too large to be to the community.” innovative features of Growmada is called micro-enterprises, but too small the integrated nature of our platform. to be the ‘S’ in SME. Hence, they often In markets that have already developed Our research indicates that for both fi nd it diffi cult to scale or to access relatively sophisticated crowdfunding social crowdfunders as well as ethical traditional forms of fi nancing. sectors, such as the US and UK for consumers, being able to engage example, venture capital fi rms that with the producer and the product “Creating the bridge from Micro to would normally enter in the later stages throughout the entire product cycle Small is absolutely critical for MENA of a company’s life are telling their is a key component of developing to be able to create the jobs it requires, potential targets to go and crowdfund their emotional engagement. Through given the demographic bulge in this the fi rst round of fi nancing themselves, the integrated platform and unique region,” said Kavilash. “To be able to to demonstrate the appetite and potential revenue-sharing model we have fund this scaling in a Shariah compliant for the product. “These things all lower developed, Growmada will enable manner increases our reach and access the risk for those follow-on investors; so social crowdfunders and ethical to a wider range of social enterprises in they see crowdfunding as a benefi cial consumers to partner and engage the region.” innovation,” explained Best. “I can see later stage investors who are looking for new products in the Islamic economy to be able private investors from being carried tools that now are available with the to leverage crowdfunding as a great way to away with excitement and losing out. rise of the Internet and the social web. access a larger volume of deal fl ow.” Erman Akinci, the director of business To streamline bureaucracy and protect development for leading early-stage private information, individuals should digital investment fi rm Catcha Group, be allowed to self-certify their income or Regulation & protection closely involved with the venture capital net worth brackets on funding platforms However, just because the growth and online start-up space in Malaysia, and allow the technology to limit opportunity is there doesn’t mean that raised his concerns to IFN regarding the them from going over their investment everyone will be successful, and there is need for stronger safeguards to protect allocations.” a danger in being too optimistic about a retail investors. “This is a positive step process that it must be remembered has and a great opportunity, but it has to be In Malaysia, the SC has proposed a RM5 no guarantees. “It is a diffi cult thing, to done properly,” he warned. “Without million (US$1.53 million) capital limit raise money for a business,” the appropriate investor protection and on participating private companies, Best warned. “This just regulation, small private investors which it believes is currently suffi cient. provides a new avenue with limited experience could get Although the regulator has allowed to do that, but it badly burned — and in that scenario microfunds onto the platform, it plans doesn’t make it an the adverse publicity could do the to impose rigorous provisions including easy process.” cause more harm than good.” registration as a venture capital company and a restriction to raise funds only from Investor protection This issue has also been sophisticated investors. In addition, and rigorous highlighted by the World Bank, investors will be given a cooling-off regulation which noted that: “In the case period of six days within which they may are also vital, of crowdfunding, it is important withdraw their investment; and 14 days to protect that regulators rethink investor unsophisticated protection given an array of new continued on page 7

Grassroots revolution: The relentless rise of compliant crowdfunding Continued from page 6 to opt out if there is a material adverse sophisticated, opportunities will only in the developed world is creating change eff ecting the project or the issuer. grow — and one of the most exciting a more real and tangible connection possibilities in the Islamic space could between individuals and the use of their Ease & transparency in fact be the crossover with another key money, giving them a vested interest in trend of the moment — the rise of ethical the success of the project. With Islamic Yet it is a fi ne line to walk, with others investing. Crowdfunding platforms fi nance based on similar principles, there arguing that while investor protection focusing on the alternative energy and is an obvious relationship that could is important, regulation must be loose ethical investment arenas have boomed be leveraged. “Creating anything new enough to encourage participation from in the last few years, especially in western in fi nance is a slow burn, but we have issuers. “The strength to protect investors markets such as the UK (see Table 1), seen strong and steady growth in both also creates barriers for their ability to and industry observers are heralding the the numbers and size of investment,” participate in equity based crowdfunding trend as a gamechanger for the renewable said Bruce Davis, the managing platforms,” warned Kavilash. “For a energy market — a sector which Muslim director of Abundance. Speaking to successful equity-based crowdfunding countries especially in the Middle East IFN he explained that although the platform you need regulatory issues to have highlighted as a core focus over the platforms were not necessarily Shariah be addressed and the development of coming decades. US solar crowdfunding focused or specifi cally targeting Islamic a regulatory framework that enables platform Mosaic has raised US$8 million investors, there was a defi nite potential the crowd to participate but balances so far, with its fi rst four projects selling for that to come in future. “When that opportunity to participate against out in less than 24 hours: and analysts we created Abundance, I was aware the need of the regulator to protect the predict that crowdfunding could supply of Islamic fi nance in my work as an investor.” Best agreed that: “First you rooftop solar projects with up to US$5 anthropologist… and we tried to mirror have to protect investors. But secondly billion over the next fi ve years – 50 times some of the principles and structures in you have to make the process accessible. If the amount raised so far. the way we approached the idea.” the process is too onerous, then companies won’t use it and you will have wasted a lot Leading UK platform Abundance One of the most important aspects of of time and capital and eff ort.” Generation has raised US$10 million crowdfunding is the ability it provides since starting operations in 2012, while for individuals to express their personal Netherlands-based Windcentrale has choices through the way they invest. In fact, the crowdfunding process could raised EUR15.5 million (US$19.54 million) “We will only break through into the off er regulators potential advantages for wind-powered projects – with one mainstream if we become part of the over traditional investment channels. project achieving EUR1.3 million (US$1.64 way people save and invest for the “One of the things that this market million) in just 13 hours. Windcentrale future,” predicts Davis. However, he will allow is bett er transparency for CEO Harm Reitsma explained to IFN that: remains optimistic: “We see the potential regulators into private company “We enable consumers to buy a small for hundreds of millions of pounds of transactions — because all the part of a windmill. They get in return investment into ethical projects beyond transactions will be available online, not a fi nancial return but the produced renewable energy — ultimately we there will be a database available and electricity is subtracted from their power would like ‘democratic fi nance’ to the regulators will have a much easier bill.” While not targeted at the Islamic provide the capital for schools, roads, job of tracking this,” Best suggested. In market, the crossover is clear. Despite hospitals and ethical businesses.” addition, current activity suggests that admitt ing a lack of familiarity with the platforms themselves are ensuring Shariah compliant investment, Reitsma As the sector expands ever outwards, the strenuous due diligence processes in noted that: “All our (nine) windmills impact can only be positive for Shariah order to protect their own reputation as a are without any debt. So we don’t pay compliant investors. With seemingly source of quality deals. any interest at all. That is one of the key endless opportunities and new reasons why the Windcentrale model is possibilities being incorporated all the unique.” time, crowdfunding truly could be one of Expanding opportunities the most exciting new trends ever to hit As the sector becomes increasingly The emerging model of ethical fi nance the Islamic fi nance industry.

Table 1: Top Five Ethical Crowdfunding Platforms, 2014 Name Model Funds Raised Average ROI Windcentrale Investors raise capital to acquire windmills; receive fi nancial benefi ts & energy EUR15.5 million 7% (Netherlands, 2010) in return (US$19.54 million) Abundance Generation Investment from GBP5 into alternative energy projects, receive percentage of EUR8 million 7.25% (UK, 2009) revenue through debentures of up to 20 years (US$10.07 million) Mosaic Investors receive returns generated through sale of solar energy funded through EUR6.3 million 5% (US, 2013) project — functions like a virtual renewable energy bank with loans paid back (US$7.93 million) over around 10yrs Trillion Fund Peer-to-peer lending platform aiming to collect US$1 trillion globally for clean EUR1.4 million 7.98% (UK, 2011) energy projects. Also allows users to back projects by bonds, debentures and (US$1.76 million) shares in local cooperatives and funds. GenCommunity Aims to develop and invest in socially benefi cial projects that build community GBP1 million No data (UK, 2013) knowledge and resilience, alleviate fuel poverty, and support the sustainability (US$1.6 million) and security of UK energy supplies, with investors receiving capital rewards.

Top of the class: New funding platform teaches student loans a lesson

With crowdfunding investment one of charities can receive donations, meaning the biggest new trends around, both that JustGiving was unable to help. “We conventional and Shariah compliant were inundated with requests,” recollects players from across all sectors are Woolf. “So I recruited a team to try and jumping online to harness the power solve the problem of Shariah compliant of the private investor. But the channel student fi nance — and started a whole does not only have implications from a new business.” profi t-based perspective, with its social benefi t implications also immense. With dual channels — conventional IFN managing editor LAUREN platform www.edaid.com and its Shariah MCAUGHTRY speaks exclusively compliant sibling www.qardhasan.com to Thomas Woolf, the mission chief — the sites allow students to reach out to charged at up to 6% compounding annual in Dubai for groundbreaking charity their peers, colleagues and community interest. For a graduate earning GBP25,000 fundraising website JustGiving. to fund their education through (US$39,984.3) per year, it would take com, and founder of a new business crowdfunding and pay back their loans around 19 years to repay; with the full for student loan funding that could over time via interest-free income-based amount including interest reaching revolutionize global access to education. repayments. While both platforms are GBP55-60,000 (US$87,965.3-95,962.2). In based on the same interest-free principles comparison, Woolf claims that in contrast, When JustGiving launched in the Middle and both charge an upfront 5% processing the QardHasan product can be repaid East in 2011, the platform focused fee, they have a diff erent cultural identity in 10.5 years, at a total of just GBP31,500 on its key pillar of traditional event- and support diff erent audiences. (US$50,380.2) including the processing based fundraising (such as sponsored fee, the ‘optional’ time cost of capital and marathons, etc.) However, Woolf notes Students who fund their education using insurance. The choice seems easy. that: “As that sector evolved, we realized EdAid will repay back their loan index that our second and largest sector was linked, so their friends and family do Although the UK government has been Islamic giving — on a regional level.” not lose money over time. Likewise, in talks since March to fi nd a Shariah The company started targeting products supporters can make a peer-to-peer compliant solution, the potential Takaful to enable Muslims to donate online impact investment to a Muslim student structure that has been proposed (where through channels such as Zakat, initially via Qard Hasan and the student may students pay back by charitable donation and predominantly towards British make an ‘optional’ gift at the equivalent rather than by loan) is set to be charged Muslim charities. As its profi le grew rate of infl ation so their supporters do at the same rate as the current UK loan among the Muslim community, however, not make a loss by supporting them. scheme, making the gesture rather empty. users started to identify a wider range of It is worth noting that both platforms A September 2014 announcement released opportunities — and demand products will always remain 100% Riba-free, by the Department for Business Innovation that the site was unable to provide. and that as a social enterprise the and Skills on the consultation fi ndings project specifi cally promotes the goal of for a “Shariah compliant alternative One of these areas was the need for drastically reducing the cost of att ending fi nance product” confi rmed that the core individual education funding. “In 2012, university and democratizing the way we criteria included the clause: “Repayments the UK introduced the 3% interest collectively fund higher education. after graduation and debt levels must be charge on top of RPI for student loans, identical to that of a traditional loan, so and increased fees from GBP3,000 After 12 months of development, a that students who chose the alternative (US$4,798.11) to GBP9,000 (US$14,394.3),” six-month beta trial is due to start in fi nance product would be in no worse or explains Woolf. “It was a quantum shift November before a full launch for bett er position than those who took out a for Muslim students both at a religious the 2015/16 academic year following traditional loan.” and fi nancial level. Before, the perception fi nal FCA compliance approval – and was that paying infl ation-linked interest according to Woolf the response has On the other hand, the advantage of wasn’t ideal, but it was acceptable. Now, already been overwhelming. “We have the government option is its ease of thousands have fallen off the radar — the a holding page up just saying that the access and speed of process. “It’s an system is failing them.” site is coming, and in four weeks we had easy fi x — you just fi ll in a form,” says 2,500 students sign up — with many Woolf. “To do a fundraising campaign, While those students with private family asking if they can delay or give back their on the other hand, requires time and means were able to fund themselves, existing student loans in order to raise eff ort — and some may not want to put others had no choice but to accept the the funds themselves instead. We’ve seen that in at fi rst.” However, he believes interest payments or give up their hopes an incredibly positive response.” that momentum will build as students of a university education. Searching for see their peers succeed. “People follow an alternative solution, British Muslim One of the reasons for this is the people. And if you look at the products students started to contact Woolf to ask signifi cant fi nancial advantage that it that are out there — people give to how they could use the site to pay for theoretically provides. A GBP27,000 people, not just to the cause.” their degrees through crowdfunding. (US$43,183) state-provided student loan Unfortunately however, only registered (of GBP9,000 per year for three years) is continued...

Continued

This works particularly well in a Muslim with Fortune 500 companies who are Islamic community, high priority on context: given the characteristically really excited about this — and we education and rapidly expanding middle strong sense of community, global should have a big announcement coming class. And while Asia is a key market for spread, large family network and high soon.” the product, the Middle East is another value often placed on education — and target – with 50% of the population therein lies the potential of the ‘diaspora under the age of 30, education is rapidly dollar’. “If you make it simple and easy becoming a focal topic. for a large amount of people to give a The small amount, they will,” insists Woolf. The UK and US are also prime “This enables a broad base of people that implications destinations for foreign students; and have a vested interest in your future to with the UK loan system closed to donate. Education is for the benefi t of for the new channel foreign students, this creates another the community and this allows those have the potential promising target market for the communities to invest in people they crowdfunding concept. In addition, believe in.” to extend into a far many of these applicants are looking at post-graduate qualifi cations, which are The average donation is expected to wider global a key segment for the platform. “There start at around GBP100 (US$159.94) is very litt le funding out there for post- per person, but the channel in fact has context graduate students, yet they often have wide-ranging possibilities above and a proven track record and an existing beyond the initial community platform. network of colleagues and companies For example, one feature of the system With around 120,000 Muslim students that will support them, which decreases will allow fi rms to sponsor individual in the UK, the market is signifi cant the risk and increases the att raction of students – possibly in return for a post- but restricted. Yet the implications for their campaign,” explains Woolf. “This is graduation employment commitment. the new channel have the potential to where we expect the crossover to occur.” “A lot of these students already apply extend into a far wider global context. to companies for support and it’s a “It’s a global product,” agrees Woolf. With the trial platform set to launch next haphazard process,” comments Woolf. “We plan to prove our model in the UK month and interest abounding from all “We are moving this into a pain-free where the regulatory environment is quarters, it looks as if crowdfunding may system which formalizes that structure solid and scaleable, before moving into have the potential to transform yet and increases visibility on both sides. We new markets.” Malaysia is likely to be another niche in the market. have had some fascinating conversations the next port of call, based on its strong

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Bridging the gap: Finding middle ground for Islamic and conventional ϐinance

The dividing line between Shariah the assets of the companies forming this compliant fi nance and conventional middle ground into the Islamic fi nance fi nance has always been clearly industry bott om line. Considering the drawn. However as greater numbers proposition, Dr Jonathan AJ Wilson, of investment managers begin to a branding consultant and program explore the areas of synergy between leader of the postgraduate marketing conventional socially responsible degrees at the UK-based University of investment and Islamic fi nance, Greenwich, recommends approaching REBECCA SIMMONDS contemplates the question from base principles: “If methods for bridging the gap. we take the lead from the principle of Halal (permissibility) which applies In a recent interview Ashar Nazim, the to fi nance too — then everything is head of EY’s Global Islamic Banking permissible, unless stated otherwise; Center, questioned why the Islamic and the genesis of this lies in the correct fi nance industry is worth only US$2 intention (of individuals) that is aligned trillion whilst assets of the 1,290 with the principles of Islam… However, signatories of the UN Principles for the challenge is mediating and balancing Responsible Investment – 828 of which factors such as context, risk, personal are investment managers – represent accountability, collective good, time over US$45 trillion and over a third of horizon, and control.” global assets under management. He off ered the opinion the Islamic fi nance industry could benefi t from more inclusive screening criteria (rather than The a method of exclusion) in order to utilize a more diverse company base within the participation be undertaken, immediately increasing industry. the number of Shariah compliant of Shariah scholars transactions taking place and in turn the A large number of companies in industry’s bott om line. between the two distinct camps of is key, but this Shariah compliant and conventional Devonshire agrees that the participation could actually, with very litt le eff ort, approach would of Shariah scholars is key, but believes be considered on the cusp; carrying that this approach would be tackling out business in a manner that could be tackling the the issue from the wrong side of the be considered Shariah compliant if equation; and beginning with product assessed by a Shariah scholar. The entry issue from the development is instead the way forward: of conventional companies to the Shariah “Only a scholar can approve the Shariah compliant market has been stalled wrong side of the compliance of a product. Companies that however, by the prevailing perception of want to off er Shariah compliant products what being deemed ‘Halal’ or ‘Shariah equation; beginning should consult with a scholar at the compliant’ means in terms of business. onset of product development because Speaking to industry experts it seems with product products should be Shariah compliant that there are varying opinions on the from inception. This will serve to increase most eff ective method for incorporating development is the product base of Islamic fi nance the assets of the companies forming this because the industry is still relatively middle ground into the Islamic fi nance instead the product poor, although it is improving.” industry bott om line. Paul Devonshire, the director of Pramerica Real Estate way forward An increase in the number of companies Investors, notes that: “For non-compliant which off er Shariah compliant products companies, a major barrier is lack of The idea of everything being permissible but are not inherently Shariah compliant knowledge of what a Wakalah or an unless stated otherwise is the basis themselves, could lead to a situation Ijarah or a Murabahah is. With so much behind one suggestion by an industry rendering the dividing line between capital to invest, many investment professional as to how the industry could Shariah compliant and non-Shariah managers have not made Shariah approach the problem: engaging Shariah compliant companies redundant. As long compliant products a focus but with 20% scholars to assess the transactions carried as the necessary compliance throughout of the world’s population Muslim, it is a out by conventional companies for the in terms of product development, huge market opportunity.” possible application of Shariah compliant approval process and audit is maintained methods. In this scenario, if it is possible this could be an option that opens the The industry has varying opinions on the to conduct these transactions in a market to both sides of the industries’ most eff ective method for incorporating Shariah compliant manner, this could dividing line.

