Canada-based Hillcore Group has begun applying Shariah principles to underpin its PE fund structures since 2012, even when Fatwa certification was not specifically sought for such offerings, Senior Investment Manager Mark McKenna shared with IFN Investor.
“When we structure deals for investments, why shouldn’t we come up with something that everyone can be comfortable with? Recognizing that Muslims make up a large community in the world right now, we see it as an opportunity and it’s also respectful to go on this route.”
This approach was taken for a client conglomerate that has 22 distinct operating entities – of which, one operates 29 long-term healthcare facilities throughout Canada. “Should these assets be seen as Shariah or conventional? They’re one and the same. They have to stand on their own feet as a product.”
Having adopted the Ijarah structure for this deal, Hillcore is already conducting assessments of the client conglomerate’s other businesses that may need extra capital infusion – and the underlying expectation is all of these will also be approved as Shariah compliant.
For the healthcare fund, Hillcore has expanded the offering beyond its traditional market within the Americas for outreach to different marketplaces – where some investors have their own Islamic boards and want to understand the entire fund structure and operational process, noted Mark.
A critical step for this new direction is registering the healthcare fund in Singapore to tap investors in Southeast Asia and also potentially the Middle East, via forged partnerships. All investments received will be directed into Canada.
Anticipated to provide an ROI of between 15 and 20% over the five-year fund tenor, Hillcore is aiming to raise US$30 million – but is prepared to accommodate up to US$100 million if investor response is positive. Minimum entry is set at US$50,000.
Confident that the Singapore operations will take off well, Hillcore is exploring the option to establish another operational offshoot in Germany with funds registered in Luxembourg. These plans include having an even higher entry level of US$1 million, depending on target client segments.
Toronto-headquartered Hillcore was established in 1995 and began exploring Shariah options in 2012 while advising clients then of IPO options – as various real estate investments tend to fit within that rule box very well.
The firm has now expanded that focus to other businesses like healthcare. It is looking at oil and gas services as well as some technology plays along with construction companies and real estate activities.
The Shariah portion still constitutes a very small portion of Hillcore’s current US$5 billion AuM. The firm believes that it’s underserved and undervalued as ethical and Islamic investment opportunities are not being looked after. For Canada, Hillcore wants to be a trailblazer for this asset class.
