Several Islamic funds were highlighted over the past week with KFH Capital getting a new Kuwait marketing license, CIMB Niaga’s US-dollar Shariah mutual fund in Indonesia, Investcorp surpassing its Bahrain fund target and reducing its NephroPlus stake plus GFH and Ithmaar Holding continuing talks for acquisition of the latter’s investment portfolio.
There was a plethora of Sukuk issues over the week, as usual, because it is a popular Shariah compliant financing instrument that is relatively low-risk and provides steady returns. Among the more interesting are green Sukuk issues by alrajhi bank and Aldar Properties.While such Sukuk is popular with institutions like pension funds and takaful firms, which seek steady growth for their cash kitties, high net-worth individuals and retail investors want more.
Such opportunities abound in GCC nations – where wealth distribution remains fragmented. An example is Founding Souq, a crowdfunding platform operating in the UAE and now set to launch its platform in Saudi Arabia. It is eyeing 15% yield for investors – more than double that usually offered for Sukuk.
IPOs also appeal and this week sees registration till 16th May 2024 of eligible investors for Pakistan’s Fast Cables, with bidding open on both 15th and 16th May 2024. Public subscription will be on 22nd and 23rd May 2024. The country’s largest cable producer is expected to be declared a Shariah compliant stock ahead of its initial trading on PSX.
But away from these high-profile markets, Islamic investment opportunities face liquidity issues – both in terms of available assets as well as capital flows, as being experienced in Bangladesh currently.
A different issue was seen at The Dubai FinTech Summit last week, where a number startups secured funding. Because these outfits are still at their early stages, Shariah compliance isn’t high on the priority list just yet and potential investors have to play a waiting game.
The lack of Shariah certification is also hampering another high-risk, high-return asset class that is gaining popularity in the GCC region. Known as litigation funding, it is associated with the US law firms taking on contingency cases and then securitizing these.
All in all, the Islamic investment landscape continues to be in a flux, with potentially exciting developments awaiting over the horizon.