Easy entry to Takaful: OAC offers a new model

In September, UK-based OAC Actuaries however in Malaysia, the model is already the UK to make the Takaful proposition and Consultants launched a new Takaful in use by Malaysian partner company potentially very successful. The product compliant model for the company’s Actuarial Partners, aiding the industry in would fi t well within the mutual and fi nancial modelling software Mo.net in the development of Takaful products for friendly society sectors and we are aware the UK. REBECCA SIMMONDS explores the local market and beyond, including of an increasing interest in this area.” how OAC’s innovation could aid in the markets such as Brunei, Kenya, Mauritius global development of Takaful. and Sri Lanka. Whilst Takaful is a fully-fl edged industry in Malaysia, in the UK Gardner appreciates Introduced in 2008, Mo.net is a next Hassan Scott Ordierno, a partner at that the potential of the market is yet generation fi nancial modelling software Kuala Lumpur-based Actuarial Partners, unrealized. As such, OAC sees the package and is one of the few actuarial explained that despite the greater development of the Mo.net Takaful model modelling products available worldwide. prevalence of Takaful in Malaysia, the lack as a way to further the actuarial industry, Speaking to IFN, Nigel Gardner, the of software capable of modelling for the with an OAC consultant as part of the business development manager for industry is what led to the development of industry body, the Institute and Faculty of fi nancial modelling at OAC, outlined the the model using Mo.net. Ordierno believes Actuaries’ active working party on Takaful reason that the company built an off -the- that there is a market for Takaful in the UK and the model being presented to the shelf Takaful model, for an industry that (and therefore the Mo.net Takaful model), international Mo.net user group in London has yet to reach critical mass in the UK. even if it is not known by that name. “You this month. However it is clear that the “Takaful is not a mainstream product in have mutual insurance companies, you introduction of Takaful is seen as a case of the UK despite the general view in the UK have cooperative insurance companies, ‘when’ and not ‘if’ by Gardner. “In recent insurance industry that there is a potential you have discretionary mutual companies; years, more research is being carried out in market for these products. There is diff erent types of companies which have a this area and it is only a matt er of time uncertainty as to how such products would similar operating model as Takaful without before Takaful products form part of the ‘fi t’ within UK regulation and how they the religious aspect of it. So in this sense, wider insurance market in the UK. We could be best priced and marketed.” Takaful modelling can work very nicely want to play a key role in this process, and with these other types of companies as consequently have increased our own The company, based in London, has well.” Cara Spinks, a consultant actuary expertise alongside development of partners in countries including Australia, at OAC, concurs: “Alongside the UK fi nancial models in Mo.net that would Slovenia, South Africa, Russia and government’s commitment to grow the enable a UK insurer to move into the Malaysia. In the UK, OAC has yet to sign market in commercial Islamic insurance, Takaful market.” any clients for the Mo.net Takaful model, we believe there is enough appetite in Company Focus: Dar Al Sharia – A pioneer, a leader

As the world’s frontrunner in Islamic world’s fi rst Shariah compliant bank) The effi ciency of its team is due in no small fi nancial advisory services, Dar Al under the supervision of Dr Hussain part to Dar Al Sharia’s strong emphasis on Sharia has blazed the trail in its 10-year Hamed Hassan. And three years later in continuous in-house training for its staff illustrious career – and shows no signs of 2007, it was decided that the unit would to create profi cient, multi-tasking, Islamic slowing down. For IFN’s Company Focus be converted into Dar Al Sharia due to fi nance professionals (see IFN Vol. 11 this week, VINEETA TAN caught up with rising demand for Islamic fi nance advisory Issue 39 for the fi rm’s talent development the CEO of Dar Al Sharia who shared the services. strategy). Adding to that is the fi rm’s solid secret to the fi rm’s success. commitment to optimal time effi ciency. Ever since its inception, many more “We understand that time is money for “As a pioneer in the area of Islamic fi nance Shariah fi nancial advisory fi rms have our clients, hence we keep pace with our consultancy, Dar Al Sharia had fi rst-mover joined the market, raising market clients’ expectation and turn things around advantage when clients needed innovative competition however, it seems that Dar Al faster,” said Sohail. products to expand their customer base,” Sharia has managed to carve a niche for shared Sohail Zubairi, the founding CEO of itself in the industry. This is evident by its As a trailblazer and leader in the fi eld Dar Al Sharia. “Hence many new Islamic enviable portfolio boasting many world’s of Islamic fi nance Shariah advisory, the fi nancial products from retail/corporate to fi rsts including: the fi rst convertible Sukuk, Dubai-based consultancy has naturally set treasury to Takaful in the UAE and wider Islamic stock exchange, Shariah compliant the precedent for newcomers, resulting GCC were developed by Dar Al Sharia investment trust, electronic commodity in replicated or inspired products. Sohail whereby the fi rm provided the structure, Murabahah platform, Shariah compliant however did not show much concern over documentation, Fatwa, standard operating currency and rate hedging structures it instead said: “Since our mission is to procedures, IT compatibility check and among many other game-changing spread the correct application of Islamic training as a package.” Sohail further products. fi nancial principles and practices, we expounded that all tasks are carried out by are happy that products developed by its team – i.e. without outsourcing anything Yet with such an impressive portfolio and us are widely accepted and used in the – in order to keep strict control on quality high-profi le clientele list, Dar Al Sharia market.” And it seems that with several of the company’s deliverables. remains a modest fi rm with only 16 staff , big projects in its hands now, Dar Al Sharia with a view of expanding it to 20 by the will continue to contribute to the Islamic The seed of Dar Al Sharia was planted in end of this year, spread across fi ve diff erent fi nancial world with sound advice and 2004 in the form of the Sharia Coordination departments: structuring, documentation, innovative instruments, while remaining Department of Dubai Islamic Bank (the Shariah audit, training and administration. true to the Shariah.

IFN Dealogic roundup

After an active September for the global Figure 1: Global Sukuk volume by month Sukuk market, REBECCA SIMMONDS US$ billion US$ million casts an eye over the fi eld as we enter 12 1,500 the fi nal quarter of the year. 10 1,250 The most recent issuance by IDB Trust 8 1,000 Services of US$1.5 billion has increased 6 750 the total issuance by the special purpose 4 500 vehicle of the IDB to US$3 billion, placing IDB Trust Services second on the list of 2 250 top 30 global Sukuk issuers in the last 12 0 0 months, according to Dealogic data. The 123456789101112123456789 2013 2014 fi rst week of October has been relatively quiet in terms of Sukuk issuances Value (US$ billion) Avg Size (US$ million) Source: Dealogic following the high level of activity in September; the highest volume of global Sukuk issuance since 2012 at US$7.03 Figure 2: Islamic fi nance related loans by country — Last 12 months (Rolling) billion. (See Figure 1) 1 UAE 3,785 10 47.9

Ringgit-denominated issuance continues 2 Saudi Arabia 2,226 2 28.2 to ease ahead as we fully enter the fi nal 3 Turkey 961 3 12.2 quarter, with CIMB maintaining its 4 Qatar 350 1 4.4 position as top Sukuk manager and 5 Sri Lanka 150 1 1.9 Shariah compliant fi nancing statistics remain static, with the UAE remaining 6 Pakistan 138 1 1.7 on top of the table for Shariah fi nancing 7 Malaysia 116 2 1.5 related deals, hosting 47.9% of all 8 Indonesia 90 1 1.1 transactions as reported by Dealogic, with a deal value of US$3.78 billion (See 9 Taiwan 80 1 1.0 Figure 2). Source: Dealogic

Sovereign Sukuk: Asian wave on the horizon

NABILAH ANNUAR reports on the Sukuk plans have been repeatedly recently concluded Luxembourg Sukuk delayed due to political uncertainty and upcoming programs from Asian in the country. The government is issuers. hoping to generate US$850 million from disinvesting shares of Oil and Gas The Grand Duchy of Luxembourg Development Company (OGDCL) and successfully auctioned its landmark US$1 billion from its Sukuk issuance. EUR200 million (US$250.23 million) The Cabinet Committ ee on Privatization Sukuk on the 30th September 2013; three was reported to have approved the years after its ﬁ rst announcement in divestment of 10% government shares in 2011. The issuance was made promptly OGDCL on the 15th September 2014 and after their roadshow was comducted the has planned a 21-day execution window previous week. The paper was priced at for the completion of this transaction. 0.436% and represents the ﬁ rst sovereign The international market roadshows will Islamic debt issuance in the Eurozone. be held in Hong Kong, Singapore, UAE, Frankfurt/Stockholm, London, New The ‘AAA’-rated paper saw positive York, Boston and Chicago. demand and reportedly amassed over EUR500 million (US$625.58 million) in In Asia, two further sovereigns are soon orders and was twice oversubscribed to tap the Sukuk market. The Indonesian denominated Sukuk worth TRY1.84 (See IFN Report page 17). government will be conducting a Sukuk billion (US$809.08 million). The paper auction on the 7th October 2014 for three carries a tenor of 728 days and a six- Over in Pakistan, the government is project-based Islamic facilities (one new, month periodic rent rate of 4.84%. The expecting to complete its US$1 billion two reopened) at an indicative target of Turkish issuance was expected to be Sukuk auction this month, before the IDR1.5 trillion (US$123 million). The completed on the 1st October 2014, IMF executive board meeting takes place Turkish Treasury has also announced however no annoucements has yet been in the second half of October. Pakistan’s that it will issue a Turkish lira- made to indicate a successful issuance.

IFN Global Trendswatch

LAUREN MCAUGHTRY highlights selling prices for customers across a selection of economic and regional all regions in November, leading events, issues and trends that have the to doubts over OPEC’s long-term potential to aff ect the Islamic fi nance strategy of price stability — could industry. the cartel be gearing up for a price war amid fi ght for market share? • Christine Lagarde, managing director of IMF, warns that global • The next Silicon Valley? Central economic recovery is “britt le, uneven and Eastern Europe identifi ed and beset by risks” in speech on as new global technology and Thursday. “Overall, the global entrepreneurial hub with growing economy is weaker than we had interest from international investors envisaged even six months ago, and • Nigeria becomes fi rst country to — including Microsoft with fi ve new only a modest pick-up is foreseen stop selling oil to the US following innovation centers in the region to for 2015.” IMF 2014 growth forecast dramatic increase in domestic support local entrepreneurs. Positive of 3.4% likely to be slashed in new production due to shale revolution news for Islamic investors and estimates released next week. — a reversal from its position as private equity players looking for a top-fi ve supplier in 2010 — and new opportunities in CIS. • Lagarde confi rms that emerging analysts suggest Africa-US oil trade economies will remain the main could stop completely by 2016. • Pakistan returns to global equity source of global growth — but Nigeria compensates by increasing markets with a US$2 billion at a slower pace than before. sales towards Asia — but what privatization plan including Countries urged to invest more in impact could this trend have on international sale of energy and infrastructure, as transport and other key Islamic exporters such as banking shares, signaling end to energy bott lenecks are holding Saudi, Kuwait and Libya? country’s political crisis, according to back growth — with infrastructure Muhammad Zubair, chairman of the projects potentially “paying for • Brent crude oil hits 28-month low privatization commission. themselves” as rates are so low. after Saudi Arabia lowered offi cial

• IMF also warns that global imbalances continue to threaten stability, with debts owed by borrower countries (including advanced economies) to surplus countries (including oil producing nations such as Saudi, Kuwait Complimentary Thought Leadership Seminar and Qatar) continuing to rise even though defi cits may be shrinking. Accessing Indexing Opportunities in Islamic Market • Yields rise on new US corporate bond issuance as investors demand higher premiums for new debt as Tuesday, 14 October 2014 market volatility rises and bond InterContinental Hotel Kuala Lumpur prices falter — will this trend translate into the Sukuk market? Registration: www.spdji.com/events/sp-hosted/ • S&P 500 dividends set to rise 10.7% this year, led by technology, industrial and oil, as revenue growth falters and Hosted by S&P Dow Jones Indices investors turn to dividend-paying Best Islamic Index Provider of the Year - IFN Awards Service Providers Poll stocks in low-rate environment. A panel of industry professionals will discuss the developments in the • Rock bott om US infl ation due to market, as well as creditable indices designed to capture its opportunities. strengthening dollar overshadows • Islamic Market Overview growth outlook and threatens • Is 2014 the year for Sukuk? What’s next? continued low interest rate cycle: leading to global defl ationary fears • Accessing Global Opportunities through Shariah-Compliant Indices and suggesting possibility of further • Is Malaysia ready for alternate beta? aggressive bond purchases from Fed, which could further impact global Media Partner: economy.

IFN Weekly Poll: Will the recent spate of sovereign issuances in non-Muslim majority countries spur corporate Islamic issuances?

On the back of the emergence of many Will the recent spate of sovereign issuances fi rst half on the year stood at US$14.72 sovereign Sukuk deals this year, one in non-Muslim majority countries spur billion, while in the second half, thus far cannot help but wonder if the spate corporate Islamic issuances? the market has seen only US$1.43 million. of Sukuk in non-Muslim majority countries might encourage more Yes Nonetheless, as testimony to the majority corporates to raise funds in a Shariah optimism, several new players have No compliant manner. This week, the IFN either successfully tapped or announced Poll explores this possibility: gauging intentions to enter the Sukuk space this market sentiment and att itude towards year. The debutants include: Malaysia’s 33% the new players in the primary Sukuk EXIM Bank and RHB Islamic, UAE’s market. NABILAH ANNUAR reports. Investment Corporation of Dubai and Emaar Malls Group, Saudi Arabia’s 67% National Commercial Bank and most recently US player Goldman Sachs. “The Goldman success of Goldman Sachs’ high profi le Sachs’ high Sukuk is also expected to raise a lot of eyebrows and att ract interests amongst proϔile Sukuk is also those who were either not familiar with confi dence that the aforesaid high profi le or exposed to Sukuk before this,” opined expected to raise sovereign Sukuk transactions will pave Safri. the way for more corporates, both from a lot of eyebrows their respective countries as well as other Despite the scepticism, the global Sukuk new jurisdictions, to consider Sukuk as pipeline indicates signifi cant interest and attract a feasible funding option. Sixty seven from both the primary and secondary percent of respondents voted that the market. Increasing numbers of issuers interests trend will boost corporate participation, appear confi dent on entering the Shariah although the remaining 33% remained compliant fi nancial space, as investors sceptical. According to data from seek to diversify their portfolios in search This year, particularly in the second half, Dealogic, corporate Sukuk issuance in the of more stable income streams. the Islamic debt capital markets have witnessed a healthy Sukuk pipeline Global Islamic fi nance DCM volume since 2013 that has been boosted by a number of signifi cant issuances from non-Muslim Deal pricing date by half year Deal value US$ (million) No. sovereigns: with the UK Treasury’s 2013 fi rst half 18,968 65 landmark debut Sukuk providing a 2013 second half 19,447 54 stable of additional sovereigns with 2014 fi rst half 23,385 64 the impetus they needed to follow suit. “The Sukuk trade had given the 2014 second half (to date) 10,050 25 others the much needed push, and true enough within a few months, the Global Islamic fi nance sovereign DCM* volume since 2013 market saw maiden issuances from Hong Deal pricing date by half year Deal value US$ (million) No. Kong, South Africa and most recently, Luxembourg, almost in a coordinated 2013 fi rst half 750 1 sequence — as though they were acting 2013 second half 7,306 4 in concert,” said Mohamad Safri Shahul 2014 fi rst half 1,086 2 Hamid, deputy CEO of Malaysia’s CIMB Islamic, to IFN. As of now, all the 2014 second half (to date) 3,519 5 contenders in our previous IFN sovereign *Includes local authorities bonds Sukuk race have successfully conveyed their commitment and capabilities Global Islamic fi nance corporate DCM volume since 2013 towards the Sukuk market. Deal pricing date by half year Deal value US$ (million) No. Supplementary to these pivotal sovereign 2013 fi rst half 13,455 46 deals, the global corporate Sukuk market 2013 second half 8,278 35 continues to exhibit very respectable 2014 fi rst half 14,726 44 growth, dominated by the traditional Sukuk centers of Malaysia and the Middle 2014 second half (to date) 1,434 9 East. Our poll results exhibit fair market Source: Dealogic

Philippines Stock Exchange moves ahead with plans to launch Shariah compliant sub-index

As the Philippines moves towards When fi rst launched in December the introducing Islamic fi nance more fully list of Shariah compliant companies into its monetary system, REBECCA totalled 47, and included Aboitiz Equity SIMMONDS takes a closer look at the Ventures, Apex Mining, Manila Electric last step in the journey. Co, Nickel Asia and Pepsi Cola Products Philippines among others. The number of Hans B Sicat, the president of the companies assessed as Shariah compliant Philippine Stock Exchange (PSE), has rose to 61 between January and March stated that the bourse plans to launch this year, before retreating to 51 this a Shariah compliant sub-index this quarter. quarter. The imminent launch of the sub-index marks the culmination of The listed companies are screened each plans announced in December last year quarter by IdealRatings to AAOIFI with the release of the list of Shariah standards with those to be chosen for compliant screened companies in inclusion on the sub-index also assessed collaboration with IdealRatings. on liquidity, market capitalization and public fl oat. Speaking on the sidelines of The sub-index will be launched in the Philippine Economic Briefi ng in order to boost market liquidity and Pasay City, Sicat indicated that the fi lter to add diversity to the investor base markets of Malaysia or Indonesia. Sicat on stock liquidity would be a factor that of the PSE, given that many investors has stated that sub-index will include would limit the number of companies seeking Shariah compliant investment approximately 40 of the companies eligible for inclusion on the sub-index. opportunities currently look to the categorized as Shariah compliant on the more developed Shariah compliant PSE.

Shariah compliant ϐinancial operations providing major boost to Oman’s banking landscape

The Sultanate of Oman, which was (except HSBC Bank Oman) off er Bank managed to grow its market share recently aff orded an ‘A1’ rating by Islamic fi nancial products through both in the retail and corporate segments, Moody’s due to the government’s their Islamic windows. These banks increasing its fi nancing portfolio to solid fi nancial position supported by (which account for almost 88% and OMR27 million (US$69.92 million) as a robust growth outlook, is seeing 96% of total commercial banks’ credit compared to the OMR20 million (US$51.8 a healthy expansion of its banking and deposit, respectively, according million) in the previous quarter while sector. VINEETA TAN writes how this to Al Maha Financial Services) show expanding its deposit base to OMR5 growth is att ributed considerably to the that their Shariah compliant business million (US$12.95 million); and the development of its Shariah compliant has outperformed their conventional bank plans to launch another four new banking industry. counterpart with income from Islamic branches before the end of 2014. Bank fi nancing more than doubled to OMR14.4 Nizwa on the other hand had managed Central bank fi gures show that the million (US$37.29 million) for the fi rst to cut its losses by more than half during Omani banking sector has registered six months of the year while non-interest the fi rst six months of 2014: from a an increase in the areas of deposit and income was up 18.1% against the 1.2% OMR9.75 million (US$25.25 million) loss credit extension: For the period until growth in interest income as compared in the fi rst half of 2013, Bank Nizwa was the end of July 2014, aggregate deposits to the corresponding period last year. able to moderate its negative earnings to held with commercial banks accrued by This growth has supported the overall OMR3.9 million (US$10.1 million) as it 15.9% year-on-year to reach OMR17.2 operating income growth of the six banks saw revenues for the period more than billion (US$44.54 billion) while combined which counted 6.7% year-on-year. quadrupled to OMR3.43 million (US$8.88 banking credit charted a 12.8% increase million) from OMR707,805 (US$1.83 in the 12 months until June 2014, parallel The two Islamic banks in Oman — million) the year before. to the growth in deposit base over the Alizz Islamic Bank and Bank Nizwa — same period. however may not be able to boast such With a resilient banking sector, the positive success stories as they both Omani banking landscape is looking to Leading the positive growth story are recorded net losses for the fi rst half. Yet, continue on its positive trajectory with the country’s six conventional banks: while not reporting profi ts for the period industry observers noting that Islamic Ahlibank, Bank Dhofar, Bank Muscat, ending the 30th June 2014, the banks have fi nancial operations coupled with a Bank Sohar, National Bank of Oman nonetheless demonstrated improved buoyant market condition would play a and HSBC Bank Oman, all of which performance in some areas. Alizz Islamic major supporting role.

Africa: A destination for long-term growth investments

The African region has beneﬁ ted from increased investment ﬂ ows on the conventional side which as a result have simultaneously boosted demand and created a surge in appetite for Shariah compliant investment products across the continent. With several dedicated Shariah compliant investment houses, Africa is expected to bear strong growth prospects over the long-term. NABILAH ANNUAR takes a look at the continent’s investment landscape and potential opportunities.

Gradually being recognized by global to employ large amounts of capital investors as an exciting destination, quickly and eff ectively within Africa’s Educating Africa has been suggested to show listed equity markets. As a result, large positive developments similar to the investments are mostly private equity potential rise of the Asian tiger economies in the in nature, focusing on infrastructure 1970s and 1980s. Nadir Thorkan, an and green/brownfi eld projects,” investors on investment analyst at 27four, a South explained Nadir. Africa’s stock exchanges African (SA) investment fi rm, revealed nevertheless remain an att ractive the merits of that excluding SA, Africa is increasingly proposition for smaller institutional being recognized by global investors as investors. including an Africa an exciting, long-term growth investment destination. “Over the last decade, most Conveying a critical outlook, Nadir allocation within key African countries have enjoyed suggested two global factors that economic growth in excess of 6% per could challenge Africa’s economic and their investment annum – more than twice the average investment landscape over the next year. growth rate of South Africa – and over The slowdown China is experiencing strategy, as well the next fi ve years, nine out of the top 20 will likely spill over into slower growth fastest growing economies in the world in Africa. This is due to signifi cant trade as depth in the are expected to be in Africa,” he said. ties between sub-Sahara Africa’s (SSA) and China. Exports to China are now Shariah compliant Shariah compliant assets available in equivalent to almost 7% of SSA’s GDP, the African investment space include: a much larger ratio than in any other investment options (1) Equities which are subjected to the emerging region including Emerging regular Shariah compliant fi nancial Asia. This leaves SSA more vulnerable both in terms of screens as set out by AAOIFI; (2) Sukuk to China’s economy with commodity — following issuances from Senegal and exporters, such as South Africa, scope and liquidity, South Africa, Nigeria and Kenya are also Angola and Zambia projected to be hit expected to launch their Sukuk in the hardest. The second factor would be the is imperative to near future; (3) Commodity exchange appreciation of the US dollar and the traded funds (ETFs), in particular potential for an increase of interest rates develop traction for precious metal commodity ETFs listed in the US, which is expected to aff ect all on the Johannesburg Stock Exchange; emerging markets and frontier markets Islamic investments (4) Murabahah contracts; (5) Selected such as Africa. “Country capital accounts private equity. According to Nadir, the will experience pressure, which will in the most easily accessible asset class remains ultimately manifest in higher interest continent Shariah compliant equities as these have rates due to a pick-up in supply side the largest universe eligible for selection infl ation. This will, in all likelihood products will naturally follow given the and are also the most liquid asset class. negatively impact fi nancial asset prices,” large Muslim population, particularly in said Nadir. North and West Africa. However, However, unfortunately Africa’s educating potential investors on the capital markets are predominantly The major driving factor of the African merits of including an Africa allocation underdeveloped and small compared to economy is the demographics of young within their investment strategy, as well South Africa. “Stock market penetration and growing urbanised workforce that is as depth in the Shariah compliant ratios (as a percentage of GDP) range more literate and healthier than previous investment options both in terms of from 15% to 60%, whereas in South generations as well as a broad economic scope and liquidity, is imperative to Africa, this ratio is in excess of 150%. reform which is the result of improving develop traction for Islamic investments This, together with low listed equity institutional and political governance. in the continent. market liquidity ratios, limits the ability The demand for Islamic investment

Luxembourg prices long-awaited Sukuk

Launched on the 30th September at the and potentially boost the development of tight end of initial price guidance of Islamic fi nance across Europe.” 0-2bps below midswaps, Luxembourg has fi nally priced its much-awaited The euro-denominated issuance proved inaugural Islamic debt at 0.436% – popular among Middle Eastern investors becoming the fi rst sovereign in the as they formed the bulk of the purchasers eurozone to issue an Islamic debt. at 61% while European investors took up VINEETA TAN takes a closer look at 20% and Asian players 19%. Luxembourg’s historical move. Banque Internationale à Luxembourg, The ‘AAA’-rated (by Moody’s and S&P) BNP Paribas, HSBC and QInvest are the Reg S facility saw positive demand transaction’s arrangers. (although not as high when compared to industry as it welcomes growing interest earlier debuts by Hong Kong and South from traditionally non-Muslim-majority Africa) as the book-building process for jurisdictions including the UK, Hong the landmark EUR200 million (US$253.02 Kong and South Africa, but also for Join the most active Islamic million) program reportedly amassed Luxembourg as it anchors its ambition finance focused group on over EUR500 million (US$632.55 million) to become a hub for Shariah compliant in orders and was twice oversubscribed. fi nance. Linked-In Carrying a tenor of fi ve years, the Islamic debt was distributed across 29 accounts, “The Luxembourg Sukuk issuance is a with up to half of the program taken very positive development for the Sukuk up by central banks (40%) and other industry being a rare euro-denominated offi cial institutions, confi rmed the fi nance Sukuk from a strong ‘AAA’-rated ministry. sovereign,” said Hani Ibrahim, the head of debt capital markets at QInvest (co- Although not the fi rst sovereign lead manager of the deal), who spoke Linkedin/ Sukuk issue out of Europe, the facility exclusively to IFN. “It’s an issuance that ISLAMICFINANCENEWS nonetheless marks an important will cement Luxembourg’s position as milestone not only for the Islamic fi nance one of the premier Islamic fi nance centers

Country ϐirst for Al Baraka Bank Pakistan

Al Baraka Bank Pakistan, a member of issued US$200 million Sukuk to boost was established in 1991 and currently has the Bahrain-based Al Baraka Banking Tier 2 capital. a branch network of 110 branches across Group and one of Pakistan’s fi ve 58 cities, with plans to expand its reach fully-fl edged Islamic banks, issued to 83 towns and cities within Pakistan. a subordinated Sukuk last week. As the drive to increase the footprint of REBECCA SIMMONDS analyzes the In issuing, Islamic fi nance in Pakistan continues, Al privately-placed issuance that raised Baraka Bank Pakistan has contributed to PKR2 billion (US$19.31 million) for the Al Baraka its development, acting as lead advisor bank. and arranger on a PKR3 billion (US$28.97 Bank Pakistan million) Musharakah-based transaction The issuance is the fi rst of its kind to be to Zaver Petroleum Corporation in issued by an Islamic bank in Pakistan, has followed in May. In August, the bank announced a according to Abdullah Ghaff ar, the research partnership with the World Bank bank’s head of investment banking. The the footsteps of a examining the risk-management challenges ‘A’-rated, seven-year paper utilizes a facing Islamic banks, with a particular Mudarabah structure and includes loss number of Islamic focus on Musharakah and Mudarabah absorbency features. Ghaff ar elaborates: under the profi t-and-loss-sharing system. “The Tier 2 Sukuk by its nature is banks worldwide, unsecured and subordinated, is rated and Plans for the subordinated Sukuk were privately placed to institutional investors including AlBaraka announced in May by Adnan Ahmed in local currency.” The minimum paid-up Yousif, CEO of Al Baraka Banking Group, capital for Islamic banks in Pakistan is Turk following confi rmation from the PKR6 billion (US$57.95 million) and in government of Pakistan that it would be issuing, Al Baraka Bank Pakistan has issuing sovereign Sukuk of US$1 billion. followed in the footsteps of a number The government this week stated that the of Shariah compliant banks worldwide, Al Baraka Bank Pakistan, the country’s auction for the sovereign issuance will including AlBaraka Turk, which last year second-largest Islamic bank by assets, take place before the end of October.

US market welcomes Shariah compliant NYSE-listed ETF

Islamic investing has been identifi ed by Figure 1: Calendar-year returns of the Russell-IdealRatings Islamic US Large Cap Index the World Bank as one of the fastest- and the Russell 1000 Index, 2007-2013 and 2014, and YTD performance as of 30th June 2014 growing areas of global fi nance over the last two decades, with strong prospects 40 33.1 for continued growth. It is based on this 28.4 31 27.7 premise that Seatt le-based Falah Capital 30 launched a New York Stock Exchange (NYSE)-listed Shariah compliant 16.1 16.4 20 14.6 exchange-traded fund (ETF). VINEETA 13 13.4 8.8 8.2 TAN has the exclusive. 5.8 7.3 10 5.4 3.3 1.8 Known as Falah Russell-IdealRatings 1.5 0.9 US Large Cap ETF (NYSE Arca ticker: 0 -0.7 -2.1 FIA), the fund is designed to allow global -3.1 -3 investors access to a portfolio of well- -10 known US companies, which have been screened for their ethical and fi nancial -20 dealings, and to provide a full physical Annual Return (percent) replication of the Russell-IdealRatings -30 Islamic US Large Cap Index. -32.2 -40 -37.6 The addition -50

of FIA into 2007 2008 2009 2010 2011 2012 2013 the Islamic funds Source: The Russell-IdealRatings Islamic US Large Cap Index: Values-based investing can markets is indeed Thom Polson, the co-founder of Falah IdealRatings leads in the number Capital, explained to IFN that: “Creating of securities at over 3,654, across 49 timely as there is Shariah compliant ETFs and placing jurisdictions. Russell Investments in a them on the NYSE is a potential solution landmark study released last month a lack of options to facilitate a more global Islamic funds also confi rmed that based on the back- industry. More importantly, Islamic tested historical performance of the available for investors in the US are very active and in Russell-IdealRatings Islamic US Large a market as big as the US, adding more Cap Index, the Shariah index would have investors seeking products will not only build awareness outperformed the Russell 1000 Index among American investors but also over the period of the 31st July 2006 to exposure to foreign bring more diversity to the Islamic funds 30th June 2014 on a cumulative basis. market.” “It is notable that this outperformance markets due to occurred even with the application of As the fi rst US-domiciled fund to be dividend purifi cation to the total return the sector being supervised for Shariah compliance by a of the compliant fund,” commented the GCC-based Shariah advisor (Shariyah report. disproportionately Review Bureau), the fund is strategically positioned in the US as an ethical and “We see it as a natural progression skewed towards value-based off ering to appeal to a wider for institutions especially, in Muslim- pool of investors in line with the theme majority countries, to seek out Shariah Malaysia and Saudi of global tradability. Building on that, compliant products that have a the decision to partner with Russell- conventional level of effi ciency. We Arabia IdealRatings Islamic Index was one are excited to be a part of the rapidly made with both Shariah credibility and growing Islamic investment industry, eff ective distribution in mind. “Being which should bring in new participants linked to the Russell-IdealRatings Islamic in the near future,” said Polson. The addition of FIA into the Islamic Indexes has been a tremendous benefi t as funds markets is indeed timely as there it provides the broadest market coverage This smart beta play fund (as termed by is a lack of options available for investors and is the only Islamic index to have a ETF.com), is a culmination of close seeking exposure to foreign markets due third-party Shariah auditor,” explained collaboration with Exchange Traded to the sector being disproportionately Polson. Concepts, Russell Indexes, IdealRatings, skewed towards the domestic markets of Shariyah Review Bureau, KCG, Mellon Malaysia and Saudi Arabia. In enhancing Comparing the Shariah indexes of Dow Capital, and US Bank. international tradability of Islamic funds, Jones, FTSE, S&P and MSCI, Russell-

Islamic ϐinance in Libya: Taking a step back?

Last year Libya was making plans to establish a smooth transition to a fully Shariah compliant banking system. But this year, the country is once again in the throes of civil war. REBECCA SIMMONDS reviews the impact of the new conﬂ ict on the pace of change for the development of Shariah compliant ﬁ nance in Libya.

Legal and regulatory to be resolved before any investment in political situation in the country, plans to Following the events of the Arab Spring the country could be considered. launch have been put on hold. and the subsequent political changes, in 2012 Libya’s National Transitional Changes at the central bank Council introduced Islamic banking The political In November 2013, the central bank to the country via Law No. 46 of 2012, announced that it planned to issue three with plans to phase out non-Shariah situation is one Islamic banking licenses in 2014 with compliant banking by 2015. In January fi ve more institutions currently being 2013, the legally elected General National that would need to evaluated, although the names of the Congress (GNC) passed Decree No. 1 of banks were not released. There has been 2013 banning the charging of interest on be resolved before litt le progress in terms of the launch loans granted to individuals (the decree of new Islamic banks in Libya since will also be applicable to corporate loans any investment in the this announcement; in September 2014 from 2015). Plans to update a 2005 law Shariah compliant Qatar-based bank to allow foreign banks to operate in country could Masraf Al-Rayan stated that the planned Libya were suggested in 2013 and the acquisition of a stake in a commercial World Bank moved to aid the GNC in be considered bank in Libya would be placed on hold the development of a well-structured “until further notice, or till positive framework to accommodate Islamic indications in the fi eld of investment in fi nance within the country’s existing Banking and ϐinance Libya are evidenced”. banking structure. Libya’s banks remain substantially under-developed as a holdover from On the 14th September, the country’s Business environment conditions under former leader Colonel parliament voted to dismiss Saddiq al- Following a vote by the GNC to replace Gaddafi , when transactions carried out Kabir, the governor of the central bank, itself with an elected council of deputies, by most ordinary Libyans were limited in a move to secure the country’s fi nances and a subsequent return to civil war to cash deposits and withdrawals and the from the GNC. At the start of the month following defeat in the elections for the country’s banking system was dominated the central bank had issued a statement country’s Islamist representatives, the by four state-owned institutions. declaring that the institution was the last situation in Libya remains tenuous. The Prior to the most recent fi ghting, the line of defense of state institutions and it country is torn between the camps of government, along with the banking remained important that the bank stayed the Islamists and the nationals with the and fi nance industry, had stated the aim away from political struggles. The central newly-elected government, the House of strengthening the infrastructure of bank holds over US$100 billion in foreign of Representatives, currently situated the fi nance sector in order to improve currency and investments as well as in a Greek car ferry in the eastern town operations and products in line with the receiving and accounting for the sale of of Tobruk and the capital Tripoli and move to a completely Shariah compliant the country’s oil reserves. Analysts have second city Benghazi under the hold of banking system. The country currently suggested that the country is on the brink the country’s Islamists. has 16 banks (including seven foreign of having its international assets frozen banks) off ering mainly conventional as a way of compelling the two sides to The eastern region of Cyrenaica, banking services with some also fi nd a resolution to the confl ict. including Tobruk, contains two-thirds providing interest-free Islamic banking of the country’s oil, leading many to through Shariah compliant windows. Outlook call for separation as oil accounts for Al Baraka Group, HSBC, National Bank The continued civil unrest has deterred 80% of Libya’s GDP and 97% of its of Abu Dhabi (NBAD) and Standard many companies from making the move exports. However, oil production has Chartered Bank all have representative to invest in Libya. Prior to the recent been predicted to decrease by 40% in offi ces in Libya. BNP Paribas holds a 19% confl ict the former government had been 2014 from last year’s levels, with the stake in Libyan bank Sahara, but has paving the way towards privatization IMF forecasting a resultant 45% dip had operations in its own representative and the introduction of a Shariah in government income for the year. offi ce frozen since January 2012. compliant banking system however the In June this year, the Central Bank of renewed confl ict has slowed Libya proposed the issuance of Sukuk Earlier this year Philippe O Piett e, the development, particularly in the area of to counter the hole that would be left chairman and CEO of the Malaysia fi nance given the central bank’s in the country’s budget. Libya has operations of US fi rm World’Vest Base, monopoly within the country’s banking been identifi ed as a market ripe with stated that the company had plans to system and the uncertainty over which opportunity for Islamic fi nance by launch a Shariah compliant index in faction will prevail. UAE-based bank, Emirates NBD but the Libya. Speaking to IFN Piett e confi rmed political situation is one that would need that the index is complete, but due to the

Real estate remains a fundamental accessory in the Islamic ϐinance landscape

As one of the most vital asset classes in the industry, the real estate and property sector continues to indicate healthy growth prospects. This positive outlook is supported by the maintained level of investments in real estate assets across the globe. NABILAH ANNUAR provides an overview of recent developments in the market.

Current landscape Bahrain’s alternative investment fi rm absorb up to 80% of this capital fl ow Market observers have thus far conveyed Investcorp recently acquired a portfolio and given the scarcity of prime assets an optimistic view on the current state of of offi ce and industrial property assets in in London and the level of yield, France the real estate sector in the Islamic fi nance the US, for around US$250 million. The will be a likely target. Over the last two landscape. The Shariah compliant real purchases, which cover nearly 2.2 million years, investors from the Middle East estate sector is indicated to be in a strong square feet and have an average occupancy have spent US$20 billion in on commercial position on the back of an increasing rate of 87%, were made in separate property outside of the region. Sovereign volume and frequency of transactions, transactions by the company’s US-based wealth funds therefrom are expected to as well as a wider geographic spread. As real estate arm, for Property in Durham in make a large impact as they increase their Shariah tenets require wealth to only be North Carolina, Seatt le in Washington, and investment in alternative assets from the generated through trade and investment Jacksonville in Florida. current 9% of total portfolio. in real assets, real estate remains a top choice for investment, evidenced by no Challenges respite in the constant fl ow of investment They represent Most large Islamic real estate fi nancing capital: particularly from the GCC into deals in the western world are completed UK and European real estate. majority using commodity Murabahah; thus one of the challenges faced by the sector is Trends, opportunities and of total Western the need to move towards Ijarah and Musharakah-based fi nancing structures developments Europe real estate and push these towards becoming the International Islamic capital remains typical and preferred structure. Industry largely focused on the UK, US, Germany investments and are players have suggested that this requires and France. Over the last six months both regulators and tax authorities to be the UK has seen a marked increase in thought to be safer fully engaged. Additionally, it also calls the availability of Islamic debt for real for Islamic banks to be able to accept a estate transactions with a trend in favor investments than slightly diff erent risk profi le associated of residential developments in central with real ownership of the asset. London. Although there was a recent the other Another potential diffi culty is the risk tightening of yields in the local real estate of government intervention that doesn’t market, latest transactions in Mayfair cities necessarily focus on Islamic real estate, were closed under 2.75%, with the lowest but impacts even greater restrictions on reaching 2% for a retail area in New equity raising or shifting tax policy. Bond Street. The UK’s 90 North Real Estate Partners also acquired a controlling interest in Consequently, international investors the Federal Bureau of Investigation’s Outlook are increasingly present in the French headquarters in Denver, Colorado, as part As confi dence in the Shariah compliant real estate market, which showed an of a US$68.5 million Shariah compliant industry continues to grow, investors impressive resilience to the crisis aff ecting transaction. The property was acquired as continuously search for opportunities in the region’s economic background. Paris part of its US$750 million drive into the new countries. They search for a variety saw a higher concentration of signifi cant US real estate market. It serves as the FBI to increase their diversifi cation and seek deals in the fi rst half of 2014. In Europe, headquarters for Colorado and Wyoming higher projected returns. The UK and Paris and London are the most interesting and has a further 16 years remaining on Europe remain a popular choice for real cities for the prime investors. They the lease, held by the US General Services estate investment from Middle Eastern represent majority of total Western Europe Administration agency. high net worth individuals and real estate investments and are thought to institutional Islamic investors. be safer investments than the other cities. According to a research report from Opportunities in the UK real estate sector As concerns over a sudden rise in interest property advisor CBRE published in June, are usually seen as good investments, rates have been alleviated by European Middle Eastern investors are expected to att ributed to good risk adjusted returns Central Bank action, leverage remains at a spend US$180 billion in commercial real that are available in the residential reasonable level with stability expected to estate markets outside the Middle East development, student housing and prevail in the French real estate market. over the next 10 years, due to a mismatch healthcare sectors. The real estate sector between the spending power in the region as a whole will continue to play a crucial There has also been a signifi cant increase in and a lack of institutional real estate in role towards the sustained growth of the investment into the US real estate market. domestic markets. Europe is expected Islamic fi nance industry.

Maiden sovereign Sukuk: Emirate of Sharjah

Emirate of Sharjah, the third-largest emirate in the UAE, successfully The Dubai Government of Sharjah auctioned its debut Sukuk off ering on Sukuk Issuance the 17th September 2014. The US$750 Financial million 10-year facility was more than US$750 million 10 times oversubscribed receiving an Services Authority orderbook of US$7.85 billion. Speaking to Alex Roussos partner at Dentons & also had to Co, NABILAH ANNUAR discusses in detail the Sukuk transaction. amend its rules to 17th September 2014 Demonstrating investor demand for new accommodate the Gulf issuers, the paper was structured based on the principle of Ijarah. It government as Issuer Sharjah Sukuk carries a tenor of 10 years with a return Obligor Sharjah government of 3.76% per year, payable on a semi- an exempt offeror Issuance Price US$750 million annual basis. “This structure was used in view of the availability of assets,” pursuant to Rule Purpose of Purchase price for the issuance sale of lease assets said Roussos in explaining the choice of structure. According to him, the issuer A5.1.1 of the Trustee HSBC Corporate also considered a Wakalah structure for Trustee Company (UK) the purpose of the transaction. Proceeds Markets Rules from the Sukuk will be channeled to the Tenor 10 years emirate’s general budgetary purposes. Coupon rate/ 3.76 % per annum return payable semi-annually as an exempt off eror pursuant to Rule Commenting on the challenges faced A5.1.1 of the Markets Rules. Payment Semi-annual by the team in the process of issuance, Currency US dollar Alex said: “We were required to prepare As the pricing tightened to 110bps over Maturity date 17th September 2024 a decree specifi cally authorizing the midswaps, the US$750 million Sukuk Bookrunners Global coordinator issuance of Sukuk. In addition, we were att racted orders from 250 investors worth required to address ownership issues and joint bookrunner: US$7.85 billion. Priced in line with Abu HSBC relating to the asset.” Apart from making Dhabi National Energy Company’s 2023 Joint bookrunners: Sharjah’s debut in the global Islamic bonds, the issue was allocated to KFH Investment, debt capital markets, the deal’s unique investors from Europe, Middle East and National Bank of Abu features also include the fact that the Asia. The US dollar-denominated paper Dhabi, Sharjah Islamic underlying assets for the Sukuk had was assigned a rating of ‘A3 (Stable)’ by Bank and Standard Chartered Bank to be transferred from a related entity Moody’s and ‘A (Stable)’ by S&P. The to the government prior to issuance. Sukuk is expected to list on NASDAQ Governing law English law (UAE Additionally, the Dubai Financial Dubai and the Irish Stock Exchange. law for certain Islamic Services Authority also had to amend its documentation) rules to accommodate the government Legal advisors Dentons & Co Maples and Calder Cliff ord Chance REDmoney Ideal Ratings The REDmoney Global Shariah Index Series Listing NASDAQ Dubai powered by IdealRatings consists of a rich Irish Stock Exchange Indexes subset of global listed equities that adhere Underlying assets Ijarah real estate assets to clearly defi ned and transparent Shariah Rating ‘A3’ by Moody's and guidelines defi ned by Shariyah Review ‘A’ by S&P Bureau. Shariah advisor(s) HSBC Saudi Arabia Sharjah Islamic Bank The REDmoney Shariah Indexes provides Kuwait Finance House Islamic investors with an accurate and Standard Chartered Shariah-specifi c equity performance Structure Ijarah benchmark with optimized compliance Tradability Euroclear/Clearstream credibility due to the intensive research conducted to ensure that index constituents Investor Europe, Middle East do not confl ict with the defi ned Shariah breakdown and Asia (Reg S) requirements. Face value US$200,000 and / minimum integral multiples of investment US$1,000 in excess thereof

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

During the recent economic crisis, an Islamic bank faced a number of defaults in fi nancial commitments by its clients. As a result, the Islamic bank is required to allocate a part of the current income as provision for bad and doubtful debts in its fi scal year. What is the Shariah position in this regard, keeping in view that Islamic banks work on a diff erent model than their conventional counterparts?

Pronouncement:

An Islamic bank is allowed to allocate a part of its income for a ﬁ scal year as provision for bad and doubtful debts as a result of default of certain of its clients with respect to a depositors’ or shareholders’ pool held with the Islamic bank, or as a result of diminution in the value of certain assets with respect to a certain pool managed by the Islamic bank, provided such loss or default has not been caused due to bank’s negligence.

It must be noted that the allocation of the provision required with respect to a certain investment pool with the Islamic bank must be only from the income of that particular investment pool. Resultantly, if an Islamic bank has two investment pools, namely the shareholders’ investment pool and the depositor’s investment pool, then the allocations with respect to the depositor investment pool must be from the income of such depositors’ investments and the shareholders’ pool should not be touched, and vice versa. Moreover, the extent of the amount allocated should be reasonable and limited to the actual need since any excess allocation shall result in injustice to the current participants of the relevant pool.

It is important to note that in case the debt or loss, with respect to a certain investment pool, which was writt en off from the balance sheet of the fi scal year in question by utilizing the provision, is recovered fully or partially in the future; such recovery must be returned to the same pool out of which the provision was originally made. Resultantly, all such amounts recovered shall form part of the distributable profi t amount between the participants of the relevant pool at the agreed time of distribution, without there being any requirement to make any payments to the participants of the relevant investment pool at the time of such original allocation of the provision, if they have since left the pool (i.e. have liquidated their respective investment deposit).

The above Shariah position is necessary since every investment pool is established on the principle of mutual discharge: whereby every outgoing participant waives its future possible interests and rights in the relevant pool in favor of the existing or future participants of the pool if such interests and rights are realized and are ready for distribution at any time in future when it is not part of the pool.

In view of the foregoing, it is advised that the relevant deposit agreement should cover the right of the Islamic bank to make such provision to cover the defaults and losses and should also provide for the concept of mutual discharge in case of any future recovery of such losses.

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

Reϐinance facility for Islamic banks opens IFN Country Correspondents AFGHANISTAN: Manezha Sukhanyar head of Islamic banking, Ghazanfar Bank a new era AUSTRALIA: Chaaban Omran, Principal, Crescent Professional Services

BAHRAIN: Dr Hatim El-Tahir BANGLADESH lower, where the central bank as fund director of Islamic Finance Knowledge Center, Deloitt e & manager will not charge any fee thereon. Touche By M Shamsuzzaman BANGLADESH: Md Shamsuzzaman A Shariah lender can make a three- executive vice president, Islami Bank Bangladesh month renewable investment in the BELGIUM: Prof Laurent Marliere Bangladesh Bank has recently decided CEO, ISFIN fund. The borrower will have to repay BERMUDA: Belaid A Jheengoor to form a refi nancing scheme for director of asset management, PwC their investment on every three months BRUNEI: Dr Aimi Zulhazmi, Islamic fi nance consultant, banks and fi nancial institutions based Draznine Advisory maturity. The borrowing bank/NBFI, if under Shariah to provide funding and CANADA: Jeff rey S Graham fails to repay, will have this deductible partner, Borden Ladner Gervais investment for agro processing, small EGYPT: Dr Walid Hegazy from their current account with the managing partner, Hegazy & Associates enterprise, renewable energy and FRANCE: Kader Merbouh central bank. co head of the executive master of the Islamic fi nance, Paris- environmentally friendly initiatives. Dauphine University HONG KONG & CHINA: Anthony Chan founder, New Line Capital Investment Limited This has been long demanded by Islamic This will open INDIA: H Jayesh banks since they possess 20% of the founder partner, Juris Corp INDONESIA: Farouk A Alwyni market share of deposits and investments CEO of Alwyni International Capital and the chairman a new scope of Centre for Islamic Studies in Finance Economics and but have less opportunity to access Development IRAN: Majid Pireh refi nancing facilities as off ered by the for Islamic Islamic fi nance expert, Securities & Exchange Organization of Iran central bank due to the presence of an IRAQ: Khaled Saqqaf interest element in the transaction. On banks and extend partner and head of Jordan & Iraq offi ces, Al Tamimi & Co JAPAN: Tareq Rahman the other hand they have enormous Islamic fi nance consultant JORDAN: Khaled Saqqaf surplus funds, around BDT25 billion their investment partner, Al Tamimi & Co (US$323.4 million) to invest further KOREA: Yong-Jae Chang partner, Lee & Ko which has up until now been limited opportunity. It will KUWAIT: Alex Saleh due to the absence of inter Islamic bank partner, Al Tamimi & Co LEBANON: Johnny El Hachem fund transactions on any suitable Islamic also help small partner – corporate, Bin Shabib & Associates LUXEMBOURG: Said Qaceme product. This will obviously open a senior manager of Advisory & Consulting, Deloitt e Tax & new scope for them and extend their clients who are Consulting MALAYSIA: Abdullah Abdul Rahman investment opportunity. It will also help partner, Cheang & Ariff MALDIVES: Aishath Muneeza small clients who are not able to take not able to take deputy minister, Ministry of Islamic Aff airs, Maldives funds at a higher cost (not less than 15%) MALTA: Reuben Butt igieg president, Malta Institute of Management under the normal banking mechanism. funds at a higher MAURITIUS: Sameer K Tegally associate, Conyers Dill & Pearman MOROCCO: Ahmed Tahiri Jouti Earlier in October 2013 the central bank cost under the senior consultant, Al Maali Islamic Finance Training and Consultancy introduced the Funding Assistance NEW ZEALAND: Dr Mustafa Farouk counsel member for Islamic fi nancial institutions, The Program for fi nancing Shariah-based normal banking Federation of Islamic Associations of New Zealand (FIANZ) NIGERIA: Auwalu Ado; Shariah auditor, Jaiz Bank banks, and allocated BDT1 billion OMAN: Riza Ismail; senior associate, Trowers & Hamlins (US$12.63 million) but could not succeed mechanism PAKISTAN: Muhammad Shoaib Ibrahim managing director & CEO, First Habib Modaraba owing to their surplus liquidity and PHILIPPINES: Rafael A Morales absence of clear utilization methodology. managing partner, SyCip Salazar Hernandez & Gatmaitan QATAR:Amjad Hussain partner, K&L Gates The central bank in an earlier circular Under this scheme, detailed guidelines RUSSIA: Roustam Vakhitov confi rmed that the profi t rate should managing partner, International Tax Associates have been given where the Islamic banks SAUDI ARABIA: Nabil Issa be realized at the client level and under partner, King & Spalding will provide their surplus liquidity this scheme shall not exceed more than SENEGAL: Abdoulaye Mbow in a special account titled the Islamic Islamic fi nance advisor, Africa Islamic Finance Corporation the prevailing bank rate (currently 5%) SOUTH AFRICA: Amman Muhammad Refi nancing Fund Account, maintained CEO, First National Bank-Islamic Finance plus the rate of the Mudarabah Savings with the central bank. Eight Islamic SINGAPORE: Yeo Wico Account of the user bank in case of partner, Allen & Gledhill banks (Islami Bank Bangladesh, Shahjalal SRI LANKA: Imruz Kamil borrowing. head of Islamic banking, Richard Pieris Arpico Finance Islami Bank, Al Arafa Islami Bank, Exim SWITZERLAND: Khadra Abdullahi Bank, First Security Islami Bank, Social associate, Investment banking, Faisal Private Bank Islamic Bank Consultative Forum (IBCF) SYRIA: Gabriel Oussi, Islami Bank, ICB Islami Bank and Union general manager, Oussi Law Firm task force committ ee chairman Md Abdul Bank) and two non-banking fi nancial TANZANIA: Khalfan Abdullahi Mannan welcomed the move of head of product development and Shariah compliance, Amana institutions (NBFI) (Islamic Finance & Bank Bangladesh Bank (the central bank), THAILAND: Shah Fahad Investment and Hajj Finance Company) vice-president and head of strategic marketing and product saying that it will enhance the investment development, Islamic Bank of Thailand are open to participate in the fund as TURKEY: Ali Ceylan opportunities as well as image of Islamic partner, Baspinar & Partners providers and users. The balance in the banking in the country. UK: Fara Mohammad account shall be treated as part of their director of Islamic fi nance, Foot Anstey US: Joshua Brockwell statutory Liquidity Requirement (SLR). investment communications director, Azzad Asset Management Md Shamsuzzaman is the executive vice- YEMEN: Moneer Saif; head of Islamic banking, CAC Bank president of Islami Bank Bangladesh. He can IFN Correspondents are experts in their respective fi elds The fund provider will receive profi t and are selected by Islamic Finance news to contribute be contacted at [email protected]. designated short country reports. For more information under the Mudarabah rate of the about becoming an IFN Correspondent please contact [email protected] respective bank or 5%, whichever is

Retail banking focus in the Bruneian Islamic ϐinance industry

BRUNEI up the oil and gas industry as well as administration, Wasiyah, Hibah, trust supporting infrastructure development and Waqf. By Dr Aimi Zulhazmi in the country. Over seven Sukuk (excluding the monthly Islamic debt By studying the retail market segments, The Islamic banking industry in Negara programs from the central bank) have banks may be able to develop tailor- Brunei Darussalam (Brunei) is moving been issued in the past few years, the made product to segmented high signifi cantly towards fully-fl edged most recent being the Sukuk Ijarah (IDB net-worth clients, who may need advice Shariah compliant banking. This is & Brunei LNG) raising US$1.6 billion in to organize their assets both in Brunei indicated by the formation of Bank July 2014. and overseas. They may need global Islam Brunei Darussalam as the only estate planning in a holistic discretionary state-owned bank in the country after Nonetheless, the retail banking sector’s trust structure that is Shariah compliant, merging two entities, as well as the growth rate has been acceptable, thanks which will be able to act as a legal owner keen interest demonstrated by foreign to a healthy economy. The Islamic to protect their assets and manage banks, such as Standard Chartered, in banking industry in Brunei should be property tax, thus ensuring succession establishing an Islamic banking set-up. looking at growing its fee-based income planning for family members. This can be According to market practitioners, it by expanding its service range. This achieved by opening the door to is projected that the market share of could be achieved not only through the collaboration with global professional Islamic banking will grow from 45% to introduction of technological deliverables fi rms such as estate and trust 60% over the next fi ve years. such as mobile and online banking but practitioners and legal fi rms to expand also by off ering more comprehensive the services range. Having a small population of around fi nancial services. ‘Traditional’ Shariah 400,000, Brunei does not off er a big banking products (i.e. deposit accounts, Dr Aimi Zulhazmi is an Islamic fi nance market for either retail banking or Takaful, credit cards, property and consultant via his own Draznine Advisory. corporate banking. The latt er however auto fi nancing, personal and mutual He can be contacted at draz9.advisory@ has primarily focused on raising funds, etc.) should be expanded to gmail.com. fi nancing from Sukuk issuance to shore asset management services like estate

Leading the way in the Middle East

UAE when it is structured and promoted by a Dubai government, is holding talks conventional bank. with its creditors with the purpose of By Rima Mrad re-negotiating the terms of a US$1.2 It was reported earlier this month that at billion debt facility. This has been already The past month witnessed the least three UAE-based banks supported negotiated one time before, however the announcement of several pieces Goldman Sachs in arranging meetings company seems to have a new business of groundbreaking news fostering with local investors. The Sukuk were plan that it would like to implement and the growth and presence of primarily bought by Middle Eastern is expected to heavily support the course Shariah compliant products in the banks. of these negotiations. Middle Eastern market. The latest developments are pushing hard at the DIFC Investments Sukuk: DIFC In addition to the above and with the limits and boundaries of the Islamic Investments, which is the investment expansion of diff erent Islamic product fi nance industry as serious new players arm of the Dubai International Financial off erings, Noor Bank recently announced are coming on board. Center Authority, announced in the past the launch of two new Shariah compliant week its intention to raise about US$700 home fi nance off ers at a fi xed profi t rate. Goldman Sachs Sukuk: Goldman Sachs million from an Islamic bond sale with successfully issued a sizeable US dollar- the purpose of using it to repay debt. We are expecting to hear further denominated Sukuk with a Wakalah announcements in the same context in structure last month, becoming the fi rst This was announced by the DIFC the coming months. A number of Russian conventional US bank to issue Sukuk. governor Essa Kazim, who further noted and East European banks are actively that the bonds will be mainly used to studying the Islamic market in Asia and This is the second att empt for Goldman repay the US$650 million outstanding the Middle East with the intention of Sachs, as the fi rst one (which took on a syndicated loan, to develop another entering into possible ventures with place in 2011) never went through. The building in DIFC’s Gate Village and to strategic Islamic-based institutions. model followed for this deal is based on fund the completion of a connecting Wakalah, which is a basic structure and corridor across the business park. Rima Mrad is a partner at Bin Shabib & less complicated than other structures Associates. She can be contacted at rima. opted for in similar deals such as Limitless re-negotiating Islamic debt [email protected]. Murabahah; thus posing fewer challenges facility: Limitless, a Dubai based real as to its conformity and compliance with estate master developer owned by the Islamic Shariah principles, especially

More room for religious scholars? IFN Sector Correspondents CROSS-BORDER FINANCING: Fara Mohammad, senior lawyer and consultant in Islamic REGULATORY ISSUES ﬁ nance DEBT CAPITAL MARKETS: Muhammad Shoaib Ibrahim, managing director & CEO, By Intan Syah Ichsan If the solution First Habib Modaraba

DERIVATIVES Without a good grasp of the basic of the above Suhaimi Zainul - Abidin, treasurer for Gulf-Asia Shariah Compliant Investment Association and advisor to 5Pillars concepts of Islam, the vital role of LAW (EUROPE): regulation in the progress of Islamic problem is more the Ayhan Baltaci, att orney at law, Bereket & Baltaci Law Firm fi nance is diffi cult to comprehend. Islam LAW (MIDDLE EAST) promotes equality in the social relation responsibility of the Bishr Shiblaq, head of Dubai offi ce, Arendt & of production; and the size of power Medernach religious scholars LEASING: that an economic player can acquire in Professor Dr Shahinaz Rashad, executive director, Financial Services Institute, Egyptian Financial the production process is determined Supervisory Authority. not only by the size of the monetary therefore, how can MERGERS & ACQUISITIONS contribution they make but also by the we then ensure that Jamal Hijres, CEO, Cappinova Investment Bank fairness sourced from Islamic ethics. MICROFINANCE (ASIA): Dr Mahmood Ahmed, executive vice president and However, although it may be possible director training, Islami Bank Training and Research for a single regulatory framework to these scholars have Academy accommodate this concept of fairness MICROFINANCE (AFRICA): enough information Mansour Ndiaye, director of microfi nance, Assistance and and justice, no such single regulatory Consulting for Development framework currently operates at the PRIVATE BANKING & WEALTH MANAGEMENT to make the Khadra Abdullahi, associate, investment banking, Faisal global level. Private Bank appropriate PRIVATE EQUITY & VENTURE CAPITAL: Though we should not deny the fact Arshad Ahmed, partner, Elixir Capital that diff erences between schools of PROJECT & INFRASTRUCTURE FINANCE rulings? Anthony Coleby, head of corporate commercial Islamic Fiqh have made such an ideal department, Said Al Shahry Law Offi ce (SASLO) universal regulatory framework diffi cult ensure that these scholars have enough REAL ESTATE to materialize, we should also not information to make the appropriate Philip Churchill, founder partner, 90 North Real Estate Partners ignore the fact that for many Muslims, rulings? One answer perhaps lies in REAL ESTATE (MIDDLE EAST): Islamic fi nance is not only a monetary restructuring the curriculum at the Yahya Abdulla, head of capital markets — Middle East, phenomenon but also the manifestation learning centers that produce religious Cushman & Wakefi eld REGULATORY ISSUES (ASIA) of Islamic ethics. From this perspective, scholars. Unlike Islamic fi nance practices, Intan Syah Ichsan , chief operating offi cer, Samuel Aset the further growth of Islamic fi nance which may come from many diff erent Manajemen can be achieved by preventing it from disciplines but with knowledge on REGULATORY ISSUES (MIDDLE EAST): Mohammad Abdullah Malik Dewaya, head of Shariah becoming segregated and localized Islamic fi nance, religious scholars in compliance and audit, Maisarah Islamic Banking Services — working instead towards a global Islamic fi nance often have to master RETAIL BANKING: Chowdhury Shahed Akbar, Offi cer, Southeast Bank, level of understanding that encourages Islamic Fiqh at the university level Bangladesh. discussion between diff erent rulings and/ before they start to learn fi nance through RISK MANAGEMENT: Hylmun Izhar, economist, Islamic Research and Training or regulatory frameworks. interaction with market participants. This Institute, Islamic Development Bank Country has resulted in a gap in their knowledge SECURITIES & SECURITIZATION: Nidhi Bothra, executive vice president, Vinod Kothari Today we have two diff erent sets of of how the market should operate. The Consultants standards that operate at global level: reverse step to become a religious scholar STOCK BROKING & TRADING: one designed by the Islamic Financial in Islamic fi nance could perhaps provide Athif Shukri, research analyst, Adl Capital Services Board (IFSB) and another by the the solution, with the requirement to STRUCTURED FINANCE: John Dewar, partner and head of Islamic fi nance, Milbank, Accounting and Auditing Organization master an understanding of market Tweed, Hadley & McCloy of Islamic Financial Institutions operations and fi nance practices before SUKUK (AAOIFI). While ideally synchronization given permission to study Islamic Fiqh. Anthony Coleby, head of corporate commercial department, Said Al Shahry Law Offi ce (SASLO) of these two views can be conducted This will ensure that religious scholars TAKAFUL & RE-TAKAFUL: through mutual understanding and for Islamic fi nance not only have Dr Sutan Emir Hidayat, assistant professor and academic collaboration between religious scholars, suffi cient knowledge to make accurate advisor for Islamic fi nance, University College of Bahrain TAKAFUL & RE-TAKAFUL (AFRICA): market agents and regulators, in reality and appropriate rulings but are also Uwaiz Jassat, acting head of Islamic banking, Absa Islamic this is a daunting task as the accepted aware of the current problems faced by Banking common views sees the discourse the Islamic fi nance industry. TAKAFUL & RE-TAKAFUL (EUROPE): Ezzedine Ghlamallah, director, Solutions Insurance and of Islamic fi nance from its religious Islamic Finance in France (SAAFI) paradigm as sacrosanct and solely the After decades of growth in Islamic TRADE FINANCE Anthony Coleby, head of corporate commercial domain of religious scholars – and fi nance, mostly driven by the market department, Said Al Shahry Law Offi ce (SASLO) hence it should be sterilized from forces, this may be the time to give TREASURY PRODUCTS: Nafi th ALHersh Nazzal, certifi ed fi nancial & investment intervention from market participants in religious scholars the opportunity to advisor order to maintain the purity of religious contribute more to the industry. IFN Correspondents are experts in their respective fi elds judgment. and are selected by Islamic Finance news to contribute Intan Syah Ichsan is the chief operating designated short sector reports. For more information about becoming an IFN Correspondent, please contact If the solution of the above problem is offi cer at Samuel Aset Manajemen. He can be [email protected] more the responsibility of the religious contacted at [email protected]. scholars therefore, how can we then

Takaful window: Advantages and disadvantages

TAKAFUL & RE-TAKAFUL disadvantages more than the advantages. If Takaful Among the disadvantages are: (1) a By Dr Sutan Emir Hidayat Takaful window can create public windows misunderstanding with regards to the Off ering Takaful products via the diff erences between Takaful and Islamic windows of conventional are allowed, it conventional insurance since public may insurance companies has become a view Takaful as just another type of never-ending debate among scholars. should only be on product from conventional insurance. In Some countries, such as Pakistan for addition, (2) there is also a possibility of example, have recently opened the a temporary basis the comingling of funds between way for Islamic windows; while other conventional insurance and Takaful in the countries such as the UAE prohibited as a catalyst for sense that the Takaful funds might be the practice following the introduction used for non-Shariah compliant of its Takaful regulations in 2010. the development of investments by the insurance company. In These diff erent approaches taken by other words, an agency problem with Muslim countries with regards to the overall Takaful regards to Shariah compliance exists with Takaful windows are inevitably due to a Takaful window. Therefore, allowing the advantages and disadvantages of market Takaful windows is considered by its off ering Takaful products via Islamic opponents to open the possibility of windows. even point than via a separate Islamic Shariah violation. In summary, the author subsidiary since a Takaful window believes that even if Takaful windows are Those countries which allow the practice does not require a lot of separate new allowed, it should only be on a temporary of Takaful windows believe in the infrastructure to be acquired. In other basis as a catalyst for the development of advantages more than the disadvantages. words it allows the company to capitalize the overall Takaful market. Once the Among the advantages are: (1) windows on its existing infrastructure to develop market has accepted Takaful, ‘spin-off ’ allow Takaful products to be sold using Takaful business. This situation is should be encouraged. the already established distribution favorable, especially when the Takaful channels of conventional insurance market is newly established. Dr Sutan Emir Hidayat is the director of products since the same company is the MBA program at University College of off ering both products; (2) establishing On the other hand, the countries which Bahrain. He can be contacted at sutan@ucb. Takaful business via Islamic window prohibit the practice believe in the edu.bh. requires less time to achieve break-

The Philippines: A latent opportunity

Though not a Muslim-majority nation, the Philippines has demonstrated a strong commitment to developing its Islamic ﬁ nance capabilities. In an interview with IFN, RAFAEL A MORALES discusses the potential in the island nation.

THE PHILIPPINES By Rafael A Morales

Why is it important for your jurisdiction to develop its status as an Islamic ﬁ nancial center?

The Philippines has a large Muslim population and it is certainly consistent with this fact for our jurisdiction to develop its status as an Islamic ﬁ nancial center.

Given the emphatic global growth of Islamic ﬁ nance, how can the shortage of Shariah scholars be best addressed?

This shortage is particularly true in the How important is it that we look The Bangko Sentral ng Pilipinas, pending Philippines, but this can be remedied towards standardization of practices the passage of a general law on Islamic by sending qualifi ed Filipinos to train across the globe? banking and fi nance, should initially in Malaysia and other Islamic fi nancial allow traditional or conventional banks centers to become Shariah scholars. I to open Islamic windows, based on its foresee the planned fi nancial integration I foresee existing statutory mandate to establish within the Association of Southeast ‘other classifi cations of banks’. This Asian Nations (ASEAN) to benefi t the planned would bolster the government’s ongoing the Philippines in terms of transfer of peace initiatives in southern Philippines knowledge and technology in Islamic ϔinancial integration where the Muslim population is fi nance. concentrated. Interestingly, the private within (ASEAN) sector is doing its part. To spur Islamic Can you outline the main benefi ts and investments in the country, the Philippine challenges currently facing the Islamic to beneϔit the Stock Exchange recently published a list banking and fi nance sector? of companies that passed the AAOIFI Philippines in Shariah standards. The main challenge is the lack of a general legal framework. While the terms of transfer Rafael A Morales is the managing partner in Philippines offi cially recognized Islamic SyCip Salazar Hernandez & Gatmaitan. He banking and fi nance 40 years ago when of knowledge can be contacted at [email protected]. a legislative franchise was granted to Al Amanah Bank (the fi rst Islamic bank and technology established to cater to the banking requirements of the Muslim population), in Islamic since then there have been no signifi cant Are you receiving our daily steps taken by the Philippine government ϔinance to encourage Islamic banking and fi nance. The passage of a general law on This is very important. In this regard, the subject would rectify the situation. I see the wisdom in the call of the IDB for a global Shariah board to How are risk management issues provide uniformity in Islamic fi nance. and solutions diff erent to those of Standardization of practices would be traditional banks? welcomed by funders and fund users alike. This is a matt er that the Bangko Sentral ng Pilipinas, as the regulator of both What key trends do you expect to see traditional and Islamic banks, must over the coming year and in an ideal The Number ONE news service with confi gure. Unfortunately, this is still a world what would you like to see work in progress. implemented or changed?

Saudi Arabia: An economy on the up

Saudi Arabia continues to be a booming and stable economy that continues to be buoyed by high oil prices and a thriving private sector. While oil prices have fallen from record highs down to US$95 a barrel, such price exceeds the amounts required for another expected budget surplus. NABIL ISSA updates us on the largest economy in the Middle East.

SAUDI ARABIA By Nabil A Issa & James Stull

Saudi Arabian authorities have encouraged that the oil proﬁ t inﬂ ux be reinvested in the Saudi domestic economy to promote more growth and sustainability. The 2014 budget of US$228 billion is the largest in the history of the country and contains massive expenditures for education and healthcare, two areas of focus for the government and for investors into the country.

The government has empowered forward-thinking regulators that have implemented a relatively clear, stable and predictable funds and capital markets regimes. It is encouraging to many investors and commentators to see the Saudi Arabian markets opening up. As a result, it is widely expected that MSCI Arabia’s largest bank; ACWA Power, form of Sukuk, and it is expected that will add Saudi Arabia to its indices a large developer of water and power this trend will continue. There has been in 2015, in particular to the emerging projects; and Abdul Mohsen al-Hokair a tremendous growth in Sukuk, with market index, a move that would Group for Tourism and Development US$14.15 billion of Sukuk issued from potentially foster more growth and lead Co, a large owner, manager and operator Saudi Arabia in 2013, which accounts for to a greater infl ux of capital into the of hospitality and entertainment assets 7.8% of global Sukuk issuances in 2013. country’s markets. in Saudi Arabia. The public off ering Sukuk issuances are regulated by CMA. of shares in NCB is expected to be the The kingdom is also upgrading its largest IPO in Saudi Arabia in the past In 2013, there were no direct sovereign infrastructure with the concurrent dozen years. issuances, although the General Aviation development of high speed rail and Civil Authority issued Sukuk with multiple metro projects in the major In a long-expected and very welcome government support. Also, Sadara cities. Jeddah Economic Company has move, the Saudi Arabian government Petrochemical, which is owned by the recently reaffi rmed that it is proceeding announced in July 2014 that it plans to Saudi Arabian Oil Company (Saudi with developing what is expected to be open the Saudi Arabian Stock Exchange Aramco) and Dow, also issued a the world’s tallest building at over one to direct investment by foreigners. This multibillion riyal Sukuk. The Sukuk kilometer tall in the Jeddah area. move is expected to result in up to US$35 have been predominantly domestic, billion in foreign investment during Saudi Arabian riyal-denominated, and Equity capital markets 2015. In August, the CMA announced privately-placed issuances in Saudi The Saudi Arabian government is the initial draft of the Rules for Qualifi ed Arabia. encouraging signifi cant investment Foreign Financial Institutions Investment into the Saudi Arabian economy, both in Listed Shares. As of the end of July The current population demographics from local investors and from foreign 2014, the Saudi stock market was of Saudi Arabia are signifi cant in investors. The fi rst half of 2014 witnessed capitalized at approximately US$531 supporting the demand for property four IPOs and a number of additional billion. At the same time, the Saudi mortgages, auto loans, and general capital increases through rights issues. Arabian Capital Market Authority personal borrowing. It is expected that Some of the largest Saudi Arabian (CMA) has been encouraging many of retail lenders will inevitably need to companies are preparing to go public the country’s blue-chip companies to list. tap the international capital markets to during 2014: Saudi Arabian Basic meet the potential increased demand Industries Corp (SABIC), the world’s Debt capital markets: for retail borrowing. The growth of the largest petrochemicals group; The Historically, the majority of debt issues domestic market should also encourage National Commercial Bank (NCB), Saudi from Saudi Arabia have been in the continued...

Continued the expansion of business interests Many, but not all, of the uncodifi ed that may require access to debt capital Due to this procedures and stances taken by CMA markets to help fi nance them. A number have found their way into the draft of Saudi Arabian banks are considering heightened regulations. Sukuk to meet required capital adequacy requirements. scrutiny, there has Finance We continue to see a growth in fi nancings Investment funds been a signiϔicant in the kingdom. New regulations and Saudi Arabia is home to the largest procedures have improved the ability of number of investment funds domiciled shift toward lenders to enforce promissory notes and in the GCC. With the support of CMA single asset funds, record pledges in regards to moveable and other Saudi government institutions, property in addition to listed shares. The funds and asset managers are particularly single liquidity in the banking sector has diversifying from real estate into other resulted in lenders actively competing parts of the economy, with a particular asset real estate against each other for the largest energy, focus on listed equities. Additionally, development, and real estate projects. managers are being encouraged to funds with very We have witnessed a dramatic increase in reinvest capital and proceeds into Saudi Saudi Arabian lenders providing Arabia rather than deploying funds into limited numbers of fi nancing to CMA funds that are foreign investments. developing large-scale real estate investors projects. We have had the opportunity to CMA has increasingly scrutinized work on fi nancings in relation also to blind-pool investment funds and real signifi cant fi nancings of ships, dredgers, estate development funds. Due to this In May 2013, CMA issued draft ports and mega energy-related project heightened scrutiny, there has been Investment Funds Regulations, which it fi nancings in the kingdom. Most of such a signifi cant shift toward single asset was intended would replace the previous fi nancings continue to be on a Shariah funds, particularly single asset real Funds Regulations issued in 2006. CMA compliant basis. estate funds with very limited numbers hoped this would provide clarity and of investors. We note, however, a encourage more managers to launch Some portions of this report will also appear dramatic increase in the number of funds funds. Such have not yet been adopted. in the upcoming Third Edition of “Asset that are fully subscribed, particularly Management Review”. income-producing funds. We are also CMA has intended for years to revamp increasingly seeing the fund structure the Funds Regulations to address Nabil A Issa is a partner and James Stull is a being utilized to invest in logistics, problems of investor protection, which senior associate with King & Spalding in its healthcare and education assets, as well arose during the fi nancial downturn, and affi liated Riyadh and Dubai offi ces. They can as a renewed interest in venture capital to cover the launches of a diverse range be contacted at [email protected] and jstull@ funds. of new funds, many of which were not kslaw.com respectively. contemplated by the 2006 Regulations. SHARIAH GOVERNANCE, CORPORATE GOVERNANCE & IFSA 20133 15th & 16th October 2014, Kuala Lumpur

Key Highlights: • Corporate governance in the Islamic Financial Services Industry • Concepts and principles of Shariah Governance • Impact of IFSA 2013 on the Shariah Governance and Corporate www.islamicfinancetraining.com Governance Framework [email protected] • Implementation and Challenges

Structured Islamic ϐinance and the issue of ownership

For a structure to be Shariah compliant, an Islamic fi nancier needs to have a direct or indirect ownership interest in an asset or a business. PAUL JARVIS and HELEN MUNRO explore the challenges and benefi ts of the various structures used for Shariah compliant structured fi nancings.

STRUCTURED is that not all jurisdictions recognise FINANCE trusts, so this structure might not be suitable in all jurisdictions. By Paul Jarvis & Helen Munro If the transaction is documented on a syndicated basis, the fi nancier needs to The vast majority of structured Islamic consider the nature of its relationship with fi nancings incorporate an Ijarah. The the syndicate. For instance, in the direct extent and manner in which a fi nancier ownership structure, will the syndicate acquires an ownership interest in the be comfortable with the fi nancier owning asset being leased under an Ijarah often the asset directly? What happens if the raises interesting structuring issues. fi nancier becomes insolvent? Will an insolvency offi cial recogniZe that the The most straightforward structure is for the actions of the Wakil as a matt er fi nancier is holding the asset on behalf of a for the fi nancier to acquire the asset of law, especially if the Wakil does or syndicate? The answers to these questions outright in its own name. One of the omits to do something that results in a depend on many factors, including the law issues for the fi nancier is the inherent loss to a third party. This is a complicated of the jurisdiction of the fi nancier and the risks associated with owning certain question and beyond the scope of this law of the jurisdiction in which the asset is assets, and the extent to which these risks article. located. can be properly mitigated. The direct ownership structure is often used for real An additional consideration for estate transactions, where the fi nancier syndicated deals generally is the is able to more accurately determine Syndicate contractual nexus that exists between the risks associated with ownership. the members of the syndicate and the However, this structure is not suitable for members underlying customer. In a conventional all asset classes, especially where there loan fi nancing, the customer and are restrictions in local law as to who need to understand the syndicate will both be party to a can own certain assets. For instance, in facility agreement. This creates direct many parts of the GCC, non-GCC entities what rights they contractual rights between the syndicate cannot own real estate. Accordingly, and the customer which, subject to a foreign fi nancier cannot enter into a have following a certain restrictions, can be enforced direct sale and Ijarah. directly. This can be contrasted with a default, especially if Shariah compliant structured fi nancing, An alternative structure is to use a where syndicate members might have a bankruptcy-remote special purpose for any reason the contractual relationship with the fi nancier company (SPC) to own the asset. This only, without having direct recourse to is often the preferred approach when ϔinancier is the customer. Syndicate members need dealing with moveable assets, such as to understand what rights they have aircraft and ships. The issue with such also insolvent following a default, especially if for any a structure is the method by which the reason the fi nancier is also insolvent. fi nancier funds the SPC in a Shariah An alternative structure is for the SPC compliant manner, without exposing to act as trustee for the fi nancier. In Islamic fi nance is developing rapidly and itself to the risks of direct ownership and this structure, the SPC declares a trust the industry has shown a strong appetite thereby defeating the purpose of using over the asset and its right to receive to develop structures that are Shariah the structure in the fi rst place. This is rental under the Ijarah. One of the key compliant whilst at the same time often a fi ne balancing act. characteristics of a trust is that it allows balancing the commercial objectives of legal ownership and benefi cial interest the contracting parties. The most straightforward method is to to be separated. In a fi nancing context, appoint the SPC as the Wakil (agent) of this means that the trustee (being the Paul Jarvis is the partner and head of banking the fi nancier pursuant to an investment SPC) owns the trust property as far as and fi nance — Middle East and Helen agency agreement. The fi nancier then a third party is concerned. Accordingly, Munro is the senior associate of banking and makes fi nancing available to the SPC for a fi nancier may be of the view that this fi nance at Dentons. They can be contacted at the purposes of acquiring the asset. One structure off ers bett er protection than a [email protected] and helen.munro@ key consideration is the circumstances in Wakalah structure. A complicating factor dentons.com. which a fi nancier might be responsible

The Eurekahedge Report: Key trends in Islamic hedge funds

With Muslims forming a quarter of in fund oﬀ erings and the additional industry has experienced strong and the world’s population, global Islamic Shariah compliance costs associated steady growth over the past seven ﬁ nance assets made of Islamic banking, with screening ‘Halal’ investments have years, with the growth in assets under Sukuk, Takaful and Islamic funds, are also dented the att ractiveness of Islamic management of the industry averaging projected to breach the US$2 trillion funds. 9.17% year-on-year since 2007, while the mark by the end of 2015. In the 2014 total number of funds has concurrently Key Trends in Islamic Funds report As a consequence, the majority of increased by 401. This is representative (as at April 2014), Eurekahedge, the potential investors for Islamic fund of certain stability and trust among world’s largest alternative investment vehicles rely on traditional mutual funds investors and fund managers despite the funds research house, conducts a and savings accounts to grow their recent political challenges encountered thorough analysis on the Shariah wealth, thereby stunting the sector’s in the aftermath of the Arab Spring. compliant funds sector. The report development among retail investors. is geared towards investors looking Adding to this optimism is the strong for insights into Shariah compliant Despite these obstacles, the global performance by Shariah compliant investment vehicles and for fund Shariah compliant asset management continued... managers interested in raising capital for their Islamic funds.

While small, this sector has almost doubled its asset base since 2007 despite a lukewarm reception from its predominantly Muslim investors

Shariah compliant funds have close to US$100 billion in assets under management (AUM) and are estimated at less than 5% of the global Islamic ﬁ nance industry. While small, this sector has almost doubled its asset base since 2007 despite a lukewarm reception from its predominantly Muslim investors, who remain unfamiliar with the key tenets of Shariah compliant investing.

In the absence of a central body to advise on contentious Shariah rulings, coupled with a lack of marketing, ﬁ nancial education and political unrest in the Muslim world, the growth prospects for this industry remain mired in challenges. A lack of innovation

Continued funds. Their conservative approach present in non-Muslim countries. In towards investing, such as avoiding Islamic funds 2014, 9% of Islamic funds have their highly leveraged companies and head offi ce located in North America, derivatives, has worked to their favor investing 4% in Asia and 3% in Europe and have and has ensured that it is too early to att racted att ention from various quarters dismiss the potential of the Islamic in North America including western banks and investors. off erings. Att racting more institutional investors have delivered and growing their asset base should Moreover, the new Islamic funds be a priority for fund managers and launches post-2008 have increased the strongest would be a crucial determinant for the their diversity in the industry in terms development and maturity of the Islamic of asset classes, industry segments, performance over funds sector in the long run. geographies and investors which make them more competitive to regional the past three years, The full Eurekahedge Key Trends in hedge funds. Equity investments with three-year Islamic Hedge Funds report is available account for 43%, fi xed income to all IFN subscribers. Complete with investments constitute another 19% of annualized returns data, graphs and commentary, it the assets, while commodities are the provides an in-depth analysis of the third-largest asset class by AUM with of 8.66%. Islamic funds sector covering the a total of 17% of Islamic fund assets. following: historical growth of Islamic Malaysia and Saudi Arabia remain the funds, asset fl ows into the industry, fund most popular Islamic fund centers as performances across regional and they boast the most dynamic Islamic over the past three years, with three- strategic mandates, indications on head fi nance industry and the greatest year annualized returns of 8.66%. offi ces and fund domicile locations, number of investors, while Islamic yearly comparison of management fees, funds investing in North America have Shariah compliant funds have adjusted geographic mandates, asset classes and delivered the strongest performance to the landscape changes and are fund size.

Successful debut issuance CLOSING BELL DEALS MALAYSIA: Malaysia-based property Pakistan sets October target developer IOI Properties Group has Gulf International Bank PAKISTAN: The Pakistani government issued Sukuk Murabahah for the UK: Mark Watt s, who confi rmed his is reportedly expecting to complete its aggregate nominal value of RM750 departure from his former role as chief US$1 billion Sukuk auction, previously million (US$228.66 million) under the investment offi cer at National Bank of delayed due to political uncertainty, this company’s RM1.5 billion (US$457.32 Abu Dhabi to IFN in June, is currently month; before the IMF executive board million) Sukuk program. The Sukuk, serving as CEO of Gulf International meeting to take place in the second half which are the fi rst under the program, Bank (GIB) in London. Bahrain-based of October. have been issued with tenors of three, GIB introduced Shariah compliant retail four and fi ve years. banking services under the brand name .in Saudi Arabia in June ’ﻡ Conversion implemented ‘meem Indonesian Sukuk auction MALAYSIA: Puncak Niaga Holdings has announced that RM3.5 million INDONESIA: The government of (US$1.06 million) in nominal value of Indonesia held a Sukuk auction on the the company’s convertible Sukuk Ijarah 7th October to auction three project- worth up to RM165 million (US$50.45 based Islamic facilities (one new, two million) has been cancelled following its reopened). An indicative target of IDR1.5 conversion to shares in the company. trillion (US$123 million) has been set.

DEAL TRACKER Full Deal Tracker on page 37 DATE ANNOUNCED COMPANY’S NAME SIZE DATE EXPECTED STRUCTURE 2nd May 2014 Government of Pakistan US$1 billion Oct-14 Sukuk

1st October 2014 Kesas RM735 million TBA Sukuk

30th September 2014 Government of Turkey TRY1.84 billion 1st October 2014 Sukuk 29th September 2014 WCT Holdings Up to RM1.5 billion TBA Sukuk Murabahah

29th September 2014 Malaysia Marine and Heavy Up to RM1 billion TBA Sukuk Murabahah Engineering Holdings

the US$2.6 billion fi nancing provided cross-border Islamic fi nancing into AFRICA via a structured Islamic tranche from the Morocco and the fi rst international Innovative ϐinancing IDB. An innovative fi nancing structure Islamic project fi nancing structured in combining an Istinah arrangement with this manner. Cliff ord Chance advised MOROCCO: Islamic fi nancing for a a Wakalah agreement was implemented sponsors GDF Suez, Nareva and Mitsui power project near the port of Safi , and represents the fi rst multi-tranche on the 18-year deal. Morocco has been agreed with part of

The deal must be approved by both improving public awareness regarding ASIA board and shareholders, but the goal Islamic fi nance and Takaful. The Amãna Bank honors elders of an Islamic megabank is still at the focus will be on training regarding forefront, according to Aziz. Shariah compliant business and trade SRI LANKA: Shariah compliant Amãna transactions. Bank has named October ‘Senior Citizens Saving Month’ to coincide with ‘World Inϐlation anticipated Elders Day’. The bank will be off ering MALAYSIA: RAM Ratings has projected Budget hopes senior citizens the opportunity to receive a base-case infl ation of 3.8-4% for 2015 in MALAYSIA: The Malaysian Islamic additional benefi ts and special gifts with Malaysia for 2015, anticipating a further banking industry has highlighted the opening of new savings accounts. 25bps increase of the overnight policy rate incentives to aid the development of to 3.5% prior to the implementation of investment accounts as a hope for the Merger talks progressing GST in the second quarter of the year. forthcoming budget for 2015, given the implementation of the diff erentiation MALAYSIA: Zafrul Tengku Abdul Increasing Shariah ϐinance between Islamic investment and deposit Aziz, acting CEO for CIMB Group, has accounts to be implemented under stated that the bank doesn’t expect an awareness the Islamic Financial Services Act by announcement regarding the three-way MALAYSIA: The Islamic Dakwah June 2015. Education for the public merger between CIMB Group Holdings, Foundation Malaysia (YADIM) has regarding Islamic fi nance and GST tax Malaysia Building Society and RHB announced plans to work with local neutralization are also elements that have th Capital before the 8 October, although banks and increase its fi nancial literacy been highlighted. talks have progressed to the board level. programs in 2015 in order to aid with

Sector remains ‘underweight’ markets in Malaysia and ASEAN+3 transaction in Islamic banking, such as countries. the International Currency Business Unit MALAYSIA: CIMB Research has initiative which aff ords tax breaks for 10 maintained ‘underweight’ on the The SCA could see Danajamin’s RM500 years on Islamic cross-border deals, will Malaysian banking sector highlighting million (US$153.59 million) ceiling limit continue to be in place next year. static loan growth and margin per transaction raised higher as it allows contraction as reasons for concern. Danajamin and CGIF to jointly undertake Maybank Islamic is expecting to report transactions in the Malaysian capital record growth this year, with positive The research house maintains its choice markets (Islamic and conventional), joint numbers projected into the fourth quarter, of Maybank, the parent company of guarantees and share the risks. according to Muzaff ar. The bank reported Shariah compliant Maybank Islamic, as over RM1 billion (US$304.88 million) in its top pick. Tax incentives wanted net profi t in 2013. Danajamin brings more MALAYSIA: As Malaysia prepares to th Inquiry to be undertaken capacity with SCA unveil its budget for 2015 on the 10 October, Maybank Islamic is hoping that AFGHANISTAN: The inquiry into MALAYSIA: Malaysia’s national the government will introduce corporate the theft of almost US$1 billion from fi nancial guarantee insurer Danajamin tax incentives, particularly in the area of Kabul Bank in 2010 has been reopened Nasional signed a strategic collaboration Waqf and Zakat as these two programs by Ashraf Ghani, the new president of agreement (SCA) with Credit Guarantee can add value to the agenda of equality Afghanistan. Islamic fi nancial products and Investment Facility (CGIF), a joint in the country, according to its CEO were off ered by the bank and its later initiative of the governments of China, Muzaff ar Hisham. incarnation of New Kabul Bank. Japan, South Korea (ASEAN+3) and a trust fund of Asian Development Bank, The bank also expressed hopes that the to promote the development of capital favorable policy on foreign currency

by the end of the year, refl ecting the is the fi rst in the UK to be backed by EUROPE relationship with parent bank, Qatar- the UK government’s home purchase Name change for IBB based Masraf Al Rayan. Separately, the plan guarantee scheme. The HPP off ers bank has also announced the launch of a rental rate of 4.99%, fi xed until 31st UK: Islamic Bank of Britain (IBB) will its Home Purchase Plan (HPP), a Shariah December 2017, and can provide fi nance be changing its name to Al Rayan Bank compliant home fi nance product that up to 90% of funds to value.

will be complemented by a US$128 bank, has offl oaded 30% of its stake in GLOBAL million Shariah compliant fi nancing International Bank of Qatar for KWD155 New purchase for EFG Hermes facility by the IDB. million (US$538 million) as it fails to see opportunities in securing a controlling GLOBAL: Egypt-based investment The loan, which is World Bank’s largest stake in the unlisted entity. bank EFG Hermes has announced the fi nancing to Lebanon will require purchase of a 49% stake in wind power ratifi cation by both the Lebanese The selling of the stake is set to gain NBK fi rm EDPR France. The acquisition was parliament and government, which is a profi t of KWD25 million (US$86.25 made by the bank’s private equity arm also expected to invest US$15 million into million) which will be reinvested into its for US$208 million and is EFG Hermes’ the project. business. fi rst investment outside the MENA region. Sukuk market widens Moody’s launches UMPPR Slowdown for MENA M&A’s GLOBAL: A greater number of Sukuk GLOBAL: Moody’s Investors Services issuances from non-Islamic issuers are has launched a new private placement GLOBAL: The merger and acquisition expected over the next year by US-based ratings product in EMEA, known sector in the Middle East and Africa Azzad Asset Management, to tap the as Unpublished Monitored Private has recorded deals worth a combined market’s large and stable capital pool. Placement Ratings (UMPPR), providing US$33.3 billion in 2014 to date, according The fi rm sees value in non-Islamic independent view of the creditworthiness to research by Mergermarket; almost issuers given their need to price Sukuk of issuers seeking funding through the 31% lower than the same period in 2013. generously to tempt investors, says Ihab EMEA private placement markets. The dip is att ributed to a lack of inbound Salib, the lead portfolio manager for M&A with inbound values down by the fi rm’s Sukuk fund, the Azzad Wise Sale conϐirmed 65.2% from the same period in 2013. Capital Fund. GLOBAL: Bahrain-based alternative IDB aids Lebanon investment fi rm Investcorp has NBK lets go of Qatari bank confi rmed that the US$1.43 billion sale of GLOBAL: The World Bank has agreed GLOBAL: National Bank of Kuwait Berlin Packaging to US-based Oak Hill to a US$474 million water supply (NBK), which has expressed interest Capital Partners will be completed in the development scheme to Lebanon, which in becoming a fully-fl edged Islamic fi rst week of October.

Public Real Estate Association (EPRA)/ Saudi KFH signs agreement National Association of Real Estate MIDDLE EAST SAUDI ARABIA: Saudi Kuwaiti Investment Trusts (NAREIT) Global Real Meeting Shariah standards Finance House has agreed to act as Estate Index. KUWAIT: The iMAL Islamic banking fi nancial advisor to Telal Al-Baraka and investment system from technology Holding Group to arrange Islamic provider Path Solutions has successfully New Shariah service from NBF funding, in addition to executing completed AAOIFI compliance UAE: The National Bank of Fujairah residential, administrative, industrial and engagement on the scope of the review (NBF) has announced the launch of NBF commercial projects in Mekka, Medina conducted by Deloitt e. Islamic, a service to provide Shariah and Jeddah. compliant fi nancial solutions to the IMF cautions Kuwait bank’s customers. The bank will initially Incriminating evidence provide retail banking products, but against Haigh KUWAIT: Kuwait has registered a plans to also off er support to corporates budget surplus of KWD12.9 billion in the UAE. The bank will utilize the UAE: Shariah compliant GFH Capital (US$44.66 billion) for the fi scal year Shariah supervisory board of Amanie has announced that contrary to claims which ended March 2014, marking the Advisors. made by David Haigh, the former Leeds second-largest budget surplus on record United managing director currently after 2011-2012. Despite 15 straight jailed in Dubai, bank statements have years of budget surpluses (contributed WIEF 2014 in Dubai confi rmed payments for fake invoices to signifi cantly by oil revenues), the IMF UAE: The 10th World Islamic Economic his account. Haigh is under investigation has however warned that a drop in oil Forum (WIEF) will be held in Dubai from for the embezzlement of at least GBP4 prices (as much as US$20) could see the 28th-30th October this year at Madinat million (US$6.47million) from his then- Kuwait in the defi cit in the medium-term Jumeirah, and will feature speakers from employer, GFH Capital, by fabricating if the state does not adopt measures to Bank Negara Malaysia, the IDB, and the approximately 100 false invoices. arrest rising spending. IMF among many others. Merger not a priority New ofϐice for Baker & Mobile solutions for the Hajj UAE: The CEO of Dubai sovereign SAUDI ARABIA: The Saudi Project for McKenzie wealth fund, Investment Corp of Dubai, Utilization of Hajj Meat, managed by SAUDI ARABIA: Global law fi rm Mohammed Al Shaibani has said that the IDB, has introduced a mobile point Baker & McKenzie and the fi rm’s Saudi although the merger of Dubai Financial of sale for the fi rst time, confi rming Arabian association legal advisors Market and Abu Dhabi Securities purchases via SMS, as well as allowing Abdulaziz I Al-Ajlan & Partners are due Exchange is well supported by the pilgrims to make purchases online via to open a second offi ce in Saudi Arabia, country’s decision makers, the project the project’s website. located in Jeddah. Julie Alexander and has been delayed due to recent economic Basel Barakat, two of the fi rm’s partners rebound which has made the long Customer outreach by EI specializing in Islamic fi nance, will be discussed merger not a current priority. UAE: Emirates Islamic (EI) has organized based in the new offi ce. an open event with customers to gain New acquisition for Gulf feedback and suggestions in shaping the NCB to ϐloat IPO Capital bank’s future products and services. SAUDI ARABIA: Saudi’s National UAE: UAE-based private equity Commercial Bank (NCB) is looking to fi rm Gulf Capital has announced the Global listing for Emirates fl oat an IPO this month to raise SAR22.5 acquisition of a minority stake in Middle REIT billion (US$6 billion). The bank will sell East Glass Manufacturing. The Egypt- 300 million shares to individual investors based company is a worldwide approved UAE: UAE-based Shariah compliant real and 200 million shares to state-run Public estate investment trust Emirates REIT has supplier of glass bott les to companies Pension Agency at a price of SAR45 including Coca-Cola, Pepsi and Nestle. been selected to join the FTSE European (US$11.99) per share.

Investing in talent Receive all the latest news via the TAKAFUL MALAYSIA: Syarikat Takaful Malaysia Shariah audit for Al Alamiya has provided a RM50,000 (US$15,244.20) No.1 Islamic fi nance based feed SAUDI ARABIA: Al Alamiya for bursary scheme to aid Universiti Cooperative Insurance Company has Teknologi Mara (UiTM) degree and contracted a one-year agreement eff ective diploma holders in actuarial science to sit the 1st October 2014 with Shariyah for a professional examination. Review Bureau (SRB) through which the latt er will provide the operator with Shariah review and advisory services in relation to the fi rm’s products, activities and investments.

(US$460.75 million) Sukuk Musharakah fi nancial institution in Malaysia and the RATINGS medium-term notes (due 2033); and expectation of government support for Rating upgrade for JAFZ RM 2.2 billion (US$675.77 million) the bank. RAM has also concurrently Murabahah medium-term notes (due reaffi rmed the ‘AA2(s)/Stable/-’ rating of UAE: Moody’s Investors Service has 2021). Imtiaz Sukuk’s RM1 billion (US$306.13 upgraded the rating of Jebel Ali Free million) Islamic medium-term note Zone (JAFZ) FZE’s US$650 million MBSB under watch (MTN) program and the ‘AA2(s)/Stable/ Sukuk, issued by JAFZ Sukuk (2019) P1(s)’ rating of Imtiaz Sukuk II’s RM9 to ‘Ba1’ from ‘Ba2’. Concurrently the MALAYSIA: RAM has maintained billion (US$2.75 billion) Islamic MTN and corporate family rating of Jebel Ali Free Malaysia Building Society (MBSB)’s ‘A2/-/ Islamic CP program. Imtiaz Sukuk and Zone FZE has been upgraded to ‘Ba1’ P1/RW_Developing’ fi nancial institution Imtiaz Sukuk II are the bank’s funding from ‘Ba2’ and the company’s probability ratings. The ratings agency has also conduits. of defaulting rating to ‘Ba1-PD’ from maintained the ‘AA1/-/-/RW_Developing’ rating on MBSB’s RM495 million ‘Ba2-PD’. All ratings have a stable Foreign and local currency outlook. (US$150.91 million) Tranche 1 Structure Covered Sukuk, the fi rst issuance ratings for Abu Dhabi Indonesia reafϐirmed under MBSB’s RM3 billion (US$914.65 UAE: Abu Dhabi has been assigned a million) Structured Covered Sukuk long-term rating of ‘AA’ and short-term INDONESIA: RAM has reaffi rmed Commodity Murabahah Program. RAM rating of ‘A-1+’ by S&P, with a stable the sovereign ratings of Indonesia at is maintaining the rating watch on MBSB outlook. ‘gBBB2(pi)’ and ‘seaAA3(pi)’ on the and the institution’s issuance following rating agency’s global and ASEAN scales, the announcement regarding the possible refl ecting the resilience of the country’s merger of MBSB, CIMB Group Holdings New issuance for Kesas? growth and fi scal performance. and RHB Capital. MALAYSIA: The proposed issuance of Sukuk worth RM735 million (US$224.09 MARC assigns ratings Ratings reafϐirmed million) by Shah Alam Expressway toll concessionaire Kesas has been assigned MALAYSIA: The following Islamic debt MALAYSIA: RAM has reaffi rmed the a preliminary rating of ‘AA2/Stable’ by programs of Putrajaya Holdings have ‘AA2/Stable/P1’ fi nancial institution RAM. The ‘AA3/Stable’ rating for the been affi rmed at ‘AAAIS’ and ‘AAAID’ ratings of Shariah compliant Bank company’s RM800 million (US$243.9 with a stable outlook by MARC: RM3 Kerjasama Rakyat Malaysia (Bank million) Al-Bai’ Bithaman Ajil Islamic billion (US$921.51 million) Sukuk Rakyat), based on the bank’s position as Debt Securities (BaIDS) has also been Musharakah (due 2032); RM1.5 billion a leading cooperative and developmental reaffi rmed.

ContourGlobal Global Investment House MOVES GLOBAL: ContourGlobal has announced KUWAIT: Following the resignation Bank Sohar the appointment of Cheick-Oumar Sylla of the executive management team of OMAN: Oman-based Bank Sohar, which as executive vice-president, CEO for Global Investment House, including operates Shariah compliant subsidiary Africa and a member of the executive Maha al-Ghunaim, the group CEO; Sohar Islamic, has announced the committ ee. Sylla joined power plant Bader al-Sumait, company CEO; and resignation of Mohamed Abdulaziz operator ContourGlobal on the 29th executive vice-presidents Khawla al- Kalmoor, the bank’s CEO. Rashad Ali al- September and leads ContourGlobal Roumi and Nawal Mulla-Hussain in Musafi r, the bank’s chief fi nancial offi cer Solutions business in Africa and Europe. September, the company has stated that will become acting CEO for an interim He was formerly CEO and general the resignations have been withdrawn period, replacing Kalmoor, who has manager of Tamweel Africa Holdings after resolving unspecifi ed issues with resigned for personal reasons. The bank (jointly owned by the ICD and Bank the company’s board. is currently in merger talks with Bank Asya). Dhofar.

IFN ONLINE DIRECTORY

Over 4,000 individual companies directly involved in the Islamic ﬁ nance industry

DATE ANNOUNCED COMPANY’S NAME SIZE DATE EXPECTED STRUCTURE 2nd May 2014 Government of Pakistan US$1 billion Oct-14 Sukuk 1st October 2014 Kesas RM735 million TBA Sukuk 30th September 2014 Government of Turkey TRY1.84 billion 1st October 2014 Sukuk 29th September 2014 WCT Holdings Up to RM1.5 billion TBA Sukuk Murabahah 29th September 2014 Malaysia Marine and Heavy Up to RM1 billion TBA Sukuk Murabahah Engineering Holdings 24th September 2014 Turkiye Finans Katilim Bankasi US$50 million pre-2015 Sukuk 16th September 2014 Agaoglu Group Up to US$300 million TBA Sukuk 15th September 2014 Kuveyt Turk Up to RM2 billion TBA Sukuk 10th September 2014 Advanced Petrochemical Co TBC TBA Sukuk 6th January 2014 Government of Oman OMR200 million Q12015 Sukuk 4th September 2014 International Finance Facility for TBA pre-2015 Sukuk Immunization 27th August 2014 Zain Group TBC TBC Sukuk 26th August 2014 CIMB Islamic Up to RM5 billion TBA Sukuk 25th August 2014 Sunway Treasury Sukuk Up to RM2 billion TBA Sukuk Mudarabah 19th August 2014 Malaysia Airport Holdings TBA TBA Sukuk 18th August 2014 Government of Indonesia IDR6.4 trillion pre-2015 Sukuk 15th August 2014 DIFC Investment TBA Sep-14 Sukuk 7th August 2014 Government of Malta TBA TBA Sukuk 20th June 2014 Bank Internasional Indonesia IDR300 billion TBA Sukuk 26th May 2014 Government of the Philippines TBA 2016 Sukuk 2nd May 2014 Government of Pakistan US$1 billion Sep-14 Sukuk 7th February 2014 Government of Tunisia US$140 million Sep-14 Sukuk 26th August 2013 Societe Generale RM1 billion TBA Sukuk 2nd July 2014 Adira Dinamika Multi Finance IDR1.5 trillion 2014 Sukuk 27th June 2014 Dogus Varlik Kiralama Up to US$400 million TBA Sukuk 25th June 2014 Bank Muamalat Malaysia Up to RM2 billion TBA Sukuk 17th June 2014 International Finance Corp TBA 2015 Sukuk 17th June 2014 Jeddah Economic Co TBA TBA Sukuk 21st January 2014 UEM Sunrise RM2 billion TBA Sukuk 17th June 2014 Aktif Bank Up to TRY200 million TBA Sukuk 6th June 2014 Government of Ras Al Khaimah TBA TBA Sukuk 5th June 2014 Government of Jordan TBA TBA Sukuk 2nd June 2014 Al Othaim Real Estate and Up to SAR1billion TBA Sukuk Investment Co 2nd June 2014 Bank Islam Malaysia Up to RM1 billion 2014 Sukuk 22nd May 2014 Felda Global Ventures Holdings US$1 billion 2H2014 Exchangable Sukuk 5th May 2014 Meethaq OMR300 million TBA Sukuk 30th April 2014 Pelaburan Mara RM1 billion TBA Sukuk 30th April 2014 Hua Yang RM250 million TBA Sukuk Murabahah 18th April 2014 Dubai Islamic Bank TBA TBA Sukuk 11th April 2014 KLCC REIT RM3 billion TBA Sukuk Murabahah 10th April 2014 Emaar Misr for Development TBA TBA Sukuk Sabah Credit Corp Up to RM1.5 billion TBA Sukuk Musharakah 4th April 2014 Electricity Supply Board - Ireland RM500 million TBA Sukuk 4th April 2014 Japan Bank TBA TBA Sukuk 2th April 2014 Treedom Group TBA TBA Sukuk 27th March 2014 Maybank Islamic RM10 billion TBA Sukuk Murabahah 27th March 2014 Bumi Armada Capital RM1.5 billion TBA Sukuk

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REDmoney Global Shariah

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

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

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

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

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

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

Eurekahedge North America Islamic Fund Index 150

140

130

120

110

100

Index Values 80

50 Jul-08 Jan-06 Jun-02 Feb-12 Sep-09 Dec-99 Dec-10 Apr-07 Aug-03 Aug-14 Mar-01 Nov-04 May-13

Top 10 Monthly Returns for ALL Islamic Funds Fund Fund Manager Performance Measure Fund Domicile 1 Pheim Asia Ex-Japan Islamic PHEIM Unit Trusts 13.61 Malaysia 2 Al-Mubarak Pure Saudi Equity Arab National Bank 11.77 Saudi Arabia 3 Amanah GCC Equity SABB 10.88 Saudi Arabia 4 Saudi Companies The Saudi Investment Bank 10.08 Saudi Arabia 5 Al Yusr Tamoh Multi Asset Saudi Hollandi Bank 9.89 Saudi Arabia 6 Bakheet Saudi Trading Equity Bakheet Investment Group 9.59 Saudi Arabia 7 Amanah Saudi Equity SABB 9.17 Saudi Arabia 8 Jadwa Saudi Equity Jadwa Investment 8.72 Saudi Arabia 9 Jadwa Arab Markets Equity Jadwa Investment 8.51 Saudi Arabia 10 Jadwa GCC Equity Jadwa Investment 8.44 Saudi Arabia Eurekahedge Islamic Fund Index 0.87 Based on 92.37% of funds which have reported August 2014 returns as at the 3rd October 2014

Top 10 Monthly Returns for Global Funds Fund Fund Manager Performance Measure Fund Domicile 1 DJ Islamic Market Titans 100 Theam Easy UCITS BNP Paribas Investment Partners 3.53 France ETF - USD 2 Al Shamekh Islamic Portfolio Riyad Bank 3.30 Saudi Arabia 3 HSBC Amanah Global Equity Index HSBC Amanah Central Shariah Committ ee 2.68 Saudi Arabia 4 Altaira Funds - Ethical Global High Dividend (I) Altaira Capital Partners 2.52 Luxembourg 5 iShares MSCI World Islamic BlackRock Advisors (UK) 2.10 Germany 6 ETFS Physical Palladium ETFS Metal Securities 2.01 Jersey 7 Al Shuja'a Islamic Portfolio Riyad Bank 2.00 Saudi Arabia 8 Oasis Crescent Global Property Equity Oasis Global Management Company (Ireland) 1.96 Ireland 9 Al Dar Fund of Funds ADAM 1.71 Kuwait 10 AlAhli Global Real Estate The National Commercial Bank 1.31 Saudi Arabia Eurekahedge Islamic Fund Index 0.10 Based on 89.98% of funds which have reported August 2014 returns as at the 3rd October 2014

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

Eurekahedge Islamic Fund Fixed Income Index over the last 5 years Eurekahedge Islamic Fund Fixed Income Index over the last 1 year 175 103.5 165 103 155 102.5 145 102 135 101.5 125 101 Percentage Percentage 115 100.5 105 100 95 99.5 Jul-08 Jun-02 Jun-14 Feb-06 Oct-13 Sep-09 Feb-14 Dec-99 Dec-10 Dec-13 Apr-07 Apr-14 Aug-03 Aug-14 Mar-01 Mar-12 Nov-04 Aug-13 Aug-14 May-13

Top 10 Islamic Fixed Income Funds by 3 Months Returns Fund Fund Manager Performance Measure Fund Domicile 1 Al-Ameen Islamic Income UBL Fund Managers 4.50 Pakistan 2 RHB-OSK Islamic Bond RHB Asset Management 2.69 Malaysia 3 BNI-AM DanaPlus Syariah BNI Asset Management 2.14 Indonesia 4 Insight I-Hajj Syariah Insight Investments Management 2.07 Indonesia 5 Libra AsnitaBond Libra Invest 1.91 Malaysia 6 Meezan Islamic Income Al Meezan Investment Management 1.72 Pakistan 7 AmBon Islam AmInvestment Management 1.65 Malaysia 8 CIMB Islamic Sukuk CIMB-Principal Asset Management 1.63 Malaysia 9 MAA Takaful Shariah Flexi MAA Takaful 1.59 Malaysia 10 PB Islamic Bond Public Mutual 1.58 Malaysia Eurekahedge Islamic Fund Index 1.18 Based on 93.26% of funds which have reported August 2014 returns as at the 3rd October 2014 Top 10 Annualized Sortino Ratio for ALL Islamic Funds Fund Fund Manager Performance Measure Fund Domicile 1 Atlas Pension Islamic - Debt Sub Atlas Asset Management 15.26 Pakistan 2 Meezan Tahaﬀ uz Pension - Debt Sub Al Meezan Investment Management 15.04 Pakistan 3 BIG Dana Muamalah Bhakti Asset Management 10.72 Indonesia 4 Commodity Trading - SAR Riyad Bank 6.30 Saudi Arabia 5 Insight I-Hajj Syariah Insight Investments Management 5.07 Indonesia 6 AlAhli GCC Growth and Income NCB Capital Company 4.81 Saudi Arabia 7 Public Islamic Income Public Mutual 4.11 Malaysia 8 Taurus Ethical B Taurus Asset Management 3.46 India 9 Public Islamic Bond Public Mutual 3.32 Malaysia 10 PB Islamic Bond Public Mutual 3.30 Malaysia Eurekahedge Islamic Fund Index 0.23 Based on 92.37% of funds which have reported August 2014 returns as at the 3rd October 2014 Based on reporting funds with at least 12 months of returns till August 2014 as at the 31st August 2014

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

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

Most Recent Global Sukuk Priced Issuer Nationality Instrument Market US$ (mln) Managers 30th Sep 2014 Grand Duchy of Luxembourg Sukuk Euro market 254 BNP Paribas, HSBC Luxembourg public issue 18th Sep 2014 IDB Trust Services Saudi Sukuk Euro market 1,500 Standard Chartered Bank, Deutsche Bank, Arabia public issue HSBC, National Bank of Abu Dhabi, First Gulf Bank, Maybank, Gulf International Bank, Natixis, CIMB Group 18th Sep 2014 ZAR Sovereign South Africa Sukuk Euro market 500 BNP Paribas, Standard Bank, Kuwait Finance Capital Fund public issue House 16th Sep 2014 JANY Sukuk US Sukuk Murabahah Euro market 500 Saudi National Commercial Bank, Goldman / Wakalah public issue Sachs, National Bank of Abu Dhabi, Abu Dhabi Islamic Bank, Emirates NBD, QInvest 10th Sep 2014 Sharjah Sukuk UAE Sukuk Ijarah Euro market 750 Standard Chartered Bank, HSBC, Kuwait public issue Finance House, National Bank of Abu Dhabi, Sharjah Islamic Bank 10th Sep 2014 Hong Kong Sukuk Hong Kong Sukuk Ijarah Euro market 1,000 Standard Chartered Bank, HSBC, National 2014 public issue Bank of Abu Dhabi, CIMB Group 3rd Sep 2014 Bank Pembangunan Malaysia Sukuk Murabahah Domestic market 948 HSBC, CIMB Group Malaysia public issue 2nd Sep 2014 Perusahaan Indonesia Sukuk Wakalah Euro market 1,500 Standard Chartered Bank, HSBC, CIMB Penerbit SBSN public issue Group, Emirates NBD Indonesia III 25th Aug 2014 Bumi Armada Malaysia Sukuk Murabahah Domestic market 474 RHB Capital, Maybank, CIMB Group, Capital Malaysia public issue AmInvestment Bank 25th Aug 2014 Bumitama Agri Indonesia Sukuk Musharakah Domestic market 158 Maybank, CIMB Group public issue 19th Aug 2014 National Higher Malaysia Sukuk Murabahah Domestic market 317 Maybank, CIMB Group Education Fund public issue 19th Aug 2014 Rantau Abang Malaysia Sukuk Musharakah Domestic market 476 RHB Capital, Maybank, Bank Islam Capital public issue Malaysia, CIMB Group 25th Jul 2014 Golden Assets Singapore Sukuk Murabahah Domestic market 118 RHB Capital, CIMB Group International public issue Finance 21st Jul 2014 DanaInfra Nasional Malaysia Sukuk Murabahah Domestic market 126 Maybank, CIMB Group, AmInvestment public issue Bank 21st Jul 2014 DanaInfra Nasional Malaysia Sukuk Murabahah Domestic market 157 RHB Capital, Maybank, CIMB Group, Aﬃ n public issue Investment Bank, AmInvestment Bank 16th Jul 2014 DanaInfra Nasional Malaysia Sukuk Murabahah Domestic market 501 Standard Chartered Bank, RHB Capital, public issue Maybank, CIMB Group, AmInvestment Bank 10th Jul 2014 Aquasar Capital Malaysia Sukuk Domestic market 473 RHB Capital public issue 30th Jun 2014 Sepangar Bay Malaysia Sukuk Domestic market 146 Hong Leong Financial Group Power public issue 25th Jun 2014 Department for United Sukuk Euro market 336 Standard Chartered Bank, HSBC, National Communities & Kingdom public issue Bank of Abu Dhabi, CIMB Group, Barwa Local Government Bank 25th Jun 2014 Sarawak Energy Malaysia Sukuk Musharakah Domestic market 467 RHB Capital, Kenanga Investment Bank, public issue AmInvestment Bank

Global Sukuk Volume by Month Global Sukuk Volume by Quarter

US$bn US$m US$bn Value (US$bn) Avg Size (US$m) US$m 12 1500 18 600 Value (US$bn) 16 10 1250 14 500 Avg Size (US$m) 8 1000 12 400 10 300 6 750 8 4 500 6 200 4 100 2 250 2 0 0 0 0 123 4 5 6 78 9 10 11 12 1 2 3 4 5 6 7 8 9 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2Q 3Q 4Q 1Q 2Q 3Q 2013 2014 2009 2010 2011 2012 2013 2014

Top 30 Issuers of Global Sukuk 12 Months Issuer Nationality Instrument Market US$(mln) Iss(%) Managers 1 Saudi Electricity Saudi Sukuk Al- Domestic market 3,700 8.6 Banque Saudi Fransi, HSBC, JPMorgan, Deutsche Bank Arabia Istithmar public issue 2 IDB Trust Services Saudi Sukuk Euro market 3,000 6.9 Standard Chartered Bank, HSBC, National Bank of Abu Arabia Wakalah public issue Dhabi, First Gulf Bank, RHB Capital, Natixis, CIMB Group, Commerzbank Group, Deutsche Bank, Maybank, Gulf International Bank 3 DanaInfra Nasional Malaysia Sukuk Domestic market 2,437 5.6 RHB Capital, Maybank, CIMB Group, Aﬃ n Investment Murabahah public issue Bank, AmInvestment Bank, HSBC, Standard Chartered Bank 4 Malakoﬀ Malaysia Sukuk Domestic market 1,521 3.5 Maybank, CIMB Group public issue 5 Perusahaan Penerbit Indonesia Sukuk Euro market 1,500 3.5 Standard Chartered Bank, HSBC, CIMB Group, Emirates SBSN Indonesia III Wakalah public issue NBD 6 National Saudi Sukuk Domestic market 1,333 3.1 Saudi National Commercial Bank, JPMorgan, HSBC, Gulf Commercial Bank Arabia public issue International Bank 7 Cagamas Malaysia Sukuk Domestic market 1,274 3.0 RHB Capital, Maybank, CIMB Group, AmInvestment Bank, public issue HSBC 8 Ooredoo Qatar Sukuk Euro market 1,250 2.9 Deutsche Bank, HSBC, DBS, Qatar National Bank, QInvest public issue 9 TNB Western Malaysia Sukuk Domestic market 1,109 2.6 CIMB Group Energy Ijarah and public issue Wakalah 10 National Higher Malaysia Sukuk Domestic market 1,074 2.5 Maybank, CIMB Group Education Fund Murabahah public issue 11 Hong Kong Sukuk Hong Sukuk Ijarah Euro market 1,000 2.3 Standard Chartered Bank, HSBC, National Bank of Abu 2014 Kong public issue Dhabi, CIMB Group 12 Bank Pembangunan Malaysia Sukuk Domestic market 948 2.2 HSBC, CIMB Group Malaysia Murabahah public issue 13 Syarikat Prasarana Malaysia Sukuk Ijarah Domestic market 928 2.2 HSBC, RHB Capital, CIMB Group, AmInvestment Bank, Negara public issue Maybank, Kenanga Investment Bank 14 Rantau Abang Malaysia Sukuk Domestic market 781 1.8 Standard Chartered Bank, HSBC, CIMB Group, RHB Capital Musharakah public issue Capital, Maybank, Bank Islam Malaysia 15 Sukuk Funding UAE Sukuk Euro market 750 1.7 Standard Chartered Bank, Goldman Sachs, National Bank of (No 3) Musatahah public issue Abu Dhabi, First Gulf Bank, Dubai Islamic Bank 15 Sharjah Sukuk UAE Sukuk Ijarah Euro market 750 1.7 Standard Chartered Bank, HSBC, Kuwait Finance House, public issue National Bank of Abu Dhabi, Sharjah Islamic Bank 15 Government of UAE Sukuk Ijarah Euro market 750 1.7 Standard Chartered Bank, HSBC, National Bank of Abu Dubai public issue Dhabi, Dubai Islamic Bank, Emirates NBD 15 Emaar Malls Group UAE Sukuk Euro market 750 1.7 Mashreqbank, Standard Chartered Bank, Morgan Stanley, Wakalah public issue National Bank of Abu Dhabi, First Gulf Bank, Dubai Islamic Bank, Union National Bank, Abu Dhabi Islamic Bank, Emirates NBD, Noor Bank, Al Hilal Bank 19 Konsortium Malaysia Sukuk Domestic market 718 1.7 CIMB Group Lebuhraya Utara- Musharakah public issue Timur (KL) 20 ICD UAE Sukuk Euro market 700 1.6 Standard Chartered Bank, HSBC, Dubai Islamic Bank, public issue Citigroup, Emirates NBD 21 Dar Al-Arkan Saudi Sukuk Euro market 694 1.6 Goldman Sachs, Deutsche Bank, Emirates NBD, Bank of International Sukuk Arabia Wakalah public issue America Merrill Lynch, Bank Alkhair, Masraf Al Rayan, Al Hilal Bank, QInvest, Barwa Bank 22 DAMAC Real UAE Sukuk Euro market 650 1.5 Deutsche Bank, National Bank of Abu Dhabi, Barclays, Estate Development public issue Dubai Islamic Bank, Abu Dhabi Islamic Bank, Citigroup, Emirates NBD 23 Pengurusan Air SPV Malaysia Sukuk Ijarah Domestic market 613 1.4 RHB Capital, Bank Islam Malaysia, CIMB Group, private placement AmInvestment Bank, Maybank 24 Saudi Telecom Saudi Sukuk Domestic market 533 1.2 Saudi National Commercial Bank, Standard Chartered Bank, Arabia public issue JPMorgan 25 ZAR Sovereign South Sukuk Euro market 500 1.2 BNP Paribas, Standard Bank, Kuwait Finance House Capital Fund Africa public issue 25 Turkiye Finans Turkey Sukuk Euro market 500 1.2 HSBC, Citigroup, Emirates NBD, QInvest Katilim Bankasi public issue 25 Kuveyt Turk Turkey Sukuk Euro market 500 1.2 Standard Chartered Bank, HSBC, Kuwait Finance House, Katilim Bankasi public issue Citigroup, Emirates NBD 25 JANY Sukuk US Sukuk Euro market 500 1.2 Saudi National Commercial Bank, Goldman Sachs, National Murabahah / public issue Bank of Abu Dhabi, Abu Dhabi Islamic Bank, Emirates Wakalah NBD, QInvest 25 Government of Ras UAE Sukuk Euro market 500 1.2 Mashreqbank, Standard Chartered Bank, National Bank of Al Khaimah public issue Abu Dhabi, Citigroup, Al Hilal Bank 25 Al Hilal Bank UAE Sukuk Euro market 500 1.2 Standard Chartered Bank, HSBC, National Bank of Abu Mudarabah public issue Dhabi, Citigroup, Emirates NBD, Al Hilal Bank 43,245 100.0

Top Managers of Sukuk 12 Months Sukuk Volume by Currency US$ (billion) 12 Months Manager US$ (mln) Iss % 20.4 1 CIMB Group 7,721 48 17.9 Malaysian ringgit 2 HSBC 5,682 30 13.1 US dollar 18.4

3 Maybank 4,797 36 11.1 Saudi riyal 3.5 4 RHB Capital 3,320 39 7.7 Other 0.3 5 Standard Chartered Bank 2,793 20 6.5

6 AmInvestment Bank 2,789 26 6.5 Sukuk Volume by Issuer Nation US$ (billion) 12 Months 7 National Bank of Abu Dhabi 1,549 12 3.6 Malaysia 20.0 8 Emirates NBD 1,489 13 3.4 Saudi Arabia 9.7 9 Deutsche Bank 1,452 6 3.4 UAE 5.9 10 JPMorgan 1,344 3 3.1 Indonesia 1.9 Turkey 1.6 11 Citigroup 716 7 1.7 Qatar 1.3 12 Dubai Islamic Bank 676 6 1.6 Hong Kong 1.0 13 Banque Saudi Fransi 600 1 1.4

14 QInvest 595 5 1.4 Global Sukuk Volume by Sector 12 Months 15 Saudi National Commercial Bank 594 3 1.4

16 First Gulf Bank 572 4 1.3 12% 5% Finance 17 Kuwait Finance House 518 4 1.2 Utility & Energy 41% 18 Gulf International Bank 500 2 1.2 11% Government Real Estate/Property 19 Al Hilal Bank 376 5 0.9 Telecommunications 13% 20 Aﬃ n Investment Bank 375 6 0.9 Other 18% 21 BNP Paribas 369 3 0.9 22 Natixis 354 2 0.8 23 Goldman Sachs 342 4 0.8 Global Sukuk Volume - US$ Analysis 24 Bank Islam Malaysia 308 3 0.7 US$bn US$m 25 Kenanga Investment Bank 308 2 0.7 18 600 16 Non-US$ US$ 500 26 Abu Dhabi Islamic Bank 294 4 0.7 14 12 400 10 27 DBS 285 2 0.7 300 8 28 Qatar National Bank 250 1 0.6 6 200 4 100 29 Hong Leong Financial Group 221 6 0.5 2 0 0 30 Mashreqbank 218 3 0.5 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2Q 3Q 4Q 1Q 2Q 3Q 2009 2010 2011 2012 2013 2014 Total 43,245 120 100.0

Top Islamic Finance Related Project Finance Mandated Lead Top Islamic Finance Related Project Financing Legal Advisors Arrangers 12 Months Ranking 12 Months Mandated Lead Arranger US$ (million) No % Legal Advisor US$ (million) No % 1 Banque Saudi Fransi 283 1 16.9 1 Allen & Overy 765 2 34.8 1 Public Investment Fund 283 1 16.9 3 Alinma Bank 281 2 16.8 2 Baker Bott s 668 1 30.4 4 Samba Financial Group 254 1 15.1 5 Al-Rajhi Banking & Investment 188 1 11.2 6 Bank Al-Jazira 95 1 5.7 2 Chadbourne & Parke 668 1 30.4 6 Bank Albilad 95 1 5.7 8 KfW Bankengruppe 66 1 3.9 4 Mohammed Al Zamil & Emad Al 97 1 4.4 8 Mizuho Financial Group 66 1 3.9 Kharashi Law Firm 8 Standard Chartered 66 1 3.9

Top Islamic Finance Related Financing Mandated Lead Arrangers Ranking 12 Months Top Islamic Finance Related Financing Deal List 12 Months Mandated Lead Arranger US$ (mln) No % Credit Date Borrower Nationality US$ (mln) 1 First Gulf Bank 651 7 8.3 th 2 Dubai Islamic Bank 583 6 7.4 30 Jun 2014 Ma'aden Waad al-Shamal Saudi Arabia 2,318 Phosphate 3 Abu Dhabi Islamic Bank 484 6 6.1 21st May 2014 Emaar Malls Group UAE 1,500 4 Noor Islamic Bank 430 4 5.4 th 5 National Bank of Abu Dhabi 401 3 5.1 7 May 2014 Emirates Steel Industries UAE 1,300 6 Mashreqbank 393 3 5.0 8th Sep 2014 Atlantis The Palm UAE 1,100 7 Emirates NBD 387 7 4.9 26th Feb 2014 Mobily Saudi Arabia 761 8 Standard Chartered Bank 331 7 4.2 st 9 Alinma Bank 299 1 3.8 31 Jul 2014 Emirates Airlines UAE 425 9 Al-Rajhi Banking & Investment 299 1 3.8 14th Feb 2014 Gulf Marine Services UAE 410 11 SG Corporate & Investment Banking 267 2 3.4 23rd Dec 2013 Kuveyt Turk Katilim Turkey 388 11 Credit Agricole 267 2 3.4 Bankasi 13 Abu Dhabi Commercial Bank 264 4 3.4 23rd Jun 2014 Turkiye Finans Katilim Turkey 351 14 Union National Bank 208 4 2.6 Bankasi th 15 Deutsche Bank 187 1 2.4 24 Mar 2014 Ezdan Real Estate Qatar 350 16 Arab Banking Corporation 183 4 2.3 17 Commercial Bank of Dubai 167 2 2.1 Top Islamic Finance Related Financing by Country 12 Months 18 Al Hilal Bank 147 3 1.9 Nationality US$ (mln) No % 19 Barwa Bank 139 3 1.8 1 UAE 3,785 10 47.9 20 Commercial Bank International 134 2 1.7 2 Saudi Arabia 2,226 2 28.2 3 Turkey 961 3 12.2 21 HSBC 123 2 1.6 4 Qatar 350 1 4.4 22 BNP Paribas 92 2 1.2 5 Sri Lanka 150 1 1.9 23 Mitsubishi UFJ Financial Group 80 2 1.0 6 Pakistan 138 1 1.7 24 Sumitomo Mitsui Financial Group 79 1 1.0 7 Malaysia 116 2 1.5 24 Saudi National Commercial Bank 79 1 1.0 8 Indonesia 90 1 1.1 24 Saudi Investment Bank 79 1 1.0 9 Taiwan 80 1 1.0 24 Samba Capital 79 1 1.0 Top Islamic Finance Related Financing by Sector 12 Months 24 Riyad Bank 79 1 1.0

24 Islamic Development Bank 79 1 1.0 Real Estate/Property 24 Export Development Canada 79 1 1.0 Mining 24 Banque Saudi Fransi 79 1 1.0 24 Arab Petroleum Investments 79 1 1.0 Transportation Finance Top Islamic Finance Related Financing Mandated Lead Arrangers 12 Months Telecommunications Bookrunner US$ (mln) No % US$ bln0 126 3 4 5 1 Abu Dhabi Islamic Bank 767 3 36.2 2 Barwa Bank 405 2 19.2 Global Islamic Financing - Years to Maturity (YTD Comparison) 3 Standard Chartered Bank 205 5 9.7 2014 4 Emirates NBD 141 3 6.6 2013 5 Noor Islamic Bank 135 3 6.4 2012 6 Arab Banking Corporation 126 2 5.9 2011 7 Abu Dhabi Commercial Bank 70 1 3.3 2010 8 Mashreqbank 34 1 1.6 2009 8 Askari Bank 34 1 1.6 2008 0% 20% 40% 60% 80% 100% 10 United Bank 30 1 1.4 0-3yrs 3-5yrs 5-7yrs 7-10yrs 10+yrs 10 Al Hilal Bank 30 1 1.4

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

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27four 16 Emirates REIT 35 Mitsui 33 90 North Real Estate Partners 20 ETF.com 18 Moody’s Investors Services 15,17,21,34,36 AAOIFI 15,16,25,27,35 Eureeca 4 Mosaic 7 Abdul Mohsen al-Hokair Group for Eurekahedge 31,32 MSCI 18 Tourism and Development Co 28 European Public Real Estate Association 35 MuslimCrowdFunding 5 Aboitiz Equity Ventures 15 Exchange Traded Concepts 18 myStartr 4 Abu Dhabi Securities Exchange 35 EXIM Bank (Bangladesh) 23 NAREITS 35 Abundance Generation 7 EXIM Bank (Malaysia) 14 Nareva 33 Actuarial Partners 11 EY 10 NASDAQ Dubai 21 ACWA Power 28 Fajr Capital Advisors 1 National Bank of Abu Dhabi 19,21,33 Aﬂ amnah 4 Falah Capital 18 National Bank of Fujairah 35 Ahlibank 15 First Security Islami Bank 23 National Bank of Kuwait 34 Al Alamiya for Cooperative Insurance Company 35 FTSE 18,35 National Bank of Oman 15 Al Amanah Bank 27 Funding Circle 1 National Commercial Bank 14,28,35 Al Arafa Islami Bank 23 GDF Suez 33 Nestle 35 Al Baraka Bank Pakistan 17 GenCommunity 7 New Kabul Bank 34 Al Baraka Banking Group 17 General Aviation Civil Authority 28 New York Stock Exchange 18 Al Baraka Group 19 GFH Capital 35 Nickel Asia 15 AlBaraka Turk 17 Global Investment House 36 Noor Bank 24 Ali Baba 6 Goldman Sachs 14,24 Nur Global Strategies 3 Alizz Islamic Bank 15 Goodgate 4 OAC Actuaries and Consultants 11 Amãna Bank 33 Growmada 6 Oak Hill Capital Partners 34 Amanie Advisors 35 Gulf Capital 35 Oil And Gas Development Company 12 Apex Mining 15 Gulf International Bank 33 OPEC 13 Azzad Asset Management 34 Hajj Finance Company 23 Path Solutions 35 Baker & McKenzie 35 HalalFunder 5 Pepsi 35 Bangko Sentral ng Pilipinas 27 HSBC 17,19,21 Pepsi Cola Products Philippines Inc. 15 Bangladesh Bank 23 HSBC Bank Oman 15 Philippine Stock Exchange 15,27 Bank Asya 36 HSBC Corporate Trustee Company 21 pitchIN 4 Bank Dhofar 15,36 ICB Islami Bank 23 Pramerica Real Estate Investors 10 Bank Islam Brunei Darussalam 24 ICD 36 Puncak Niaga Holdings 33 Bank Muscat 15 IDB 12,34,35 Putrajaya Holdings 36 Bank Negara Malaysia 35 IDB Trust Services 12 QInvest 17 Bank Nizwa 15 IdealRatings 15 RAM Ratings 33,36 Bank Rakyat 36 IFSB 25 Bank Sohar 15,36 IMF 13,33,35 RHB Capital 13,33,36 Banque Internationale à Luxembourg 17 International Bank of Qatar 34 Russell Indexes 18 Berlin Packaging 34 Investcorp 34 Russell-IdealRatings 18 BNP Paribas 17,19 Investment Corporation of Dubai 14,35 S&P 13,17,18,21 Capital Market Authority (KSA) 28,29 IOI Properties Group 33 Sadara Petrochemical 28 Catcha Group 6 Irish Stock Exchange 21 Samuel Aset Manajemen 25 CBRE 20 Islami Bank Bangladesh 23 Saudi Arabian Basic Industries Corp 28 Central Bank of Libya 19 Islamic Bank of Britain 34 Saudi Arabian Oil Company 28 CIMB Group Holdings 33,36 Islamic Dakwah Foundation Malaysia 33 Saudi Arabian Stock Exchange 28 CIMB Islamic 13 Islamic Finance & Investment 23 Saudi Kuwaiti Finance House 35 CIMB Research 34 JAFZ Sukuk 36 Saudi Project for Utilization of Hajj Meat 35 Cliﬀ ord Chance 21,33 Jebel Ali Free Zone FZE 36 Securities Commission Malaysia 4,6 Coca-Cola 35 Jeddah Economic Company 28 Shahjalal Islami Bank 23 ContourGlobal 36 JustGiving 3,4,8 Shariyah Review Bureau 18,35 Credit Guarantee and Investment Facility 34 Kabul Bank 34 Sharjah Islamic Bank 21 CrowdCube 5 KCG 18 Shekra 3 Crowdfund Capital Advisors 3 Kesas 36 Silatech 5 Danajamin Nasional 34 KFH Investment 6 Social Islami Bank 23 Dar Al Sharia Legal & Financial Consultancy 22 KFH Investment 21 SocialSharity 4 Dealogic 12,13 King & Spalding 29 Standard Chartered 19,21,24 Deloitt e 35 Kiva 5 Syarikat Takaful Malaysia 35 Dentons & Co 21,30 Kiva Arab Youth 5 SyCip Salazar Hernandez & Gatmaitan 27 DIFC Investments 24 Kiva Microfunds 5 Tamweel Africa Holdings 36 Dow 28 LaunchGood 4 Telal Al-Baraka Holding Group 35 Dow Jones 18 Leeds United Football Club 35 Trillion Fund 7 Draznine Advisory 24 Limitless 24 UC Berkeley 4 Dubai Financial Market 35 Malaysia Building Society 33,36 UmmahHub 5 Dubai International Financial Center 24 Manila Electric Co 15 Union Bank 23 Dubai International Financial Center Authority 24 Maples and Calder 21 Union Square Ventures 5 EasyJet 5 MARC 36 Universiti Teknologi Mara 35 EasyProperty 5 Masraf Al Rayan 19,34 University College of Bahrain 26 EdAid 8 Maybank Islamic 34 University of Greenwich 10 EDPR France 34 Meem 33 US Bank 18 EFG Hermes 34 Mellon Capital 18 Windcentrale 7 Emaar Malls Group 13 Mergermarket 34 World Bank 5,6,17,18,19,34 Emirates Islamic 35 Microsoft 13 World’Vest Base 19 Emirates NBD 19 Middle East Glass Manufacturing 35 Zaver Petroleum Corporation 17

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